What a recovery in base metals and energies as they pared all the week’s losses and went to create new yearly highs (base metals). This is due to positive news from the global economic front resulting in higher equity markets and higher base metals. The direct correlation between equities and precious metals and energies will continue into August also.
Silver I continue to remain bullish in the long term despite being disappointed repeatedly in 2009. I believe silver is the safest bet for the day trader and the short term trader. Silver is less volatile than gold and energies. But silver is still a poor mans gold in the mindset of the retail investor. I am very confident slowly and over a period of time silver will get its due. I am not talking of silver replacing gold but expecting greater retail participation in silver futures. In India and China there are no silver exchange traded funds and once its started silver will wallop. Some of the readers will disagree with me but I expect Indian silver prices to rise between INR 43,000 to INR 50,000 per kilogram by the end of 2011 and current prices of around INR 22,000 per kilogram silver is a great long term investment. In 2009 I do not expect silver to fall below INR 19,000 per kilogram and below INR 17,000 per kilogram in 2010. Hence the risk to return ratio is good even for the medium term investor.
There will be position squaring and rebuilding before next week’s European central bank meeting, US July non farm payrolls and other economic number risk. Better to trade in the technical. Further one should keep in mind that gold December futures is of four months. Long term investors should buy gold on dips with a stop loss below $860 price target $1032 and $1052. I do not expect gold to fall below $860 till November 2009 and anything below that will result in a fall to $750-$770 zone. Further August is the hurricane season in the Gulf of Mexico. Under Mr. Bush’s regime we would have seen three to four hurricane formations but it seems even the hurricanes are scared of Obama. Bye and have a great weekend.
TECHNICAL VIEW
COMEX SILVER SEPTEMBER
Silver needs to hold $1348 to target $1405 and $1435. On the lower side as long as $1300-$1315 zone holds downside risk will be limited.
NYMEX CRUDE OIL (1ST CONTRACT)
$67.40 price target achieved. Crude oil now needs to break $70-$73 for gains else it will trade in $63-$73 zone.
