| Welcome to this issue of Fast Break Ask an Expert. Today's author is Boyd Cruel. Boyd joined Alaron in 1996 and has been the firm's principal Soft Commodities analyst sine 1997. Boyd's highly regarded research and analysis covers the soft commodities -- coffee, sugar, cocoa and orange juice [more] |
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Today's Questions
Question: basically I would like to know the gold and silver status and also want to know that is it going more high or not & when it got break & move to down. whats the position will it take further next month or weak. and also tell me some more sites on where i could see news relavent or sites silver & gold i.e. bullion, vikas commodities, etc...
with
Best Regards
Gautam...
ANSWER: Despite the recent severe break of the precious metals their status will remain longer term bullish. There sharp correction was positional driven as a heavily long speculative market booked profits. In the near term, after further long liquidation look for the $10.00 level in Silver as a good value to buy. This is the point that showed us investors are not afraid to buy here, and the rally sharpened. Remember, fundamentals have not changed yet. For Gold, watch the Gold/ Silver ratio to come back to the 55 area from a recent low around 43. I would like to see Golds long liquidation put it around 570.00 to spark new buying interest.
Name: Shelley
Location: NYC
Question: Focusing on the relative value of Crude Oil (WTI) versus Natural Gas, Gas is trading at a record low in its heating value equivalent compared to Crude. This seems to be a US phenomenon in comparison to Europe and the UK, which place a much greater value on Natural Gas relative to the Brent contract. Why is this so and when will this price disparity correct in the US?
ANSWER: To answer the why, we need to look at the supply factors of each market. In the US, we control our supply of Natural Gas which is a weather driven market. Whereas we import over 50% of our Crude oil from what's viewed as troubled areas, which puts a "fear premium" on the market of about $10-15. This creates greater price swings in our Crude market versus the UK which is more Crude Oil self-sufficient. They can easily get by with what they produce compared to our usage requirements.
As for the when. Our Gas storage, which is limited compared to Crude, is at an all time high after a mild winter. This should change due to the weather expected this summer. We use more gas to generate electricity than for heating, this should perk up the Gas market but still may not be enough to even out the price disparity. I believe it would require more from the Crude factors to help this out, which I do not see happening for quite some time. |
A
Word From Our Fast Break Author
Name: Trevor
Location: Australia
Question: G'Day from down under.
I believe at some point there will be a correction of the USD such that it will fall against a number of currencies.The Chinese and Japan will resist that as might many of the USA trading partners,but it might be put upon them at some point.But in the short what currency or bunch of currencies would be the best bet in the advent of a reduction in the USD.
ANSWER: I have received a few questions regarding the USDs stance. One major currency to trade is obviously the Euro. With Banks and Foreign Industry changing their Fx reserve allocations to Euros vs. the USD and JPY it seems as though everyone is expecting a significant slide in the USD. In expectation of this I would not only position myself in EUR, GBP, NZD, and CAD vs. the USD but look to the cross currencies such as EUR-JPY and AUS-NZD.
Anonymous Question: Where do you see coffee going in the short to medium term?
ANSWER: The mid-April to mid-May time frame is the seasonal time when coffee prices move higher. The reason behind this is that a weather premium is being built into the market ahead of the Brazilian winter. The July contract has found support around 106.00 and has rallied about 700 points off this level as of the 4/19 close. In the next few weeks, we could see this market test the 2006 high of 130.30. As we get into mid-May, the seasonal trend for this market is to move lower as Brazil begins to harvest their crop. Barring any freezes in Brazil, the market could remain under pressure through the middle of July. If we do get a freeze during this
time, we could see new yearly highs made in this market.
Anonymous Question: Basically, I would like to know the gold and silver status in the next month.
ANSWER: Gold and silver have been in a bull trend for the last few years. These markets usually move side by side, monetarily. This means that if silver is up 5 cents for the day($250), gold usually will be up the same amount($2.50=$250). However, since March 2006, the silver market has rallied almost 500 cents($25,000), while gold has only rallied $100($10,000). This is a ratio of 2.5 to 1. Funds have been buying the silver/gold spread in the last month and at some point they will be unwinding this spread. This leads into a seasonal trade next month. During the first week of May, the seasonal trade in the metals is
to buy August gold and sell September Silver. During this time, we could see the silver/gold spread tighten up. This would just be a correction for the metals market. These two markets should continue to trend up through 2006..... |
About
the Author
Boyd Cruel joined Alaron in 1996 and has been the firm's principal Soft Commodities analyst sine 1997. Boyd's highly regarded research and analysis covering the soft commodities -- coffee, sugar, cocoa and orange juice -- appears dailyonvarious financial sites. The New York Board of Trade, the dominant exchange for soft commodity futures, also distributes his research reports both to private clients and industry professionals. A favorite of the financial press, Boyd has been quoted extensively in the Wall
Street Journal, Futures Magazine, Investor's Business Daily and other financial publications.
Boyd works with individual clients, money managers and system developers, advising them and helping them to execute complex trading strategies. He is also part of Alaron Trading's Futures Training Division, which specializes in educating novice, intermediate, and professional traders." |
For
Our Fast Break Readers
Disclaimer
The Commodity Futures Trading Commission has asked us to also advise you that trading futures is not without risk. While there is opportunity for incredible wealth building, there is also the risk of losing even more than you invested. Of course, that's not unlike most other businesses. But informed traders are the best traders! Opinions expressed by Fast Break authors are not those of FutureSource.
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The day a trader feels he has no more to learn, is the day he should stop trading.
-Boyd Cruel
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