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COMMODITY REVIEW AND OUTLOOK
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800-634-3194(November 24, 1999) METALS: GOLD--Fund buying, with rollovers out of December and into February and April also a feature. The Bank of England will be selling gold for the third time this year next Monday, Nov. 29. They plan to sell 25 tonnes of gold. I would expect a generally subdued tone until the Bank of England sale is history, unless there is news of some significance. I would also see any weakness as a result of that sale as likely a buy. The World Gold Council announced that world demand for gold the last quarter was a record 877 MMT. This was a 22% increase over gold sales for the same period last year. While this was good news, the market seems to have its mind on other matters. Like the bonds for example.
The weakness in bonds may not be bullish to gold, in that it means that a guaranteed investment, the U.S. Treasury bond, offers an increased return.
RESISTANCE--Basis February lies near 303-304, 307, 313, 319, 325-326, 338, 346, 352.
SUPPORT--Basis February lies near 299, 296-295, 289-288, 278, 273, 269, 262-263, 256.
RECOMMENDATION--Aggressive traders might buy gold near current levels or on dips to near 299 with stops under 295 or of 3-4 dollars. Objective is open.
Option traders could consider a near the money call for either April or June. Objective is open.
SILVER--Fair volume in the silver. Traders should be watching this market.
I still find the carrying charge structure of silver to be bullish, but as yet the market has not given any confirmation. The chart is improving, but is still arguably range-bound. This could be a first rate "what if" trade on the long side. As is the case with gold, silver may be viewed as trading within a wedge.
RESISTANCE--Basis March lies near 533-535, 549, 563, 571, 575, 595, 605, 623-628, 656.
SUPPORT--Basis March lies near 522-526, 514-512, 509, 505, 501, 493, 488.
RECOMMENDATION--Futures traders could buy silver near current levels or dips to the mid 520's with stops of 5-10 cents or under 509. First objective is the upper 540's, but overall, the objective is open. Watch for selling in the low 530's. Option traders could buy near or in the money March or May calls. If you've read me much at all, you know I'm not fond of way out of the money options. Usually it is the trader who ends up way out of the money. But in this case, traders could consider out of the money calls for what could be a solid option trade. Try to stay 600 or lower for a strike.
COPPER--No feature of consequence. Demand seems to have taken a holiday.
RESISTANCE--Basis March lies near 8085, 8150, 8200, 8355, 8395, 8470.
SUPPORT--Support basis March lies near 7990, 7800, 7690, 7635, 7500, 7420, 7350, 7250-7230, 7140-7110.
RECOMMENDATION--No trade for now.
M. Steven Morgan