2012 July-August MetaStock Monitor
In this issue:
Main Article
Non-Farm Disappoints, But Gold Still Ends The Week On A Low. So What’s Next For Gold?
Contributed by Nik Kalsi and Phil Carr
Gold fell 1.6% in less than two hours on Thursday, as monetary policy easing in Europe and China was shortly followed by a better-than-expected US jobs report on Friday. US June non-farm payrolls rose by 80,000 while the jobless rate unchanged at 8.2 per cent, official figures showed.
US employers hired at a dismal pace in June, raising pressure on the Federal Reserve to do more to boost the economy and further imperilling President Barack Obama's chances of re-election in November.
By Friday lunchtime in London, Gold in Dollars was down around $5 per ounce on the week, while the Gold Price in Euros was still showing a 1.9% weekly gain following the weakening of the Euro. Meanwhile Silver fell to $27.10 per ounce – a few cents below where it started the week.
The Gold & Silver Clubs technical analysis on MetaStock’s QuoteCenter shows Gold has been in a three month consolidation range of $1525 to $1640. Despite its flat performance in recent months, we believe it’s likely to rebound before the end of the year and here are three good reasons why...
Quantitative Easing
Last Thursday The Bank of England (BoE) confirmed it was to restart its asset purchase programme with a further £50 billion of quantitative easing (QE). To put that into perspective, that will take the total size of the UK programme to £375 billion. We believe the Federal Reserve will be next to boost the US economy and of course that will result in renewed buying interest in the shiny metal.
Central banks still buying gold
Central banks, the largest holders of gold, may expand reserves for the third year running, according to the World Gold Council.
As gold prices head for a 12th consecutive annual gain, the council forecasts that central banks may buy more this year than the purchases of 456 tons in 2011 as countries diversify their reserves.
We believe this makes absolute sense. The last thing that central banks want to hold is dollars. The most obvious thing for them to diversify into is dollar-denominated real assets and the easiest of these is gold.
Indian gold demand: A repeat of 2009?
Another reason why gold is in a consolidation period is due to news that the Indian economy, the biggest global consumer and importer of the commodity, is suffering, with the country registering its slowest quarterly growth of 5.3% in nine years in the first quarter this year.
In early 2009, when the Indian economy faltered and the rupee crumbled, demand all but disappeared. In the first quarter of that year, demand was just 24.2 tonnes, down 77% year-on-year, according to GFMS data. For the full year Indian gold consumption fell 19%.
Since March, gold sales to India have dropped between 50% and 60% year-on-year, with analysts forecasting Indian demand to fall between 20% and 30% over the full year.
However, traders should be aware that a downturn in Indian consumption is a purely cyclical phenomenon. In 2010, for example, when the Indian economy made a comeback, gold consumption soared 74% to a record high of 1,006 tonnes, according to GFMS estimates. And a similar rebound, later this year or in 2013, could be back on the cards.
Whilst we are still bullish on gold in the long-term, what’s our short-term outlook?
In the short-term The Gold & Silver Club is focused on potential sell short opportunities with both Gold and Silver. If we break the important support levels – $26 on Silver and $1525 on Gold, the momentum is likely to continue downward in the short-term.
If Silver breaks $26.00, we expect a big sell off with the price rapidly dropping to $25.00, $24.00, $23.00 or lower fast. In which case traders should be prepared with two things: one, the right trading strategy to profit from the downside momentum and two: a precise market data tool such as MetaStock’s QuoteCenter to give you the right information at the right time to make the right trading decision.
On the flipside, if the market continues to bounce and rally off the $26.00 support level this potentially could be a very profitable trade to the upside. This key level has not been breached in the last 12 months so is the pivotal level to watch.
Looking at gold – if we continue to bounce off and rally from the $1525 to $1535 support level then expect a great trade toward the upside. Again this key level has not been breached in the last 12 months so is the pivotal level to watch. On the reverse side, if gold breaks through $1525 prepare yourself for a major sell off with the potential of gold price hitting lows of $1500, $1485, $1450 or lower fast.
On both occasions be aware – The more times we test a support level, the likely it is to break. To sum things up, the outlook for gold and silver remains bullish for the medium and long term but is rather bearish for the short term. If you would like to receive free weekly Gold & Silver trading updates then sign up to The Gold & Silver Clubs newsletter at www.thegoldandsilverclub.com.
About Nik Kalsi and Phil Carr
Nik Kalsi and Phil Carr are recognised as leading authorities on gold and silver trading. They are the founders of thegoldandsilverclub.com and professional commodity traders.
Nik Kalsi
Nik has extensive knowledge of the financial markets and investment strategy. Prior to founding The Gold & Silver Club, he spent 5 years coaching professional fund managers and traders internationally for some of the world’s top tier hedge funds and investment banks. Through his journey across the world’s leading trade floors, Nik formed first hand relationships with successful traders – discovering the strategies, mindset and tools giving professional traders the definitive edge in any economy. Nik has written many articles on monetary economics. He is also a regular columnist for a number of financial publications and appears frequently on television.
Phil Carr
Phil is the co-founder and director of The Gold & Silver Club. He specialises in teaching people how to make money from trading one of the biggest financial markets in the world: Gold, Silver & Oil and has trained hundreds of individuals to become independent traders and successfully manage their own investment portfolio.
He has personally developed The Gold & Silver Club’s trademark investment strategies that have a proven track record of generating returns for traders.
Phil speaks at numerous trading seminars and workshops across the world sharing his expert knowledge with investors who have a passion and interest in trading Gold, Silver & Oil.
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Support Tip
How do I create an expert adviser for an optimized system test?
Contributed by MetaStock Support
Some of the System Tests look for optimized values based off of the data set and security you are testing. Optimization values can change with each new data point coming into the chart, so the optimization values can constantly change. Since optimization values are ever changing, it would be impossible to create an Exploration\Expert including all the different optimization values. This is why there are not matching Explorations and Experts for each System Test.
Below are instructions to create an Expert Advisor that uses optimization values found in the System Tester. The same steps can be used for non-optimized System Tests, you will simply not need to replace OPT1, etc with a value.
To create an Expert from an Optimized test:
1) First, you need to run the System Tester to get the optimization value. Open the System Tester.
2) After opening the System Tester, choose the formula you wish to create an Expert Advisor for. For this example, we selected "Equis - Bollinger Bands". Click the "Edit" button. Once the information appears, click the "Buy Order" tab, highlight the formula and copy it.
To create an Expert Advisor symbol (based off a Buy Order): 3) Close the System Tester and open the Expert Advisor.
4) After opening the Expert Advisor, select the "New" button. Then name your expert and add any helpful notes in the notes area.
5) Go to the "Symbols" tab and select "New". Paste the copied formula from the System Tester in the "Condition" area and give the symbol a name. Anywhere in the formula that opt1 is listed, insert the optimization value found in the System Tester.
6) After naming the symbol and pasting the formula on the "Name" tab, click on the "Graphic" tab and assign a graphic for your Expert Symbol.
7) After saving your new Expert Advisor, you will see it listed.
8) Here is a screen shot of the Expert Advisor we created generating a signal.
To create an Expert Advisor alert (based off a Buy Order):(Use steps one and two from "To create an Expert from an Optimized test")
3) After opening the Expert Advisor, click the "New" button. Create a name for your new Expert Alert and add any notes you feel necessary in the space provided. Once you have completed these steps, click on the "Alerts" tab.
4) Select "New" once you have clicked on the "Alerts" tab. Name the Alert and copy and paste the formula taken from the System Tester in the "Condition" area. Anywhere in the formula that opt1 is listed, insert the optimization value found in the System Tester.
5) Click on the "Alert" tab. This will allow you to specify how you would like to be notified when a signal is generated.
6) You can see your Expert Advisor listed with the rest of the Expert Advisors once you set your Alert method.
To create an Expert Advisor symbol (based off a Sell Order): You will need to close the Expert Advisor window and re-open the System Tester. Highlight and Edit the System Test. Go to the "Sell Order" tab and copy the formula. Repeat all of the same steps, making sure you name them "sell".
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MetaStock Power User Tip
The Importance of Managing Your Money
Contributed by Breakaway Training Solutions
How important is money management when trading? The short answer is that this can make or break your trading account! No one should ever place a trade without a solid money management plan in place. To help explain extremely important topic, please watch this review and tutorial of the JBL Risk Manager.
http://www.youtube.com/watch?v=zr6vV2x18Vs
For more MetaStock training, make sure to visit Breakaway Training Solutions at www.learnmetastock.com or email Breakaway Training Solutions at admin@learnmetastock.com.
About Kevin Nelson
Kevin Nelson is the founder of Breakaway Training Solutions, Inc. He has spent the last 17 years becoming an expert on MetaStock software and a serious student of technical analysis while working for MetaStock. Prior to joining MetaStock in 1993, Kevin was a stockbroker for a well-known NYSE firm. In his role as Sales Manager at MetaStock, Kevin interacted extensively with MetaStock customers via phone, webinars, and public appearances. His experiences while working at MetaStock have enabled him to gain a keen understanding of the needs of technical analysts worldwide. While with MetaStock, Mr. Nelson was a featured presenter for four years. During this time, he traveled the U.S. introducing the MetaStock program to thousands of people and teaching them how to use its many features. His easy-to-understand approach is considered by many to be the best in the industry.
©Breakaway Training Solutions, Inc. 2012
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