Fuelled by the possibility that the US may soon default on its debt – to avoid default, US politicians have to agree to raise the country’s debt limit by 2nd August 2011 – coupled with the imminent announcement of the European Banking Authority’s stress tests on 90 banks across Europe, it was a bumper period for our gold play last week.
Gold has long been seen as a primary haven purchase in times of economic uncertainty. And there’s no doubting that these are uncertain times.
We’re long on gold at £20 a point (averaged in at $1,530.65 USD per ounce with a stop at $1,477.50 USD per ounce) so last weeks 50 point rise from $1,543 USD to $1,593 per ounce added roughly £1,000 to our spread trading account (one week gold chart below courtesy of SharePrice.co.uk).
If we can get the strong start to the week that I’m expecting and gold pushes through – untested but natural resistance at – $1,600 per ounce I’ll be doing a little technical homework and looking to bring that stop in to below support levels a tad closer to our purchase price.
I’m hesitant to rush this move because of the magnitude of world economic events at the moment. Short term price swings can be violent and you can be stopped out in a matter of minutes if you’re playing an overly cautious hand.
Again long-term I’m very hopeful for the continuation of gold’s primary trend that hasn’t looked like reversing for years – with the exception of a short-to-mid-term blip in 2008 (five year gold chart below courtesy of SharePrice.co.uk)..
Thanks again for dropping by.
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