Commodities Update: How Long Will It Last?

Image for post
Image for post

Bill Poulos is an American investor who was born and raised in Detroit, Michigan, by first generation Greek Parents. He married his high school sweetheart, Karen, in 1969. Poulos was accepted into a co-op program with General Motors where he worked on the factory floor and attended college. He climbed the corporate ladder during his 35 years at General Motors. When Bill retired in 2001 he began Profits Run, Inc. with his son, Gregory Poulos. Profits Run provides materials for traders and have assisted over 100,000 investors with managing their wealth. Bill contributes to many online news platforms, such as Investing, LinkedIn, Yours.org, and here on Medium. He is the author of several books on investing. He works hard to give back to the community and inspire the youth of Detroit. Bill and Karen are happily married and live in Wixom, Michigan.

GOLD

Gold opened the week at $1440 per oz with previous resistance just about $1450. However, Gold broke that resistance and ran up hard to above $1500 per oz on Wednesday and has chopped around that level since. Trading on Friday started above $1500 and in late trading is right at $1499. The $1500 is an obvious area of resistance and if the market can close at or close to it as it appears it will, the week has been a big win for gold investors with a gain of about 4% on the week. This rally is mostly a result of Monetary policy easing in the U.S and globally and haven demand due to economic slowing. Even though Friday’s price action has just been chopping, this is what has also been happening in the broader market the last couple of days. The question is can this run up in gold prices be sustained? The answer lies in part with the continued actions of the Federal reserve and whether they continue to lower rates and deflate the US dollar, if so, Gold could be on its way up to $1600 with another rate cut or two. If the FED discontinues the rate cutting this year as it had indicated that it would, we may not see a sustained rally in Gold prices much above the $1500 price level.

SILVER

Silver like Gold had a big rally this week. Silver started the week right around $16.20 per oz and ran all the way above $17.20 on Wednesday. Thursday and Friday have been chopping around and consolidating around $16. 90-$17 per oz. In late Friday trading, Silver is trading just below $17 per oz at $16.97. This is still a big move for the week overall. With the Silver prices hanging around $17 per oz, this is a big psychological resistance level that has gotten a lot of attention from investors. However, this looks like a level which maybe a bit over extended and at which investors may take some profits, and so look for short-term pullback before it moves higher.

OIL

This week we continued to see Crude prices sinking lower. US OIL opened at 55.29 per oz. and then fell all the way to $51 on Wednesday but closing at $52. Mostly due to ongoing concerns about global demand. However, on Friday, there has been a rally back up to $54.50 almost completely erasing drop. Friday’s rally against the trend is due to optimistic news that Saudi Arabia is working with over OPEC members to come up with a plan to stop the slump in Oil prices. The market likes the attempt, however, the reality of lower global demand for oil seems to be a huge reality which may prove difficult to overcome.

Bill Poulos is an author, retired automotive executive (General Motors), and co-founder of Profits Run, Inc. Bill offers insight into the economy and trading.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store