Only a Handful of Investors Truly Understand

Think of it as light heavy oil, thick and gooey enough that it needs a pump to get out of the ground, but not so thick that it needs expensive heating to flow, hence the name cold flow. Now when I say that cold flow heavy oil is the most profitable, I mean that producers get more profit per barrel (the netback) than from other types of oil.

For every dollar producers put in the ground to get the oil, they get anywhere from $3-$7 back, sometimes up to $11, compared to $1-$3 for light oil. That's due to two factors:

1. The heavy oil is shallow so it doesn't cost much to get out, and
2. U.S. refineries love Canadian crude as Mexico and Venezuela heavy oil production declines, so heavy oil prices in Canada are now strong

And Canada has more of this oil than anyone else in the world. The real opportunity comes from the fact that right now, at this very moment, only a few junior and intermediate producers focus on cold flow heavy oil. That will soon change and as a result, investors will see a host of explosive new profit opportunities as this massive Canadian resource gets developed.

But make no mistake, the biggest, juiciest profits will come from those companies who are already in the cold flow heavy oil game. I've just prepared a new research report that examines three fast growing producers who stand to provide early investors with astounding returns as a result of this opportunity.

This new report, "North America's Heavy Oil and 3 Junior Heavy Oil Producers Set to Explode", spells out all the details, including:

* A detailed explanation of heavy oil and how big the market for it might be * How new technology will impact the market and create new opportunities for forward-thinking investors in the coming months * Why we're in the midst of extraordinary times for Canadian heavy oil producers and how long these good times might last * And most importantly, the names of three carefully selected junior/intermediate Canadian heavy oil producers perfectly positioned to take advantage of this unique market scenario.

You can claim your copy of this detailed report "North America's Heavy Oil and 3 Junior Heavy Oil Producers Set to Explode", immediately via email by clicking the link below.

While this report includes the type of research that might ordinarily cost hundreds of dollars, and includes three stocks with triple digit profit potential. But don't delay, as word begins to spread of the opportunity in cold flow heavy oil, the stocks revealed in this report will begin to move up sharply and I wouldn't want you to miss out.

Click here to order your copy of this in-depth report right now!


Share

Phil Flynn: A Trillion Reasons To Buy Oil May Not Be Enough

A trillion dollars in printed money and oil still can’t close higher! Ok, well maybe it hasn’t happened yet but the rumors of another trillion in quantities easing from the Fed as well as a multitude of other factors sent gold soaring to an alltime high and other commodities soaring.

What also seemed to help was this perception that with the reelection of Japan’s Prime Minister Naoto Kan's in the Democratic Party of Japan leadership, it could be less likely that Japan will intervene in the yen. WRONG!!! The yen seemed to taunt the prime minster hitting a 15 year high against the dollar and only then the Japanese finally said enough is enough and intervened in the yen for the first time in 6 years.

Reuters News quoted Finance Minister Yoshihiko Noda as saying, "Japan intervened in the currency market as the impact of the yen's rise on the economy could not be ignored and that Japan would continue to take action, but that it had been acting alone.” Reuters said that estimates on how much yen selling Japan had done in Asia varied widely.

Dealers cited talk of 300-500 billion yen ($3.6 billion-$6 billion) although some reports put it closer to 100 billion yen. Of course prior to the intervention and while gold and silver were flying high, oil sagged on the fact that.....Read the entire article.

Hottest Investment Plays in North America: Oil and Gas Bulletin

Share

Saudi Arabia Set to Raise Crude Oil Production

2 major themes dominating the market are Japanese government's unexpected intervention of yen and Fed's extension of QE by increasing bond purchases. Gold consolidated in Asian and European sessions after rallying above 1270 yesterday. Outlook remains firm and is likely to extend gains to 1300. Crude oil weakened for a second day and is currently trading below 76. Despite OPEC's downward revision on demand for the cartel's oil, Saudi Aramco said that it's ready to boost production as consumption in emerging markets expands.

With the exception of China, most Asian stocks surged as led by Japan's Nikkei Stock Average which added +2.34%. Japan's measures to curb yen's appreciation revived optimism on the country's export-driven economy. For the first time in 6 years, the BOJ intervened by buying dollar and selling yen as the country's currency has surged to the highest level in 15 years. The action was a surprise to the market as it's widely expected Naoto Kan, the re-elected Prime Minister, is less aggressive in curbing yen's appreciation. That said, the impact of the intervention should not last for long as it appeared to be carried out unilaterally, rather than in collaboration with other central banks.

China's stocks fell amid speculations that the country may raise banks' capital adequacy ratios to as high as 15% by 2012 and the government will accelerate restrictive measures to boost energy efficiency in coming months.

At an interview with the Globe and Mail, a Canadian newspaper, Khalid al-Falih, head of Saudi Aramco, Saudi Arabia's state oil company, said he expects global demand for crude oil to rise, mainly from from China and India, and the company is ready to boost production to meet any increase. The comments appeared to be in contrast with OPEC's monthly report that lowered the demand for the cartel's output by -0.1M bpd and -0.2M bpd for 2010 and 2011 respectively as non OPEC production increased. We believe Khalid's saying aimed at reducing the country's spare oil capacity.

Saudi Arabia, which produces 8.5M bpd and has the capacity for an output of 12.5M bpd, is looking to increase output by about +2M bpd over the next 5 years, thus trimming the spare capacity 2M bpd. According to OPEC's September report, the 11 members bearing quotas produced 26.799M bpd, bringing the compliance level +0.9% higher to 53.5%, in August.

The US government will report industrial production which probably grew +0.3% m/m in August, following a +1% growth in the prior month. Capacity utilization rate should have climbed to 74.9% in August from 74.8% in July. The Empire State manufacturing index is expected to have crawled higher for a second month to 9 in September after plummeting to a 7-month low of 5.1 in July.

From Oil N' Gold Focus.....

Just click here for your FREE trend analysis of crude oil ETF USO


Share

Credit Suisse Analyst is Bullish on Two Engineering and Construction Firms

A Credit Suisse analyst is bullish on two engineering and construction companies, saying the prospects for new oil and natural gas contract awards are improving.

Analyst Jamie Cook called shares of Fluor Corp. and Foster Wheeler AG "top picks" in a note to investors on Wednesday. The companies build infrastructure to ship natural gas, and their shares have been depressed because natural gas prices have been relatively low. Natural gas prices are trading around $4 per 1,000 cubic feet on the New York Mercantile Exchange. That's higher than the same time last year but only about half of what natural gas traded for in 2008.

Cook said prospects for new contract awards and additional backlog for oil and natural gas work "should ramp up in 2011," citing private industry sources. "Areas of optimism include Saudi Arabia, Abu Dhabi, Australia, Brazil, India, China and Iraq, but longer term," Cook said. Cook maintained an "Outperform" rating on Fluor with a $56 price target. He maintained the same rating on Foster Wheeler with a price target of $31. Shares of Fluor fell 9 cents to $48.85 in morning trading. Shares of Foster Wheeler fell 18 cents to $24.22.

From INO.Com/AP

Share

Crude Oil Technical Outlook For Wednesday Morning

Crude oil was lower overnight as it consolidates some of the rally off August's low. Stochastics and the RSI are overbought and are turning neutral warning bulls to use caution as a short term top might be in or is near.

Closes below the 20 day moving average crossing at 74.47 would confirm that a short term top has been posted. If October extends the rally off August's low, the 62% retracement level of the decline off August's high crossing at 78.58 is the next upside target.

First resistance is Monday's high crossing at 77.50
Second resistance is the 62% retracement level off August's high crossing at 78.58

Crude oil pivot point for Wednesday morning is 77.00

First support is the 10 day moving average crossing at 75.27
Second support is the 20 day moving average crossing at 74.47

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

Share

Commodity Corner: Pipeline Outage Continues, But Oil Ends Lower

October oil futures edged lower Tuesday despite fears of a prolonged shutdown of a key Enbridge pipeline that carries crude oil from Canada to the U.S.

Crude prices settled at $76.80 a barrel, a 39 cent decrease from the previous day's trading session. The continued shutdown of Line 6A of Enbridge's Lakehead System near Chicago is providing support for oil prices. Line 6A, which can carry up to 670,000 barrels a day from Canada to the upper Midwest, will not be allowed to restart until U.S. government regulators deem it safe. Already causing a sharp increase in gas prices across the region, investors fear the supply disruption could begin to drain U.S. oil inventories.

Additionally, sluggish economic growth in Germany applied downward pressure to crude futures. A survey revealed lower than expected German investor sentiment, and industrial production in the euro area was flat in July, according to EU's statistics office. Analysts suggest that despite China's booming economy, mixed economic conditions in the U.S. and Europe have kept price increases in check.

The intraday range for October crude was $76.21 to $77.99 a barrel.

Meanwhile, natural gas for October delivery rose 2.8 cents Tuesday to settle at $3.97 per thousand cubic feet. The third price increase in as many trading days supports speculation that the days of lower natural gas futures may have passed for the season. However, some analysts are being cautious and are not declaring a seasonal rally yet. Gas prices were threatened earlier Tuesday on forecasts of storm clusters forming in the Gulf of Mexico, but no immediate storm threats have been seen, steering clear of production outages. Natural gas
fluctuated between $3.84 and $4.02 Tuesday.

RBOB gasoline settled lower at $1.97 a gallon, peaking at $2.00 and bottoming out at $1.96.

From the staff at Rigzone

Share

Where is Crude Oil and Gold Headed on Wednesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.




MarketClub Alerts in Action and Explained

Share

Stock Market and Commodities Summary For Tuesday Sept. 14th

The U.S. stock indexes closed mixed today. Some dour economic data out of Europe was offset by slightly better than expected U.S. retail sales data today. Bulls have gained some upside near term technical momentum recently as the bulls have "climbed a wall of worry." While the months of Sept. and Oct. have been historically unkind to the stock market bulls, the indexes are starting out the month of September in good shape. The record high in gold today and the rebounding U.S. Treasury markets this week are a warning signal to the stock index bulls that more money may soon be flowing into safe haven assets and away from the stock market.

Crude oil closed down $0.41 at $76.78 a barrel today. Prices closed near mid range today and saw a corrective pullback from recent gains and were also pressured by some weak economic data coming out of Germany. Bulls still have the slight near term technical advantage. The next near term upside price objective for the bulls is producing a close above solid technical resistance at $80.00 a barrel.

Natural gas closed up 1.7 cents at $3.955 today. Prices closed nearer the session high today and hit another fresh three week high on short covering in a bear market. The bears still have the overall near term technical advantage. A three month old downtrend is still in place on the daily bar chart.

Gold futures closed up $24.90 at $1,272.00 today. Prices closed near the session high today and soared to a fresh contract and all time record high. A sharply lower U.S. dollar and some fresh safe haven investment demand boosted gold higher today. A dour economic report coming out of Germany today spooked the markets in Europe, and that added to buying interest in gold. Now, look for price volatility in the gold market to heat up in the near term, with bigger daily price movements likely, both on the upside and on the downside. Gold bulls still have the strong overall near term and longer term technical advantage.

The U.S. dollar index closed down 72 points at 81.46 today. Prices closed near the session low again today and hit another fresh four week low. Bears have the near term technical advantage and gained more downside momentum today. Bulls' next upside price objective is to close prices above solid technical resistance at last week's high of 83.31.


Share

Phil Flynn: OPEC Divisions

In a world awash in crude supply OPEC has had it pretty darn good. The cartel that always puts its own interests first seems to be getting a little testy with each other as the competition for a declining market share may be causing some tension. This behind the scene squabbling may have come out in the open when Reuters News and the Globe and Mail reported that Saudi Aramco, the Saudi State oil company chief executive Khalid al-Falih, declared that global oil demand has bottomed and the state owned giant stands ready to increase production when more is needed.

The Globe and Mail quoted him as saying, "We believe that the market has bottomed in terms of demand and has already begun picking up," he said. "And Saudi Aramco will be responding to the economic recovery that has ensued with appropriate adjustments. But those will be determined collectively and not singly, either by the company or by the kingdom." Of course when the Saudis speak the market listens yet at the same time are they sending a message to other members of the cartel that the kingdom is tired of holding back on production while others profit by taking their market share. Early this morning the OPEC Secretary said in so many words.....Read the entire article.

Start Trading Crude Oil Today....Get 10 Trading Lessons FREE

Share

Crude Oil Retreats Along With Equities as Economic Data Disappoints

From Oil N Gold Insights.....

Crude oil pulled back in concert with stock markets. Political environment in Japan and economic releases in the UK and the Eurozone took center stage in driving market sentiment. Currently trading at 76.7, the front month WTI contract retreated for the first time in 3 days after soaring to a 1 month high of 78.04 yesterday. Weakness in USD sent precious metals higher. Gold climbed to as high as 1256.9 while silver continued trading above 20. For PGMs, both platinum and palladium strengthened for a second day to 5 week high of 1570 and 4 month high of 541 respectively.

In Japan, Prime Minister Naoto Kan's victory as the head of the ruling Democratic Party of Japan (DPJ) pushed the yen to a 15 year high against the dollar. Kan has been viewed as more tolerant to yen's appreciation than another PM candidate Ichiro Ozawa.

In the Eurozone, ZEW's index signaled investors lost confidence on Eurozone's economy. The 'economic sentiment' index for the 16-nation region plummeted to 4.4 in September from 15.8 in August. The market had anticipated a milder drop to 14.5. The reading specifically for Germany slumped to -4.3 in August from 14 a month ago. In the UK, headline CPI surprisingly rose to +3.1% y/y in August. Inflation has been overshooting BOE's target of +3% for 6 straight months, increasing the difficulties for the central bank to implement measures to stimulate growth.

Gold/silver ratio has dropped to 62.2 yesterday from 64.4 earlier in the month and above 70 earlier this year, indicating silver's outperformance. However, we have become more cautious of a correction in silver price from current price level. In fact, silver is the only precious metal under our coverage that is oversupplied due to rising mine production.

PGM prices rallied as a labor strike at the South African PGM producer Northam Platinum entered a second week. According to the company, about 80% of the mine's 6 800 workers were on the strike.

Share

Short Term Buy Signal on Gold!

GOLD ALERT: The MarketClub Daily “Trade Triangle” signaled an enter long gold position today for short term traders at $1,250.35. Spot gold is currently trading at $1,265.28. Intermediate and long term traders remain long gold.

Get MarketClub Alerts in Your email.....Just Click Here!

Share

Crude Oil Is Little Changed as Enbridge Works on Pipeline

Crude oil was little changed as Enbridge Energy Partners LP prepared to weld a new section to a pipeline that was shut last week and U.S. retail sales climbed for a second month. Oil dropped as much as 0.9 percent after work began on Enbridge’s Line 6A, which transports 670,000 barrels a day of Canadian crude to refineries in the central U.S. Prices rebounded from the day’s lows after the Commerce Department reported that purchases increased 0.4 percent following a 0.3 percent gain in July that was smaller than previously estimated.

“We are all waiting to see what happens with the Enbridge pipeline,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston. “Any news that comes out will have the ability to move the market.” Crude oil for October delivery fell 9 cents to $77.10 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Futures settled at $77.19 yesterday, the highest level since Aug. 11.

Brent crude oil for October settlement, which expires tomorrow, slipped 5 cents to $78.98 a barrel on the ICE Futures Europe exchange in London. The more actively traded November contract dropped 13 cents to $78.94. Canada is the largest exporter of crude to the U.S., sending 2.2 million barrels a day in June, according to the Energy Department. Refiners in the region may obtain supplies from Cushing, Oklahoma, the Midwest oil-storage hub, driving up futures traded in New York.

From Bloomberg News



Share

Crude Oil Support, Resistance and Pivot Point Numbers For Tuesday Morning

Crude oil was lower overnight as it consolidates some of the rally off August's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If October extends the rally off August's low, the 62% retracement level of the decline off August's high crossing at 78.58 is the next upside target. Closes below the 20 day moving average crossing at 74.48 would confirm that a short term top has been posted.

First resistance is Monday's high crossing at 77.50
Second resistance is the 62% retracement level off August's high crossing at 78.58

Crude oil pivot point for Tuesday morning is 77.20

First support is the 20 day moving average crossing at 74.48
Second support is the reaction low crossing at 72.63



Share

Where is Crude Oil and Gold Headed on Tuesday?

CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.




Better Make Sure You Get This....The #1 Predictor of Inflation or Deflation

Share

Stock Market and Commodities Commentary For Monday Evening

The S&P 500 index gapped up and closed higher on Monday as it extended the rally off August's low. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional gains are possible near term. If December extends the aforementioned rally, August's high crossing at 1120.90 is the next upside target. Closes below the 20 day moving average crossing at 1073.22 would confirm that a short term top has been posted. First resistance is today's high crossing at 1118.80. Second resistance is August's high crossing at 1120.90. First support is the 10 day moving average crossing at 1084.13. Second support is the 20 day moving average crossing at 1073.22.

Crude oil closed higher on Monday as it extends the rally off August's low. Profit taking tempered early gains and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If October extends the rally off August's low, the 62% retracement level of the August decline crossing at 78.58 is the next upside target. Closes below the 20 day moving average crossing at 74.43 would temper the near term friendly outlook. First resistance is today's high crossing at 78.04. Second resistance is the 62% retracement level of the August decline crossing at 78.58. First support the 20 day moving average crossing at 74.43. Second support is August's low crossing at 70.76.

Natural gas closed higher due to short covering on Monday while extending the trading range of the past three weeks. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 3.973 are needed to confirm that a short term low has been posted. If October renews this year's decline, weekly support crossing at 3.225 is the next downside target. First resistance is the reaction high crossing at 3.946. Second resistance is the 20 day moving average crossing at 3.973. First support is August's low crossing at 3.697. Second support is weekly support crossing at 3.225.

Gold closed lower due to profit taking on Monday and below the 10 day moving average crossing at 1248.80 signaling that a short term top might be in or is near. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that additional profit taking is possible near term. Closes below the 20 day moving average crossing at 1240.20 would confirm that a double top with June's high has been posted. If October renews the rally off July's low, June's high crossing at 1267.10 is the next upside target. First resistance is last Wednesday's high crossing at 1263.20. Second resistance is June's high crossing at 1267.10. First support is the 20 day moving average crossing at 1240.20. Second support is the reaction low crossing at 1232.40.

The U.S. Dollar closed sharply lower on Monday and below trading range support crossing at 82.23. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging and are turning neutral signaling that sideways to lower prices are possible near term. If December extends the decline off August's high, August's low crossing at 80.75 is the next downside target. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. First resistance is last Tuesday's high crossing at 83.29. Second resistance is August's high crossing at 83.96. First support is today's low crossing at 82.02. Second support is August's low crossing at 80.75.

Get Your FREE Preview of INO TV

Share

Commodity Corner: Oil Gets Boost from China, Pipeline Closure

From the Rigzone staff....

The October crude oil futures price increased by nearly 1% Monday on news about China's industrial production growth rate.

Oil settled at $77.19 a barrel, a 74-cent increased from Friday, after the National Bureau of Statistics of China reported the country's August 2010 industrial production rate was 13.9% higher than the comparable figure for August 2009. Broken down by various sectors, the government agency reported year on year increases of 12.9% in raw chemical material and chemical product manufacturing; 20.1% in transport equipment manufacturing; and 14.9% in the production and supply of electricity, gas, and water.

Also supporting the oil futures price Monday was the ongoing closure of a key segment of Enbridge's Lakehead System near Chicago following a leak reported last Thursday. Enbridge announced Monday that it had recovered all but approximately 50 of the 6,100 barrels of crude that had leaked from the pipeline. The company had no current estimate of when it might restart the line, but it was working with shippers to divert crude oil volumes to other available pipelines and storage facilities.

Oil traded within a range from $76.36 to $78.04 Monday.

A suddenly active Atlantic hurricane season, and the possibility that energy infrastructure in the Gulf of Mexico will be in the path of a tropical system, helped to nudge the natural gas price toward $4.00 Monday. Gas for October delivery settled at $3.94 per thousand cubic feet, a six-cent gain from Friday, with the existence of three systems circulating in the tropics. In the west-central Caribbean, a broad, poorly organized low-pressure system was moving west-northwestward Monday afternoon. The National Hurricane Center was giving the system a medium chance (40%) of developing into a tropical cyclone by Wednesday afternoon.

Out in the mid-Atlantic, Hurricane Igor was packing maximum sustained winds of 150 miles per hour late Monday morning. Forecasters were expecting the storm to follow a northwestward track and become centered approximately 500 miles northeast of the Lesser Antilles by Thursday morning. Another system, Tropical Storm Julia, was churning near the Cape Verde Islands Monday afternoon and moving in a west-northwestward direction at 13 miles per hour. Thanks in part to shearing conditions produced by Igor, forecast models anticipate that Julia will become a low end hurricane and then weaken into a tropical storm.

The October natural gas futures price fluctuated from $3.80 to $3.97. Gasoline futures increased by a penny to settle at $1.98 a gallon Monday. The intraday range for gasoline was $1.97 to $2.01.

From Rigzone.Com

Share

Phil Flynn: Just When You Thought Gas Prices Were Going To Go Down

Just when you thought gas prices were going to go down. A pipeline leak and strong economic data out of China and relief that the Basel banking regulations did not go too far is conspiring to set a positive tone in the oil markets. Chicago gets the shaft. While according to Trilby Lundberg the national average gas price fell 0.8 cents a gallon to $268.99, Chicago and the Midwest prices soared. Enbridge Energy Partners LP shut a major oil pipeline in Romeoville right outside of Chicago that ships crude from Canada to refineries in the Midwest.

The impact was felt across the markets as refiners may be forced to reduce runs. This can also increase the demand for higher yielding crudes as well to maximize output. Thanks goodness there is plenty of supply in storage or this could have really been worse. The market seemed to like the Basel rule or maybe they just like the finality of it all. Global blinking regulators agreed on a new set of rules designed to increase banks capital buffers to better be able to withstand large market movements but at the same time gave them more than a few years to get up to those levels.....Read the entire article.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

Share

Crude Oil Technical Outlook For Monday Morning

Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If October extends the rally off August's low, the 62% retracement level of the decline off August's high crossing at 78.58 is the next upside target. Closes below the 20 day moving average crossing at 74.43 would confirm that a short-term top has been posted.

First resistance is the overnight high crossing at 77.50
Second resistance is the 62% retracement level of August's high crossing at 78.58

First support is the 20 day moving average crossing at 74.43
Second support is the reaction low crossing at 72.63

New Video: How to Spot Winning Trades
Publish Post
Share

Gold forms Overbought Rising Wedge at Resistance

From guest blogger Chris Vermeulen from The Gold and Oil Guy....

Precious metals soar as investors flock to gold and silver. But are they looking deep enough to truly understand the current trends at hand?

When reviewing the metals sector I like to look at it from different angles to get a solid understanding of the patterns and trend forming. I follow multiple time frames along with monitoring the gold mining stocks. Gold stocks tend to lead the price of gold bullion and when its out performing the price of gold substantially by 10% or more you should be expecting a pause or pullback in both gold stocks and gold bullion prices temporarily.

Below are a few charts showing the long and short term trends for gold.

Gold Bullion Price – Weekly Trend Chart
Gold continues to be in a strong up trend. The occasional test of support at the major moving averages can provide great long term points for adding to a position. The 50 period average is one which is tested frequently.

Looking at the weekly chart does give me a red flag for the intermediate price of gold. While the trend is clearly up I can’t help but notice the rising wedge which is a bearish pattern. During an uptrend we want to see bull flags and pennants, not a grind higher forming a narrowing range. This grind higher could unfold much similar to the price action of 2005 and 2007 instead of a correction but I am leaning more towards a sharp correction because more people are bullish on gold now then they were during the June top.

For those looking at gold as a long term investment/currency can be patient and wait for a pullback to a major moving average before adding to your position then you would lower your overall risk for this position. You will understand after reviewing the following charts.

GLD – Gold Bullion ETF – Daily Chart
(This fund moves identical to spot gold price so even though I am showing you GLD fund, the spot gold chart is doing the exact same thing.) As you can see below the price of gold is trading at resistance and becoming choppy. Buying gold at resistance does not make much sense to me. There is a very good chance gold will move lower in the coming weeks providing a better price for long term investors to add to their positions. For example, if you waited for the weekly chart to pullback to the 50 period moving average that would be like buying this GLD fund at $113, which is an 8% discount.

Gold continues to hold up within its channel but this week we could see fireworks if the price breaks below the blue support channels.

Gold:Gold Stocks Comparison – Daily Chart
This chart shows the performance of gold vs gold stocks from the Feb 2010 lows. The blue line is the performance of gold stocks while the red line shows gold’s performance. It’s obvious that when everyone is bullish on gold they buy the highly leverages gold investments in order to take full advantage of the upcoming move. This is much like reading the put/call ratio for trading the SP500 and it measures the bullishness of the precious metals sector.

When gold equities are strongly out performing gold bullion you should be thinking about raising your stops, taking partial profits and or hedging your long term position until the sector stabilizes is not trading at a premium.

Precious Metals Sector Trading Conclusion:
In short, Gold is in a strong up trend and will remain inrecious Metals Sector Trading Conclusion: one for a long time. Commodities have higher percentage of going parabolic. That means there’s a small chance that gold continues to move up quicker and quicker surging hundreds of dollars in a very short period of time. That being said, it’s not very likely, and from a technical point of view those buying gold now are paying a premium in my opinion.

Being a patient trader is not easy, but waiting for low risk entry points is very rewarding on many different levels when done correctly.

Get Chris Vermeulen'a detailed ANALYSYS and TRADES for Oil, US dollar, Treasury notes, the broad market, and Sectors. Be sure to join his ETF Trading Service at The Gold and Oil Guy.Com



Share

Oil Rises For Second Day Amid Optimism About Economic Recovery in the U.S.

Crude oil rose for a second day in New York amid optimism demand for fuel will strengthen because of improved prospects for an economic recovery in the U.S., the world’s biggest crude consumer. Futures rose amid forecasts that retail sales probably gained in the U.S. during August for a second month, according to a Bloomberg News survey of economists before the Commerce Department’s Sept. 14 report. Prices increased the most in six weeks on Sept. 10 as China increased imports of crude and after a pipeline that carries Canadian oil to refineries in the U.S. Midwest was closed because of a leak.

“It’s that optimism in the market,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The data out of China was quite supportive. The whole world is looking for a means to create confidence. As result of that being created you’ll see more demand, or an expectation for more consumption of oil.” The October contract rose as much as 47 cents, or 0.6 percent, to $76.92 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.80 at 9:32 a.m. Sydney time. It gained $2.20, or 3 percent, to $76.45 on Sept. 10. Prices have fallen 3.2 percent this year.

Enbridge Energy Partners LP on Sept. 9 shut its Line 6A, part of a system that can transport 670,000 barrels a day from Canada. The country is the largest source of U.S. imports, sending 2.2 million barrels a day in June, according to the Energy Department. Brent crude oil for October settlement added as much as 31 cents, or 0.4 percent, to $78.47 a barrel on the London-based ICE Futures Europe exchange. The contract rose 69 cents, or 0.9 percent, to $78.16 on Sept. 10.

Bloomberg reporter Ben Sharples can be reached at bsharples@bloomberg.net


Check out the new "Trend TV"

Share