Monday September 30, 2013 08:39
Traders took no chances on Friday and squared their shorts early, taking their cue from their European desks. The squaring took the metals to the upper end of our Friday’s target of $1,337 and traded there for most of the balance of the day. The rhetoric, over the weekend, that no debt ceiling compromise was possible encouraged the shorts in the Far East to run for cover and the $1,355 major resistance line was peeked at. This morning we find ourselves again comfortably in the $1,317-$1,337 range. I am not downplaying the psychology of the impact of a government shutdown but I continue to believe that this issue will be resolved, and on its face, will be negative for the metals. Momentum is not confirming the short term strength. My focus is more on the issues that surfaced in Italy over the weekend, where major dissent in the Italian government may force an election and raise the specter of EU trouble ahead. This development needs to be monitored closely. We in North America may begin to feel the worst is behind us and Pollyanna growth is coming , ‘a la’ a famous often quoted economist, but, we represent a fraction of the picture. In Europe there continues to be anxiety and the Chinese continue to back up the truck. Holding those insurance positions continues to be a sound strategy.