Asian Metals Market Update: Events which can affect the price of precious metals short-term

Executive Summary

Events which can affect the price of precious metals and energies in the short term.

1. Between 13^th July and 14^th July: US inflation numbers (PPI and CPI) and Federal Reserve chairman’s semi annual testimony.
2. FOMC meet on 28^th July.
3. Various US July jobs numbers (NFP, ADP etc) between 4^th August and 6^th August.
4. Jackson Hole conference of central bankers between August 26-August 28.
5. Not to forget other central bank meetings in August.

Each of the above can have surprises. There can be technical breakout and technical breakdowns in all asset classes. The core of each is (a) whether a nation’s economic growth will be sustainable. (b) Whether jobs creation will continue for the rest of the quarter and rest of the year. (c) How quickly the nations will reach normalcy to pre covid times. (d) Last when will central banks stop their money printing machines? Once the answers are known with a fair degree of certainty then only central banks will give us a time frame of shifting away from easy monetary policy. Everyone is looking at taper time or reduction of money supply by central banks. Central banks will delay every measures only if covid makes a big comeback.

How to trade and invest in metals and energies

In the long term everything is bullish as in gold, silver, copper and industrial metals, soft commodities. Common man or masses does invest on the basis of long term fundamentals. Most of them invest for a quick buck or good profit. The reddit traders have changed the way world analyses and gives investment views on every asset class. Copper and silver are the long term gold. Silver is not rising. There are some people who will never ever invest in silver due to past experience. On the contrary everyone in the world is looking to use crashes in copper and industrial metals to invest for the short term and the long term. Masses or herd as I call them will be the first to panic if their investment falls for a fortnight after they invest. This creates volatility and losses.

In the short term I will prefer to be a technical trader and ignore all news. Gold price should have nosedived after US July nonfarm payrolls. Gold in fact rose after July NFP numbers. The reason was a good NFP was already factored in by the traders. The Wham Bam traders should just trade in technical.

Medium term to long term one needs to look at news and factors which affect the price rise and price fall. The pace of rise of my investment compared to pace of rise of similar alternate investment (in the same asset class) will be the key. For that I need to look at the news which can change price trend. For example copper is bullish. Aluminum is a direct alternate to copper. Aluminum can beat copper if it is replaced and demand shoots up. Silver will beat gold in the long term if investment demand beat gold by a big margin. Every week or every fortnight there will be some news or the other.

Now let’s look at each metal individually.

Gold: (a) In the short term remain on the buy side as long as it trades over 100 day MA of $1789. But keep on booking profit till $1829.80 is not broken. (b) In the long term gold is currency. So use crashes of $100 and more to start investing.

Silver: (a) Industrial application and industrial demand will ensure that silver is in a long term bullish zone. So silver is invest in crashes but for a period of three years. (b) In the short term silver will break free from $2550-$2750 range and form a new range. One can buy silver futures at current price and hedge with put option buy at strike price $2500.

Copper September: (a) Copper and industrial metals are the most tricky part to decide which way it will go in the short term. All I can say is crashes up to $390-$396 zone will be a part and parcel of the long term bullish rally with chance of breaking past $500. (b) For a long term investment I will prefer to wait till end July and then decide.

Most of us complicate the way we trade and invest. Mental framework and state of mind (apart from physical health) is the key. Trading and investment is just playing a mind game with markets players. Social media, central bank chiefs, United nations, health organizations (in covid times) are all playing mind games with you. Good profit will be achieved only if your own investment strategy beats the mind manipulators. Do not copy your friend investment strategy or any one’s investment strategy. In your losses everyone except you will be the happiest.