Commodities

Metal Analysis Report 5/7/19 – Gold…A Great Position Trade

First-quarter gold purchases by central banks, led by Russia and China, were the highest in six years as countries diversify their assets away from the U.S. dollar.

Global gold reserves rose 145.5 tons in the first quarter, a 68 percent increase from a year earlier, the World Gold Council said Thursday in a report.

Central bank purchases have been a key support for gold, helping to offset lower demand from bar and coin investors as well as from industrial users of the metal. Gold has lost 1 percent so far this year, and was trading at about $1,270 an ounce in London on Thursday.

Inflows into exchange-traded funds backed by gold during January have been wiped out over the rest of the year, with ETF levels now at their lowest in four months.

Source

Central banks are going gaga over gold.

They are snapping up the metal at the fastest rate in almost half a century in a trend that looks set to continue.

Over the 12 months through March 31, they purchased a whopping 715.7 metric tons of gold bullion worth around $29.4 billion, according to a recently published report from the industry group World Gold Council.

"In all likelihood, we expect another strong year," says Alistair Hewitt, director of market intelligence at WGC in London.

He notes that the volume of gold purchased by such institutions over the most recent four quarters was higher than for any calendar year since 1971.

Source

Position trading is taking a position in an asset, expecting to participate in a major trend. Position traders aren't concerned with minor price fluctuations or pullbacks. Instead they want to capture the bulk of the trend, which can last for months or years. It possible to generate your biggest profits by trading around a core position over months, even years.  Trading around a core is the process of taking a longer term 'core' position.

The first step is to find the right candidate.  Once this is identified, you initiate a small buy/sell. As it develops you will want to increase your position size enough.  If price starts to go against you, you have to wait patiently for another setup to develop to add to your position.

The verbiage above comes from two different articles, one giving you a short term view and another giving you a longer term view.   If you think Gold is going to go higher over the long run, the correction doesn’t matter.  Price breaking the weekly demand zone at is an opportunity to develop the next set-up.

Perhaps that comes a little lower at the next weekly demand zone at .  That zone is an opportunity to join the trend or add to your position.

With the goal or target of seeing price climb much higher.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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