The latest OMF Metals Report by Kevin Morgan:
Be careful for what you wish for! Â ?After an extended period of low volatility global markets have been shaken up thanks to an escalation in the Greek saga and Chinaâ€™s announcement of a wave of new measures in an attempt to halt the collapse of the Chinese stock markets. Traders love volatility, until theyâ€™re actually faced with it.
The dominant story has been how the Greece â€˜Noâ€™ vote is going to play out. The situation looks messy to say the least and we look to be in for several weeks of market turbulence as the Europeans and the Greeks try and resolve their differences. Â ?European Creditors donâ€™t seem to realise that the current approach has not worked, and are demanding more spending cuts and tax hikes that will see the economy shrink further. On the flipside, the Greeks turned up to last nightâ€™s Eurogroup meeting without any new proposal, and with the attitude that a No referendum vote was somehow a victory for their bailout negotiations.
Against this backdrop of uncertainty and speculation in Europe, Chinese stock markets have been plunging 30% in the past three weeks. Yet thereâ€™s been a distinct lack of safe haven buying. Sure a strengthening USD is a headway for commodities, but I believe the real issue is â€˜Greek fatigue’. For too long this story has promised so much, for the bullion investor, and for so long thereâ€™s been a 11 hour concession. Many still believe some sort of interim compromise will be reached to keep Greece limping along.
Last nightâ€™s capitulation in precious metals, which saw Silver and Palladium plunge over 5% at one point, was based on frustration, but shouldnâ€™t have come as any surprise to technical traders. Prices been languishing so perilously close to major support levels, that any minor setback in prices would trigger a bulk of pre-set sell orders just below recent support.Â ? My view is that last nightâ€™s capitulation is an opportunity. Bullion prices priced NZD have risen and benefitted from a recent fall in our currency. Now, following this clean out of the nervous bullion investors, an opportunity has arisen to benefit from undervalued metal prices.
Overview *Gold unfazed by Greek tragedyÂ ?*Silver looking cheap compared to goldÂ ?*CopperÂ ?slumps on China fears
See page 2 of the report for trading recommendations
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