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TradeFib’s

Special Offer Gold & Silver Full Report

By KHOBI

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Contents:

Introduction

Related News Various Sources

Technical Analysis on Gold

Technical Analysis on Silver

Fibonacci Analysis (Trade Alerts)

VaR-Value at Risk (Limits)

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INTRODUCTION

Gold and Silver are two precious metals that are dictating the commodities and

other markets as well. There is a strong positive correlation of 0.7998 between

them recently observed, this suggests that a strong move in either market

would move the other in same direction. We recently observed, how gold

broke into $1600/oz range from 1530 to 1580 and heading back again to 1530

this week. Gold’s volatility has been around 1.4% which is seen as high in

recent times.

Similarly, Silver is back around 2670 range which was last tested in May this

year. Volatility in Silver market is around 2.5% nearly doubled that of gold.

Therefore it is more risky, but a volatile market is preferable for most Hedge

Funds and Investors.

I will be looking at price action on daily and hourly charts, giving you the

support and resistance levels. Fibonacci retracements and extensions will used

as a trading system, giving you clear entry points and exit points.

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RELATED NEWS VARIOUS SOURCES

GOLD:

Market players will keep an close eye on Europe events, as sell-off this week

shows that the global economy is slowing down. According to Debbie at Kitco

News the gold would hold around $1520/oz. The most active August Gold

contract on Comex Division of the New York Mercentile Exchange rose on

Friday 22nd June, settling at $1566.90/oz down about 4% on the week. The

Kitco survey suggests out of 33 participants (participants included Investment

banks, Futures Traders and Analysts suggests), 28 responded, 7 are neutral

and only 12 see prices up. Oil prices are down so as gold, no more safe haven.

This week main event to watch is the EU summit on 28th and 29th June focus

will be on economic policies and foreign policies. The Fed announcement that

they will continue its Operation Twist Program, selling of treasuries had not

gone well with the investors. The next move up for the gold would be the fiscal

cliff at year end.

SILVER:

Silver will be near the lower range of $2600 which dates back to September.

The July silver fell Friday 22nd June, settling at $2666/oz down 7.23% on the

week. The China and US manufacturing data was disappointing last week

which changed the market. Greek Elections are out of the way but Greece

bailout is still on the list with troubled banking system of Spain. The Oil prices

were on a downside taking gold and silver with it, worries about disinflation.

Acording to Barclays analysts the silver demand is slowing down while

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investment demand filling the gap. Slowing economic growth might pull down

the silver prices.

TECHNICAL ANALYSIS ON GOLD

Gold Daily Chart Price Action:

On the daily chart you can see the horizontal lines that I have drawn which

represent the support levels and the circles show when these levels have been

been tested in the past.

Support Levels: 1557.0, 1532.9, 1478.3 and 1441.4.

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This is just the basic price action analysed historically, 1557.0 and 1532.9

support levels are waiting to be tested.

A weekly technical outlook could be seen on www.oilngold.com, a very useful

website.

TECHNICAL ANALYSIS ON SILVER

Silver Daily Chart Price Action:

On a Daily Chart, same as for Silver, due to strong positive correlation between

gold and silver the charts look identical. The horizontal lines are the support

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levels and the circles show how many times they have been tested in past.

Could see the market rebound from any of the levels.

Support Levels: 2601.7, 2493.8, 2396.6 and 2272.5.

More technical analysis can be seen on www.kitco.com, another useful site.

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FIBONACCI ANALYSIS (TRADE ALERTS)

Gold:

Gold 4Hour Chart – Analysis time: 02:50am 25/06/12

Comment:

A Fibonacci Analysis on 4Hour Gold Chart. The green line is our Entry Level(Sell)

at 1583.2, looking to go short here. But let the market retrace to this level first,

use your favourite indicators once the market get close to this level. I normally

use Bollinger Bands and RSI to make a decision. 70percent chance is that the

the market will bounce from this level. Initially I will place my stops beyond the

red line our Stop Level at 1597.8. Once the market finds resistance at our Entry

Level and moves down below our Key Level 1577.6, I will bring my stops to the

Key Level and see if the market is heading to our Projection Level at 1535.5.

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Remember: Wait for market to retrace, always use a 1hour or 15min chart to

confirm the sell signal at the Entry Level using indicators. Observe the market

to see what it does at these levels, there is always a chance of breakout if

market conditions change and rally can develop in upward direction.

SILVER:

Silver 4Hour Chart – Analysis time: 02:50am 25/06/12

Entry Level: 2767.6 and 2814.4

KeyLevels: 2734.9 and 2780.9

Stops: 2843.7

Projection: 2549.9

Same rules apply, for detail explanation look at the Gold Trade Alert.

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VaR-Value At Risk (Limits)

VaR is used by mainly all Risk Managers, Hedge Fund

Managers and by Traders as well. It uses mathematics

and statistics techniques to determine how much you

are likely to lose in give time horizon with specified

confidence. There are many ways of computing VaR,

Historical Approach the most famous in Industry,

Variance-Covariance Approach commonly used by

JPMorgan. I have used a basis Historical and Normal

Distribution method to give you a estimate of VaR for

Gold and Silver. Used Bloomberg for Data and

calculated daily returns and then estimated VaR, I have

pasted a VaR file from Excel shows calculation:

0.79988291

Volatility (silver) 2.5385%

Volatility (gold) 1.3940%

Mean 0.0008

Mean 0.0007

Bottom 5% VaR(%) -4.0921%

Bottom 5% VaR(%) -2.2244%

Bottom 1% VaR(%) -5.8221%

Bottom 1% VaR(%) -3.1744%

Historical Method:

Historical Method: No of observations 1066

No of observations 1066

Bottom 5% 53.3

Bottom 5% 53.3

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Bottom 54rth return -

0.03927813

Bottom 54rth return

-0.02237055

Bottom 53rd return -

0.04043338

Bottom 53rd return

-0.02254406

Bottom 53.3rd return -4.0087%

Bottom 53.3rd return -2.2492%

The VaR with 95% Confidence means your most likely

loss 95% of the time, for Gold its $36 which you would

need additional to your capital for a single Gold

Contract. Say if you Buy two Gold CFD’s then you

multiply $35.145 by 2. If you want to be more safe and

also consider the 5% tail or worst losses then you take

the Total VaR which is $94.1529. Same way for Silver.

Disclaimer: Commodity Futures and Options Trading has large potential rewards but

also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This website or blog is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website or blog. The past performance of any trading system or methodology is not necessarily indicative of future results.

Gold: VaR($) with 95%confidence -35.145

T.VaR=VaR+ES -

94.1529

Silver:

VaR($) with 95%confidence -

117.357

T.VaR=VaR+ES -406.2

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