Gold prices have been on the rise amid the coronavirus pandemic and massive monetary stimulus. Veteran and new traders are taking advantage of the lockdowns to enhance their skills, and there is more than meets the eye. Phil Carr, Head of Trading at The Gold & Silver Club, is a top commodities expert and shares his tips. In an interview with Yohay Elam, Carr also provides tips for traders and also discusses other metals that are often overlooked.
Yohay Elam: How are you coping with the lockdown?
Yohay Elam: A bit of easing from Monday?
Phil Carr: The lockdown has been ok
Phil Carr: The sunshine certainly helps
Phil Carr: Exactly, this is welcome
Yohay Elam: Indeed, sunshine helps...
Phil Carr: It does indeed, Vitamin D
Yohay Elam: some say it´s useful against coronavirus, Vitamin D
Yohay Elam: In your videos, I´ve seen that you urge people to take the opportunity and enhance their skills.
Yohay Elam: Are club members reporting that they are sharpening trading skills?
Phil Carr: 100% Yohay - this has been a common theme with all of our existing and new clients.
Phil Carr: They have taken this lockdown as an opportunity to sharpen their trading skills
Phil Carr: And the volatility has provided plenty of trades
Yohay Elam: indeed, especially in March
Phil Carr: March was incredible
Yohay Elam: The focus is shifting to other topics, with Sino-American tensions now in the spotlight
Yohay Elam: Is gold still the go-to asset in times of tensions?
Phil Carr: Gold is getting bid again, we have been building positions this week off the lows as mentioned in the week ahead report
Phil Carr: *buy the dips
Phil Carr: As long as traders are aware of the cycles
Phil Carr: Gold lows are often on Tuesday / Wednesday's
Phil Carr: This week gold dipping sub-1700 was ideal to re-load
Yohay Elam: Suffering early on before recovering
Phil Carr: Exactly
Yohay Elam: How about silver? Does it also have a pattern?
Phil Carr: Now we have the Thursday and Friday rally outlined in this weeks gold asset of the day
Yohay Elam: It is often overlooked
Phil Carr: Silver has been incredible lately, 18% move this month and 2% today
Phil Carr: It is often overlooked
Phil Carr: For those that trade silver the Gold To Silver Ratio should be tracked
Yohay Elam: The ratio provides an indication
Phil Carr: The Gold To Silver Ratio is now trading lower at 97.37 down 1.4% today
Phil Carr: Silver is up 1.85% at $17.74
Phil Carr: Gold is up 0.36% at $1728.
Phil Carr: The perfect time to buy silver was at the peak of the ratio when the ratio hit all-time highs of 125: 1
Phil Carr: This is when silver hit 11-year lows of $11.60
Yohay Elam: A buy the big dip opportunity
Phil Carr: When the ratio sells-off, gold and silver will go up but silver will outperform
Phil Carr: Exactly that
Yohay Elam: That's a great tip for traders
Phil Carr: For sure
Yohay Elam: I've seen that in your videos, you talk about the positioning of money managers, hedge funds, etc.
Yohay Elam: Is that a major factor in trading these precious metals?
Yohay Elam: More than fundamentals or technicals?
Phil Carr: I would classify that as a research-driven approach - it certainly has an impact to track this data
Phil Carr: Funds increased long in gold more than usual in the latest week which is often a strong sign at this time of year for a breakout into June.
Phil Carr: Same occurrence the last week of May in 2019
Yohay Elam: Seasonality also plays a role, like in energy commodities?
Phil Carr: Before gold shot up from 1300 - 1550 in 3 months
Yohay Elam: That was one huge move
Phil Carr: Seasonality and cycles certainly have an impact for commodities - there are specific reasons for demand increasing at certain times of year which happen regularly
Phil Carr: Absolutely
Yohay Elam: Palladium also had a massive move last year
Yohay Elam: a metal that is well down the list
Yohay Elam: but provided an opportunity
Phil Carr: Palladium doubled from August to March
Phil Carr: This is actually the cycle for Palladium, the highest probability time of year to hold a position, is a long in August and bank the position at the end of March
Phil Carr: It's a market we trade and has been amazing for us in the last year
Yohay Elam: Demand in the industry grows in the autumn and winter?
Yohay Elam: amazing and overlooked
Phil Carr: Exactly, typically demand peaks during this period. Then Palladium we usually correct in the spring and bottom out in May / June
Phil Carr: Exactly
Yohay Elam: Moving to oil, one commodity that cannot be described as overlooked
Yohay Elam: Memorial Day in America represents that beginning of the driving season
Phil Carr: Oil is definitely not overlooked
Phil Carr: From -40 back to $35 per barrel in a couple of months
Phil Carr: US Oil up 70% this month
Phil Carr: Up 300% off the lows
Phil Carr: Yes and Oil has certainly found support
Yohay Elam: I guess many traders look at changes in dollar terms
Phil Carr: Hedge funds have been building significant long positions for week
Yohay Elam: Is there an opportunity there, or is this year totally different due to coronavirus?
Phil Carr: *for weeks
Phil Carr: With Oil there have certainly been opportunities, on the sell-side leading into the crash in prices and also on the recovery
Phil Carr: With Oil now it continues to consolidate between 31 - 35
Yohay Elam: Looking for a breakout
Phil Carr: We need a break and close below 31 to provide a sell opportunity or a close above 36 for a move back to 40
Yohay Elam: buy high and sell higher
Yohay Elam: or sell low and cover lower
Phil Carr: Personally we prefer to catch the cycle lows and tops
Phil Carr: The risk to reward is far higher
Yohay Elam: And these cycle tops and bottoms have been far apart
Yohay Elam: Rig counts are published later. They were in the spotlights several years ago, when prices fell
Yohay Elam: Are they growing in importance?
Yohay Elam: Do you incorporate them more than beforehand in your research?
Phil Carr: Historically the cycle low for US Oil is the start of May
Phil Carr: The short term top is this week for Oil leading into a correction in June
Phil Carr: However Oil typically is a range-bound play in June
Phil Carr: October - December much more bearish once driving season dissipates
Yohay Elam: This year, the driving season gets an extra boost with reopening in America
Yohay Elam: and demand seems to be rising in China
Phil Carr: Exactly - I suspect Oil will follow more range-bound price action over June
Phil Carr: And maintain the majority of gains
Yohay Elam: Yet these prices remain low for Saudi Arabia and Russia
Yohay Elam: which need to balance budgets
Phil Carr: We observe this data for profit-taking and trade management
Phil Carr: Correct
Yohay Elam: As a tactical data point rather than a big picture one
Phil Carr: That's it - more from a tactical data point for trade management
Phil Carr: Most traders will be reluctant to execute new positions ahead of the weekend on Oil when that data comes out
Phil Carr: The highlight for us today is certainly gold and silver
Phil Carr: Which is playing out to expectation
Yohay Elam: falling in the first half of the week, rising in the second half
Phil Carr: U.S. President Donald Trump's response to China next
Yohay Elam: Indeed, it seems that markets are waiting to hear from Trump, perhaps some headlines will come out ahead of his speech
Phil Carr: Correct, this marries up to cycles and data also - last week of May is often explosive for gold at the end of the week and first week of June also
Yohay Elam: A convergence of cycles
Phil Carr: Exactly, Trump is due to make a series of announcements on China today
Phil Carr: Exactly
Yohay Elam: Some fear a significant second wave of coronavirus
Yohay Elam: If that happens, and hopefully it doesn't, would that push gold and silver to new highs?
Yohay Elam: Or should we look more to central bank action?
Phil Carr: You got it - I would look at central bank action
Phil Carr: The stimulus measures will be the driver
Phil Carr: Same as 2008, when gold initially corrected then rallied back 30%
Phil Carr: Goldman Sachs forecast of 1800 in 2020 is not that far off now
Yohay Elam: The Fed has proven that it always has something up its sleeve
Phil Carr: $1765 tapped 2 weeks ago, $1730 right now
Phil Carr: They have indeed, and they have done enough to trigger a significant rally in Gold and Silver in the weeks to come
Yohay Elam: So perhaps $1,800 is not the upper bound
Yohay Elam: For Gold
Phil Carr: That's a good point if you view gold on the monthly chart
Phil Carr: Once $1810 - $1820 is breached, there is clean air back to the all-time highs towards $1900.
Yohay Elam: Back in 2011
Phil Carr: That's it, 2011 highs
Yohay Elam: What would be a warning sign that the fall from that peak could occur again
Yohay Elam: Although such a huge fall seems unlikely to me at this point
Phil Carr: I would look out for the end of quarter profit taking which can be severe for gold
Phil Carr: Usually the biggest corrections occur at the end of September and follow through to mid-December
Yohay Elam: Correcting the gains
Phil Carr: Historically that's been the case
Yohay Elam: Another great tip
Phil Carr: Spot on - end of quarter profit taking is very notable for gold, something to have in the diary for each quarter and be sure to bank a few days before this occurs.
Phil Carr: Thank you
Yohay Elam: Do you see potential ECB stimulus as another bullish driver for Gold?
Yohay Elam: Por is it mostly the Fed when talking about stimulus for the precious metal?
Phil Carr: It's more the FED - this week was a good example
Phil Carr: ECB stimulus helped the Euro to rally however gold corrected
Phil Carr: When the FED provides stimulus gold rallied immediately
Yohay Elam: Indeed
Yohay Elam: Great stuff for gold traders. What brought you to specialize in commodities?
Phil Carr: Definitely good for gold traders - Commodities very much the volatility and tangible nature of commodities.
Yohay Elam: Higher volatility than in currencies
Phil Carr: Typically yes
Yohay Elam: EUR/USD can be frustrating
Yohay Elam: Any other commodities you are focusing on?
Phil Carr: Agreed
Phil Carr: Platinum also - it been a great year for trading this metal
Phil Carr: It hit 18-year lows in March, more severe sell-off then gold and silver - and it's still well below 2008 lows
Yohay Elam: Depressed by diminished demand?
Phil Carr: It almost doubled in price since March, it's another great market to trade
Phil Carr: Yes demand switched to Palladium
Phil Carr: However we could see that flip again in the coming months and Platinum recover
Yohay Elam: Another overlooked metal, at least by me
Yohay Elam: Seems highly volatile
Phil Carr: Historically Platinum has big gains from December to February each year
Phil Carr: Its certainly volatile - it respects cycles and seasonality well
Phil Carr: Keep an eye on it in December
Yohay Elam: A gift for Christmas, Platinum
Phil Carr: December - February rally for Platinum can be very lucrative
Phil Carr: You got it
Yohay Elam: So much seasonality in commodities
Yohay Elam: But trading is never easy
Phil Carr: Absolutely, seasonality is part of it - but must also confluence with other factors
Yohay Elam: Indeed
Yohay Elam: Any tips that you have for traders?
Yohay Elam: *Additional tips
Phil Carr: Yes - don't put your stop losses at round numbers, these will often get hit
Phil Carr: I good example being gold this week,
Phil Carr: Gold flushed to 1693 then rebounded back to 1732
Yohay Elam: Within a few hours
Yohay Elam: A fakeout
Phil Carr: So retail traders with SL at 1700 get stop hunted only for the price to rebound +300 points
Phil Carr: Exactly, a fakeout
Phil Carr: Having a target at round number is ok but not the stop loss
Yohay Elam: The difference between the strategy and the tactic
Phil Carr: Spot on - strategy (executing the trade) / then tactics (managing the trade).
Yohay Elam: Sounds advice for any trader in any market
Phil Carr: For sure
Yohay Elam: We have covered a lot of ground and you´ve provided wonderful tips to our readers. Your videos are all always well-received by FXStreet's audience
Yohay Elam: Thank you for being generous with your time
Phil Carr: Its been a pleasure Yohay and thank you, much appreciated - its been a great session.
Yohay Elam: for me as well
Yohay Elam: thank you!
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