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Yatin Karnik
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I am an avid investor with over a decade of experience and over five years of experience trading options. Academically, I hold a master of science in Software Engineering from University of Houston and bachelors in Computer Technology. I am very passionate about trading. I think trading is like... More
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  • How to benefit from a move in gold.

    North African geopolitical concerns enabled gold futures to rise sharply Friday after a downward correction in the previous session. Libya is headed towards a civil war, or as some might argue is already dealing with a civil war. Violence continues to erupt in major cities of Libya, because of which oil production has been disrupted, and there are worries about protests in Bahrain, Yemen and other neighboring countries.

    Short term.

    It is a very tense situation and gold is a flight-to-quality instrument when people encounter volatile situation like the one we are seeing in the Middle East. Traders did not want to hold on to their short positions over the weekend. There were rumors that Gadafi’s men were awaiting for Friday prayers before launching an assault on the rebels. With such rumor circulating traders were buying back in and covering shorts. Gold looks overbought on the short term graph as shown below.

     

     

    But in turbulent times like this, the technicals tend to get overlooked to a certain extent. I think there will be support at the psychological level of $1400 per ounce and resistance at $1441 per ounce. We are in for a trading range for the coming week between $1400-$1441 per ounce unless there is a dramatic shift in the situation in Libya which seems very unlikely.

    Long term.


    In the long term, gold is positioned to run a lot further. Target of $1600 per ounce seems reasonable by fall of this year. Bernanke’s denial of real inflation taking hold and his testimony before congress this past week where answering a question he said Feds will not rule out QE3 at this point in time. There are rumors that QE2 might be extended beyond June. There are also reports hitting the wires almost every other day about Middle East turmoil spreading to other countries in the region. The next big country that could be plagued with the same issue is Iran. If that happens, we can easily see oil north of $150 and gold closer to $1600 in coming weeks.

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Mar 06 8:38 PM | Link | 2 Comments
  • Can silver still go up from here?
    Silver is expected to go up from here. The nay sayers think that silver has already had a parabolic rise and hence it's upside is restricted.


    (Courtesy: Stockcharts.com)

    Silver price is still within Bollinger bands. Anytime the price goes outside of the Bollinger bands, price is unsustainable. Between November 5th and 8th of last year price broke out of Bollinger band and silver took a dive for the next week. Price of SLV broke above the Bollinger bands again around December 6th and yet again price took another dive for next couple of days. The same happens again at the beginning of this year.

    Current SLV price is still within Bollinger bands and hence it has more upside. If SLV breaks above the Bollinger bands decisively for at least a couple of days that's where I will look to short SLV. Until then keep your longs.


    Disclosure: I am long SLV.
    Mar 04 9:55 PM | Link | 2 Comments
  • Silver for Monday, March 7th.
    Silver has been having a nice run lately. It has been making a new 31 yr. high almost every day except yesterday. This is good because it needed a breather. Today Silver has traded very well which is evident from the chart below



    In my view, Middle East situation deteriorates before it improves. There are other countries like Bahrain and Yemen where protests are flaring up. Which supports the precious metals going up higher. I think Monday (Mar 7th) you will see Silver make another 31 yr. high.

    There are many investors here in US who are trying to get ahead of the curve ball and that has bid the commodity higher today. Here is how it has traded

    I think you will see Silver closer to $36 than you would see closer to $35 my end of trading day on monday. For retail investors who want to track the moves in silver, they can bet on iShares silver ETF (NYSEARCA:SLV).

    Disclosure: I am long SLV.
    Tags: SLV, GLD, SLW
    Mar 04 2:43 PM | Link | Comment!
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