Money will flow to cover this credit event in Greece. There’s no way around that. It may be fire-walled it may not be but money will flow to cover this. Responding to this in a rational way, traders bid up the prices of the three things most likely to be desired in the case of new money flows, the grand-daddies of commodities, gold, silver and oil.
Gold, on the announcement of the final tally out of Greece shot up nearly $40 per ounce trough and then ran into a wall of central bank paper to contain any potential panic. Measured retreats are fine, but not full on routs. Why do you think gold was whacked last week? To allow the orderly retreat after the inevitable Greece default. Gold closed the week at $1714.45 up $2.05.
Silver did the same exact thing running up $1.03 trough to peak and closed the week at $34.31, down $0.42. This 2 down candles in a row on the weekly chart will spook some traders for a while, but for now silver looks like $32.50 on the downside is solid support.
Oil had an excellent week all things considered, with West Texas Intermediate Crude closing the Globex at $107.42 with $105 being very strong near term support on the weekly cart. Brent Crude closed at $125.94 per barrel the highest weekly close since May 2011. I would be shocked if they both do not break higher next week unless somehow the U.S. and Israel back off completely on their aggressive stance towards Iran.
Gasoline futures for April delivery closed at $3.31 per gallon and, like Brent closed higher on a weekly basis than the previous two weeks, confirming that this rally has legs and now that the Grecian tragedy has moved into the denouement traders can get back to some serious number crunching.
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