GOLD, RUPEE N STEEL

The last time we covered steel was 3 months back on 22 OCT 2008 in ‘What Happened to Steel?’. It was then we talked about the connection of steel with silver. This is what we said.
“A rise on silver against gold could help industrial metals like steel. Based on intermarket pairs, we suggest a bottoming on silver and on steel. And the Oct 2008 low in equities should see some interest in steel stocks. As a rising stock market helps steel prices more than gold. Silver prices have also reached all time historical oversold zones of a decade”.
From 4 Dec when we gave the Long Silver – Short Gold update, Silver has outperformed gold by 7%. This in barely 40 days translates to a 54% annualized spot return. Even steel stock prices e.g. TISCO bottomed five days after our 22 Oct call on bottoming steel. The prices are still above respective lows. Equity is known to outperform it’s underlying commodity and this is one reason we will not be surprised if TISCO takes the lead up (SLIDE 1, 2). The illustrated formation is the inverted TISCO price. The formation seems ready for a reversal. Overreactive momentum also confirms our view of an impending turn around.
Other base metals like Aluminum and related equity majors are also in news. ALCOA’s bad results are all over. But the current prices after all the negative news are still above ALCOA’s price from 24 Dec when we said ‘Alcoa is a screaming BUY’ (SLIDE 5). One should remember, it’s easy screaming SELL after prices collapse 88% from the top. This is also similar to the Zinc story, which the world might consider over. We have illustrated ZINC momentum, which is challenging and leading a breakout (SLIDE 11).
About GOLD…The ‘UP BUT TOPPING’ recommendation panned out as expected. We have carried out the Anticipated and Happened scenarios (SLIDE 6,7). A break below 800 should start the anticipated negativity for GOLD back to 700 and potentially down till 560. The Indian spot (SLIDE 9) also failed back from near historical highs. And what may look like an expanding diagonal on INDIAN gold futures is nothing but falling international gold prices denominated in the Indian Rupee creating the illusion that Indian Gold prices behave differently than international gold (SLIDE 8). The last bout of strengthening on Dollar also might push gold back into our anticipated Q1 2009 lows.
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WAVES.GOLD is a perspective product published on Monday and Wednesday. The report highlights GOLD and other precious and base metals. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.
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