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Market Bulletin 29th April 2010

Gold prospers after break from the Dollar

The Technical Trader’s view:
Euro - US Dollar, Gold 100 Troy Oz. COMEX Continuous 1.64
1.63
1.62
1250
1.61
1.60 WEEKLY CONTINUATION
1200 1.59
1.58
1.57
CHART
1150 1.56
1.55
1.54
1100 1.53
1.52 The story of gold and the dollar is
1.51
1050
1.50
1.49
clearly a historical one of close
1000 1.48
1.47 association with only occasional
1.46

950
1.45
1.44
divergence (for example in early
900
1.43
1.42 2009) but the divergence that
1.41
1.40
1.39
began in February this year is
850 1.38
1.37
dramatic and enduring.
1.36
800 1.35
1.34
1.33 Basically the relationship of Dollar
1.32
750 1.31
1.30
strength and Gold weakness has
700
1.29
1.28
fallen apart.
1.27
1.26
1.25
650 1.24 Can this move be sustained – or
1.23
1.22 more specifically, the concern of
1.21

J A S O N D 2008 A M J J A S O N D 2009 A M J J A S O N 2010 A M J J this note is whether Gold is

vulnerable to continued Dollar
strength?

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believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
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Gold 100 Troy Oz. COMEX Continuous 1450

Minimum H&S 1400

WEEKLY CHART
1350
target 1300

1250 This market doesn’t look

1200
vulnerable.
1150

1033.90 High 1100

The market was already well
1050
set up before the February
1000
divergence with Gold.
950

$873 Prior High in 1980 900

And the beginning of the
850
divergence coincided with the
800 completion of the bull falling
Prior High support $732
750
wedge.

700

650

600
2007 M A M J J A S O N D 2008 M A M J J A S O N D 2009 M A M J J A S O N D 2010 M A M J J

1.53 Gold 100 Troy Oz. COMEX Jun 10, Euro - US Dollar
Minimum H&S 1275
1270
1.52 1265
target 1260
DAILY CHART
1.51 The Euro – 1255
1250
1.50 Completion of Completion of 1245

1.49 Dollar FX the bull wedge the H&S

1240
1235
1230
1.48
1225
1220
1215
Since the completion of that
1.47 1210

1.46
1205
1200
wedge we can see that
1195
1.45
High 1170.70
1190
1185
1180
another continuation Head
1.44 1175

1.43
1170
1165
1160
and Shoulders pattern has
1.42 1155

1.41
1150
1145
completed - minimum target
1140
1.40 1135
1130
1125
1250 or so.
1.39 1120
1115
1.38 1110
1105
1.37 1100
1095
1090
The current bullishness of
1.36 1085
1.35
1080
1075
1070
Gold is even more
1.34 1065

1.33
1060
1055
impressive because of the
1050
1.32 1045
1040
1035
context of recent Dollar
1.31 1030
1.30
1025
1020 strength.
1015
20000 200000

15000 150000

10000 100000 Watch for great additional

5000 50000
x10 strength on a break up
23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 22 29 5 12 19 26 3 10
December 2010 February March April May through 1170.70.

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This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
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The Macro Trader’s view:

The Greek debt drama has continued to dominate most markets this week. Last Friday the
Greek prime minister sought to activate the rescue package negotiated a couple of weeks
earlier, only to find accessing the funds promised wasn’t that simple.

When the deal involving the EU, Euro zone and IMF was struck a couple of weeks earlier, the
impression was given that the funds were readily available if Greece needed them. As part of
the negotiating process Greece had to agree to a tough austerity package, leading markets to
assume that as soon as a request for help was made, the Funds would flow.

But that soon proved not to be the case, as Greece and the markets found out at the end of
last week. Germany sought fresh tough measures and assurances. With the German
Government needing to pass legislation through parliament to provide its share of the funds,
they were aware that German public opinion wasn’t supportive of bailing Greece out.

Although the German Government understood that failing to fulfil the terms of the agreement
would do the Euro serious damage. But still they needed to persuade the Public and opposition
that the rescue wasn’t just for the benefit of Greece but also necessary for the credibility of the
entire Euro zone and Euro.

It now appears the Germans will be able to pass a bill through Parliament next week enabling
the funds to be released. But the delay has come with serious costs.

The Greek sovereign credit rating has been downgraded to Junk. Portugal has seen its
Sovereign credit rating reduced by two notches and Spain by one. The Euro was sold off hard
against the dollar and equity markets took a hammering.

The odd thing was that Gold rallied –unlike its reaction in other periods of risk aversion driven
by Greece, Previously, Gold was driven lower as traders bought the Dollar and Yen as safe-
haven trades. This time traders still bought sought those safe haven trades, but with markets
fearing a contagion effect, Gold has emerged as a stronger safe haven trade.

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Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
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This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
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The main reason for this new gold reaction is that the major developed economies are all
running large budget deficits and high debt to GDP ratios. And although the assumption is the
US and UK will to a degree generate enough economic growth to make these deficits
manageable, there are still risks.

In the US the Obama administration still plans big government spending that some analysts
fear will push the debt to GDP ratio through 90%, a level regarded by most US analysts as the
point where growth and productivity begins to suffer.

In the UK a general election campaign is underway and the outcome is unclear with a hung
Parliament looking likely. The policy result could be that the new government adopts a slow
path to correcting the budget deficit and shrinking the debt, rather than the Conservative
intention of tackling the problem more aggressively if they win an overall majority.

So while the situation in Greece is far worse than any of these other cases, traders are aware
that sovereign debt is no longer the gilt- edged investment it used to be and gold stands out as
the one store of wealth independent from any one nations policies, either economic or
monetary.

The result is clear: gold is likely to rally further regardless of the direction of the Dollar.

Mark Sturdy
John Lewis
Seven Days Ahead

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.