Gold Price - Where is it heading?

[sinner]

As for the action in gold priced in AUD: a nice kick in USD price gold combined with some indecision in the AUDUSD markets provided a moderately bullish test/bounce from the 40 day breakout event earlier this week. Event test/bounce can be a good low risk swing entry (especially combined with the inside bar present), if you are into that sort of thing. Otherwise it is only a modest bullish confirmation, without penetrating the prior days high. Resistance at 1673-5ish only leads to more resistance. A lot of work to push into the 1760-1830 range, where even more work is required to generate a serious breakout without faltering. Supports remain unchanged, aside from short term support/swing low which developed last night on the event test.

Well that puts the breakout to shame! I had to zoom down to the intraday charts to see where support failed last night! Looks like once the new daily swing low at 1640 gave way it was a little bit of a panic! Old daily support at 1575 seems to have stopped the offers for now.



Will post more thoughts on the w/e.

 

[Uncle Festivus]

But Tinhat that is actually my point. Just because something is a reasonable investment, super, gold, whatever doesn't make it a better investment than what I'm doing.

You think paying money from my business capital which is taxed @ 30% yet completely free for me to do as I please, into a restricted fund for 30 years which I cannot use for my business to be taxed at 15% and earn a reduced return is wise? Its not, not on the numbers alone let alone the fact that the money is not mine for 30 to god knows how long years.

And thats my point about gold/silver "investment" it may be/may have been a good investment, its just that I believe it will not be the best investment for my business capital.

Not yet.

I agree - for those who can do better than the crowd surfing, talk-it-up fund managers super is a ponzi con for the sheeples, although the concept is commendable as a source of funds for retirement. I simply don't believe any of mine will be there when I retire anyway, the way things are going. Something along the lines of too many eggs in the one basket, with china holding the basket!

Back to the topic, whilever the fundamentals remain in place, gold will continue to be a store of accumulated fiat wealth - locking in the value of a fiat dollar at any point of time.

So the call would be made 'but everything is going great now - just look at the Dow & the data coming out'? Well yes & no. Yes the data shows a recovery but the data is either incorrect, manipulated to suit politically or both! I can put forward any number of examples. The underlying fundamentals for gold still remain in place and in fact continue to get stronger, despite dropping $100 in a session.

Gold needs a good correction for the next leg up to be strong - and with the $AU/$US at this level we should get some good leverage for when the $AU finally capitulates on a worsening financial climate in China ie the $AU is severely overbought on the China dream? (Shorted @ 1.083 )

 

[DB008]

Gold Falls in ‘Manic’ Plunge as Bernanke Damps Stimulus Bets - Bloomberg

Gold fell as much as $100 to below $1,700 an ounce on signs that that the Federal Reserve will refrain from offering more monetary stimulus to bolster the U.S. economy.

In testimony before Congress today, Fed Chairman Ben S. Bernanke gave no signal that the central bank will take new steps to boost liquidity. The dollar rose as much as 0.8 percent against a basket of major currencies, eroding the appeal of the precious metal as an alternative investment. Yesterday, gold reached $1,792.70 an ounce, a three-month high.

“People were expecting that the Fed would loosen policies, even if the perception is that the economy is doing well,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in a telephone interview. “The investor sentiment changed as the Fed committed to nothing. This is the manic nature of the market.”

In electronic trading on the Comex in New York, gold futures for April delivery fell $91.40, or 5.1 percent, to $1,697 at 4:39 p.m., compared with yesterday’s settlement. Earlier, the price tumbled as much as $100, or 5.6 percent, to $1,688.40, the lowest for a most-active contract since Jan. 25.

Kitco Spot Price overnight



(Unsurprisingly, Silver also dipped as much as $3)

 

[sinner]

I cannot be super bullish GOLD while thinking the AUD is still in a long term uptrend. To me one and the same trend.

I was thinking a lot about this today. I mean, the AUD is definitely in a long term up trend against a lot of things, like the currencies of our trade partners, hell even against the XJO, the AUD looks like it is doing pretty good...

and yet something was niggling me. The AUD isn't in a long term up trend against everything, in fact AUD has been in a long term down trend of the very asset class this thread is about!



You can see that while gold and the AUD used to be "one and the same thing" (high component correlation=narrow trading band of the component ratio), that has long since changed.

 

[drillinto]

Gold Crushed

http://www.bespokeinvest.com/thinkbig/2012/2/29/gold-crushed.html
***

 

[Trembling Hand]

The AUD isn't in a long term up trend against everything, in fact AUD has been in a long term down trend of the very asset class this thread is about!

You can see that while gold and the AUD used to be "one and the same thing" (high component correlation=narrow trading band of the component ratio), that has long since changed.

The charts are misleading to a degree. A commodities will double/triple etc with ease relative to a currency. The fact that AUD has held up against "a basket" of products is the important thing to me. As I don't need to buy gold with my AUD but I certainly do need to buy a basket of other products.

Thats the trend that important to me. Which I still think there is a correlation of sorts there.

 

[sinner]

The charts are misleading to a degree. A commodities will double/triple etc with ease relative to a currency. The fact that AUD has held up against "a basket" of products is the important thing to me. As I don't need to buy gold with my AUD but I certainly do need to buy a basket of other products.

Thats the trend that important to me. Which I still think there is a correlation of sorts there.

When Central Banks start adding other commodities to their balance sheet as an asset, or start disgorging all their gold, then we can talk about gold being part of that 'basket'. But for now, it is clearly a monetary metal, exempt from the usual 'commodity' moniker. The best evidence of this lies in Stock to Flow ratios, the governing mechanism for commodity prices, are inverted for gold versus other commodities (even silver). That is, you can't expect a higher price of gold to bring on more production to cap price or meet increased demand, as you would in the case of most other commodities. Rather there is a strong (and rising?) price floor at the average cost of production

http://www.cnbc.com/id/41058173/Gold_Cost_of_Production

below which, sufficient quantities of gold will not flow to those who demand it.

As I don't need to buy gold with my AUD but I certainly do need to buy a basket of other products.

Just like you buy wheat or cattle to eat and oil to combust, you need to buy gold to save.

 

[Uncle Festivus]

As I don't need to buy gold with my AUD but I certainly do need to buy a basket of other products.

Thats the trend that important to me. Which I still think there is a correlation of sorts there.

Yes, but if you were looking at a chart or the price action and didn't know or care that it was gold and you didn't get some of that action then you have missed the trend because of your aversion to g-o-l-d? Anyway, not sure what you are trying to advance/add here as you have proffered your view(s) on gold several times?? ie you either get it or not??

Re: Gold Price - Where is it heading?

 

[Uncle Festivus]

Wednesday’s sell off is being attributed to one massive sell trade of 31 tonnes on the Chicago Mercantile Exchange during Bernanke’s speech. There are rumours of a large US fund selling and also that the selling may have been by JP Morgan – rumoured to be acting on behalf of an Asian fund.
Who sold off and why is less important than the fundamentals of the gold market.
Absolutely nothing has changed regarding the fundamentals of gold which remain as sound as ever with broad based demand from store of wealth buyers, institutions and central banks internationally and especially in Asia. Good volumes have been seen on the Shanghai Gold Exchange in recent days.

GoldCore

So it takes 31 tonnes to drop it $100??

 

[Trembling Hand]

Yes, but if you were looking at a chart or the price action and didn't know or care that it was gold and you didn't get some of that action then you have missed the trend because of your aversion to g-o-l-d?

Oh I got some of the action. Just without the cost or risk of holding long term bullion. Thats is my point. Not holding bullion up to this point could be the best way to trade the gold trend.

Wednesday’s sell off is being attributed to one massive sell trade of 31 tonnes on the Chicago Mercantile Exchange during Bernanke’s speech. There are rumours of a large US fund selling and also that the selling may have been by JP Morgan – rumoured to be acting on behalf of an Asian fund.

This is where my " aversion to g-o-l-d" comes from. The reporting of "events" just never ring true in fact ring closer to BS than real events. So in that hour there was 90,000 contracts sold, just so happens that thats about 31 tonnes. So there was only 1 seller? LOL!!!

Absolutely nothing has changed regarding the fundamentals of gold which remain as sound as ever with broad based demand from store of wealth buyers, institutions and central banks internationally and especially in Asia. Good volumes have been seen on the Shanghai Gold Exchange in recent days.

Well this I can agree on technically long term nothing much has changed. And open interest hardly moved, just a decrease of 1% (just 13 tonnes).



But on a shorter term view these massive washouts are not a friend of a longer term trend.

 

[DB008]

TheAppleInvestor has a look at Gold and Silver futures + risk....

Gold and Silver Hedge Too Risky

 

[Trembling Hand]

TheAppleInvestor has a look at Gold and Silver futures + risk....

Gold and Silver Hedge Too Risky

IMHO he has it completely wrong. Risk has very little to do with minimum exchange margin unless you are a cowboy. :cowboy::badass:

In fact you cannot look at risk in trading by simply looking at margin without also looking at opportunity. In case of gold or commodities in general they offer a far greater R:R than the locked up S&P.

 

[Mr Z]

http://goldsilver.com/news/guest-post-warren-buffett-priced-in-gold/ ---> LOL!

Gold is a managed market... period, end of story. It is the political metal, to think otherwise is tooth fairy stuff

 

[Uncle Festivus]

http://goldsilver.com/news/guest-post-warren-buffett-priced-in-gold/ ---> LOL!

Gold is a managed market... period, end of story. It is the political metal, to think otherwise is tooth fairy stuff

That chart was interesting in that I continually come across several similar charts that seem to indicate that 'peak capitalism' occurred around the year 2000-2001 and that what we have had since is just an attempt to keep the fiat ponzi scheme continuing. It also coincides with the rise of gold as an alternative?

You could always bet against the manipulators - I've shorted JPM several times now....

And TH, that bit at the end of one of your posts -

And thats my point about gold/silver "investment" it may be/may have been a good investment, its just that I believe it will not be the best investment for my business capital.

Not yet

'Not yet' maybe closer than you think - time to lock in your gains in fiat with some hot & heavy physical?

 

[Mr Z]

How can it be "Peak Capitalism" when we have not had "Capitalism" for many, many decades?

This is Crony Capitalism failing due to too much political influence in the economy, these failures ultimately lay at governments feet.... LOL, the US is closer to a Fascist State than it is a Capitalist one!

 

[Uncle Festivus]

How can it be "Peak Capitalism" when we have not had "Capitalism" for many, many decades?

This is Crony Capitalism failing due to too much political influence in the economy, these failures ultimately lay at governments feet.... LOL, the US is closer to a Fascist State than it is a Capitalist one!

OK, 'the system' then?

We all knew it ('the system') was a game, it's just that now a lot more people know as well, and can see how corrupt it is, and may just doing something (violent??) about it?

Blythe Masters is the chief of commodity trading at JPM, and the apparent mastermind behind their gargantuan short position in silver.

Previously, Ms. Masters attained fame for having helped to create credit default swaps.

Their fierce performance in crushing Goldman Sachs in the commodity pits has earned Jamie Dimon and Blythe Masters the fearsome nicknames, "Sharkboy and Lava Girl."

 

[Mr Z]

When has it ever not been a game of some sort? I don't think it will end as such, it will just morph into a different game depending on who comes out of this with the political power or "social license" and what their goals are. Are we going to elect to be beaten into some green socialist quasi communist mold? Are we going to extract big government from is ever increasing roll in what where once private lives? Just what philosophy will drive us where and how misguided will it be? Who will end up in the "White House" and who will end up on the gallows?

Your mission is to survive the best you can whatever the outcome of this massive mess...

IMO 2013 is shaping up to be yet another major trauma... I wonder where that will leave us?

Ain't this fun!

 

[Trembling Hand]

That chart was interesting in that I continually come across several similar charts that seem to indicate that 'peak capitalism' occurred around the year 2000-2001 and that what we have had since is just an attempt to keep the fiat ponzi scheme continuing. It also coincides with the rise of gold as an alternative?

Maybe you need to look at some better charts.

And TH, that bit at the end of one of your posts -

'Not yet' maybe closer than you think - time to lock in your gains in fiat with some hot & heavy physical?

Well that would make a good discussion. But what would be a sign to swap from paper gold(COMEX) with tiny cost, easy trade-ability ,leverage and a perfect correlation to physical?? All things that bullion have not got and with spreads like these will lock you into a trade.



look at the spread on silver!! Is that a joke?

 

[Uncle Festivus]

Well that would make a good discussion. But what would be a sign to swap from paper gold(COMEX) with tiny cost, easy trade-ability ,leverage and a perfect correlation to physical?? All things that bullion have not got and with spreads like these will lock you into a trade.

View attachment 46324

look at the spread on silver!! Is that a joke?

A sign? When Lavagirl starts to lose and Comex goes (arbitrarily imposed?) limit up/down? Or for that matter simply suspends trading because of lack of confidence in the market - several nails were inserted into it's coffin with the MF Global bust fiasco........expect markets to be halted as it gets worse.....

Not sure where your prices are from, but if you know the right people/companies you can get better ie 500gms @ 2.8%? For me though I'm not looking to even think about buying more until it get's below $1500, then see how close it get's to $1200??

With the 'unwind' of fiat, spread would be the last of your concerns?

 

[Trembling Hand]

Not sure where your prices are from, but if you know the right people/companies you can get better ie 500gms @ 2.8%?

Perth mint.

Then again if I ever wanted to get my hands on the phisical I would just hold the contracts to expiray and pay a spread of $0.01. Bullion dealers.. LOL