Gold Price - Where is it heading?

[bean]

The current COT structure is very bearish and almost the same as May 2006
And look what happened to POG

Is this time different??

Latest
The COT structure in GOLD is near extreme levels.
http://news.silverseek.com/TedButler/1190745461.php

Is this time different???

BEWARE

"And it won't just be POG And Gold stocks dropping."

I am still 100% in cash. The gold stocks I sold almost two weeks ago are at similar prices to what I sold them for.
Thanks to the strong AUD

 

[Sean K]

Latest
The COT structure in GOLD is near extreme levels.
http://news.silverseek.com/TedButler/1190745461.php

Is this time different???

BEWARE

"And it won't just be POG And Gold stocks dropping."

I am still 100% in cash. The gold stocks I sold almost two weeks ago are at similar prices to what I sold them for.
Thanks to the strong AUD

While you've been 100% cash, you've missed some opportunities beanster. Perhaps you should consider some short term trading instead of hiding in a bear cave with all those $$ under the mattress?? Or, be shorting some things....Each to there own I suppose. All the best, kennas

 

[Sean K]

BEWARE

"And it won't just be POG And Gold stocks dropping."

Bean, what's this quote in relation to?

POG looks to be consolidating, as would be hoped, above support. Rising $90 in a few days was not sustainable. USD will not head vertically down and should recover some as has been mentioned also effecting POG.

How are your indexes looking bean?

HUI and XAU look very similar as you'd probably expect. MACD's are falling over a bit with the consolidation in POG. Personally I'd be hoping for XAU to settle around the green circle before making another push up. Perhaps that will require POG consolidating between $690-$730. Breaking down through those and we start all over again maybe.

Interesting for you is that the general market is up, and POG and the gold indexes are down. Has it decoupled?

 

[bean]

All US Gold Indices have had 4 days down.

Oil is coming into effect as its cost is hurting Gold producers.
Is its rising cost is it hurting any other metal producers?

Has POG and Gold stocks de coupled from the market?
At times it seems like it but I do not think so just yet.

COT readings in GOLD are extreme and US markets (DOW etc) just below previous highs.
In elliott wave ABC correction are they completing wave B
With wave C to come.

As I said stock I sold almost 2 weeks ago MMN .28 yesterday .26
CTO .42 yesterday .42
TAM .135 about the same yesterday
Though a couple of others did rise, however I am in no risk position at the moment and if Goldies and POG do take a reasonable hit they could easily drop 10% plus overnight.

 

[explod]

Kennas, I have found the HUI a particularly accurate indicator for trading gold stocks. The players are very nervous as many got in at the peak of May 2006 and have only now been able to cash thier chips back in.

The market also strongly expects a gold correction which has been typical of the gold bull so far. Overnight the gold price swung wildly but overall is holding between 725 to 730 $US oz.

Indications are that the market for physical itself is now very strong and from the Bullion Desk it was reported over the weekend that Central Bank sales for august alone was some 450 tonnes. That is enormous when one considers that the annual CB agreement is 500 tonnes.

So the rise of the gold price in the last month was a very strong one indeed. It is my belief that we have a very differrent gold market now but it will take awhile for confidence to be reflected in the indecies.

The dips in quality gold stocks an opportunity.

 

[Sean K]

In elliott wave ABC correction are they completing wave B
With wave C to come.

Bean, I think the HUI and XAU may be starting a W2 of a larger move. Although trying to fit nice conforming wave patterns into the past 18 months seems very difficult so I'm not sure why the HUI/XAU should start conforming now. Perhaps I'm just EW blind. :dunno:

 

[robandcoll]

Limited supply of Gold in particular from South Africa, whose production has fallen to an 85-year low, while demand has increased. To me it is quite basic demand has out stripped supply.

 

[Mofra]

Limited supply of Gold in particular from South Africa, whose production has fallen to an 85-year low, while demand has increased. To me it is quite basic demand has out stripped supply.

To look at the other side of the equation, due to Benake's willingness to cut rates to sooth the equities & housing markets in the US, gold demand will increase; rate cuts pressuring the USD. USD & Gold have an inverse relationship that shows little sign of breaking in the MT/LT.

 

[So_Cynical]

Limited supply of Gold in particular from South Africa, whose production has fallen to an 85-year low, while demand has increased. To me it is quite basic demand has out stripped supply.

Most members here just cant see this as some vision and real world
thinking is required..

Theres prospectors out there spruking finds of less than 1 gram per tonne Sth Africa has been #1 since the 70s and now its at
a 85 year low...all the easy golds gone.

 

[explod]

Most members here just cant see this as some vision and real world
thinking is required..

Theres prospectors out there spruking finds of less than 1 gram per tonne Sth Africa has been #1 since the 70s and now its at
a 85 year low...all the easy golds gone.

Absolutely, however "you may lead a donkey to water but you cannot make it drink."

The following excerpt from Chuck Butler's just released newsletter adds more to the tone:-

"
Ok... I've got to look further! I know! How about Gold? How about this piece of data... I asked Chris Gaffney to update our Currencies and Metals returns to date since the start of the weak dollar trend that began in Feb. 2002. How does a +154% return since Feb 2002 sound? Well... That's what Gold has done! WOW! Isn't that amazing? You've gotta love it, eh?

For more on Gold... I always turn to my friend, The Mogambo Guru... There's nothing like reading the Mogambo to get one's blood going on a Monday morning... I will go to him on a Tremendous Thursday... This is a snippet of the Mogambo's letter from Monday 9/24.

"When the Congress leads the Federal Reserve to create more and more money so that Congress can borrow and then spend more and more money to 'fix' more and more problems of more and more people…", he would have been correct if he had finished the phrase by saying, "Then The Mogambo is right! We are freaking doomed!"

And so while even little kids know the terrible price we will pay for our stupidity and greed, there is a salvation! Adrian Ash at bullionvault.com writes, "the last time America's credit rating came into crisis - during the late '70s - inflation ate both equity and fixed-income investors alive", but "Gold, on the other hand, rose by 510% for dollar-based buyers."

Gold! Just like I have been yelling about! See? I'm not as stupid as you thought!" [unquote]

 

[Sean K]

Having a woody.

 

[So_Cynical]

I just looked to ...mite break 750 tonite.:

Sif the gold run is over.

 

[Enoch]

This is a link to a presentation by James Turk which outlines why the long term fundamentals are so good for precious metals.

Its worth a look.

http://thesilversummit.com/webcastturk.aspx

Regards
Enoch

 

[Uncle Festivus]

At the moment I see no other way for the USD to rally.

How about intervention by Euro CB to stem the appreciation of their currency. It might be temporary but could see some profit taking this week in gold. Just another chance to top up?

What about the link between a declining dollar and rising gold?
I wouldn't overweight that too much, either, because while the dollar is in a little bit of trouble here and it probably will lose some shelf space as a global reserve currency, at the end of the day, the Europeans don't want the euro/dollar rate to be at 1.50 because they will be out of business. All economies are interdependent on the dollar as an instrument of credit for cross-border trade.

http://online.barrons.com/article/SB119101973818043179.html?mod=rss_barrons_this_week_magazine

 

[bean]

The COT for May 2006
http://news.goldseek.com/COT/1147463220.php

The current COT - very extreme
Is this a record??
http://news.goldseek.com/COT/1191008035.php

Definitely a week for fireworks in Gold

 

[Sean K]

The COT for May 2006
http://news.goldseek.com/COT/1147463220.php

The current COT - very extreme
Is this a record??
http://news.goldseek.com/COT/1191008035.php

Definitely a week for fireworks in Gold

So, are you calling the long awaited plunge to $540 this week bean? I suppose I should let you revise your downward target, but I'm not sure where you've got it now. Have you a revised number, and what is it based on? EW?

I would anticipate a correction shortly, and the steaper and faster this run goes then the more dramatic it will be, which I am getting prepared for. More psychologically than anything else. However, I'd imagine a bump at $730 and $710 to $690 support.

 

[explod]

So, are you calling the long awaited plunge to $540 this week bean? I suppose I should let you revise your downward target, but I'm not sure where you've got it now. Have you a revised number, and what is it based on? EW?

I would anticipate a correction shortly, and the steaper and faster this run goes then the more dramatic it will be, which I am getting prepared for. More psychologically than anything else. However, I'd imagine a bump at $730 and $710 to $690 support.

Would be interested in your rationale.

I am inclined to say gold will go the other way. Strong move late Friday when PPT usually cap price and HUI recovered. US dollar weakness increasing. Sabre rattling out of Washington on a strike against Iran also very bullish for gold.

The Dow is looking tired and a correction down here can drag on gold, however some decoupling has been evident of late since institutional investors have begun to change tack.

Should be an interesting week. We will soon see what pans out.

 

[Sean K]

Would be interested in your rationale.

Just general principles, not time based. I 100% agree with geo/eco/polical events shaping POG atm, but as I said, nothing should go verticle, without a VERY steep retrace. I will be very happy to see consolidation around these levels with natural support at levels stated and then push on momentarily. If not, then yes, more gains, but then even steeper retrace causing significant loss of confindence and longer recovery time...

 

[clowboy]

This is the advantage of using leverage... even if you don't use the leverage.

Supposing Gold is $700 oz and AUD 0.80 and you have $87,500 AUD

You could buy 100oz of physical Gold.... or, you could by 1 x 100 oz Gold future and be completely unleveraged.

You margin would be $3,375 USD which is ~$4220 AUD. This is what you would need to lodge with your broker.

So your position is:
1 x 100 oz Gold Future @ $700
$3375 USD lodged with broker
$83280 AUD in cash

Let's suppose both AUD and Gold went up 10%. i.e. Gold to $770 and AUD to 88c.

If you bought 100oz of physical gold, you would be squits, no profit.

However, if you bought the future, your position would be.

1 x Gold future @ $770
$10,375 USD with the broker ($7,000 USD profit + initial margin)
$83280 AUD in cash

Now if you wind up the trade and convert your profit back to AUD:
$10,375 @ 88c = $11,790
add that to your cash and you have $95,069 AUD.

Slightly less than 10% profit, but a hell of a lot better than zip.

That is ex commission (an iniquitous $6 - $40 round trip depending on the broker) but bear in mind, commish on physical is 5 or 10% for the round trip.

Same principle with buying AUD/USD with AUD... leverage

EVEN IF YOU DON'T USE IT.

Cheers

Disclaimer: Opinion only, you can lose a substantial amount of money with futures. It is not like stocks where you can only lose 100%, with futures they can come for your house, your wife, your left testicle, your liver, wine cellar and your first-born boy child. Futures can give you diabetes, AIDS, and warts on your nose. Please seek the advise of a commissioned salesma... errr, financial adviser before using any financial product.

WayneL, I know this is going back in time a bit, but....

Looking back over this example using futures it is a bit complex for me at this point in time and I dont think I should get involved in something I dont fully understand yet. Also I believe that futures are not that flexible in terms of posistion sizes (IE i looked into gold futures with some Aussie mob but u had to buy contracts at pre determined lot sizes).

Anyway.....

If I had 10k worth of physical gold and was bullish on the gold bearish on USD (or bullish AUD) then it would imply I wouldn't make any money on my gold holdings (as previous discussed). If I opened a position in FX going long AUD for 1 contract (mini account) that would give me a 10k long posn on the AUD movement. Am I right in thinking that if gold and AUD continue to climb I would make profit on the gold price movement (as the conversion back to AUD from USD would be hedged). If gold went up and the AUD (or gold down and AUD up) went down I'd be back to break even and if both went down I lose out?

Also it would not cost me anything to do this as I would get paid to hold the AUD/USD position due to interest rate differences. The only cost would be setting it up (commsion on the trade).

Does this make sense?

 

[explod]

Just general principles, not time based. I 100% agree with geo/eco/polical events shaping POG atm, but as I said, nothing should go verticle, without a VERY steep retrace. I will be very happy to see consolidation around these levels with natural support at levels stated and then push on momentarily. If not, then yes, more gains, but then even steeper retrace causing significant loss of confindence and longer recovery time...

The weakness in the US currency has never been at such a low and weak position. When this filters through to a realisation that the present fundamentals indicate that this situation is only going to get worse then gold will rise exponentially. We are near that point.

Back in late 1979 gold went from US$300 an ounce to a peak for a day of $900 an ounce. It settled at an average of $600 for the next twelve months.

Now with the currency situation worse than it was back then we can expect a gold spike the next time to take our breath away.

You may remember a few months ago I posted that the last gold bull multiple, which rose from US $35 oz to $900, was about 25 to one. This bull started at about $270. So currently, in my analysis gold is very, very undervalued at the moment. Bigger players are now going long gold, so any pull back will be small and short lived.

It is interesting, but we tend to believe fiction before fact and there is an old saying that "the truth is stranger than fiction"

In my very humble opinion