Gold Price - Where is it heading?

[chops_a_must]

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

The thing that worries me is that gold hasn't broken out against most of the other currencies. It's risen purely on the dollar weakness. So unless you have the ability to access physical gold, trades on gold atm look almost like a red herring. However, if you have the power like a lot of instos obviously do, long term arbitrage gold to currency plays probably look quite attractive now.

Having said this, there looks to be a great box play forming on the ticker, GOLD. With a target just under $98. However, until the gold price breaks out against the AUD, the results of the local miners are probably going to disappoint...

GOLD box play chart:

 

[explod]

The thing that worries me is that gold hasn't broken out against most of the other currencies. It's risen purely on the dollar weakness. So unless you have the ability to access physical gold, trades on gold atm look almost like a red herring. However, if you have the power like a lot of instos obviously do, long term arbitrage gold to currency plays probably look quite attractive now.

Having said this, there looks to be a great box play forming on the ticker, GOLD. With a target just under $98. However, until the gold price breaks out against the AUD, the results of the local miners are probably going to disappoint...

GOLD box play chart:

At the NY close gold is up US$3.50 and the dollar itself is up also. What I have been trying to relate is that the gold price on an inflation rated basis is many time undervalued and that currency differentials will have little effect when gold goes up 10 or more times its current value. If you take the time to look analytically at the charts and values of gold over the last 80 years the picture becomes clearer. Uncle Festivus et al have many times explained the facts throughout this thread and if you are serious about investing in gold you need to do your own calculations before proceeding.

Following from Kitko this morning:-

By Atul Prakash

LONDON, Oct 1 (Reuters) - Gold hit a 28-year high on Monday as a weaker dollar made the metal more attractive to investors, while platinum aimed at an all-time peak on speculative buying.

But the metals fell in the afternoon trading session on profit-taking and as the dollar rebounded from record lows against the euro ahead of a fresh batch of U.S. data this week.


Spot gold rallied to $746.50 an ounce, its highest level since January 1980, before easing to $742.70/743.40 by 1357 GMT, against $742.40/743.20 late in New York on Friday. The metal has hit new highs four times in less than two weeks.

"Gold is feeling a bit heavy at the moment. I think we are likely to see a correction from here unless something else comes into the market to trigger another leg lower in the dollar," said Tom Kendall, metals strategist at Mitsubishi Corporation.

"But overall, gold is still pretty bullish and I don't think we are likely to come back below $700 in the near term. The more headlines about gold appear in the mainstream media, the more overall sentiment keeps on going up," he said.

A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. Continued...

 

[explod]

It seems that we may have established reasonable support at US$730. The problems with the US economic outlook, in spite of the rising Dow continue to look grim so we can expect the gold price to continue strengthening in the coming weeks.

It is interesting to note that this US$730 area was a point of considerable resistance back in 1980.

 

[explod]

It seems that we may have established reasonable support at US$730. The problems with the US economic outlook, in spite of the rising Dow continue to look grim so we can expect the gold price to continue strengthening in the coming weeks.

It is interesting to note that this US$730 area was a point of considerable resistance back in 1980.

................................................................................................................................................................................................................

 

[explod]

By Roger Wiegand
Oct 3 2007 11:02AM

www.tradertracks.com



“Technical analysis absorbs and reflects all technical and fundamental market moving action to the daily close. Fundamentally, precious metals are long term bullish. Never take your attention away from the bigger picture.”-Traderrog

“Gold is revisiting similar trading action from 1979-1981. Price never gives us a smooth line, straight shot to the moon. Corrections are normal and we expect a mild one from October 8, 2007 through October 19th. Technical projections tell us a return to $700 seems the worst case but we forecast something higher. Yesterday’s gold close was $729.20 after the dollar found some support. Look for a small wave higher this week followed by more corrective selling. This interim period ought to demonstrate sideways, choppy action before the next rally. With a general stock selling haircut coming later this month, precious metals shares could weaken with the others-temporarily. After a price adjustment, gold and silver ought to rally strongly into the fall.”- Traderrog



Thirty years of monthly gold action tells us a price stall at $700 was predictable resistance.There are other price points trying to suppress gold but these are only a blip on the longer term trading screen. Do not be fazed or knocked out of the bigger picture. We like to trade the technicals but fully expect to be trading PM’s long for a minimum of four years and more likely several years longer. Traders will pause at major price points in the $700’s and $800’s but some of our sharper analyst friends are now forecasting $900 or more this fall.

Old Highs on Gold & Silver Index Attract Current Price Like Magnets



This is an excellent longer term chart explaining several things and forecasting others. The big, red triangle in the price box is of the continuation and breakout variety showing us the clear, breakout XAU rally in late 2005. The dotted red line at the top is longer term major price resistance. We broke that line in 2006 and again this year showing larger buying pressures as they build for a rally. Notice too, the lows in 2006 and 2007 are moving higher, which is also bullish. The PMO or, price momentum box signaled selling with a crossover moving average right at year-end in 2006.

Note that now, it is curling up to cross-over again into the bull posture and rally. One of the best gold and gold-silver shares indicators is the shares XAU price relative to gold in the lower box. Look at the beautiful signal it provided in early 2005 just as price rocketed on this chart. For now, in 2007, we see the same signal saying here comes another of those big shares’ rallies. Currently, the dark line crossed over and broke above the exponential moving average of 20 days. This tells us on the longer term historical chart that buying is just ahead.

December, 2007 Monthly Silver with Slow Stochastics



Monthly silver has doubled since a bottom in 2004. Silver prices can be confusing to some traders as they reflect heavy commercial applications as well as being a precious metal and a currency. This tug-of-war among the three applications coupled with lower volumes compared to other futures contracts produces extreme volatility. Note the last three price bars: (1) a long bar opening near $13.00 and falling to $11.00 support. But, then it jumped right back up with a close above $12.00; (2) the second bar opened above $12.00 and then zoomed to $13.00; (3) the last and most recent bar opened near $14.00, sold lower and bounced back to close undecided in the middle. All of these signals are bullish, showing higher price pressures.

In the lower box, the slow stochastics indicates a definitive bottom, and a cross-over to the buying posture. Since silver often follows gold and copper prices like a little puppy, and all of these signals and indicators are saying stay with precious metals.

Do not let the forthcoming market disruptions and confusion take your eyes off the precious metals football. Those staying in the game for the longer pull with some occasional profit-taking trading can become major winners.-Traderrog

Roger Wiegand

 

[explod]

We have established support at US$720 to 730 and with consolidation at this level we can look to new highs. However Dow looking toppy with volume down at second lowest level for the year.

A number of posters are concerned at the effect of our strong dollar. Many of our mid gold stock prices were not only very oversold but were valued by analysts at a much lower gold price. Analysts tend not to factor on where things are going but on where things have been up to 12 months ago. Of course their jobs and reputation is on the line whereas we are unqualified and probably do not know what we are talking about.

 

[Sean K]

Of course their jobs and reputation is on the line whereas we are unqualified and probably do not know what we are talking about.

 

[Uncle Festivus]

Peter Hambro Mining has found an ingenious way to beat the credit crunch, raising $150m (£73.5m) with a rare form of bond that allows investors to lock in a 7pc interest rate while also taking a bet on gold.
If the price of gold rises above $1,000 an ounce, the owners of the bonds can accept payment of the equivalent value in cash once two years have elapsed. This would give them a 37pc capital appreciation above today's price of $741 (£363).
If gold goes higher, they make more. Should the price fail to reach $1,000, investors redeem the bond at par, plus interest yield.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/06/cnhambro106.xml

 

[bean]

The COT 's are still extreme.
Have the US gold Indicies made a double top last week
Have they completed wave B with wave C to start

HUI from a high 394.32 on 10 May 06
wave A to 287 on the 11 October 06
Wave B 401 on the 1st Oct 07
Wave C 2?? on the ??????

Bullish above US$ 750 bearish if it does not take it out this week?

Also DOW in MAY 06 was about 11500 today 14000
POG US$ 737? today US$ 737
POG has not been bullish at all has it.
US$ index was in the 80's

 

[Sean K]

The COT 's are still extreme.
Have the US gold Indicies made a double top last week
Have they completed wave B with wave C to start

HUI from a high 394.32 on 10 May 06
wave A to 287 on the 11 October 06
Wave B 401 on the 1st Oct 07
Wave C 2?? on the ??????

Bullish above US$ 750 bearish if it does not take it out this week?

Bean,

Can you please clarrify your ABC there.

I'm an EW quamby, but I guess that a B can not be higher than the starting point, or maybe it's 'close enough'.....

Your call of HUI going to 2....something.....!?? on ??!! date, is what exactly? The crystal ball a bit foggy??

All I see on this chart is some consolidation after a breakout through $375 ish, which looks to have been validated. Twice.

Your EW is saying that this is now going to $200 and something...way under all that support?

 

[wavepicker]

Bean,

Can you please clarrify your ABC there.

I'm an EW quamby, but I guess that a B can not be higher than the starting point, or maybe it's 'close enough'.....

Kennas,

A wave B CAN be higher than the starting point. It's called an irrregular or expanded flat correction. The clues are as followes:

-Wave A: subdivides into 3 waves
-Wave B: subdivides into 3 waves
-Wave C: is an impulse(5 wave structure) which often carries BEYOND the extreme reached by wave A


In this case what BEAN I believe is saying is that wave B is an Unorthodox top. This move up is not impulsive and has the hallmarkes of a double zigzag correction in other words it might be a suckers rally. The last consolidation on the daily chart before it blew off was a contracting triangle, these often precede the last move. Bean might be right here, but each to their own.

The USD generally rallies between Dec to Feb on a seasonal bsis. Whatever Gold is gonna do it's running out of time on this leg up IMO.

Cheers

 

[>Apocalypto<]

The COT 's are still extreme.
Have the US gold Indicies made a double top last week
Have they completed wave B with wave C to start

HUI from a high 394.32 on 10 May 06
wave A to 287 on the 11 October 06
Wave B 401 on the 1st Oct 07
Wave C 2?? on the ??????

Bullish above US$ 750 bearish if it does not take it out this week?

Also DOW in MAY 06 was about 11500 today 14000
POG US$ 737? today US$ 737
POG has not been bullish at all has it.
US$ index was in the 80's

Hi Bean,

I also see some weakness in Gold.

Last night I went short on it,

My reasons this break out has made a normal trend up to it's current position.

formed its frist minor band at 630 normal, but the break out that followed was sold back down to 630 in two sessions, found support around 630 again normal. rallied again to 640's straight away it found weakness forming a creeping band with a lower high that was my entry. POG has weakened again , now if that area of support fails to hold again i will add to my trade. On the bullish side that support may hold again suggesting as long as it can hold above it it's a trading range with a break above 645 to 650 confirming a creeping trend to fast trend up a bullish sign. I am sitting short on it until that is proven.

Good trading.

 

[explod]

Hi Bean,

I also see some weakness in Gold.

Last night I went short on it,

My reasons this break out has made a normal trend up to it's current position.

formed its frist minor band at 630 normal, but the break out that followed was sold back down to 630 in two sessions, found support around 630 again normal. rallied again to 640's straight away it found weakness forming a creeping band with a lower high that was my entry. POG has weakened again , now if that area of support fails to hold again i will add to my trade. On the bullish side that support may hold again suggesting as long as it can hold above it it's a trading range with a break above 645 to 650 confirming a creeping trend to fast trend up a bullish sign. I am sitting short on it until that is proven.

Good trading.

You are not sure which way it is going so you go short. Unless I am reading something wrong, if I was not sure I would stay out. Gold has been in a confirmed uptrend since 2001 so why the concern all the time of a collapse. My reading of the last week or so would suggest that the $730 level is now fairly good support which has been tested and held the last two trading days.

Fridays, traders have had it for the week and Mondays they are rubbing thier eyes. They are poor days on which to judge the market and they are the very days that the PPT try to push gold down. That fact that they could not is very bullish.

I would point out that the crap analysts of Wall Street are flat out trying to say it is going down but in spite of that less of the sheeple are now believing it.

Doing your own reseach and thinking gives gives the best outcomes.

 

[>Apocalypto<]

You are not sure which way it is going so you go short. Unless I am reading something wrong, if I was not sure I would stay out. Gold has been in a confirmed uptrend since 2001 so why the concern all the time of a collapse. My reading of the last week or so would suggest that the $730 level is now fairly good support which has been tested and held the last two trading days.

Fridays, traders have had it for the week and Mondays they are rubbing thier eyes. They are poor days on which to judge the market and they are the very days that the PPT try to push gold down. That fact that they could not is very bullish.

I would point out that the crap analysts of Wall Street are flat out trying to say it is going down but in spite of that less of the sheeple are now believing it.

Doing your own reseach and thinking gives gives the best outcomes.

Well your post says you don't read so well, all my reasons and evidence are in that post read it again and look at the chart.

I am not a long term investor. blind faith is a mans greatest down fall in speculation!

 

[wavepicker]

Well your post says you don't read so well, all my reasons and evidence are in that post read it again, look at the chart.

I am not a long term investor. blind faith is a mans greatest down fall in speculation!

Hello Joseph,

You saw probable trade, you took the trade, you have a profit(so far), you have contigency plans in place well done, that's all that matters irrespective of what anyone says !! Now let's see where it might take you.

 

[explod]

Well your post says you don't read so well, all my reasons and evidence are in that post read it again, look at the chart.

I am not a long term investor. blind faith is a mans greatest down fall in speculation!

The chart tells me it is going up with some consolidation. Certainly not a short prospect without confirmation. Your evidence is technical, been there, trust only the fundamentals and general directions now.

Just my view, and yes us older codgers miss the point some times.

 

[>Apocalypto<]

The chart tells me it is going up with some consolidation. Certainly not a short prospect without confirmation. Your evidence is technical, been there, trust only the fundamentals and general directions now.

Just my view, and yes us older codgers miss the point some times.

LOL, no hard feelings Explod.

Well I trade what the chart tells me and fundamentals second, not that i have anything against fundamental traders/investors. CCi also showing divergence.

I agree the trend in gold is up but on the short term the puff is being taken out of the break which could be a normal consolidation or it could be more, time will tell on that.

But the evidence being presented on the daily gold chart right now tells me to be short and stay there until futher notice.

Good trading

 

[Sean K]

I agree the trend in gold is up but on the short term the puff is being taken out of the break which could be a normal consolidation or it could be more, time will tell on that.

But the evidence being presented on the daily gold chart right now tells me to be short and stay there until futher notice.

Good trading

I think there's too much support established at the previous resistance. It's been a big wind up since Apr/May 06...If we break though support it might be short lived.

 

[CanOz]

LOL, no hard feelings Explod.

Well I trade what the chart tells me and fundamentals second, not that i have anything against fundamental traders/investors. CCi also showing divergence.

I agree the trend in gold is up but on the short term the puff is being taken out of the break which could be a normal consolidation or it could be more, time will tell on that.

But the evidence being presented on the daily gold chart right now tells me to be short and stay there until futher notice.

Good trading

This should eventually provide another buying opportunity before the next big move up yes?

Cheers,

 

[>Apocalypto<]

This should eventually provide another buying opportunity before the next big move up yes?

Cheers,

Hi Can,


Yes it does have all the hallmarks of a continuation from the support at 630 area as i type spot price is at that support area 730.5 - 731.5, like i said i will ride it out until proven wrong. the way in rejected the rally and where the lower high was made with the lead up really sold the short to me.

Time will tell.