Gold Price - Where is it heading?

[nizar]

Hooly dooly, first time I've looked at AND. Might have missed it?

Oh my.
I just pulled up the chart now.
Trend and a half.
Started the year at 30c.

Well done to those that rode it.

 

[rederob]

Why would you look any further than Avoca. Good company, plenty of good grades near surface. But with our strong dollar, offshore is the go at the moment, AND and NEM

Plenty of good goldies around at moment.
My preference is always to have a low cost, long life producer in the stable - LGL is a good fit. Should gold prices hold above $800 then we will see LGL putting about $500 profit per ounce in the bank for each of its million or so ounces each year, going forward
I like EQI because apart from its growth upside, it has given me regular dividends.
But as I said, there are plenty of others around that can give excellent returns.
I'm not likely to alter my present holdings though, because my entry prices mean I have already gained good upside, and the present rush to gold will amplify that further.
Go the mighty precious yellow metal!

 

[michael_selway]

Oh my.
I just pulled up the chart now.
Trend and a half.
Started the year at 30c.

Well done to those that rode it.

Charts not bad, but looks liek it wont be profitable for soem time yet!

AND - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -1.6 -3.0 -2.0 -2.0
DPS 0.0 0.0 0.0 0.0

thx

MS

 

[michael_selway]

Nick
I only trade equities, so the niceties of futures are left to active traders.
Nevertheless, the themes of accumulation and distribution are important across the board.
So when a long term price trend is supported by other fundamental price drivers - in the case of gold it's the oil price and USD values - through a robust period of consolidation, we should expect a new high price of significant magnitude above the former.
Accordingly, we should be looking for this run to peak around $900.
Could we get continuation to $1000 without a major retrace?
I doubt it for now.
Unless a US-led recession shoots gold to a 1980-like parabolic spike that collapses equally as quickly on itself.
What I will be looking for is a possible disconnect of POG to the USD, and a tied bond to POO, instead. Should this happen the likelihood of more protracted and less volatile price rises could continue - well over $1000.
For equity traders the usual question is "is it too late to get on"?
Like any trading or investing question, the answer should depend on your trading style and strategies.
I have personally traded KCN and LGL a few times over the past 5 years, but never sold EQI or DIO. And I originally bought into OXR for its gold exposure and have never sold any of its shares since.
I expect Lihir will be the most profitable of my goldies because there are very few cheaper producers that will match over the long a term. Now that LGL is unhedged, its upside will be significantly greater than previously.

As for ducati on gold, yet again his incredibly expansive missives purporting as analysis, are shot to pieces. It is one thing to claim good luck based on "speculation". It is quite another to foresee the more likely impact of key price drivers and weave these into this thread, so that others may profit.

Hey RED, KCN looks good value at current prices (mine life is ok as well at 15+ yrs), but does it have production problems or other risks u see atm?

KCN - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -22.2 24.0 49.6 57.9
DPS 0.0 14.5 22.5 34.5

Also do you know what the mine life of EQI is?

EQI - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 12.8 9.3 29.6 30.6
DPS 7.0 6.5 8.5 7.0

thx

MS

 

[nizar]

Charts not bad, but looks liek it wont be profitable for soem time yet!

AND - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -1.6 -3.0 -2.0 -2.0
DPS 0.0 0.0 0.0 0.0

thx

MS

True, but if I rode that trend for some time, I would be pretty profitable!

Which one is more important, the profitability of the trader, or that of the company? Think about it

 

[chops_a_must]

But while POG is climbing significantly faster than AUD increases over USD, there will be big profits in the offing.

I think that's the important point. We look to have finally had a major breach of resistance on the AUD gold price. And I'm assuming then that it would be similar across all currencies right now. Which really, is a pretty key buying signal IMO.

 

[Whiskers]

Nice rederob.

The article above regarding the margin call on the Commercials is slightly inaccurate. Commercials can sell until the cows come home and gold travels to $1500 or how ever higher. They are not 'naked' short gold. They are 'forward' selling the stuff, in other words they already 'own' it and they're selling it because they believe its a damn good price here to be selling it. This is normally taken as a sign that prices have risen too far, but it doesn't necessarily mean the Commercials are correct.

What one should be aware off is that the other side to the Commercials trades are large speculators, specifically the large CTA funds that follow trends. When they decide to exit there will be a sizable, if not brief, selloff. We've seen this in more recent times so we should expect more of it in the future. (PS: this same thing happens with all commodities - not just gold).

Regards
Nick

Hi Nick

I take your point, but this is only a short term cyclical influence, isn't it?

It seems to me that longer term the POG or more particularly the supply of gold is going to be a significant factor in determining particularly US economic activity for the forseable future.

In short, with the collapse of the US property market the so called CDO's or junk paper trade, often initially AAA rated assets, accounts for a very significant part of all corporate debt. Invester confidence has been severely jolted by this trade in junk paper and investment banks are still left holding billions of dollars worth.

I guess it is fair to say that there is now a breech of trust not only by investers, but by central banks, of the investment banks and tension between the central banks and investment banks, after all it appears to be the greed of the investment banks that brought things undone.

Since central banks have been selling gold to surpress the price and give credability to the new asset-backed credit system, and the investment banks have severely undermined that credability, I would imagine the central banks are looking to literally tan the hides of these investment bankers.

The big question I am wondering is whether that confidence can be restored in the long run and whether the central banks have enough gold left to stop the POG from blowing out.

And since it appears from some reports that Russia and maybe China has actually been accumulating gold, are they going to be the new economic powerhouses. If that happens will currencies inevetably become backed by gold again?

Endless comentators are predicting the POG to increase significantly, but what will eventually cause the POG to retrace significantly or bust? Over production doesn't seem capable any time soon. Or will an inevetable tightening of credit laws and credit availability to protect the value of the $US become the ultimate undoing of the credit-based assets reserve system.

I'm trying to play the devils advocate to find flaws in the medium to long term escalating POG argument, but there doesn't seem to be any, is there?

 

[Nick Radge]

I'm not making a statement that gold will fall. Please read what I have said carefully. I have simply made a statement - and one that I know is completely true as I ran my own CTA trend following fund till 2001. I did not say that Gold was going to fall. I said that should the large speculators decide to cut their long positions there will be an aggressive selloff. I did not say that it would end the gold bull. These trend following CTA's will ride the trends up and down. If the market trends up, they will follow along. If it trends down, they will follow along.

The uptrend in gold from 2001 is firmly intact with the support line at US$640. A correction for a down trend needs to go 5% below that line on the weekly chart for such a confirmation.

Let me just say, and I can only speak from an insiders position so I may well be wrong, but you need to understand that there are many, many funds of different types and styles. Yes, the macro funds such as Covel has stated, will be riding a 20-year view on Gold and will most likely hold on through thick and thin. But there are many other funds that have very large positions and do not attempt to ride these macro trends. They ride the smaller trends such as the one we're on now after the September breakout. These particular funds hold large enough positions to generate extreme volatility when they exit. All I'm saying is be aware of that fact.

That's all I'm pointing out. Nothing more. Nothing less. I am long gold and resource stocks and will continue to add/remove positions as my systems tell me. If trends persist my system will allow me to ride them. If the trends reverse, my system will tell me to get out.

This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

 

[explod]

Yep, apologies Nick. Problem I have sometimes is timeframe with my simplistic view of things. Not having the exprience of you and many othersI can only run by the big picture. Your input is valued. Thank you.

Also grab the bull by the horns.

 

[Nick Radge]

hey, we're all here to learn. Here is an example of what I am talking about. This is my trend following system on the streetTRACKS Gold ETF. You can see an entry back in July 2005. Take a look where it exited and then notice what happened immediately after it exited. That's what I'm talking about.

Notice then that the system sat on the sidelines till February 07 before entering long again.

 

[nizar]

hey, we're all here to learn. Here is an example of what I am talking about. This is my trend following system on the streetTRACKS Gold ETF. You can see an entry back in July 2005. Take a look where it exited and then notice what happened immediately after it exited. That's what I'm talking about.

Notice then that the system sat on the sidelines till February 07 before entering long again.

Nick I can see your profit stop pretty much got you out of the trade at the very top of the move.

Very impressive I must say.

 

[rederob]

just curious...
where's bean been?
is he now a has bean?
or has bean been curious to where gold's been?
me?
i been bean counting
has bean?
has he been?
just curious.....

by the way, my bean counting puts gold over $1000 by March 2009, in case ducati was wondering

 

[nizar]

by the way, my bean counting puts gold over $1000 by March 2009, in case ducati was wondering

Thats ages, i wonder if i'll still be alive by that time lol.

 

[bean]

just curious...
where's bean been?
is he now a has bean?
or has bean been curious to where gold's been?
me?
i been bean counting
has bean?
has he been?
just curious.....

by the way, my bean counting puts gold over $1000 by March 2009, in case ducati was wondering

POG - I am in riding but with caution. Take each few days at a time. Last week in the US was still a warning to show if the markets drop POG and Gold stocks may drop with the market as people put money in bonds and cash - US$ had a bit of traction but to "much oil"
POS - still way behind POG in the move however did stay above US$ 14 last week so maybe POS may be ready to join as well.

The thing to remember is the POG is rising but so is mining costs. Some of the larger US miners what gold has increase in price per oz in the move so has there costs by the same per oz.

 

[rederob]

The thing to remember is the POG is rising but so is mining costs. Some of the larger US miners what gold has increase in price per oz in the move so has there costs by the same per oz.

Can you please translate that into English.
In anticipation...

 

[explod]

POG - I am in riding but with caution. Take each few days at a time. Last week in the US was still a warning to show if the markets drop POG and Gold stocks may drop with the market as people put money in bonds and cash - US$ had a bit of traction but to "much oil"
POS - still way behind POG in the move however did stay above US$ 14 last week so maybe POS may be ready to join as well.

The thing to remember is the POG is rising but so is mining costs. Some of the larger US miners what gold has increase in price per oz in the move so has there costs by the same per oz.

Gold price has begun to de-couple from the Share Market. Since May the Dow is at exactly the same level, in fact a couple of points down. For the same period gold is up 20%. On a day to day basis gold has moved a bit with the market but this effect is becoming less as more of the general investment community are taking notice of gold.

Cash and bonds are now being seen as risky so that haven now is also being viewed sceptically. Underlying inflation is now being appeciated, high, oil a big contributer now.

Silver as you suspect is rising on that chart at a greater rate than gold and is now near a new 27 year high. Once this resitance is broken I fully expect it to lead again and go back towards a ratio of 25 or 30 to 1.

I think Bean you have to let go and fly with us. Glad to see you have loaded up again as well.

 

[BHP]

Hi All,

Some great posts in this thread, thanks to all the contributors.

I am an inexperienced investor and was hoping someone could help me out here.

I am a little weary about investing in gold miners for two reasons:

a) I don't know enough to value them so don't know which one/ones to buy into.

b) There are risks that while the gold price goes up so does the cost of production (Oil, labour rates, machinery etc) so the profit may not be so great. An example is wheat, it's gone through the roof but you wouldn't want to be invested in an aussie wheat farmer, you would rather own the wheat itself.


For the same reason it seems better to me to invest in gold itself through something like Gold Bullion Securities Limited (ASX Code: GOLD) but the problem is its unhedged. Gold's latest run is mainly based on the devaluing $US so investing unhedged hasn't done very well.

If you look at the price of gold in $US terms its increased about 25% since the start of the year but in $AU terms its only increased about 8%. Even if you bought now if the aussie dollar hits parity gold will need to be over US $870 before you are in profit.

Now I know i could hedge myself but thats too complicated for someone green like me, I am just looking at buying something through my Commsec account.

So my question is, Is there a (simple) way to invest in gold in $AU that is hedged against the $US?

 

[So_Cynical]

So my question is, Is there a (simple) way to invest in gold in $AU that is hedged against the $US?

This mite fill your requirements.........ASX GOLD CFD

http://www.asx.com.au/investor/cfds/pdf/cfd_product_launch_phases.pdf

And Commsec is broking ASX CFD's

 

[BHP]

This mite fill your requirements.........ASX GOLD CFD

http://www.asx.com.au/investor/cfds/pdf/cfd_product_launch_phases.pdf

Thanks SC, I checked it out but this too is unhedged.
See http://www.asx.com.au/investor/cfds/pdf/contract_specifications_commodity_cfds.pdf

6.1 Contract Specification for ASX GOLD CFD
Contract Currency USD

 

[explod]

Thanks SC, I checked it out but this too is unhedged.
See http://www.asx.com.au/investor/cfds/pdf/contract_specifications_commodity_cfds.pdf

6.1 Contract Specification for ASX GOLD CFD
Contract Currency USD

]
Hedging overall is a zero based outcome. A bit like betting heads and tails at the same time. At the end of the day you have to speculate to accumulate. Best trick is to find the best stock or investment you are comfortable with and as soon as you feel it is going against you you must get out. If you are not comfortable with any of that you need to stay out of the fray till you are.