Gold Price - Where is it heading?

[Temjin]

I never cease to be amazed that some people are amazed that gold will go up. On an inflation adjusted basis gold should be more than US$2,000 an ounce. Money is deflating because it is backed by massive debt. Oil is going up because oil has a tangible value, food and other tangible needs are also going up for the same reason. But it is increasingly taking more dollars to buy these goods. It is not so much that the goods are going up, it is that the value of money is going down.

Gold has gone up 100% in the last 3 years. I have made a lot of money following the trend in gold and I have a lot more to make on it yet.

Tell me why are others sceptical. I dont want to hear from the converted gold bulls, but the sceptics.

When "others" stop becoming sceptical, and that's when the gold price is like over $1500 per oz plus you have taxi drivers talking about buying gold shares, then it's the time to leave.

Are we there yet? Nope. Most investors still have no idea about the potential in investing in gold.

The only biggest concern is the manipulation of gold prices by major central banks. While they will eventually run out of gold to sell to suppress the prices, they still have some ammo left. It's a good time to be in the gold market still but definitely not in leveraged mode due to sudden sharp selling from manipulation.

P.S: Same as for silver, but it's even worse in terms of degree of manipulation.

 

[bean]

POG is at a critical juncture over the few days.
Could we have a divergence between the POG and gold stocks.
US Gold stocks will move in the same direction of the general market if it tanks in the next week. Liquidity will be needed so the stocks will be sold initially. Last thanksgiving the US$ dropped does it do the opposite this time.

One of the few commodities not to be dropping is Oil...if that takes a hit in the next day or two...possibility POG may as well.

An insight to where the POG may head in the nearish term but it has to get past a price. Oh and he has been picking the price moves excellent

http://news.goldseek.com/RickAckerman/1195660800.php

 

[explod]

Bean it looks as though Rick's idea is little better than the rest of us in this market. Gold has quickly recovered from its correction and the consolidation now at just a little above US$800 is making it look very likely that the next move will be decidedly up.

Yes the market will effect gold stocks to some degree. The one I watch close, with an international flavour is Newmont Mining. It has risen 13% in the last month and very much against the trend of the Dow. This tells me that larger institutional players are not phased by other market forces.

The banking cartel have an agreement to offload about 500 tonnes of gold per year to keep a lid on prices. However world gold production is decreasing in spite of the rising price and consumer demand is increasing exponentially, the following released by Reuters overnight:-

"...India and China consumed 721.9 tons and 259.6 tons of gold for jewelry and investement, respectively, in 2006.

The World Gold Council said global demand in the third quarter rose 19 percent year-on-year to 947.2 tons on the back of robust inflows into bullion investment funds and improved jewelry consumption." [end quote]

Temjin: I consider from a variety of averments that the institutional cartels are uncomfortable with gold at current levels, which is much in evidence from the higher volatility in the gold price, particularly on the trading hour fringes.

I believe we have now reached the point where investment demand, largely to cushion losses against the falling US dollar, has begun to surpass the supply from both the banking cartel-dumps and mine production.

May be wrong, but just my 2 cents for thanksgiving


I hold shares in NEM

 

[Whiskers]

I've been doing my end of week musing again.

It's mainly based on the psychology of the markets with reference to the rythum and cycles, like what I imagine you wave chartists are about, with a touch of intuition. When I learn more about these wave charts I might be able to relate it better.

But to carry on from where I left off last time, it looks like we have a bit of a bull run going again, I think you might call the wave 4, that the picture in my minds eye see's this peaking sometime in the next few days before a quick fall, the number I was trying to relate technically in a chart earlier and I think in the low 700's, from where the real bull run kicks off again just as sharply.

Bean has been speculating about a bigger correction for some time and kauri I think mentioned a low 700 number earlier. I think it is coming probably late next week.

My elderly mum talks about dreams and visions that tend to come true. Coincidently after I studied a bit of psychology I encountered some literature and people involved in mind dynamics and started practising connecting to and interpreting dreams myself. As one author said once you develop the inner calm and start to see how things unfold before they happen, it's so surreal.

I think it is basically the power of meditation to let your subconscious mind compute all the variables and come up with the logical progression of events. I felt pretty comfortable with my 'intuition' re weather cycles and production levels etc in the horticultural industry. This here though is a relatively new field for me, where I am still finding my feet and learning to interpret things.

I'm getting the impression that bean is doing a bit of something similar, and sometimes doubting his vision, but he is much more versed than I in relating it in contempory investor jargon.

What say you bean? A bit of a rally next week before it hits the deck.

 

[explod]

That is an interesting approach Whiskers. At Uni years ago found my way into Emmanual Kant through to Carl Jung and the concepts of intuition fed by ESP, or as some like to describe it "the intellectual flow". Such knowledge I found was very good for developing another view of the world, or if you like, lateral thinking outside the box.

I have worked very hard at economics and technical analysis over the last eight or nine years and it is working a treat for me. However I am sorry to report that "the flow" within the vagaries of the market has not helped one iota.

In the Sunday Age I noticed that the dart board is winning the stock tipping competition, an analyist is next but Dooreen of the stars is well down this month.

If you look back over my last few posts you will note that logic seems to work ok.

 

[Nick Radge]

Here is the seasonal chart for Gold during November. Very high correlation on all 3 time frames suggesting a probable strong end to the month. The fact that some gaps (Island reversal?) have been left from the recent decline and this seasonal tendency then there was a strong cause for the market pushing back up. If you refer to the lower axis on this seasonal chart and find '12' you will note it relates to the low point for the month. Now go to your Gold chart and count 12 trading days from month start. 12 trading days is the 19th. The 19th was the exact low for Gold...

The seasonal chart for December is also very interesting.

 

[Sean K]

Gold Has Biggest Weekly Gain Since July 2006 on Dollar's Slump
By Millie Munshi

Nov. 23 (Bloomberg) -- Gold jumped 3.3 percent, capping the biggest weekly gain since July 2006, as the dollar's decline to a record against the euro and climbing energy costs sparked demand for the metal as a hedge against inflation.

The price of gold has surged 29 percent this year, and the dollar is down 10 percent to the lowest ever against a basket of six currencies, including the euro and the yen. Crude oil closed above $98 a barrel, and heating oil climbed to a record.

Dollar and oil can't keep going lower and higher like this for ever can they?

I suppose things can get worse in Iran.
US money printing might need to swing into full stride to pay for another war.

On the other hand, if the Fed does not lower rates again as expected in Dec, I think there's every chance of another correction in POG. Or at least a knee jerk sell off...

 

[Spaghetti]

Recent dips are probably central bankers dumping gold on the market to keep a lid on prices. Yet has not worked for long. I wonder how much they will continue to dump and whether it is at all smart to do so?

I found this article interesting, from May this year and published on Kitco.

http://www.kitco.com/ind/Willie/may042007.html

Sample of article

All the conditions were there, a euro currency breakout, a British sterling currency breakout, and pronounced USDollar weakness. The sterling exchange rate even hit $2.00 to capture a tremendous amount of attention. The denials streamed in on how the weaker USDollar is not such a big deal, which always serves as a confirmation of a dire situation. The crippled USDollar cannot buck the passage of time and inexorable destruction through unfettered monetary inflation abuse and colossal irresponsibility. The protection racket actually open the door for executive perks which dwarf whatever was condoned at Tyco with lavish Roman toga parties and gold bathroom fixtures. The world reserve currency is in the process of upchuck rejection.

GOLD SLAMMED BUT FIRM

Anyone wondering why gold has not made new highs during a time when the USDollar is teetering need only look to the official Euro Central Bank gold sales. Thanks to the Gold Anti-Trust Action (GATA) organization for their steady professional reporting on activity behind the scenes. Intrepid Blanchard reports the ECB sold a whopping 76 tonnes of gold bullion in the five weeks ending April 24-th, including 17 tonnes in the fifth week. That is a huge jump over their pattern in the last six months. They clearly waited for a time when the USDollar was exceptionally weak to dump gold. They call it dishoarding, in blatantly irresponsible fashion, since bullion is bank collateral for currency, the banking system, and their economy. These Keystone Gold Cops can only succeed in delaying the inevitable crescendo of a gold breakout. In the process they will destroy their currencys and banking systems. New highs for gold come soon!

 

[explod]

Dollar and oil can't keep going lower and higher like this for ever can they?

I suppose things can get worse in Iran.
US money printing might need to swing into full stride to pay for another war.

On the other hand, if the Fed does not lower rates again as expected in Dec, I think there's every chance of another correction in POG. Or at least a knee jerk sell off...

Why not?, oil is being consumed faster than it is coming out of the ground and the amount of debt backing the US dollar seems to be getting larger everyday.

Look on the bright side Kennas, you can make a lot of money knowing and taking advantage of that.

Yes there will be down ticks in gold but the upticks are getting larger than the down. The bulls have been in command of gold for six years now and the signs indicate that the big game is just beginning.

I dont (nor am I qualified to advise or to) make actual predictions, but if gold rises the same as the last week it will be in record territory.

 

[Sean K]

Why not?, oil is being consumed faster than it is coming out of the ground and the amount of debt backing the US dollar seems to be getting larger everyday.

So, oil to $10000 a barrel and 1USD to 100Euro?

My comment is just a broad generalisation that there will be a bottom, and a top, somewhere.

Maybe that's an incorrect assumption.

 

[rederob]

So, oil to $10000 a barrel and 1USD to 100Euro?

My comment is just a broad generalisation that there will be a bottom, and a top, somewhere.

Maybe that's an incorrect assumption.

There already are established tops and bottoms.
But like record books, they are prone to new entries over time.

Oil is unlikely to be dollar denominated in the timeframe needed to hit $1000/bbl, let alone $10k.
However, while oil and gold are closely correlating, not being there for the ride might be a missed opportunity: Especially so while most other equity sectors are tanking.

 

[explod]

So, oil to $10000 a barrel and 1USD to 100Euro?

My comment is just a broad generalisation that there will be a bottom, and a top, somewhere.

Maybe that's an incorrect assumption.

Apologies Kennas; I find some comments can be missleading to newcomers. A lot of industry jargon and to some degree the philosophy deliberately, for vested interrests, sets out to keep economics confusing. Having been burnt many years ago by expensive financial advisers I set out to say things as I think they are exactly. Choices are an individual thing, but setting out clear options is the greatest componenet of this forum.

 

[Sean K]

Apologies Kennas; I find some comments can be missleading to newcomers. A lot of industry jargon and to some degree the philosophy deliberately, for vested interrests, sets out to keep economics confusing. Having been burnt many years ago by expensive financial advisers I set out to say things as I think they are exactly. Choices are an individual thing, but setting out clear options is the greatest componenet of this forum.

None required explod. I am actually wondering if there can be a top in oil. If we don't find an alternative, and the stuff runs out, then maybe $10K is possible. I doubt it, economics necessitates that we find another form of energy, which though technology and human ingenuity, will solve the problem. Another big assumption. Gold on the other hand will probably only keep going while it's associated with USD, geopolitics, and inflation. Once China takes over in the next 20-50 years, who knows...another big assumption

 

[explod]

None required explod. I am actually wondering if there can be a top in oil. If we don't find an alternative, and the stuff runs out, then maybe $10K is possible. I doubt it, economics necessitates that we find another form of energy, which though technology and human ingenuity, will solve the problem. Another big assumption. Gold on the other hand will probably only keep going while it's associated with USD, geopolitics, and inflation. Once China takes over in the next 20-50 years, who knows...another big assumption

Could not postulate on where oil could go. However as it runs down I feel confident that alternatives will be found very quickly. I have identified some good uranium companies for the change that will have to come in that direction even by the ALP. (Google up "Safe Nuclear Energy")

Gold has been a form of exchange since 700 BC and due to its value in the mind of mankind as a fair exhange for goods I believe that gold will continue to grow in value ad infanitum. On the world stage gold is a very small market. It has been made so by the system of fiat paper currency. Whilst economies are healthy and strong that way seems to have been ok. But as the biggest economy in the world is now backed by debt thier currency will implode to nothing as happened to Ancient Rome, Germany, South America and Mexico (the latter was bailed out by the IMF)

However who is big enought to bail out the US ??????

So gold is going to appreciate in value beyond belief. Some extra attention could come this week if we get a close above the all time high (weekly close) of US$850 an ounce.

We shall watch with interest.

 

[rederob]

Could not postulate on where oil could go. However as it runs down I feel confident that alternatives will be found very quickly. I have identified some good uranium companies for the change that will have to come in that direction even by the ALP. (Google up "Safe Nuclear Energy")

Hmmmm.......
Solar and wind might be able to fill the gap.
Nuclear is safe to produce, but not dispose - safe nuclear is akin to clean
coal: We ain't there yet.
The real problem with nuclear, short term, is that you cannot get a power plant up and running in less than 5 years. So, if oil has peaked, nuclear hasn't a chance in hades of filling the void for some considerable time.
Which brings me back to the POGOO correlation.
If it holds, then it's gold and black gold where we need to be.

 

[So_Cynical]

Gold is Gold...there are no alternatives.

Oil is Oil and theres lots and lots of alternatives....at some point soon, very very soon...the price of oil will be the
undoing of the oil industry.

I mean u can make LPG very easily...u cant make Gold.

 

[explod]

Treading the foothills of a gold bull market (FT 11/5)
In recent weeks, as the gold price has approached the $800 level, the rate of increase in the price, the momentum of buying interest, has slowed, one sign that a correction in the uptrend could be at hand. Even so, the low volatility and low level of public interest both suggest that even with a short or intermediate correction, we are only in the foothills of the gold bull market.

Suppy/Demand may trigger quantum upward change in the gold price (Mineweb 11/5)
Credit Suisse suggests that supply and demand factors will make their presence felt to such an extent that they "could trigger a quantum upward change in the gold price, enough to sustain a new gold price/US$ equilibrium."... "Under these circumstances, the supply-demand imbalance will begin to accelerate at an ever-increasing pace into a net deficit, which in turn, will likely put significant upward pressure on the gold price."

[end quote]

Back on uranium, I think as the energy problem becomes critical the building of Nuclear Power Stations will not only continue to improve but will be developed much faster. Wind, wave of hot rock tecnology will go a long way but the big grunt power required 24/7 for heavy industry will be a hugh problem for some time.

As the earth dries out the power required for desalinisation plants will also be huge, to cite one prime example.

 

[explod]

Well worth thinking about, courtesy the Privateer newsletter:-

"Last week, as you probably know, the Gold price took two big falls. On a spot future basis, it fell $US 27.00 on Monday, November 12 and $US 27.40 on Thursday, November 15. That was news. This week, Gold rose nearly $US 50 in three trading days and rose $US 26.10 on November 23 alone. That was not news, not in the US at least if one gleans one's news from the main media outlets."
[emd quote]

The keepers of fiat currencies are going down the tubes, if you want to back your family and preserve your wealth make them get out of debt in any form and invest in solid bullion and blue chip gold stocks. Now that is not advice but just the way I think. And I have been wrong many times before

 

[rederob]

Gold is Gold...there are no alternatives.

Oil is Oil and theres lots and lots of alternatives....at some point soon, very very soon...the price of oil will be the
undoing of the oil industry.

I mean u can make LPG very easily...u cant make Gold.

If you can back this up, then I might be able to respond.
As it is, there are few alternatives to refined crude oil in terms of cheap, transportable energy.
Of the hundreds of millions of transport vehicles on the road, a minute fraction run on LPG.
There are dire substitution effects that have to be taken into account.
As it stands, oil is destined for a very strong run north in coming years.
Gold might lead or follow, but is unlikely to "disconnect" from the trend.
If, as you suggest, oil goes down the gurgler then I suggest you seriously think about getting out of gold.

 

[explod]

If you can back this up, then I might be able to respond.
As it is, there are few alternatives to refined crude oil in terms of cheap, transportable energy.
Of the hundreds of millions of transport vehicles on the road, a minute fraction run on LPG.
There are dire substitution effects that have to be taken into account.
As it stands, oil is destined for a very strong run north in coming years.
Gold might lead or follow, but is unlikely to "disconnect" from the trend.
If, as you suggest, oil goes down the gurgler then I suggest you seriously think about getting out of gold.

"Getting out of gold" I do not get the logic in what you are saying here. Of all things, gold is an exchange for all goods, not just oil.

Would be most pleased to understand your rationale in this.