Gold Price - Where is it heading?

[So_Cynical]

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.

At some point oil will be so expensive that there will be an industrial shift away from oil...ive high lighted the word "cheap" in the quote....all petrol driven cars can be easily converted to run on LPG or NG...in a few hours...

1 day oil will be as worthless as a horse, gold will never ever see this day....

Both Gold and Oil are Finite thats true...however there is no alliterative/substitute for gold.

 

[ithatheekret]

Central Banks still use gold to complete transactions .

Why is the answer to the worth of gold .

 

[rederob]

At some point oil will be so expensive that there will be an industrial shift away from oil...ive high lighted the word "cheap" in the quote....all petrol driven cars can be easily converted to run on LPG or NG...in a few hours...

1 day oil will be as worthless as a horse, gold will never ever see this day....

Both Gold and Oil are Finite thats true...however there is no alliterative/substitute for gold.

You clearly miss the point.
There is a massive substitution effect if what you propose were to occur, with LPG demand then blowing out incredibly in price as demand cannot be met.
You are right in that when a finite resource disappears (and oil will disappear while more gold is surfacing every day) it will be worthless.

explod
I suggested to Mr Cynical that, by implication, if he believes gold will disconnect from oil (ie the rising trend), then he should quit gold. My view is that for some years to come POOOG will correlate closely. Moreover, I believe that POO's rising price will be a major determinant of POG's in the near years - not vice versa.

 

[Sean K]

Moreover, I believe that POO's rising price will be a major determinant of POG's in the near years - not vice versa.

Rob, you don't believe that the inflationary effect of rising POO will have a positive effect on POG?

 

[rederob]

Rob, you don't believe that the inflationary effect of rising POO will have a positive effect on POG?

Questions framed in the negative can't get a right answer.
If I said "yes", what do I believe?
If I said "no", what am I saying no to?

I am saying I expect oil prices to rise substantially higher in years ahead.
I am saying that I expect gold will correlate closely.
I have no view on inflationary effects vis a vis oil and the above correlation.
I expect gold to be trading in the $1000 range in 2009 - maybe earlier (but that is not my preferred forecast).

 

[Sean K]

Questions framed in the negative can't get a right answer.
If I said "yes", what do I believe?
If I said "no", what am I saying no to?

I am saying I expect oil prices to rise substantially higher in years ahead.
I am saying that I expect gold will correlate closely.
I have no view on inflationary effects vis a vis oil and the above correlation.
I expect gold to be trading in the $1000 range in 2009 - maybe earlier (but that is not my preferred forecast).

My technical understanding of the English language isn't that great, but the question was open and could be answered in any way you like I thought. You only had to answer with a yes, or a no, and a brief explanation, or none.

It's generally considered that rising POO has an inflationary effect and gold is used as a hedge against inflation. That's why I framed the question as I did because you stated that rising POO would have an inverse relationship to POG. I thought you said that anyway.

I am saying that I expect gold will correlate closely.

So, correlate as in go up?

 

[rederob]

My technical understanding of the English language isn't that great, but the question was open and could be answered in any way you like I thought. You only had to answer with a yes, or a no, and a brief explanation, or none.

I believe you got a concise answer from me.

It's generally considered that rising POO has an inflationary effect and gold is used as a hedge against inflation. That's why I framed the question as I did because you stated that rising POO would have an inverse relationship to POG. I thought you said that anyway.

So, correlate as in go up?

I'm struggling to see where I said POO and POG had an inverse relationship.
I postulated a continuing close correlation, which means that POO and POG will move in similar directions - up or down. In the near years I say its "up".

In relation to your comments about inflationary effects, you really have answered part of the question that we base the close correlation on: Oil rises, inflation increases, more gold is bought - so gold rises.
But that is not my thesis.
In other threads when I talk about oil, I base the price argument on simple supply and demand.
We could make it more complicated, but the nub of the issue relates, as I see it, to oil having no present price barrier (until demand destruction kicks in), and gold enjoying the ride.

 

[Sean K]

I'm struggling to see where I said POO and POG had an inverse relationship.

LOL. I misread you. I thought you said rising POO would have a 'detrimental' effect on POG, but you said 'determinant'. I need glasses!

Apologies. I'm off to the eye doctor.

 

[explod]

LOL. I misread you. I thought you said rising POO would have a 'detrimental' effect on POG, but you said 'determinant'. I need glasses!

Apologies. I'm off to the eye doctor.

The oil problem has had and will continue to have its effect on gold but in the bigger picture it is a mere side issue. The falling value of currencies across the board are the real issues; and at this time the falling US dollar the particular one.

 

[Uncle Festivus]

The oil problem has had and will continue to have its effect on gold but in the bigger picture it is a mere side issue. The falling value of currencies across the board are the real issues; and at this time the falling US dollar the particular one.

Oil blow off top ahead? I think we might see some action with profit taking in oil soon as oil stocks are not following oil higher. What will be interesting will be how far gold will correct with it. Another top up chance? The final disconnection maybe?

So we could have a scenario where oil tanks (pardon the pun) due to the coming US recession and a global contagion, followed by or concurrent with hard asset appreciation eg gold price past inflation adjusted highs eg $2000 plus with a flight to safety?

Gold will do even better in a deflationary environement.

 

[Uncle Festivus]

.............Mr Faber highlights gold as his top investment pick in a world of frothy markets.

“…while I find the gold price to be currently somewhat overbought, I still think that gold will be one of the best investments over the next couple of years.”
However, the contrarian investor points out he only recommends gold because of the special monetary circumstances that global investors find themselves in. “I wish to add that I am not a gold bug. I would much prefer to live in a world in which central banks’ top priority was to safeguard paper money’s purchasing power and its function as a ‘store of value’.â

 

[Kauri]

This count is looking more incorrect as the days roll by, however breaking down the 2orB wave gives a=c currently... so if it is going to retreat it should be around here somewheres??
Cheers
.........Kauri

 

[Kauri]

This count is looking more incorrect as the days roll by, however breaking down the 2orB wave gives a=c currently... so if it is going to retreat it should be around here somewheres??
Cheers
.........Kauri

Too early to say if this is an abc or a W3 but I have covered my longs and gone over to the short side... as an old girlfriend used to tell me.. let it develop..
Cheers
........Kauri

 

[Whiskers]

... as an old girlfriend used to tell me.. let it develop..
Cheers
........Kauri

She was into charting too... was she??

 

[Kauri]

She was into charting too... was she??

Pretty big on Rate of Change indicators from memory..
Cheers
..........Kauri

 

[explod]

Although the gold price has levelled out it has held on to its postition in spite of the drop on the US markets overnight. Some consolidation here woudlbe very healthly prior to another launch at the all time high area.

The volumes on bullion sales continue to increase in the face of fear from currency weaknesses.

However gold stocks will follow markets down to some degree so current positions need to be considered in my humble opinion.

 

[Kauri]

Getting to an interesting stage methinks...
Cheers
........Kauri

 

[Whiskers]

Getting to an interesting stage methinks...
Cheers
........Kauri

Damn, it's gone short again.

Wow, this is loosing it's development pretty bad

 

[So_Cynical]

I thought it when like the longer it stays above support ($800) the
more solid the support becomes.

It ill bounce.

 

[explod]

I thought it when like the longer it stays above support ($800) the
more solid the support becomes.

It ill bounce.

Yep the bounce has occurred. They hit in light trading to try and impede its progress but nothing can stop the continued return of gold to its true value