Gold Price - Where is it heading?

[crackaton]

Re: GOLD Where is it heading?

As a result, it was buying from speculators and investors that restored prices to higher levels, leading the broker to suggest it would feel far more comfortable with its outlook of further price gains this year if it could establish the price level at which solid physical demand existed.

They know ****.

 

[Nicks]

Re: GOLD Where is it heading?

North

 

[rederob]

Re: GOLD Where is it heading?

North

I prefer east nor-east myself as those corrections can get nasty.
A 2% bounce-back today just shows that momentum remains to the upside.
It is very unusual for gold to immediately bounce back, especially after such a massive fall.
Moreover, the signs thus far indicate the decline to be a "manipulated" event.

 

[Odysseus]

Re: GOLD Where is it heading?

I am not inherently a gold buff, but I think that at present gold IS going through a significant re-rating, upwards, after a very long bearish period. Too much had been sold off by governments, and it had been underrated for too long. Intrinsic demand is very strong, e.g. on the part of Indian (and Chinese) women as well as investors, and as a store of "solid" wealth compared with the uncertainties of sharemarkets, bonds, real estate, and currencies. So, given time, it will probably do well. Obviously there are sure to be "corrections" after each new peak it makes, and the price will not move in a straight line. Silver and platinum are also essentially strong. A lot of people in the world are getting richer, and they will want REAL goods to invest in as well as various kinds of paper.

 

[clowboy]

Re: GOLD Where is it heading?

well I dont know stuff all but...


If that was a manipulation and the Govt sold 100T of gold....


....is that the best they can do?

 

[MARKETWAVES]

Re: GOLD Where is it heading?

Hi there Double Six

Just wanted to post4 more charts on the posture of Gold as an update to last week.
You said briefly in the above post that you didn't like the C wave count.

Seems like you understand the waves.....

Elliott waves is not 100%........It is subjective.

Wave counts also vary, based on who is counting it and what time frame is being analyzed.
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It's not about who has the right or wrong wave-count .........
I'ts all about understanding and applying Risk - vs- Reward

Well, enough said.

Here we are a week later ..........
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4 chart updates


Here's a copy of the previous post to see how it all ties together.

https://www.aussiestockforums.com/forums/showthread.php?t=2366&page=10&pp=20

- Scroll down to post # 191
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[clowboy]

Re: GOLD Where is it heading?

Marketwaves,

I have no idea about these elliot waves etc.

Can you also include in your post what the waves are signalling (bullish/bearish) in your understanding. Just so that I can try to follow what is going on.

Thanx

 

[rederob]

Re: GOLD Where is it heading?

Clowboy
It's not what's on the chart, it's what's off them that counts!
It's the "secret 5" competition.
Look for number "5" on each chart.

 

[clowboy]

Re: GOLD Where is it heading?

Meaning that 5 is the supposed price that gold is heading to?

Thanks for the reply

 

[dutchie]

Re: GOLD Where is it heading?

Its better to look for a new 2 or 4 as they are the starting points of a wave 3 and 5. When it gets to a 3 or 5 its too late unless you're looking for a retracement.

 

[rederob]

Re: GOLD Where is it heading?

Its better to look for a new 2 or 4 as they are the starting points of a wave 3 and 5. When it gets to a 3 or 5 its too late unless you're looking for a retracement.

Given that we want to know where it is ultimately heading, a 2 or 4 is relatively pointless as the correction occurs at 5 - the "top".
Even then, the wave count down - usually 3 - will be lesser in intensity, implying another run north, ie another 5 waves up.
How about putting some numbers to your numbers, dutchie?

 

[wayneL]

Re: GOLD Where is it heading?

I've read these last few posts several times now and I'm still lost

WTF are we? 5? a? 3? c? Someone (Prechter?) said that if you put 10 EW's in a room you'd get 10 different counts, plus several concussions and numerous lacerations. (Embellishments my own )

Anyway gold down again April contract LODed at $541.30. (currently $542.50) This is turning into a decent retracement and I'm having a bit of fun daytrading this (certainly easier than the indexes at the moment).

My baseless stab in the dark is ~$530 - $535 before we get another leg up.

Cheers

 

[rederob]

Re: GOLD Where is it heading?

Wayne
Short and sharp corrections are needed to keep up the momentum in gold.
It is important that jonny-cum-latelys are shaken out so that their next foray will be better informed rather than crowd-following.
This has been happening for several years now and I rejoice the corrections knowing full well that the fundamental drivers of gold not only remain firmly in place, but are stronger year on year. In this regard, I expect 2006 to provide gold the greatest percentage increase since the bull roared in 2001.
At the same time, increased price volatility - as recently shown - will become a more common feature of the metal's predicament.
So too will doomsayers - anti-contrarians - start to have their voices heard more often on the premise that gold "has topped" each time it reaches a new high.

 

[ducati916]

Re: GOLD Where is it heading?

I must admit to not being a big fan of gold, but the rise in price has really very little to do with it being an inflation hedge, as gold has increased by 35% this year, while inflation is still currently circa 2%-3% as measured by the CPI.

As regards "intrinsic value" that is often bandied about, what is the calculation that you can apply to gold? It has no cash-flow, no earnings, has limited consumption and is very doubtful ever to be used as a direct currency, nor as a currency peg, for all the reasons that it was abandoned in the first place.

Gold’s meteoric rise is largely due to the popularity of an ETF, StreetTracks Gold Trust "GLD". Launched 15 months ago, by the beginning of this month it has attracted assets of more than $6 billion.

Since shares in the trust represent ownership of one-tenth ounce of physical gold, the trust is sitting on 343 metric tons of the stuff, more than the Bank of England -- indeed, more than all but 16 of the world’s central banks.

The ETF has more assets than the next five largest gold mutual funds combined, and is the world's largest trove of gold in private hands. It dominates its marketplace more completely than any comparable investment portfolio. Among technology funds, for example, no single fund is bigger than even two of its biggest rivals.

It has consumed a big chunk of global demand -- 13% or 14% of annual mine supply,” Singlehandedly the ETF shouldered aside typical factors affecting the gold market and became the big driver of gold’s price. Traditionally, jewelry demand and hedge-fund speculation were the culprits.

Bullion’s price also surged upward because gold producers decided four years ago to stop hedging their future production, or selling next year’s output at today’s price

With prices at current levels, and cost of extraction having consumed marginal profits due to high energy bills, it is quite likely that producers will start to lock in profits by selling future supply, and reinstating hedges.
If, energy prices were to fall, and remain low, the profitability of extraction would again swell margins, but, would there still be the demand?

Both factors, sustained demand for gold, combined with sustained falls in energy prices would be required to push the POG higher. Having said that, Citigroup and Merrill Lynch are still bullish, and pushing their clients into gold.
Short sellers, if forced to cover, will also push the market higher.

What is common to these scenarios is that they are speculative. There are no pressing fundamental reasons (read valuation) for purchase at these levels. The horse has left the stable. If you weren't in a couple of years back, well too bad, but now is the wrong time to think about entering.
Entering on a "technical" basis is likely suicide, as the volatility will trigger those naughty little stops far too often.

jog on
d998

 

[rederob]

Re: GOLD Where is it heading?

"but the rise in price has really very little to do with it being an inflation hedge, as gold has increased by 35% this year, while inflation is still currently circa 2%-3% as measured by the CPI."

That price increase puts gold over $650!!!!

As for "reinstating hedges" - some producers that have maintained a so-called prudent hedge positions may lock in some high prices going forward. They will also have seen the disadvantage they are at compared to their peers, so while the analysts say this, the companies may not take up the offer.

 

[crackaton]

Re: GOLD Where is it heading?

well I guess POs and POG are almost equal

 

[wayneL]

Re: GOLD Where is it heading?

well I guess POs and POG are almost equal

Well thats a bit too obtuse for me...I suspect it was meant to be?

 

[bvbfan]

Re: GOLD Where is it heading?

bit off topic but Ducati, I'm guessing your using the name after the motorbike maker, but just wondering if you knew where the name came from or was derived from?

Reason I ask was Ducat was a gold coin minted in Venice around late 1200's, I'm guessing that maybe that where Ducati name came from?
I'd like to be corrected if you know

Back to the subject, I don't believe the ETF actually holds that much in gold, hence why I wouldn't want to own the ETF because its only just holding paper.

Gold is unlikely to ever back a currency as it will take away central bankers favourite instrument - the printing press.

 

[wayneL]

Re: GOLD Where is it heading?

I must admit to not being a big fan of gold, but the rise in price has really very little to do with it being an inflation hedge, as gold has increased by 35% this year, while inflation is still currently circa 2%-3% as measured by the CPI.

As regards "intrinsic value" that is often bandied about, what is the calculation that you can apply to gold? It has no cash-flow, no earnings, has limited consumption and is very doubtful ever to be used as a direct currency, nor as a currency peg, for all the reasons that it was abandoned in the first place.

Gold’s meteoric rise is largely due to the popularity of an ETF, StreetTracks Gold Trust "GLD". Launched 15 months ago, by the beginning of this month it has attracted assets of more than $6 billion.

Since shares in the trust represent ownership of one-tenth ounce of physical gold, the trust is sitting on 343 metric tons of the stuff, more than the Bank of England -- indeed, more than all but 16 of the world’s central banks.

The ETF has more assets than the next five largest gold mutual funds combined, and is the world's largest trove of gold in private hands. It dominates its marketplace more completely than any comparable investment portfolio. Among technology funds, for example, no single fund is bigger than even two of its biggest rivals.

It has consumed a big chunk of global demand -- 13% or 14% of annual mine supply,” Singlehandedly the ETF shouldered aside typical factors affecting the gold market and became the big driver of gold’s price. Traditionally, jewelry demand and hedge-fund speculation were the culprits.

Bullion’s price also surged upward because gold producers decided four years ago to stop hedging their future production, or selling next year’s output at today’s price

With prices at current levels, and cost of extraction having consumed marginal profits due to high energy bills, it is quite likely that producers will start to lock in profits by selling future supply, and reinstating hedges.
If, energy prices were to fall, and remain low, the profitability of extraction would again swell margins, but, would there still be the demand?

Both factors, sustained demand for gold, combined with sustained falls in energy prices would be required to push the POG higher. Having said that, Citigroup and Merrill Lynch are still bullish, and pushing their clients into gold.
Short sellers, if forced to cover, will also push the market higher.

What is common to these scenarios is that they are speculative. There are no pressing fundamental reasons (read valuation) for purchase at these levels. The horse has left the stable. If you weren't in a couple of years back, well too bad, but now is the wrong time to think about entering.

Well thats certainly going against the doctrine of "Gold is money". But a good and reasoned argument. I must admit to being neutral on gold as a hedge in and of itself. But one must be pragmatic, while its going up, it's a hedge. But it certainly weren't no hedge in the 90's. For this reason I agree with your point about it being a speculative move.

Re intrinsic value: I've questioned this point myself, never to have had it satifactorily answered. Intrinsic value could be deemed to be the cost of production. But this varies from mine to mine. The 450oz nugget that I tripped over while photographing needle nosed warblers (true, I really did dream that) has no intrinsic value by that measure. Besides someone has to be willing to pay that. Which gets us back to instrinsic value being what someone is prepared to exchange for it, what they are prepared to pay.

A faulty measure as this varies minute to minute, and may collapse without notice...no intrinic value there. So the value must be either numismatic (to borrow that term from the coin afficianados) or speculative.

I have the obligatory few krugerands etc but no way would I convert my entire cash to gold..no way. Others seem to be doing this at todays price...their ENTIRE savings

If things get that bad, my organic veggie patch and winchester 30/30 is a better hedge in my view.

Entering on a "technical" basis is likely suicide, as the volatility will trigger those naughty little stops far too often.

jog on
d998

This is where I diverge strongly with your views (as you have come to expect ) Technicals are the only sensible way to trade this beast, stop or no stop...especially leveraged to the eyeballs. Traded on fundamentals, and considering the volatility, I would trade an underlying quantity of no more than 50 - 100ozs. Whereas technically I am prepared to trade an underlying quantity of 500-2000 ozs...short, long whatever. I know which strategy, for me, would come out in front over the long haul, and by a long, long way.

Cheers

 

[ducati916]

Re: GOLD Where is it heading?

rederob

As for "reinstating hedges" - some producers that have maintained a so-called prudent hedge positions may lock in some high prices going forward. They will also have seen the disadvantage they are at compared to their peers, so while the analysts say this, the companies may not take up the offer.

Of course, that may well be the case. However, if I was a CEO of a gold producer, I would be in contact with other CEO's within the industry, particularly the larger producers, to find out their thoughts. If one does, I suspect all will.

However unless you definitively know the answer, you are speculating.
The problem, being that if they do start "hedging forward production" again, that will impose very heavy selling pressure, that will not effect a "short-covering" scenario with a speculative price rise.

bvbfan

No, I do not know the origin of the "ducati" brand.
Your hypothesis is an interesting one however.

The ETF by all accounts does hold that amount of physical gold.
Although, I must admit I haven't seen it in the vault myself. The regulation of ETF's by the SEC is stringent and I would not concern myself on this point.

Gold as a currency, is a non-starter.
Gold restricts economic growth, and as a tool for commerce, is just not practical. It will never again be a currency, not even in a armageddon scenario.

wayne

Re intrinsic value: I've questioned this point myself, never to have had it satifactorily answered. Intrinsic value could be deemed to be the cost of production. But this varies from mine to mine. The 450oz nugget that I tripped over while photographing needle nosed warblers (true, I really did dream that) has no intrinsic value by that measure. Besides someone has to be willing to pay that. Which gets us back to instrinsic value being what someone is prepared to exchange for it, what they are prepared to pay.

Intrinsic value, is the earning power of the asset.
Take a simple example; a house.
The intrinsic value is the "rental cash-flow" discounted, into *years into the future. Therefore assume a 4 bedroom house, @ $110/week and 8% interest
Intrinsic value = $286,000.00 or $71,500.00 per bedroom

On that basis, what is the intrinsic value of gold?
Gold pays no interest,
Gold has no earning power,
Its capital value, like all assets fluctuates, but lacking any earning power, there is nothing to stop it falling to zero.

The entire value of gold, like cash, resides in the confidence of people believing in the availability of exchange for goods and services.
A house, may fetch 10 eggs, 1 loaf of bread, and a good massage per/month, per/room, and that then becomes its intrinsic value.

This is where I diverge strongly with your views (as you have come to expect ) Technicals are the only sensible way to trade this beast, stop or no stop...especially leveraged to the eyeballs. Traded on fundamentals, and considering the volatility, I would trade an underlying quantity of no more than 50 - 100ozs. Whereas technically I am prepared to trade an underlying quantity of 500-2000 ozs...short, long whatever. I know which strategy, for me, would come out in front over the long haul, and by a long, long way.

Gold, pure speculation.
As a speculative play, use a speculative tool, viz. Technical analysis to play in the market, so actually we are in agreement. Its just as a fundie, I wouldn't touch gold at all, it holds no interest for me as an investment.

jog on
d998