Gold Price - Where is it heading?

[barrett]

Well, the xau:gold ratio just hit 0.2 last night, very close to buying level. In fact some people do use 0.2 rather than 0.19 as their buying level. Also, that indicator is denominated in USD, and the timing of the bottom in the Aussie golds can be a little different - sometimes earlier, sometimes later - than the US gold sector.

So I wouldn't discourage anyone from buying Aussie gold stocks at these depressed levels - despite the possibility for gold to go lower. Stocks usually bottom well before the metal.

 

[bean]

I use run patterns...a rise tonight in the US gold indexes will give a 1 up 3 down which is a bearish pattern. However some support about 365 HUI failing that 340. As for the POG it has held up pretty well so far however if selling pressure keeps on the stocks then POG may have a drop.
My preference...Looking for a V bottom? still a few days off?
And a nice plunge for the indexes.

 

[ithatheekret]

Today is the 18th of December , by the 20th the forex ranges will start to come about , its a cyclical thing where repatriation will see the greenback strengthen . The Yen will keep up it's volatile ways , we'll just have to grin and bear that , until it collapses ........ then a few loans will be safe .... r .

 

[So_Cynical]

Gentlemen with all the talk of inflation, I'm wondering how relevant that is to the POG, when u look at the charts from
the 80's u have inflation oil and gold all moving pretty much together...will they do that again?

inflation is good for gold...right?

 

[M34N]

Gentlemen with all the talk of inflation, I'm wondering how relevant that is to the POG, when u look at the charts from
the 80's u have inflation oil and gold all moving pretty much together...will they do that again?

inflation is good for gold...right?

Just thinking out loud, but I'm not 100% sure on this...

In the US, higher inflation means higher interest rates, which means a higher US dollar and therefore dearer for people to buy gold?

Probably not just going to be supported by US inflation, but also where the price of oil is heading too. I think most people have given up on the hope that oil will drop below $80 p/b in the next year or even possibly ever again, this will probably only support the POG.

Just my

 

[explod]

Just thinking out loud, but I'm not 100% sure on this...

In the US, higher inflation means higher interest rates, which means a higher US dollar and therefore dearer for people to buy gold?

Probably not just going to be supported by US inflation, but also where the price of oil is heading too. I think most people have given up on the hope that oil will drop below $80 p/b in the next year or even possibly ever again, this will probably only support the POG.

Just my

Most of the US GDP comes from consumer spending. Interest rates there are falling to stimulate the spending economy. If interest rates go up the US goes belly up. Their money is backed by debt so no one outside the US will want the US dollars, it will be immaterial. As money becomes immaterial as it has in previous depressions, gold will go up because it is material and has intrinsic value.

Just my 2cents too

 

[barrett]

Here is my attempt at a wave count for W1/2 of W3 of C
First try, would be grateful for any suggestions, EW gurus.

It looks like wave C in the chart below retraced to just over 62% before forming a top.

If this count is correct then gold would be about to head considerably lower as it enters W3 of W3 of C. This would seem consistent with the behaviour of the US gold stocks as I'm writing this,as they barely responded to the $15 rally.

 

[explod]

Here is my attempt at a wave count for W1/2 of W3 of C
First try, would be grateful for any suggestions, EW gurus.

It looks like wave C in the chart below retraced to just over 62% before forming a top.

If this count is correct then gold would be about to head considerably lower as it enters W3 of W3 of C. This would seem consistent with the behaviour of the US gold stocks as I'm writing this,as they barely responded to the $15 rally.

Yep, could be. A bit of sideways consolidation since you wrote that on some resistance at US$802

The Hui rallied in the last hour or so. And MACD looking oversold.

 

[Kauri]

Here is my attempt at a wave count for W1/2 of W3 of C
First try, would be grateful for any suggestions, EW gurus.

It looks like wave C in the chart below retraced to just over 62% before forming a top.

If this count is correct then gold would be about to head considerably lower as it enters W3 of W3 of C. This would seem consistent with the behaviour of the US gold stocks as I'm writing this,as they barely responded to the $15 rally.

Hi barrett
I'm on a pretty steep learning curve re E/W... as some of my attempted labelling shows. I get much the same picture as you.. at the moment, but reserve the right to change at the drop of a another shoe
Am waiting to see if the hourlys line up and give a signal currently.
Cheers
.........Kauri

 

[barrett]

Thanks guys

This also could change at any moment, if it breaks 807, but....
just noticed this _potential_ 2-week head and shoulders forming on the hourly
(with a lopsided head and shoulders in the middle)

 

[sydneysider]

Hi barrett
I'm on a pretty steep learning curve re E/W... as some of my attempted labelling shows. I get much the same picture as you.. at the moment, but reserve the right to change at the drop of a another shoe
Am waiting to see if the hourlys line up and give a signal currently.
Cheers
.........Kauri

Kauri, U might confirm your results by looking at where the US dollar is heading at the moment. There has been firming here and daily technicals are heading higher i.e. MACD (on US dollar Index). Fed Policy may also call a halt to further interest rate cuts. U.S. Economic indicators are looking "reasonable" with employment rate looking steady. IF u follow U.S. stocks u will notice that the multinationals are doing well and are repatriating U.S. dollars back "home" prior to the end of the financial year. NYMEX oil futures also look very toppy with a technical bias to the downside at the moment. Commodity prices are also mostly biased to flatness /weakness in many cases i.e. most of the metals appear to have seen "peaks" (for the current time). All of this points to a steady to firming USD and weakness in gold.

 

[So_Cynical]

Last nite i was reading some commentary on the POG chart for the last month or so.

Higher lows with lower highs inside a tight range indicate a breakout, the expert didn't predict a direction for the breakout.

 

[explod]

Last nite i was reading some commentary on the POG chart for the last month or so.

Higher lows with lower highs inside a tight range indicate a breakout, the expert didn't predict a direction for the breakout.

Yep, a pennant has been formed. Uncle Festivus pointed out same a few days ago. The hard support line of the lows suggest the breakout may be to the upside but that is not very conclusive.

Will be interesting to see what pans out. Could stay in this for a week yet.

 

[Whiskers]

Yep, a pennant has been formed. Uncle Festivus pointed out same a few days ago. The hard support line of the lows suggest the breakout may be to the upside but that is not very conclusive.

Will be interesting to see what pans out. Could stay in this for a week yet.

I'm starting to lean more to a bit of a bearish short term on POG... the XAU and particularly HUI, but I hope it holds up for a bit longer until I cash out of gold stocks. While the $US is holding firm I think we will be relatively ok in mining stocks in Aus, but if it fails to hold we could be in trouble.

 

[barrett]

Gentlemen with all the talk of inflation, I'm wondering how relevant that is to the POG, when u look at the charts from
the 80's u have inflation oil and gold all moving pretty much together...will they do that again?

I believe they will, in the broader trend of things in coming years - but there will be periods of months where they move in different directions.

inflation is good for gold...right?

That's right, but it's only half the equation.. what really drives the price of gold is the level of real interest rates.

This is the nominal interest rate on short term T-bills (in America), or for arguments' sake, on high interest accounts, less the rate of CPI inflation.

real rate = T-bill rate - CPI inflation

So Fed policy, and investors' fed policy expectations, is one half of the equation, and inflation, and investors' inflation expectations, is the other.

I've attached some 35-year charts that show what the gold price does whenever the real interest rate turns negative - it goes nuts. This can be caused by either inflation accelerating, or the Fed easing.. or in today's case, both.

The gold bull markets in the '70s, and today's gold bull market, are driven by negative real interest rates. Something interesting on the charts is that gold usually starts going up before the real interest rate turns negative, as contrarian investors see the writing on the wall and start accumulating gold as they have done in recent years.

The longer-term case for gold in this bull market is that a) inflation is in an uptrend as in the '70s, and b) unlike Paul Volcker, Ben Bernanke shows every sign of wanting to lower rates to avoid a recession at all costs - and most investors don't realise the implications. It's a recipe for negative real interest rates in coming years.

In the short term, anything can happen - for instance, there was a lot of talk about inflation last week, then gold goes down because some investors think the Fed will respond by being more hawkish with interest rates. I reckon the best response is to stay focussed on the longer-term case for gold, and buy it on any major dips. This bull market is just getting started. cheers Barrett

 

[explod]

I believe they will, in the broader trend of things in coming years - but there will be periods of months where they move in different directions.


That's right, but it's only half the equation.. what really drives the price of gold is the level of real interest rates.




The real question is, what drives interest rates? The money supply/ its value. If we go back over the history of money, some 5000 years now, its debasement, by printing more to overcome inflation has always sent gold up.

A great book "The Death of Money" J Kurtzman, 1993, is well worth a read. Dont' know if it would be in print now. Found mine in a basement second had shop. Uni libraries would have it.

 

[explod]

I'm starting to lean more to a bit of a bearish short term on POG... the XAU and particularly HUI, but I hope it holds up for a bit longer until I cash out of gold stocks. While the $US is holding firm I think we will be relatively ok in mining stocks in Aus, but if it fails to hold we could be in trouble.

Could be. On the five day we have a double top on the US$, a bit of resistance here perhaps. Can we have a double head and shoulders?

Silver seems to be firming again. Its getting very tight now.

 

[wayneL]

Can we have a double head and shoulders?

That would be a Tasmanian head and shoulders... wouldn't it?

I'll get my coat.

 

[>Apocalypto<]

That would be a Tasmanian head and shoulders... wouldn't it?

I'll get my coat.

Ha Ha Ha,

very good Wayne! on the back up to the POG rising and USD falling in the near to short term, the euro vs usd is starting to show support signs and consolidate on the 4 hour chart. Closed my shorts. watching with interest. big tail early this morning really got my attention.

 

[barrett]

That would be a Tasmanian head and shoulders... wouldn't it?

No, hold on I think it's their full coat of arms! :