Gold Price - Where is it heading?

[explod]

and I make predictions because of unqualification. . and also to learn.. enjoy the coily..
Cheers
...........Kauri

That's very good Kauri, looks like you got everyone to crawl back into thier litle coily with that one.

Anyhow, just wanted to give another blast on datrumpet cause Big Chief Burnin Bush is sendin gold to da moon, soooaaaah..... wees all saved.

 

[Kauri]

That's very good Kauri, looks like you got everyone to crawl back into thier litle coily with that one.

Anyhow, just wanted to give another blast on datrumpet cause Big Chief Burnin Bush is sendin gold to da moon, soooaaaah..... wees all saved.

Rumours of the White House setting up a deal on stimulation texas style..some talk has been circulating of a global stimulus deal with talk that Pres. Bush has been discussing such a move with European counterparts, who are dissatisfied with the intransigence by the ECB on rates.
Thinking
...........Kauri

 

[bvbfan]

NCM is now unhedged.

As for gold stocks here, the choice is limited.

SBM, AVO, TRY, SGX seem to stand out at the moment.

Next line down maybe ones like IGR, GDR, DIO, MON, ATV.

Depends on what sort of production profile you want and location to

 

[CamKawa]

POG is at 913, +22 bucks. I can feel a new record coming on. Drum roll please................

 

[barrett]

picked up 2 contracts at 899 last night on the pullback to the pink H&S shoulderline after the breakout..

picked up another 2 at 908 just now on the lower boundary of the 'golden channel' below on the 5-min..

the big inverted H&S should -in theory- have enough firepower to get us through the old highs and to ~930 initial.. barring double top sellers coming in too fiercely at the old high

Between the Fed hosing the streets with cash, and whatever plan Bush might be cooking up.. our friends across the Atlantic won't be able to drive around for all the paper. They'll have to pick it up and buy something with it.. hopefully something shiny

 

[Whiskers]

I do believe we have a new high... broken USD920

 

[refined silver]

Ouch! Not good news for the poor gold shorts.

JOHANNESBURG – Reuters – 8.15GMT - January 25

South Africa's three top gold producers suspended production at all their mines in the country owing to a power shortage that the government on Friday termed "a national emergency". AngloGold Ashanti, Gold Fields, and Harmony said they had stopped all gold mining after they were informed by state-owned power utility Eskom that it could not guarantee power supply to their operations. Shares in the companies fell sharply and gold hit a record high of $919.80 an ounce after the news at 8.15GMT.

 

[refined silver]

NCM is now unhedged.

Not yet they ain't, even according to their own news blast. They are "in the process" of closing out hedges. Re-read what was said.

 

[numbercruncher]

Ouch! Not good news for the poor gold shorts.

JOHANNESBURG – Reuters – 8.15GMT - January 25

South Africa's three top gold producers suspended production at all their mines in the country owing to a power shortage that the government on Friday termed "a national emergency". .

Hmmm power shortages seem to be becoming a big big Issue atm, China has less than 1 week worth of Coal on hand I read ....

No power/energy no business

 

[Kauri]

gold may be rolling over.. maybe briefly... by my vinocators anyways..
Cheers
..........Kauri

 

[barrett]

yes.. was hoping for a consolidation above previous 914 high before a move higher.. wasn't to be.. took profits on 2 contracts at 914 soon after breakdown.. still holding 2, looking for bounce off 903-904 short term target.. I guess it is unreasonable to expect gold to keep moving at the recent pace.. but to stay short term bullish I'm looking for 900 to hold at least

A couple of things disturb me as a long.. firstly, the 930 target wasn't reached.. secondly the move since 850 seemed to unfold in three steps, and with the character of a bear market rally (wave b?).. and thirdly the gold stock indices looking especially nasty so far tonight..

.. long and waiting to see how 900 area is handled, if we get there

 

[CamKawa]

Looks like the DOW will close down this morning -1.38% (god help XAO) on the fear that Fed my not drop rates at all or it will only be 25 pts and not 50 I suppose if the markets hold over the next few days why would the Fed come out and drop them further. A rate cut can take many months for the flow on effect to take place.

This is bummer for POG as I'm sure we all have fond memories of what happened after the surprise 75 pt cut. There's also some speculation out there that the POG has risen off the fear that some people don't trust banks anymore after the 8 billion dollar bandit news broke. Imagine what the POG would do if there was a run on one and I'm not ruling that out further down the track.

The stellar rise of gold of late has been offset locally somewhat by the rise in the USD. Ahhhh. What's a man gotta do?

 

[Sean K]

I think POG has factored in .25 points, but not .50. Just my perception.

Depending on the comments, steady as she goes with the .25 cut, but no cut, and there'll be some profit taking.

Of course, there's other factors that effect POG including any oil shocks, and geopolitical tension, so it's not ALL on the Fed's action at this point. Still time for 1/26 this weekend....

Has POG risen on USD strength? Against the tide if it has. Unusual for the present cimate.

 

[CamKawa]

Has POG risen on USD strength?

No it hasn't. What has happened is say hypothetically the POG rose .25% and so did the USD, then the POG in AUD terms is a nil all draw. Someone correct me if I'm wrong.

 

[explod]

No it hasn't. What has happened is say hypothetically the POG rose .25% and so did the USD, then the POG in AUD terms is a nil all draw. Someone correct me if I'm wrong.

You are both right so to speak.

The big issue is time frames. If you are a short term trader then you would be concerned with these ambiences.

Unless you are very t/a savvy I think the type of volatilitiy due to new factors of impending fianancial problems can be disastrous.

The gold bull is raging and strong as a longer time frame proposition. It is now more and more referred to in the daily press as a store of wealth and a hedge against the woes and risks in the general market.

An analyst pointed out last week that the gold component of the investment market is a mere .005%. Can you imagine the parabolic rise in the gold price if this moved to say .05%, or further to an unimaginable 1%.

I think the short term stuff is great for learning the creative ideas and analysis of Kauri and others, but a waste of time for the safe approach of the ordinary investor.

I am not by the way a gold bug. I am only interested in growing my portfolio as safely and quickly as possible. To that end I indentified gold a few years ago as the best vehicle in the current climate to achieve that. The many reasons for that conclusion are all over this thread. It may seem a large task but newcomers will find a read of the full thread a valuable exercise.

 

[explod]

The "Real" Gold Price

Now that gold has climbed above the $850 high reached back in January 1980, many are proclaiming that gold is at a new ‘record’. That’s true of course when gold’s exchange rate to the dollar is viewed in terms of nominal dollars, but nominal dollars provide a distorted picture.

After all, everyone knows that because of inflation a dollar today purchases much less than it did twenty-eight years ago, so clearly, $850 today does not have the purchasing power it did back then. The question therefore arises, what price does gold have to reach in inflation adjusted dollars to equal the purchasing power of eight hundred fifty 1980-dollars?

The answer to this question depends upon which Consumer Price Index is used to calculate the inflation adjusted gold price. The two alternatives are the US government’s CPI or the CPI provided by John Williams of www.ShadowStats.com.

These two different CPI measures provide very different inflation adjusted gold prices. So which CPI should we use?

The ShadowStats CPI eliminates the changes made by the US government since the early 1980s to its own CPI measure. In other words, the ShadowsStats CPI is the same one the US government used to calculate inflation while Jimmy Carter was president.

The changes made by the government to its CPI were clearly introduced to lessen reported CPI inflation. A lower inflation rate reduces the cost-of-living increases the US government makes to welfare and Social Security recipients, thereby reducing its budget deficit. Welfare and Social Security recipients suffer the consequences. Their purchasing power is reduced because the payments they receive do not keep up with the real rate of inflation.

An example will be useful to illustrate this loss of purchasing power. Let’s assume that a recipient received $850 per month from the US government in January 1980. Using the US government’s CPI, that recipient is today receiving $2,310. However, if the US government had not made any changes to the way it calculates CPI, the recipient would today be receiving $6,255. This difference can be seen in the following chart, which presents the January $850 gold price adjusted for inflation using both CPI’s.






There are a couple of important conclusions from the above chart. First, gold at its present price of $900 today is still very cheap. In other words, it is a long way from the purchasing power an ounce of gold achieved in January 1980.Second, both measures on the above chart show that the dollar is losing purchasing power every month. So if gold in the future were to reach a $6,255 price, the inflation between now and then would require gold to reach an even higher price to equal the purchasing power it had in January 1980.

Rather than reduce inflation, the US government instead shot the messenger. By fiddling with the CPI, the US government wants us to believe that inflation is not as bad as it really is, which is the same strategy it has pursued with the other important inflation messenger – gold. Government interventions to cap the gold price prevent the gold barometer from alerting everyone that inflation is a growing menace.

To conclude, even though gold is trading at a record high in terms of nominal dollars, the real gold price is far below the old January 1980 record when adjusted for inflation. Gold is still good value, and more importantly, government interventions have kept gold cheap, thus enabling us to buy it at prices far less than would be the case if the government wasn’t intervening. Therefore, continue to spend overvalued dollars to accumulate undervalued gold.

*****

by James Turk
Copyright © 2007 by James Turk. All rights reserved.

James Turk is the Founder & Chairman of GoldMoney.com http://goldmoney.com/. He is the co-author of The Coming Collapse of the Dollar www.dollarcollapse.com.

 

[Sean K]

This is up Bean's ally:


from Jim Sinclair site:

Posted On: Friday, January 25, 2008, 6:36:00 PM EST

Gold and Dollar Market Summary

Author: Dan Norcini


Dear Friends,

The following comments are included on the weekly COT charts that I regularly send your way although I wanted to call your attention to something that was rather interesting this past week which occurred over the reporting period from Wednesday of last week thru Tuesday of this week.

Over the reporting period for this past week's COT data, gold dropped as much as $50 before it moved higher during that wild ride it took on Monday of this week. That was one of the wildest days we have seen in the gold market in a long, long time.

Yet in spite of a $50 plunge, the speculative community did relatively little as far as liquidation goes. The funds only dropped about 6000 longs while they added some 1050 shorts. The small specs were even more daring - they added new longs and new shorts doing no liquidation overall. That, coming on the heels of a $50 plunge in the gold price is nothing short of astonishing!

It should be noted that the spreaders dropped 15,500 of their positions ? a fairly sizeable reduction by any standard of historical comparison.

The liquidation came from the commercial category with both the long commercials and short commercials (the bullion banks) doing significant liquidation. The longs shed 20,000 of their positions while the bullion banks wasted no time covering a massive 28,000 shorts! And one wonders why the price of gold hit new highs this week. They simply could not push it lower because the specs refused to run! Apparently, the bullion banks ran into a wall of buying down near the $850 level in gold that was simply too much for them and they began covering at a frantic pace. That no doubt caught the attention of some of the spec community which then plowed right back into the market further punishing the would-be shorts. The culmination of this strong wave of buying continued past Tuesday of this week with gold being driven over $20 higher in yesterday?s session with follow through buying seen in today?s session that took it past the previous record high establishing a new price peak in the process. All said, the market moved from $850 to $925 over the course of 4 days. I can say this with absolute certainty ? this was a week that the perma-shorts in gold will long remember!

Apparently it has been getting much more difficult for the bullion banks since they are no longer able to have their way with this market. In times past, a $50 rout to the downside would have seen massive fund long liquidation alongside that of the general public as well with shell-shocked bulls licking their wounds for several weeks at least while the wholesale exodus from the long side continued. Not this time around ? and who says that gold?s safe haven status is in question? Someone wanted gold and they wanted it badly enough to step in front of a market that appeared to be in a free fall, not only stemming the decline, but completely reversing it and driving it to a record high in the process!

There will be many more battles along the way for gold as it climbs past the $1000 level on to $1650 and higher in the years ahead but this week belongs to the bulls who administered one helluva thrashing to their enemies.

Dan

 

[Nyden]

I had a thought; people keep using the term 'safe haven', and with the intent of avoiding volatility.

But, is gold really that safe a haven? It's just rallied so hard in a matter of months (& years!) if it were a stock I'd say it was overbought! In the short term, is there not a risk of rather significant losses here? Not to mention all the complications from different currencies! (Especially when entering at these levels)

What bothers me, is that the rise isn't driven by a massive increase in need, but rather a want ... just seems dangerous.

In 05' gold was at 500/600-something, wasn't it? 3 years later we're sitting on nearly 1000 ... that's a fairly significant rise, for something that's supposedly stable.

Gold was actually my very first investment, I bought myself a little physical bar many years ago : & I am now considering to add the stock GOLD to what will be my conservative portfolio, consisting of an index fund, high interest savings account, & gold.

 

[Kauri]

apparently...
some funds ( talk of more bank, hedge fund and quant losses) have been caught out since last weekend and have had to bail out of some positions.. in a hurry.. (i.e. a French bank dropped 200GBP into the London fix after rumours had been circulating pre-fix that someone was getting set to go that way).. however.. quite often gold is the first assett dumped in an effort to stave off the money lenders, maybe that could go some ways towards explaining Mondays action?? .. rather than the easily and oft quoted but hard to prove CB conspiracies.. it's a bit like reporters quoting the reason for an up day in the markets as being due to bargain hunters and a down day is put down to profit takers.. makes them look intelligent (maybe??) but really shows that they don't know tiddly from toady... I thunk....
Cheers
.........Kauri

 

[explod]

I had a thought; people keep using the term 'safe haven', and with the intent of avoiding volatility.

But, is gold really that safe a haven? It's just rallied so hard in a matter of months (& years!) if it were a stock I'd say it was overbought! In the short term, is there not a risk of rather significant losses here? Not to mention all the complications from different currencies! (Especially when entering at these levels)

You may be correct, in fact nothing is safe. It is the perception or mood that drives a trend and while the trend is up, one follows that direction.

What bothers me, is that the rise isn't driven by a massive increase in need, but rather a want ... just seems dangerous.

Can one distinguish between want and need in the market. Need to make money so invest in gold while it is going up. Need food go to the supermarket.

In 05' gold was at 500/600-something, wasn't it? 3 years later we're sitting on nearly 1000 ... that's a fairly significant rise, for something that's supposedly stable.

And a couple of years before that gold was 300, is that not a stable uptrend. You will note that James Turk above believes gold is very undervalued due to inflation. So it may well continue to go all the way up to 6000. His argument is fairly good

Gold was actually my very first investment, I bought myself a little physical bar many years ago : & I am now considering to add the stock GOLD to what will be my conservative portfolio, consisting of an index fund, high interest savings account, & gold.

I am doing similar and on obvious retracements I sell my gold stocks and only go back on the obvious upticks.