Gold Price - Where is it heading?

[Uncle Festivus]

It would appear that over the next few trading days the Gold stocks are going to crash with the general market.
The POG??? may well fall
The divergence between the stocks (especially the juniors) and the price of the metals makes me think POG may fall as well.

Sorry bean, I don't see gold stocks being as affected by general market weakness as they have shown in the past. In the first route we had stocks like SBM & AVO hitting prices like 38c & 1.28. This latest weakness has seen them come off a bit but not as bad as the general market; in fact SBM is back to near it's highs.

Looks like a new phase is starting with gold leading and stocks will have to play catch up if they don't follow. Once the last effort by the CB's and currency jockeys fails ie the latest trend is to proclaim the US dollar is oversold & a buy, then the currency of last resort, gold, will be the only game in town.

Put it this way, if you were looking at parking your depreciating US dollars somewhere else where would you put them? The Euro economy is probably in more trouble than the US? Japan is still a basket case?

Possibly later this year we could see a slingshot effect for the AU price of gold as the Aussie dollar comes under selling pressure also - US POG up at the same time as the AU POG up due to $AU 'correcting' lower at the same time as the US$.

Sounds to me like you are making trouble.

If the market crashes the POG may well fall in sympathy as we have seen previously but by significantly less. Gold may be sold off in a flight-to-cash as investors struggle to meet margin calls. If you want to be 100% safe then go 100% cash and take hit on a low return. I still reckon gold is the best investment in the market at the moment.

This concept has never seemed right to me, and the data does not confirm that people invested in the general market have to sell their gold positions to meet obligations elswhere. In fact there seems to be an inverse correlation if anything. All the same, it now appears to be the one asset that holds it's value in comparison with ?? well nearly everything these days.

Supply is generally being constrained now eg NEM ann, so maybe it's time to allocate more of the portfolio to the physical as individual gold co's disappoint over production?

 

[GreatPig]

Here's my chart of the GOLD stock in A$ (per tenth oz).

Could potentially form a head and shoulders top now, but then I said that back in November too and naturally got proven wrong!

GP

 

[CamKawa]

This concept has never seemed right to me, and the data does not confirm that people invested in the general market have to sell their gold positions to meet obligations elswhere.

Have a look at your own chart around about the 22nd of Jan where DJIA touches the X axsis. See the big hole punched in the POG?

Supply is generally being constrained now eg NEM ann, so maybe it's time to allocate more of the portfolio to the physical as individual gold co's disappoint over production?

I think that's the excuse the media trott out when they can't think of a good reason for the price going up. Indian's making more jewerly and dipps in production should in theory affect the price but it's investors that are the major force driving the POG at moment.

Supply is generally being constrained now eg NEM ann, so maybe it's time to allocate more of the portfolio to the physical as individual gold co's disappoint over production?

I wouldn't do that. If you buy gold jewellery you maybe paying a 200+% mark-up just for the design of the piece and then you have a insurance cost and security issues. If you buy a bar or coins when it comes time sell the question of contamination may come up.

 

[Kauri]

Yeah, but where is it headed itha? Got a hundred bucks if you tell me....

Hows about $914-$919 short-term..
Chirp
.........Kauri

nbut where to next???
Cheers
...........Kauri

 

[explod]

A drop to $730 US could occur and the uptrend would still be intact.

Chart coutesy The Privateer Newsletter

But I think (only think, for the sceptics) that it is more likely to hit the top of the trend line.

Where is that?????

 

[cuttlefish]

thats the way!

 

[explod]

lol Looking forward to the day when traded goods (including USD) have a default pricing in Oz.

The greenback dropped against gold today, now trading at 1.12 milli Oz. The AUD is up to .975 milli Oz today.


BHP is up .76 milli Oz today on strong copper price which rose to 3.86 milli Oz in london trade overnight.


A schooner thanks ... that'll be 4.50 milli Oz cheers mate. Oh I've only got dollars do you take those?

Just had to look back a bit. Now have we inflation in gold too, hows that work

 

[ithatheekret]

There's that CRASH word again!

I'm leaning the other way, bean. With the BoE now cutting rates with the US to stave off recession and Europe resisting but probably following suite sooner or later, I see the market holding about it's current levels before pushing on later.

I did think POG had potential to retrace more than it did a month or two ago, but I'm more optermistic that a world wide recession is being avoided and demand will remain strong for gold given now that Silver, Platinium, Palladium and even Rhodium have followed gold to these levels . I'm also not sure that the supply side is positioned to meet demand for gold in that scenario.

Don't lean to far , you'll end up flat on your face in this climate . The US is already in a recession , they're just having a hard time admiting it . Unfortunately those on the ground will see further distress , you see they have too many houses and not enough owners now and there has never been a housing slump without a recession , no amount of spin will stop it . Price and value are two completely different subjects , price can be attributed to speculation , value is a fundamental problem yet to be solved . The fat lady ain't singing , she's screaming , there's a big difference .

Europes growth is slowing to a grind and England , the bastion of finance , is in the poop , the great clearing house is about to be cleared out .

When they finally admit they are in a recession and all start whistling the same tune , it will be too late and the moment they do , I'll buy the dips to hang on to .

 

[cuttlefish]

Just had to look back a bit. Now have we inflation in gold too, hows that work

far too complex question for a friday night lol!

can we have inflation in gold? Will the price of a schooner change in gold terms, has it changed historically? Wonder what a schooner would have cost in gold back in 1955. What was the average weekly wage in gold terms in 1965 - 1 oz per week? more? less?

 

[Uncle Festivus]

I think that's the excuse the media trott out when they can't think of a good reason for the price going up. Indian's making more jewerly and dipps in production should in theory affect the price but it's investors that are the major force driving the POG at moment.

NEM is the second biggest gold co in the world. It's not replacing reserves. A similar story for other companies & countries, but countries like China taking up some of the production/supply slack.

Jewellery has little influence on the direct price of gold - it's a price taker. The LBMA trades the equivalent of the worlds total annual production in 5 days.

http://www.galmarley.com/framesets/fs_trading_physical_gold_faqs.htm

I wouldn't do that. If you buy gold jewellery you maybe paying a 200+% mark-up just for the design of the piece and then you have a insurance cost and security issues. If you buy a bar or coins when it comes time sell the question of contamination may come up.

No jewellery, only bullion and coin (says me sitting here looking like Mr T

http://www.narniaweb.com/forum/uploads/kaleb70/82329_Mr_T.jpg ).

Yes, there are storage costs.
Contamination? There are standards for bullion eg purity 4 X 9's

 

[explod]

A close at golds current level will be a new all time high on a weekly basis. The solid recovery from corections (from a media frenzy last weekend) indicates the PPT have lost the game and against the fundamantal shambles of the financials gold is about to go bananas.

Even my wife has been speaking to me nicely of late.

Just my humble opinion.

 

[explod]

Gold appears to be trading beyond the normal Friday close, anyone ????

 

[CamKawa]

Contamination? There are standards for bullion eg purity 4 X 9's

Yes contamination. There may be a question of how the gold coin/bar has been stored. Has it been altered intentionally or unintentionally when stored privately?

 

[refined silver]

A close at golds current level will be a new all time high on a weekly basis. The solid recovery from corections (from a media frenzy last weekend) indicates the PPT have lost the game and against the fundamantal shambles of the financials gold is about to go bananas.

Even my wife has been speaking to me nicely of late.

Just my humble opinion.

Posted On: Friday, February 08, 2008, 12:55:00 PM EST

Gold Makes New All Time High In Euro Terms

Author: Dan Norcini










Dear Friends,

Today Gold made a new all time high when viewed in Euro terms for the London PM Fix. As you have read here for some time now, gold is trading as a currency and when it enters that realm it begins moving higher when measured in terms of every major currency. We saw a good example of that yesterday when the Euro was sharply lower while gold moved higher even as the Dollar showed broad based strength. The implications of this are quite clear – investors world wide are losing confidence in paper currencies because they understand that the response of Central Bankers to the credit derivative fiasco is ultimately going to erode the purchasing power of their respective national currencies.

It is important to keep in mind whenever you read predictions by newsletter writers or analysts calling for the demise of gold that the vast majority of them are only looking at gold in dollar terms and have completely ignored the fact that gold is an international currency. Investors from around the world view gold in terms of their own domestic currency price – since it is not just US investors who are buying gold, to overlook the price of gold in other currency terms is simply foolish. After all, when is the last time that a European buyer of gold called to get a price quote on the yellow metal and asked for that quote in Dollar terms??? Some of these US based “experts” need to enlarge their horizons. When a market is breaking out into new all time highs in various currency terms, it is a pretty amazing stunt to proclaim that it has topped out!

For you masochists out there who love trading silver, you will also note that silver broke out today in terms of its daily London Fix in Euro terms to a new high. The breakout from the consolidation formation that had been forming for nearly two years is now complete with the chart suggesting further gains are in store for the metal. Of course it did not hurt things any that platinum continued moving relentlessly closer to the $1900 level and palladium set another new yearly high above $440. Copper also roared higher on the news of shrinking stockpiles at the LME.

Dan

 

[refined silver]

View attachment 1 February0807Gold1230pmCST.pdf

 

[refined silver]

try again!!!!

 

[ithatheekret]

A friend sent me a link to Seeking Alpha after we had many a word on the sly old French Fox at the ECB , mostly in relation to my opined views on his stoking of the M3 fire coals to enliven the flames of inflation , which are licking at most European wallets and purses . The stagflation arguement well set in now as the 2% boundary has been well overshot , this is a creation of M3 policy .

http://seekingalpha.com/article/63719-gold-traders-see-through-ecbs-smoke-and-mirrors


Gold Traders See Through ECB’s ‘Smoke and Mirrors’


European Central Bank chief, Jean “Tricky” Trichet, likes to operate behind a veil of “Smoke and Mirrors” in managing the Euro zone’s monetary policy, which is designed to fool most people, most of the time. Most importantly, “Tricky” Trichet, has fueled the fastest growth in the Euro M3 money supply in history, running at three times the rate of the ECB’s original guidelines, deemed consistent with low inflation.

So it shouldn’t have been a surprise to learn that inflation in the Euro zone hit an all-time high of 3.2% in January, and far above the ECB’s inflation target of 2 percent. Euro zone producer price inflation picked up to an annual 4.3% in December, led by higher food and energy costs. Trichet and his band of propaganda artists have given plenty of lip service to fighting inflation in recent months, but behind the veil of “Smoke and Mirrors”, haven’t lifted a finger to put empty words into action.

“We are ready to act pre-emptively, if longer-term inflation expectations threaten to persistently deviate from our inflation goal,” warned Bundesbank chief Axel Weber in the Jan 25th edition of the German newspaper Boersen-Zeitung. On Jan 24th, Bank of France chief Christian Noyer said, “On European interest rates, our principle objective is price stability, our duty is to defend purchasing power,” he said.

Yet under the leadership of “Tricky” Trichet, the purchasing power of the Euro in “hard money” terms, measured against the price of gold, has collapsed by 90% over the past four years. Speaking to the World Economic Forum in Davos on Jan 24th, “Tricky” Trichet told central bankers that under the capital market system it was natural for risks to emerge, but central bankers’ main job is to solidly anchor inflation expectations. “There is one needle in our compass and it is price stability.”

“What is extremely important is to offer as steady grounds as possible. First, price stability and then solidly anchor inflation expectations. If risks did not materialize you would not be living in a market economy, you would be living in the Soviet Union,” Trichet explained. Yet 2-weeks later, Trichet was shifting his vigilant stance against inflation, and leaving the door ajar for ECB rate cuts in the months ahead.

On Feb 7th, the ECB kept its repo rate steady at 4.00%, but Trichet placed equal stress the downside risks to the Euro zone economy, on par with worries over inflation. “Uncertainty about the prospect for economic growth is unusually high and the risk surrounding the outlook for economic activity lies on the downside. Looking ahead, the slowdown in the economies of some of the euro area major trading partners is likely to have an impact on euro area real GDP growth in 2008,” he said.

For the past few years, the ECB has pursued a policy of “Asset Targeting” adjusting its repo rate in baby steps, and in-line with the direction of the Euro zone stock markets, such as the benchmark German DAX Index. In the aftermath of the German DAX’s sudden 15% devaluation, traders expect the ECB to follow suit, with a small round of rate cuts to 3.50% in the months ahead.


The yield on the German 2-year schatz has tumbled to 3.25%, far below the ECB’s 4.00% repo rate, another strong signal that the ECB will eventually abandon it empty “war of words” against inflation, and exercise the “Trichet Put” by lowering the repo rate. Very few traders in the gold market or German schatz, believe the rhetoric of Greek central banker Nicholas Garganas who warned on Feb 1st, “Our monetary policy is not led on what the markets expect. I’m very concerned about the high inflation rate. Inflation risks remain on the upside,” he said.

Garganas said the ECB has noted that risks to the Euro zone economy were on the downside, but “Our baseline scenario has not changed. The impact of the slowdown in the US is to some extent offset by continued strength in emerging market economies,” he said. At the same time, strong demand for commodities has contributed to unprecedented inflationary forces that are pushing global prices up.

Commodity prices, as measured by the Dow Jones AIG Index, in euro terms, are soaring to all-time highs, led by corn, soybeans, rice, wheat, sugar, platinum, gold, silver, and high energy prices. Tracking the general direction of commodity prices, Euro zone factory prices are 4.7% higher from a year ago, so an easier ECB money policy, would simply generate faster inflation, and bury the Euro zone economy deeper into the dreaded “Stagflation Trap.”

“Tricky” Trichet is well aware of the inflation risks of slashing interest rates to rescue the stock markets. In a speech delivered on April 23, 2002, he said, “My feeling is that we should remain extremely cautious about it, because it would be like opening Pandora’s Box, if we start setting our key policy rates according to asset price changes. Not only could large swings, misalignments and bubbles of assets prices endanger price stability, which is the main objective of most central banks, but also they could impinge upon financial stability,” he added.

Yet global traders expect “Tricky” Trichet to eventually show his weak hand, and follow Fed chief Ben “B-52” Bernanke, who has pumped tens of billions of dollars into the banking system since August, desperately trying to place a “safety net” under the US stock markets. “B-52” Ben used a chain saw to cut the US fed funds rate by a hefty 0.75%, the biggest single rate cut in more than 23-years, after global stock markets melted own, and lost $7.5 trillion of value last month.

"Easy” Al Greenspan had a magic formula for rescue operations during times of financial distress. From the stock market crash of 1987, to the S&L crisis of the early 1990’s, to the Asian crisis and the collapse of LTCM, to the feared Y2k crisis, to the bursting of the tech stock bubble, Greenspan simply injected massive doses of monetary morphine to bailout over-zealous speculators in the stock market

Global traders must see thru the ECB’s game of “Smoke and Mirrors” designed to fool most people, most of the time.” Follow the money, and not the ECB’s empty rhetoric and propaganda that fly across the newswires each day. And remember, gold knows what no one knows. “At some point, you have to choose between trusting the natural stability of Gold, and he honesty and intelligence of members of the government. With due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for Gold,” said George Bernard Shaw in 1928.

 

[Whiskers]

Don't lean to far , you'll end up flat on your face in this climate .

No mate, I still have both feet firmly planted... just tracking a little in that dfirection. I have a pretty good side step.

The US is already in a recession , they're just having a hard time admiting it .

Yeah, maybe but I think the main issue with gold in the next year or two is going to be a shift in the supply curve. Even presuming no real increase in demand it is looking like reduced supply will maintain current price levels in the short term.

Market failure seems to becoming endemic to the US in particular and has significantly unbalanced the world economy and the true medium to longer term supply and demand balance for many things.

From a commodity perspective I understand mineral companies already consider China and India bigger markets than the US and Europe combined. I think it was BHP that stated that again on the Sunday program.

So while the US is certainly a constant source of diheria for much of the world I expect a change of government come November, as in Aus to a more green, supply side and Marxian influence by government which I think will create a better societal environment and economic conditions and be more compatable with the emerging growth engines of China and India.

In short I would not be too surprised with some volitality in the gold price while all the uncertainty unraveles and more production gears up.

But as I have said before I think people are probably suffering a little hypochondria over the US economy and under-estimating the capacity of countries like Aus, China and India to mitigate the impact of any adverse effects.

 

[explod]

No mate, I still have both feet firmly planted... just tracking a little in that dfirection. I have a pretty good side step.



Yeah, maybe but I think the main issue with gold in the next year or two is going to be a shift in the supply curve. Even presuming no real increase in demand it is looking like reduced supply will maintain current price levels in the short term.

Not sure what you are saying here on supply however the price rise of late has been because of high demand not as has been in the past few years the falling dollar.

Market failure seems to becoming endemic to the US in particular and has significantly unbalanced the world economy and the true medium to longer term supply and demand balance for many things.

Not sure of your angle here either, the Dow in fact has fallen much less than Asian and Euro markets. Of all that is collapsing around them the Dow has held up well. For how much longer will be interesting

From a commodity perspective I understand mineral companies already consider China and India bigger markets than the US and Europe combined. I think it was BHP that stated that again on the Sunday program.

I dont' believe the markets are relevant to the gold price anymore, it si all about currency values

So while the US is certainly a constant source of diheria for much of the world I expect a change of government come November, as in Aus to a more green, supply side and Marxian influence by government which I think will create a better societal environment and economic conditions and be more compatable with the emerging growth engines of China and India.

The 10 trillion of US debt will take many years of many governments to correct the problems in that neck of the woods.

In short I would not be too surprised with some volitality in the gold price while all the uncertainty unraveles and more production gears up.

There will be some volatility all right, huge ups and downs at very much higher levels. Well worth lokking at the gold chart action of 1979/80, but that will be chjilds play to whats coming now

But as I have said before I think people are probably suffering a little hypochondria over the US economy and under-estimating the capacity of countries like Aus, China and India to mitigate the impact of any adverse effects.

You call it hypocondria, hickup, gulp, er. yer gotta be jocking, the US is so debt ridden with a GDP that relies on continuing debt to survive that the carcase is all but rotting away.

Anyway, just my 2cents on a Sunday evening. Roulette was great today, amen

 

[Whiskers]

You call it hypocondria, hickup, gulp, er. yer gotta be jocking, the US is so debt ridden with a GDP that relies on continuing debt to survive that the carcase is all but rotting away.

Anyway, just my 2cents on a Sunday evening. Roulette was great today, amen

Maybe my phraseology wasen't the best.

No question the US economy is fundamently RS. What I was trying to say is that I think people are exaggerating the significance of the US in the total scheme of things based on the past. I think particularly Aus and our particular circumstances with China and India will cope better than many poeple estimate.

By market failure I mean in economic terms, not just share markets, they haven't got the right mix of gov regulation and capitalism. They seem to bungle from one issue to another, the latest being the poor oversight of the mortgage industry. Retirement pensions and health care are another couple of looming issues. A change of government should slow the rate of self distruction though.

Shift in the supply curve: What I mean is that I think the cost of production and other political and industrial issues will reduce the supply of gold coming onto the market, so the supply curve will shift to the left causing price rise pressure even if demand doesn't increase. If the demand does increase, the shift in the supply curve will exponentially excellerate price.

A brief summery of supply curve here:
http://images.google.com.au/imgres?...rve&um=1&start=3&sa=X&oi=images&ct=image&cd=3