Gold Price - Where is it heading?

[explod]

What it also highlights is that the 'traditional' gold countries are basically explored out eg South Africa and Oz. I was lamenting the poor performance of one of my juniors with the companies MD, via email, and he indicated that the real 'company making' gold discoveries will be in countries that have been under explored and/or have sovereign risk, and that they may be focusing on these areas outside of Oz in the future.

This is what makes me inclined to alter the equities/physical gold allocation in favour of physical, as I think the Oz co's will face mounting & continuing pressures on costs/profit margins unless there is a commensurate/compensating rise in the $AU POG . Getting more direct exposure to the gold price will be my focus for now I think, probably trading via CFD's and investing physical on the dips.

I think we are all too used to instant gratification. Certainly most rich gold areas are on the wane. However there is a great deal of low grade stuff in Australia which are being eyed off now. There is no doubt in my mind that $1,500 plus gold in all currencies is just around the corner. Maybe it will be after the presidential election, maybe not, not relevant. Money is stuffed this time because the productivity factor is now coming home to roost, is that r..t ed.

Yes overseas there is new green pastures, Andean in SA is a sign of that, and China are finding new places.

However at a certain price, the quarts at Avoca, Maryborough, Bendigo, Stawell, Ararat and many others at plus $1,500 will be humming with front end loaders, trucks and crushers. And it is just laying on the ground in these places everywhere.

But if you want to be serious, things like SBM, AVO and OXR have immediate and great prospects at just $1,000. That's where we are. Have to pinch yourself sometimes.

However I watch RNG, with Owen Heggarty on the Board, things like GDR, MMN, CTO, BDG and so many others will be bloody dandy when gold goes permanently beyond $2,000 an ounce in all currencies.

Remember "cash is trash"............""CASH IS TRASH""

love that bloke

 

[CamKawa]

The Fed isn't due to act until Tuesday week, and gold and the ag commodities have been faltering along with the equity markets as another wave of deflation-fear takes hold..

Given the amount of hot money in commodities it wouldn't be too surprising to see a further fall there as well as in equities in the short term until the Fed steps in with what the futures market is right now saying will be either a 75bp cut (94% chance), or a 100bp cut! (6% chance). As usual the markets won't believe the rate cut until it's delivered.

US CPI figures are due out on the 14th, which may provide some direction for the POG as well.

A possible double leg up coming?

 

[scuffler]

i thought this was a good article.
I am holding enough gold stocks (and i am down on most) but i expect it to turn soon enough.History shows this.

From The Sunday Times
March 9, 2008
Gold is the ultimate safe-haven
Merryn on Money

THERE is chaos in the jewellery markets. The price of wedding rings is changing so fast that that there is no way you can pop into a shop in Hatton Garden, London, for a quote on a Friday and expect the price to stand on a Monday.

Jewellers have been reporting a rush from clients wanting to sell old necklaces and bracelets, and banks are pouring out press releases reminding people to make sure all their favourite things are properly covered. The average British household holds around £1,785 worth of jewellery, says Abbey, but 14% of us have absolutely no insurance for it at all. So what’s with the sudden sense of panic? It is all about precious metals. Having paused for breath briefly last month, the silver, platinum and gold prices have been soaring again: gold is up 15% this year and is now trading at $990 (£495) an ounce.

Gold is the ultimate safe haven investment, and there is nothing investors need more right now than a safe haven. Recession in the US is all but certain (Warren Buffett thinks there is already one) with house prices still falling at speed, and data out last week showing the biggest one-month fall in construction spending since the early 1990s (it has been one of the biggest drivers of US growth in the last few years).

At the same time the credit crunch appears to be steadily getting worse rather than better, with securitisation markets barely functioning, and estimates of the total cost of the sub-prime crisis moving towards an extraordinary $1 trillion.

Then there is inflation. In the UK the price of goods leaving factories saw their highest price rise for at least nine years (when the records began) in February. The BDO Inflation index, which collates the price expectations of business managers, has also hit a new high.

Many managers � and this is the worrying bit for consumers � say that they intend to pass price rises on to us rather than take a hit to their profits. The fact that agricultural commodity prices are still rising at rates that even the biggest bulls (me included) could never have forecast doesn’t exactly help either. Nor does the fact that basic wages in China are increasing and are expected to rise by up to 21% this year, which will push up the prices of low-end manufactured goods here.

So what next? I suspect that the gold price is going to go an awful lot higher. Until now it has been a niche investment. I’ve been writing about investing in gold here for a good four years, but still the money going into the precious metal has come more from a few governments (Russia increased its holdings by 44 tonnes last year alone, and now holds 438 tonnes in total), dedicated “goldbugs” and the big hedge funds and institutional investors.

Yet now the dollar really is in freefall and the gold price is grabbing the front pages by flirting with $1,000 an ounce. It seems likely that some of the Asian governments which hold billions of dollars but little gold might now look to change this balance. Ordinary investors might now also jump on the bandwagon in droves, partly out of fear and partly because little else is rising (anyone else noticed that the FTSE 100 is trading slightly below where it was 10 years ago?)

There is not much supply around to meet all this new demand � the miners are still struggling to get production up and the recent power problems in South Africa are hampering their efforts to do so: you can’t send workers a couple of miles down into deep mines if you can’t be sure of your power supply. The gold supply is rising at 2%-3% a year at best.

Given how fast it has been moving, the gold price is going to be volatile from here, but that doesn’t mean you shouldn’t hold it and it certainly doesn’t mean that you should be trading in and out of it (far too hard!). Instead, just have it and hold it: the long-term trend for gold is, I think, up relative to all currencies. Note that gold’s last inflation-adjusted high was near $2,000.

How do you get in? You can hold physical gold (just pop down to Hatton Garden and buy some) although I’m told that a lot of dealers are running out of the kind of little ingots and coins small investors like to buy. Otherwise there are London-listed gold exchange-traded funds or there is the Merrill Lynch Gold and General Fund which I have held for years and am resting all my dreams of a happy retirement on.

Right now it might also make sense to hold a few individual miners for the simple reason that their share prices have not gone up along with the gold price, despite the fact that this is more than covering their rising costs (of equipment, staff and power). This isn’t a situation that is likely to last � usually in a gold bull market, gold stock prices rise faster than the price of physical gold and I’d expect that to start happening soon this time round too. Among the majors, Barrick Gold, one of the world’s biggest producers, looks like the best bet right now. It doesn’t have the political or power problems of the South African mines, given that it mainly operates in Aus-tralia and the US. Despite rising costs, its earnings still rose 28% in the fourth quarter of last year.

An ex-geologist hedge fund manager friend, fresh from a big mining conference in Toronto, offers one more tip, AIM-listed explorer Leyshon Resources. Leyshon operates in China (now the world’s largest producer of gold) where it expects to start production early next year. It is well managed and it looks cheap � like those of many other miners its shares have barely budged in the last year.

Finally, if you are looking to buy a wedding ring but are finding prices a bit much, consider palladium. To the untrained eye it looks just like platinum (as, if we are honest, do silver and white gold): it’s just much cheaper.

Merryn Somerset Webb is a former stockbroker and now editor of Money Week. Her views are personal and investors should always seek professional advice

 

[MRC & Co]

Right now it might also make sense to hold a few individual miners for the simple reason that their share prices have not gone up along with the gold price, despite the fact that this is more than covering their rising costs (of equipment, staff and power). This isn’t a situation that is likely to last � usually in a gold bull market, gold stock prices rise faster than the price of physical gold and I’d expect that to start happening soon this time round too.

Thanks Scuffler.

Excellent article and all the things I have added up in my head. I just see no way other than up for gold in the medium-term, everything appears positive. Not sure if all you guys feel the same sentiments.

The part quoted is as I stated earlier to Uncles post, as to why I am holding gold equities. Then again, this can also bring more downside with further falls in global indicies.

Perhaps the GOLD ticker is another decent way to avoid equity contingencies in addition to a hedge against the AUD.........

Just a thought.

 

[MRC & Co]

US CPI figures are due out on the 14th, which may provide some direction for the POG as well.

A possible double leg up coming?

I cannot wait for this day!

 

[explod]

Thanks Scuffler.

Excellent article and all the things I have added up in my head. I just see no way other than up for gold in the medium-term, everything appears positive. Not sure if all you guys feel the same sentiments.

The part quoted is as I stated earlier to Uncles post, as to why I am holding gold equities. Then again, this can also bring more downside with further falls in global indicies.

Perhaps the GOLD ticker is another decent way to avoid equity contingencies in addition to a hedge against the AUD.........

Just a thought.

I do not understand why there is the perception that gold stocks go with the markets.

LGL 12 months ago $3.00, today $4.

NCM 12 months ago $21 today $38

SBM then .50c today .88

could go on and on. The markets at 18 month lows, rest my case.

Gold is going great, what more does everyone want ?????? ??????

 

[MRC & Co]

I do not understand why there is the perception that gold stocks go with the markets.

LGL 12 months ago $3.00, today $4.

NCM 12 months ago $21 today $38

SBM then .50c today .88

could go on and on. The markets at 18 month lows, rest my case.

Gold is going great, what more does everyone want ?????? ??????

Have a look at the relationship over time between gold equities and the S&P200 (or all ords). Not including this latest trend, is it inverse or direct? Very much direct.

Gold has hit all-time highs lately (including the GOLD ticker which is in AUD), have all gold equities? No effects of broader indices there?

Of course when the POG rises, gold equities will generally rise also, but not as fast relative to POG movements if indices are falling.

Check out the trends, they speak for themselves. Remember, intermarket analysis is also important, not just TA and FA.

Cheers

 

[explod]

Have a look at the relationship over time between gold equities and the S&P200 (or all ords). Not including this latest trend, is it inverse or direct? Very much direct.

Gold has hit all-time highs lately (including the GOLD ticker which is in AUD), have all gold equities? No effects of broader indices there?

Of course when the POG rises, gold equities will generally rise also, but not as fast relative to POG movements if indices are falling.

Check out the trends, they speak for themselves. Remember, intermarket analysis is also important, not just TA and FA.

Cheers

Of course, short term volatility due to uncertainty; but those gold stocks sure look better than the banks which have gone down in the same period and many other general stocks which have gone sideways. The average 25% rise in gold stocks is pretty reasonable.

The gold indecies in the US and Canada are hitting all time highs. Our dollar has caused some of the offset here but when it is soon realised that the US curency is palying little part in the overall markets that will soon change.

Anyway I am happy with the steady rise and expect it to continue. And intermarket; is why I sit up nearly all nights, direct watchiing is most important.

 

[MRC & Co]

Anyway I am happy with the steady rise and expect it to continue. And intermarket; is why I sit up nearly all nights, direct watchiing is most important.

I agree. ha ha, you sure do sit up nearly all nights, when do you sleep?

I was simply replying to your quote "I do not understand why there is the perception that gold stocks go with the markets". Because markets do have an effect on gold equities. Buy the real thing if you want to negate that problem, but then you miss out on a possible bounce in global indicies. We are, afterall, looking at relative returns, as opposed to absolute.

Either way, as you say, anything gold at the moment, is.......well..........gold! :grinsking

 

[Kauri]

The talk of larger margin calls on hedge funds is a possible negative for commodities markets with funds likely to have to find cash from current profitable trades such as commodities. The recent slides in gold last week and increased volatility shows increasing signs of a top in the yellow metal, with risk for a move lower.
and the coily thing seems to have broken..

Cheers
..........Kauri

 

[barrett]

The talk of larger margin calls on hedge funds is a possible negative for commodities markets with funds likely to have to find cash from current profitable trades such as commodities. The recent slides in gold last week and increased volatility shows increasing signs of a top in the yellow metal, with risk for a move lower.
and the coily thing seems to have broken..

Cheers
..........Kauri

The news on those funds like Blackstone, Carlyle etc. is terrible.. and Carlyle are rumoured to manage funds for a number of ex-presidents etc..

Soybeans were hammered 13.4% in the last 2 days of last week.. rice, corn also hammered. This after those markets went parabolic..

Following the gold action minute by minute last week gave a pretty clear picture of a lot of new speculators being fleeced over and over again.. which also suggests an interim top.

With the fundamentals still strong for the ag commodities though and the Fed focussed on saving the banks it's hard to imagine a very serious selloff in gold.. maybe just enough to shake off some easy riders? Do you have any targets coming up on the EW, Kauri? cheers

 

[CamKawa]

The POG locally is up $13.95 and has hit an all time high of $1062 as the AUD slips down to .9163 cents. Scroll down to the bottom of the page and look at the Exchange Rates table for an update. http://www.kitco.com/

 

[scuffler]

I do not understand why there is the perception that gold stocks go with the markets.

LGL 12 months ago $3.00, today $4.

NCM 12 months ago $21 today $38

SBM then .50c today .88

could go on and on. The markets at 18 month lows, rest my case.

Gold is going great, what more does everyone want ?????? ??????

Thats a fair point.
But if you only invest in the high risk gold stocks like PRE/SAU it doesnt always go up,lol.

Listen my tactics are to hold for 12-24 months every gold stock i have.....pure and simple.

Now today as much as the 2 i have mentioned have gone down ....todays price interests me not...(ok i am down on paper-big deal) but what the price is this time a year from now!!!

Stick to a stratergy and stay with it. The bigger fish are squeezing alot of stocks down and causing many to lose their shirts. You only lose your shirt when u sell out for a loss.......i am standing firm,losing more hairs but staying focused on where the POG is heading...and thats alot higher than $1600 when u adjust the inflation side of things.

Cheers and if it gets too much switch off the screen and go for a run on the beach...works for me!!:sheep::sheep:

 

[scuffler]

got this off bloomberg this morning.
I think the FED meet on the 18th and we can bet wall street will keep the pressure on stocks until they get the rate cut!!! Rates are going to zerooooooooooooo

Gold Gains in London as Fed Rate Cut Speculation Spurs Buying

By Danielle Rossingh

March 10 (Bloomberg) -- Gold rose in London on speculation the U.S. Federal Reserve will cut interest rates next week, weakening the dollar and spurring some investors to buy precious metals as an alternative investment to stocks and bonds.

Gold has rallied more than 34 percent since Sept. 18, when the Fed began cutting interest rates as losses mounted in the subprime mortgage market. The U.S. currency fell toward an eight- year low against the yen, and neared a record low versus the euro today, partly on anticipation the Fed will cut rates by at least 75 basis points when it meets on March 18 to avert a recession.

``When the Fed lowers interest rates, that's ultimately bullish for the gold price,'' Michael Widmer, head of metals research at Lehman Brothers Holdings Inc. in London, said in an interview today. ``It will put downward pressure on the dollar, and raises concern about the slowdown of the U.S. economy.''

Gold for immediate delivery advanced as much as $7.48 cents, or 0.8 percent, to $980.67 an ounce, and was at $973.08 an ounce as of 10:28 a.m. local time in London. The metal jumped to a record $992.05 an ounce on March 6 as the dollar declined against the euro and crude oil reached a record.

Silver fell 10 cents, or 0.5 percent, to $20.06 an ounce. It reached $21.23 on March 6, the highest since 1980.

Gold may rebound this week as a slumping dollar and soaring energy costs boost demand for the precious metal as an inflation hedge.

Sixteen of 25 traders, investors and analysts surveyed from Melbourne to Chicago on March 6 and March 7 advised buying gold, which fell 97 cents to $973.20 an ounce last week in London. Five said to sell, and four were neutral.

`Stunning Year'

``2008 is set to be stunning year for gold,'' Jim Lennon and Max Layton, London-based analysts with Macquarie Bank, said. Gold may trade at $960 an ounce this year, or 20 percent higher than previously forecast in October, partly as a weaker dollar and strong oil price bolsters investment demand, the bank said in a note e-mailed late on March 7.

Gold held in London-listed exchange-traded funds managed by ETF Securities Ltd. rose to a record 834,329 ounces, while silver jumped to an all-time high of 9.66 million ounces, the company said on March 5.

Gold may advance to as high as $1,000 an ounce by next week, Lehman's Widmer forecast.

Surprised Analysts

Gold's decline last week surprised a majority of analysts surveyed Feb. 28 and Feb. 29. The survey has forecast prices accurately in 125 of 201 weeks, or 63 percent of the time.

Platinum for immediate delivery in London slid $2, or 0.1 percent, to $2,020 an ounce. Palladium fell $7.50, or 1.5 percent, to $481 an ounce.

``We should see a deficit,'' in both platinum and palladium this year, analysts with Stuttgart, Germany-based Tiberius Asset Management AG, said in a note e-mailed today. Platinum may gain further this year because ``inventories are at rock bottom and will scarcely be able to play a price-dampening role.''

Platinum may trade at $1,775 an ounce this year, or 20.3 percent more than previously predicted, partly as power disruptions curbed supply from top producer South Africa, Macquarie said.

To graph technical gauges for gold: Moving Averages Relative Strength Index Fibonacci Back Test Technical Gauges

:jump:

 

[Firdy]

We know that Gold's last peak was around $ 800/oz in the mid late '80's. I saw in a newspaper article that, inflation adjusted, this equates to around $ 2,200 in today's terms.

Is it right to compare peaks? Comparative factors between now and the '80's that increase upward pressure on the current gold price are:
- the US economy is weaker
- gold production is lower (for now)
- South African production is in trouble (power limitations)
- gold demand is higher and growing (from India, China and industry)
- global economic uncertainty is higher (global warming - Islamic war vs cold war??)

Maybe it can't reach the same $ 2200 inflation adjusted number, but I can't think of too many negative factors that counter a conservative proposition that gold will go to $ 1,500 to per ounce.

Can anyone give me any negative factors?
- strengthening of the US dollar - not for a while.

So if Gold is undervalued relative to the '80's, it means that Gold stocks are undervalued.

The negative factor in this statement is to be wary of fly-by nighters in for the quick buck during the boom, lying about their resource and their ability to produce.

I have taken the time to visit some Gold Mining companies to make sure their prospects are real before I have put my dough up. I am looking for stocks that are conservative, real producers, who's management have a lifetime of experience, and who would be recently into production, or coming into production within the next six months. These are the companies who's stocks will way outperform gold price growth.

 

[scuffler]

i know its a little off topic but i hope you guys keep it on this thread!


Retirement Planning:

* If you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00
* With Enron, you would have had $16.50 left of the original $1000.00
* With WorldCom, you would have had less than $5.00 left
* If you had purchased $1000 of Delta Air Lines stock, you would have $49.00 left.

But, if you had purchased $1,000.00 worth of beer/wine one year ago, drank all the beer/wine, then turned in the cans/bottles for the aluminium and glass recycling REFUND, you would have had $214.00.

Based on the above, the best current investment advice is to Drink heavily and recycle!

 

[scuffler]

i know its a little off topic but i hope you guys keep it on this thread!


Retirement Planning:

* If you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00
* With Enron, you would have had $16.50 left of the original $1000.00
* With WorldCom, you would have had less than $5.00 left
* If you had purchased $1000 of Delta Air Lines stock, you would have $49.00 left.

But, if you had purchased $1,000.00 worth of beer/wine one year ago, drank all the beer/wine, then turned in the cans/bottles for the aluminium and glass recycling REFUND, you would have had $214.00.


:band
Based on the above, the best current investment advice is to Drink heavily and recycle!

 

[explod]

i know its a little off topic but i hope you guys keep it on this thread!


Retirement Planning:

* If you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00
* With Enron, you would have had $16.50 left of the original $1000.00
* With WorldCom, you would have had less than $5.00 left
* If you had purchased $1000 of Delta Air Lines stock, you would have $49.00 left.

But, if you had purchased $1,000.00 worth of beer/wine one year ago, drank all the beer/wine, then turned in the cans/bottles for the aluminium and glass recycling REFUND, you would have had $214.00.


:band
Based on the above, the best current investment advice is to Drink heavily and recycle!

Not off topic at all, beer is pure gold when you have had a few; and a few ramps the thread a bit as well, he he and ho

 

[MRC & Co]

Ouch, practically every single one of my mining stops got triggered today (from Zinc, Copper, Coal and Nickel plays) and some too late so I ended up actually loosing capital!

Only ones left are the gold stocks, as I used horizontal stops for these as opposed to trailing stops because I beleive in the fundamentals of gold and dont want to get caught by whipsaws. However, one of them EQI, is coming somewhat close to being breached!

OGC and SGX are still holding relatively firm.

Might have to buy up some of GOLD, these equity problems are starting to fukc me off!

 

[Aussiejeff]

Ouch, practically every single one of my mining stops got triggered today (from Zinc, Copper, Coal and Nickel plays) and some too late so I ended up actually loosing capital!

Only ones left are the gold stocks, as I used horizontal stops for these as opposed to trailing stops because I beleive in the fundamentals of gold and dont want to get caught by whipsaws. However, one of them EQI, is coming somewhat close to being breached!

OGC and SGX are still holding relatively firm.

Might have to buy up some of GOLD, these equity problems are starting to fukc me off!

With volatile stock market sentiment the way it is ATM, a *BLINK* can cost you heaps....

AJ