Gold Price - Where is it heading?

[MRC & Co]

The thing is Nyden, your risk is only as large as what you are willing to risk. Set your stops. So its no more risky than any other form of investment at the moment.

I think with inflation lower than expected, the Fed will see this as a good sign for further rate cuts and after their emergency intervention lately, it appears they are willing to surprise the masses once more.

Its all about educated guesses. If you follow the herd, you will never become a successful trader.

Gold pushing back up towards $1000.

As for selling the house, I dont own property at the moment (bad investment I beleive). But my equivelent at the moment is gold. Thing is, if I get raked over, I can sell on the spot, whereas if I owned a house, I could loose more than my "stop".

 

[Nyden]

The thing is Nyden, your risk is only as large as what you are willing to risk. Set your stops. So its no more risky than any other form of investment at the moment.

I think with inflation lower than expected, the Fed will see this as a good sign for further rate cuts and after their emergency intervention lately, it appears they are willing to surprise the masses once more.

Its all about educated guesses. If you follow the herd, you will never become a successful trader.

My only current investment is AUD cash I avoid risk like the plague. Only ever invest in a bull market with stability; not a bear with volatility.

Stop losses in this market still aren't entirely safe; you can be gapped out quite badly. If something can gain 4-5% in a day, it can surely lose it, & frankly - a 5% loss in 1 day is too much for me.

 

[GreatPig]

what implications can we draw from the piercing the top of the channel - a potential retrace?

The increased possibility of a consolidation until it moves across to the bottom of the channel again.

However, my Fib target being reached will make me watch more closely for a somewhat larger correction, possibly out of the channel altogether.

The current level of market intervention makes anything possible though, so it's really just a watch-closely-and-see situation.

GP

 

[explod]

Yes, but gold is not immune to sentiment. If the rates are cut an amount less than expected ... it's kind of like news not being as bad as already factored in.

If it were as straight forward as many seem to think; why not sell up the house, & put it all in gold today? If after the upcoming rate cut, it's almost assured that gold is going to rally? Because it may not.

People are talking about a whole 1% cut, what if it's only .25, or .5? Will the lemmings of the market see this lesser damage to the USD, as somehow something to strengthen it?

Whilst, here in Australia; I'm reading nothing but views that interest rates are only going to go up, or remain flat for at least 1-2 years ...

Funny you say that because I have sold my Real Estate and put most of it into gold stocks and bullion.

And on every rate cut gold has gone up and if you do a bit of study, as you should before you invest in what I say, you will find it to be almost absolute.

Investing is as simple as that. Read Warren Buffet to find out more on that. My mantra is, "keep it simple stupid"

But I can assure you that when I notice the underlying fundamentals go against gold, as well as the trend I will be out in a flash.

And interest rates are going up because there is a money supply problem. What I ws eferring to as I thought you were also, is the US Reserve Fed rate. It is what the US Fed are doing that is impacting on the gold price, and has been since the Nixon Bretton Woods agreement made back in the 1970's.

Although you appear to aver otherwise I think you need to get into a bit more study on the subject.

And another great piece of Buffet dogma, "do not invest in anything that you do not fully understand" A bit like measure twice cut once.

 

[MRC & Co]

My only current investment is AUD cash I avoid risk like the plague. Only ever invest in a bull market with stability; not a bear with volatility.

Stop losses in this market still aren't entirely safe; you can be gapped out quite badly. If something can gain 4-5% in a day, it can surely lose it, & frankly - a 5% loss in 1 day is too much for me.

Thats good, stick to your guns until you are prooven otherwise.

You can be gapped out. 5% in a day assumes your stop is set at 5% below cost price and that 100% of your portfolio is in gold.

Good to see gold above $1000 again.

One of the most dangerous things is being worried about the price already being too high and so not getting on board. That is a HUGE phsycological flaw that I have read (mainly read) and seen affect many a budding trader.

Good luck!

 

[Trembling Hand]

MRC & Co what instrument are you using to trade Gold?

 

[MRC & Co]

At the moment I just bought some actual gold bullion but mainly just gold equities (similar to explod and perhaps Uncle I guess) along with the gold ticker. No futures. Still have some cash to load up on more, but waiting for price/momentum change in equity markets (if that doesnt happen, I will just continue to hold the cash).

Whys that TH?

 

[MRC & Co]

At the moment I just bought some actual gold bullion but mainly just gold equities (similar to explod and perhaps Uncle I guess) along with the gold ticker. No futures. Still have some cash to load up on more, but waiting for price/momentum change in equity markets (if that doesnt happen, I will just continue to hold the cash).

Whys that TH?

Equities I bought are SGX, SBM, OGC, LGL.

Just sold EQI, love the company but dont like the fact its so hedged.

So there you go, I am completely transparent and you can see for yourself TH.

 

[Trembling Hand]

Equities I bought are SGX, SBM, OGC, LGL.

Just sold EQI, love the company but dont like the fact its so hedged.

So there you go, I am completely transparent and you can see for yourself TH.

Just wondering if you were trading the gold Futures. Thats all.

 

[cuttlefish]

Bit of a dillemma as to when the de-coupling will occur. I can't help thinking the Dow hasn't factored in the magnitude of the problem yet, given last nights mild reaction to the bear sterns situation, and there are still significant falls to come in the US markets. If our markets continue to follow the US down then I also can't help thinking that the effect will be indiscriminate and gold stocks will also be sold down along with the others due to the simple and uncontrollable effect of people needing to unwind their leveraged positions (margin loans, equity loans etc.) - so the initial flight to cash will continue. Thus even though there is value in the gold sector is it possible there will be even better value down the track due to the forced selling that could occur. (particularly in the small to mid cap new producer area where quiet achievers can go unnoticed in a flat market and build good value while drifting or falling on low liquidity).

I should qualify that at this stage I'm looking to receive value through the cashflow generated by production - I don't expect the market to get excitable in the gold sector or any sector any time soon due to the loss of sentiment from the current rout - but over performance on the dividend/cashflow front by new producers means the good returns can still be had even if the market isn't pricing them particularly well. The overperformance on share prices will come down the track when the dust has settled and people have licked their wounds and lifted their heads up again.

I wouldn't dare not to hold a good quantity of gold stocks because I don't trust cash in the bank at the moment. I don't currently hold physical gold because I'm assuming the good value producers will provide better leverage, but am considering getting some. Any thoughts as to the security of gold producer holdings and how paranoid should I get on this front. A share in a solid producer of physical gold in a country like Australia is that as good as holding physical gold? If not where do people see the differences in the risk profile? (Obviously in an extreme situation physical gold can be protected/hidden from govt attempts to remove gold from the hands of the people but thats quite an extreme situation).

 

[MRC & Co]

Just wondering if you were trading the gold Futures. Thats all.

No, futures are still something I am learning all the ins and outs of. Still have a couple books I want to get through on them.

Dont like to enter into things I dont fully understand.

But no doubt, I will try my hand in the futures market one of these days.

Cheers

 

[Uncle Festivus]

Bit of a dillemma as to when the de-coupling will occur. I can't help thinking the Dow hasn't factored in the magnitude of the problem yet, given last nights mild reaction to the bear sterns situation, and there are still significant falls to come in the US markets. If our markets continue to follow the US down then I also can't help thinking that the effect will be indiscriminate and gold stocks will also be sold down along with the others due to the simple and uncontrollable effect of people needing to unwind their leveraged positions (margin loans, equity loans etc.) - so the initial flight to cash will continue. Thus even though there is value in the gold sector is it possible there will be even better value down the track due to the forced selling that could occur. (particularly in the small to mid cap new producer area where quiet achievers can go unnoticed in a flat market and build good value while drifting or falling on low liquidity).

This is the exact dilemma I am faced with now, as I'm not sure most of the investing lemmings realise how close the world came to a full blown market crash with the Bear Stearns fiasco.

So the question then becomes for gold equity holders is 'have I bought shares at such a price that I can withstand a 20%-30% fall in price", as gold equities will be caught in the pleb shares contagion, unless there is a commensurate dramatic increase in the gold price.

As shown over the last 24hrs, there is a good level of 'flighty' spec premium attached to the pog; wether or not gold becomes the asset of last resort in a market meltdown is still to be tested (currently holding about 80% in gold equities).

 

[explod]

This is the exact dilemma I am faced with now, as I'm not sure most of the investing lemmings realise how close the world came to a full blown market crash with the Bear Stearns fiasco.

So the question then becomes for gold equity holders is 'have I bought shares at such a price that I can withstand a 20%-30% fall in price", as gold equities will be caught in the pleb shares contagion, unless there is a commensurate dramatic increase in the gold price.

As shown over the last 24hrs, there is a good level of 'flighty' spec premium attached to the pog; wether or not gold becomes the asset of last resort in a market meltdown is still to be tested (currently holding about 80% in gold equities).

Yes I have been troubled to some degree as well. Yesterday I chose to sell LGL and brought GOLD at $109.06 a unit. I feel a lot of larger players are liquidating gold stocks to meet margins in other areas, the Bear Sterns story is just a beginning in my view, so the flight for cash will remain for some time. It was interesting last night that the Dow virtually held ground whilst the NYSE dropped 164 points or 1.7%, so who is fooling who here. The US and all other world market with them are on a tight rope over a precipice and the panic becoming evident by the US Fed makes me very nervous indeed.

So I am 40% in physical, 10% from yesteday in GOLD (as on the ASX) and 20% in small caps which I hold for the long term. SBM, MMN, GDR, NGF and RNG. The other % is invested in an entirely different area.

Sure the gold price may go down or not move for awhile but the upside is more probable as gold is a tangible that cannot be deflated. If all else goes wrong I feel as insulated as one can be perhaps.

 

[MRC & Co]

Looks like POG is anticipating some hefty rate cuts.

1006.90 and climbing, good to see it doing what oil has and remaining above that phsycological barrier after testing it.

Tonight could be good

Or maybe I just spoke too soon..............

 

[cuttlefish]

As shown over the last 24hrs, there is a good level of 'flighty' spec premium attached to the pog; wether or not gold becomes the asset of last resort in a market meltdown is still to be tested (currently holding about 80% in gold equities).

I still feel that all the fundamentals are in place for a strong gold price. More hundreds of billions will need to be pumped into the system to bail out other banks and the USD decline will continue. The fed isn't just providing liquidity through rate cuts - they really are pumping massive amounts of new money into the system taking over the crud debt. This is real banana republic stuff and eventually could lead to massive USD devaluation and/or strong inflation or hyper inflation. Hyper inflation in the US dollar will be catastrophic and will lead to massive migration into gold and other hard assets. It will also of course have potential political ramifications. It is this latter part that potentially makes physical gold more attractive.

The sheer dishonesty about the size of the problem so far is evidence enough for me that there is more to come on this.

 

[cuttlefish]

Any views on how significant wage inflation/hyper inflation would affect unencumbered low cost producers? Would input costs rise before revenue or is POG going to lead inflation up?

 

[Temjin]

So I am 40% in physical, 10% from yesteday in GOLD (as on the ASX) and 20% in small caps which I hold for the long term. SBM, MMN, GDR, NGF and RNG. The other % is invested in an entirely different area.

Sure the gold price may go down or not move for awhile but the upside is more probable as gold is a tangible that cannot be deflated. If all else goes wrong I feel as insulated as one can be perhaps.

You meant 40% in UNALLOCATED, Physical gold? Remember, never trust anyone to hold gold for you. I'm trying to move toward the actual physical now. The warning signs are getting more and more clear and I have less and less trust on the ETFs. (including GOLD.ax)

 

[explod]

You meant 40% in UNALLOCATED, Physical gold? Remember, never trust anyone to hold gold for you. I'm trying to move toward the actual physical now. The warning signs are getting more and more clear and I have less and less trust on the ETFs. (including GOLD.ax)

I have my 40% of physical tucked away in a vault over which only I and another family member has control. Like you I do not trust anyone to hold it either. However a short term holding of GOLD as on the ASX is another matter.

 

[Sean K]

Looks like gold bugs wanted at least a 1% cut.

 

[Nyden]

Looks like gold bugs wanted at least a 1% cut.

Which is what I thought would happen. Glad I didn't buy yesterday
USD is up ... well, let's see if she holds.