Gold Price - Where is it heading?

[GreatPig]

the exponential increase of gold so far

That chart is on a linear scale. Do you have a chart of it using log scale?

GP

 

[explod]

That chart is on a linear scale. Do you have a chart of it using log scale?

GP

No, but realise it would make a different look. However for my own purposes as a long term investor, charting packages are not worth while. I do have metastock but will probably let it lapse as the need to scan a lot of stocks etc has fallen away as my strategies have altered. Its very good stuff though.

I probably should get up with a simple package to post charts on here and on which I can place trend lines etc. But I figure the simple approach is of more use to the newcomers anyway.

 

[GreatPig]

I've just been searching the Net and can't find a chart of historic gold prices using log scale either.

Sort-of related, I did find a rather interesting graph on Wikipedia showing the Dow/Gold ratio for the last 200 years (the associated Wikipedia article is here). While it has some rather large swings over the latter half of that time, it shows an overall uptrend, meaning the Dow index has been on average going up faster than gold. However, it last peaked in 2000, and has been falling since that time.

GP

 

[>Apocalypto<]

Gold chart in monthly,

96 -2008 as we can all see it's in a bull run. The current move is really over extended. A pull back to 850 is a good possibility. If this is a really strong bull market and there is a extreme imbalance of supply to demand we would expect to see the current selling get eaten up buy demand. So the next rally will be of real importance. Based on that monthly chart you would think a more selling and a base to form to set up the next leg. The current projection of the price advance is very vertical and as we saw last week unsustainable.

Fun times a coming

 

[explod]

This one shows the angle of the last blow off to 1980. I think we have a way to go for this angle in the current run up.

Courtesy "The Privateer" newsletter

 

[explod]

And the old point and figure shows how solid the bull is

Again courtesy "The Privateer"

 

[>Apocalypto<]

I disagree Explod,

I think this pull back will head lower. That's the beauty of trading!

 

[cuttlefish]

Why would the USD rise right now? The USD is the global reserve currency. A falling USD means a rise in non USD assets. I can't see any kind of rational argument for the USD suddenly doing a long term turnabout and rising.


This fall is largely a liquidity crunch imo - forced sales of good assets to fund bad bets elsewhere. Its pretty rare for a sharp fall to bounce back so its likely this means some time in the wilderness - but I still can't see how the US is going to restore faith in their currency any time soon - their treasuries are being exchanged for crud, they're funding the bailouts of crud. This is malinvestment to the extreme and highly destabilising. The sharper and more severe the USD fall starts to become over time the more urgent and panicky the rush to gold - and that rush if it starts will be large because of the reserve currency statusof the USD - the majority of government and banking and private assets, outside of property, are in some form of US currency based asset.

Someone needs to present an argument for a US economic recovery in the near term before I'd be bullish on the USD.

 

[chops_a_must]

Just a theory....

If all this leverage lent out, was in USD, then went into other currencies, it would have to come back when called in as USD, wouldn't it?

 

[MRC & Co]

As far as the USD, isnt the long-term driver simply PPP, historically?

So, with inflation soaring, the USD only has one way to go, right?

Until IRs finally rise to stamp out inflation (or the economy buckles), then we will get some IRP back, or the dramatic slowdown in demand will curb inflation and we will get a USD rise based on PPP.

Ceteris paribus of course

Just a thought.

 

[explod]

I disagree Explod,

I think this pull back will head lower. That's the beauty of trading!

That's fine I respect your opinion, and I hve also pointed to the same posibility in the short term. But what is your reasoning and the time frame.

 

[explod]

As far as the USD, isnt the long-term driver simply PPP, historically?

So, with inflation soaring, the USD only has one way to go, right?

Until IRs finally rise to stamp out inflation (or the economy buckles), then we will get some IRP back, or the dramatic slowdown in demand will curb inflation and we will get a USD rise based on PPP.

Ceteris paribus of course

Just a thought.

PPP can manipulate the thinking of the sheeple but they are not like the magic alchemist, they can't turn lead into gold. The US$ is dead under the debt burden but more specifically because it is merely a paper promise on which they cannot deliver, the movement you see now is the vermin eating the carcase.

 

[MRC & Co]

PPP can manipulate the thinking of the sheeple but they are not like the magic alchemist, they can't turn lead into gold. The US$ is dead under the debt burden but more specifically because it is merely a paper promise on which they cannot deliver, the movement you see now is the vermin eating the carcase.

No, I call what you refer to as the "PPP", the PPT.

PPP to me, is Purchasing Power Parity.

As IRP is Interest Rate Parity.

The real long-term drivers of exchange rates (IRP the short-term driver, along with other factors as mentioned in this thread). Otherwise, arbitrage would exist, no?

 

[chops_a_must]

Australia's trade deficit is pretty bad isn't it? And our currency is going, up/down?

Will the USD dive into marriage with Miss Faye Complee?

 

[GreatPig]

Some interesting information about gold and currencies on this Galmarley website, particularly this page about historic currencies, and this page about safety issues when buying gold.

From the historic currencies page, the fates of early Athenian and Chinese currencies are noteworthy:

Athenian money meanwhile had defined a pattern which was to repeat in other empires which were to follow:- dominance of trade; influx of gold to balance exports; public wealth; liberty; overconfidence; the discovery of loosely managed money as a stimulating solution to stagnation in an economy near its zenith; an ongoing success born of cultural momentum and monetary expansion which was to persist for decades before finally the emptiness of the monetary promise was exposed, leading to rapid national collapse.

And the Chinese currency in the late 13th century, during Mongol rule:

Population and trade had greatly increased, but the emissions of paper notes were suffered to largely outrun both, and the inevitable consequence was depreciation. All the beneficial effects of a currency which is allowed to expand with a growth of population and trade were now turned into those evil effects that flow from a currency emitted in excess of such growth. These effects were not slow to develop themselves. Excessive and too rapid augmentation of the currency, resulted in the entire subversion of the old order of society. The best families in the empire were ruined, a new set of men came into the control of public affairs, and the country became the scene of internecine warfare and confusion.

Those situations are sounding rather familiar. I wonder if the end result will also be similar.

GP

 

[explod]

No, I call what you refer to as the "PPP", the PPT.

PPP to me, is Purchasing Power Parity.

As IRP is Interest Rate Parity.

The real long-term drivers of exchange rates (IRP the short-term driver, along with other factors as mentioned in this thread). Otherwise, arbitrage would exist, no?

Now that is a good point, on reflection I have had that wrong for some time and I see now the reason for some confusion. Dislexia (and failing to proof read) has been a failing, always in too much of a hurry to deal with the next issue.

Thanks for picking me up. Plunge Protection Team, dont know where I saw PPP in that?

 

[Miner]

Some interesting information about gold and currencies on this Galmarley website, particularly this page about historic currencies, and this page about safety issues when buying gold.

From the historic currencies page, the fates of early Athenian and Chinese currencies are noteworthy:



And the Chinese currency in the late 13th century, during Mongol rule:


Those situations are sounding rather familiar. I wonder if the end result will also be similar.

GP

Thanks for historical reference.
MY comments are under the era of 13th Century America was not born (thanks Columbus 1496) and Australia was probably in Astrological page, no internet was born, gold was the only currency, barter system existed, world trade was very different. so I would not be trying to prove something from that era to modern era. Correlation factors are not similar.

Regards

 

[wavepicker]

Gold chart in monthly,

96 -2008 as we can all see it's in a bull run. The current move is really over extended. A pull back to 850 is a good possibility. If this is a really strong bull market and there is a extreme imbalance of supply to demand we would expect to see the current selling get eaten up buy demand. So the next rally will be of real importance. Based on that monthly chart you would think a more selling and a base to form to set up the next leg. The current projection of the price advance is very vertical and as we saw last week unsustainable.

Fun times a coming

Great chart Joseph. Three ascending trendlines and the fourth one which has been vertical price action is the blowoff. Typical Mclaren analysis, and according to this theory prices have a good chance of performing a "Mirror Image Foldback" to the rise of the last 3-4 months back to the "span" of the 1.5 year consolidation level.

I have posted a rather different chart here, but one which you are familiar with(this was a strategy put forward by great cycles man JM Hurst in the late 60's). It's NOT precision timing, but in my opinion was much merit and pushes the point I am making with the USD.

First of all how high is too high and how low is too low a price level? How can this be measured. Fundemental analysis has many flaws with respect to this. JM Hurst, found that market motion comprised of cycles. He looked at the market for over 10 years to find out if it was purely random or whether forecasting was possible based on TA.

What he came up with was groundbreaking IMO.

-75% of market motion is a slow long term trend that was a result of fundemental/economic activity OR some exogeneous force. he could not tell which.

-2% of market motion was random


-23% was cyclical and displayed oscillatory type motion and could be predicted.

The chart I have posted(EURUSD) focuses on the 23%. Here we have 2 cycles in play, a long term cycle(outer envelope or cycle) and a shorter term cycle(inner envelope). These cycles are usually related to each other harmonically.
The smaller cycle "vibrates" or oscillates within the bounds of the outer cycle envelope. When prices reach or touch the outer envelope they have reached a "climax" or an extreme point whereby they will reverse and reach the extreme of the opposite part of the outer envelope. This analysis helped me (along with other)to pinpoint the peak in may 2006.

As can be seen in the case of the EURUSD, which has the greatest weighting of the USD Index, we have or about to reach an extreme point whereby prices should reverse back to the lower portion of the outer cycle or envelope. This just so happens to be the span of the last correction in 2005 of 1.36 to 1.16. Now this does not have to be now, but what is important here IMO is that the best of the momentum gains are over, and that prices if they do advance from here it will not be with any speed.

I should think that Gold would follow a similar path, but that is not to say that the bull is over in the very long term but rather a multi year pullback may need to happen first before it finds it's feet again and continues.

Cheers

 

[GreatPig]

I would not be trying to prove something from that era to modern era. Correlation factors are not similar.

And 300 BC Athens was the same era as 1200 AD China?

GP

 

[explod]

In March of 2006 the US$ index was at 90.10, today it is at 72.80 and a look at the downtrend on the chart shows corrctions of no more than a point or two.

As many have said, even on Wall Street, "it is different this time" and it certainly is. The US$ index may totally change direction but as a trend follower I am not convinced till I see it. So I will stay long gold.

The chart I am looking at is from INO.com and I am damned if I can get the thing to post from my pictures file.