Gold Price - Where is it heading?

josjes · 3 April 2008

Aden sister newsletter that I subscribe declared that the C rise (which in a bull market, is the best rise in the cycle when gold reaches new highs) is over as price plunge and stay below 907. This means that gold is undergoing substantial correction just like middle of 2006 which could take months to consolidate. The fall from this rise is the most violent one, and could take gold to its 65 week MA which is 780. Good news for those that are still in accumulation phase great buying opportunity. Take heart it is still a long way ( at least until 2010-1011) to go before this mega bull is over.

barrett · 4 April 2008

Called the top, then 953, then 874... not exactly a fluke is it.. this isn't the first time either.. nice work Kauri!!

I can see it's going to take some more work to convince him gold's a currency though... would another zero on the end of the price do? Might take a while though

barrett · 4 April 2008

I know this doesn't help with the trading decisions right now, but in the meantime.. some interesting figures from Jeff Christian of CPM, interviewed on FSN about his gold yearbook..

Of the world's liquid wealth (excluding derivatives)...

45% is held in the equity markets
15% is held in the bond markets
39% is held in bank deposits
1.4% is held in gold.

39% of the world's liquid wealth in bank accounts (much of it in US and China) is rather a lot of money being taxed with a stiff annual negative IR penalty. As George Soros put it yesterday "There is an increasing unwillingness to hold dollars, though there's a lack of suitable alternatives''.

With the imbalance this big, if even a small proportion of the penalised bank savers move into gold in coming years it could make a very big difference to the market cap of the gold sector It's all the more likely if equities and housing are going sideways.

Another point made was that gold miners' market caps are still very small compared to industrial stock market caps.. the combined market cap of the whole HUI gold stock index (top 16 biggest unhedged gold&silver producers) is just $174Bn.. Coca Cola's market cap alone is $134Bn.. and Microsoft alone is $260Bn. So even after the big rises in gold stock valuations since 2000, their valuations on absolute market cap (and on P/E) are nothing like, for instance, tech bubble extremes.

Another point made was that gold investors rarely sell - in the last century there have been only 3 years when private individual gold holders were net sellers. Kind of interesting, in light of the ongoing transfer of gold from public hands into private..

explod · 4 April 2008

barrett said:
I know this doesn't help with the trading decisions right now, but in the meantime.. some interesting figures from Jeff Christian of CPM, interviewed on FSN about his gold yearbook..

Of the world's liquid wealth (excluding derivatives)...

45% is held in the equity markets
15% is held in the bond markets
39% is held in bank deposits
1.4% is held in gold.

39% of the world's liquid wealth in bank accounts (much of it in US and China) is rather a lot of money being taxed with a stiff annual negative IR penalty. As George Soros put it yesterday "There is an increasing unwillingness to hold dollars, though there's a lack of suitable alternatives''.

With the imbalance this big, if even a small proportion of the penalised bank savers move into gold in coming years it could make a very big difference to the market cap of the gold sector It's all the more likely if equities and housing are going sideways.

Another point made was that gold miners' market caps are still very small compared to industrial stock market caps.. the combined market cap of the whole HUI gold stock index (top 16 biggest unhedged gold&silver producers) is just $174Bn.. Coca Cola's market cap alone is $134Bn.. and Microsoft alone is $260Bn. So even after the big rises in gold stock valuations since 2000, their valuations on absolute market cap (and on P/E) are nothing like, for instance, tech bubble extremes.

Another point made was that gold investors rarely sell - in the last century there have been only 3 years when private individual gold holders were net sellers. Kind of interesting, in light of the ongoing transfer of gold from public hands into private..

And that is why they will do all they can to keep gold below 4 figures as long as possible. The protection of the current US system and the dollar at all cost till the Presidential election.

barrett · 4 April 2008

From a contrarian standpoint I should bring up that the analysts' consensus for the dollar has in fact been bullish for some months now, and remains bullish though pared back a little, with the only thing really supporting the dollar being the disbelief that it can go any lower. This chart brings up an interesting alternative! (daily, linear scale).

kransky · 4 April 2008

80,000 jobs lost in the US.. well above the expected 60,000
unemployment up to 5.1% up from an expected 5.0%

explod · 5 April 2008

kransky said:
80,000 jobs lost in the US.. well above the expected 60,000
unemployment up to 5.1% up from an expected 5.0%

Yep, all bad, US$ has failed to break resistance and is turning down again now. We can expect gold to claw its way back up now. The rate of recovery will be interesting this time. The increasing bad news is the main cause of the volatility so we may expect faster recoveries after faster falls perhaps.

Interesting times for gold bugs.

April on my Gann Chart has been moderately good for gold over the past 31 years. We enter that about the 10th instant for a 4 week period.

Temjin · 5 April 2008

explod said:
Yep, all bad, US$ has failed to break resistance and is turning down again now. We can expect gold to claw its way back up now. The rate of recovery will be interesting this time. The increasing bad news is the main cause of the volatility so we may expect faster recoveries after faster falls perhaps.

Interesting times for gold bugs.

April on my Gann Chart has been moderately good for gold over the past 31 years. We enter that about the 10th instant for a 4 week period.

All other soft and grain commodities are showing the same as well. They seem to be at their local bottoms (all oversold) and all in place to rise again in the next wave.

I have already entered position for all 3 of the grain commodities, still waiting for more confirmation on the softs.

So my "guts" feeling that gold/silver will soon complete their consolidation.

Of course, nothing is perfect.

Acting all too discretionary here when I should be systematic. hahah

explod · 5 April 2008

Temjin said:
All other soft and grain commodities are showing the same as well. They seem to be at their local bottoms (all oversold) and all in place to rise again in the next wave.

I have already entered position for all 3 of the grain commodities, still waiting for more confirmation on the softs.

So my "guts" feeling that gold/silver will soon complete their consolidation.

Of course, nothing is perfect.

Acting all too discretionary here when I should be systematic. hahah

I think we should go with our instincts more than we do. Read an intersting book some years ago called "The Intuitive Edge" published in the 80's, the short of it is that our intuition is based on our total experience, some of it long forgotten and some of it subconscious and some of it would you believe genetic (Carl Jung was into this stuff, deep but fascinating)

I brought back into LGL last Friday and it was all just the feeling, it works suprisingly well.

MRC & Co · 5 April 2008

There are a few successful guys I have read about who trade intuitively, based on experience. Generally, they were pit traders and MMs. However, I wouldnt say that too loud around here...........

This is the difference, dont mistake intuition with "intuition". Some can see nuances in price and "know" movements, some are simply playing the guessing game.

Big difference.

refined silver · 5 April 2008

Temjin said:
So my "guts" feeling that gold/silver will soon complete their consolidation.

Of course, nothing is perfect.

Acting all too discretionary here when I should be systematic. hahah

Gut is good!

Nice new avatar too by the way!! I like it!

explod · 5 April 2008

MRC & Co said:
There are a few successful guys I have read about who trade intuitively, based on experience. Generally, they were pit traders and MMs. However, I wouldnt say that too loud around here...........

This is the difference, dont mistake intuition with "intuition". Some can see nuances in price and "know" movements, some are simply playing the guessing game.

Big difference.

Yeh, but I am probably in the nut cupboard with most anyway. Only said "more than we do"

I differ from the purely tech in that I believe by widely reading and understanding all the fundamentals that one can and then going with the wind (the trend) you cant go far wrong.

MRC & Co · 5 April 2008

explod said:
Yeh, but I am probably in the nut cupboard with most anyway. Only said "more than we do"

I differ from the purely tech in that I believe by widely reading and understanding all the fundamentals that one can and then going with the wind (the trend) you cant go far wrong.

Yes I agree with the basic principles here.

No point buying into something because it is "fundamentally undervalued" when it is on a downtrend. Wait for consolidation and price momentum. So you may miss a bit of the uptrend.....but you will never hit the big losses either and have far smaller chances of your stops being taken out.

This is why I dont see why F/A guys trade blindly, without any T/A whatsoever! If it works for them, well done, but certainly doesnt work for me!

Either way, thats just my opinion. Everyone has their own style.

Cheers

Uncle Festivus · 5 April 2008

explod said:
I think we should go with our instincts more than we do. Read an intersting book some years ago called "The Intuitive Edge" published in the 80's, the short of it is that our intuition is based on our total experience, some of it long forgotten and some of it subconscious and some of it would you believe genetic (Carl Jung was into this stuff, deep but fascinating)

I brought back into LGL last Friday and it was all just the feeling, it works suprisingly well.

Yes, I use it a lot too, nothing to be ashamed about as it works for me, probably better/same odds than every other method. I feel it with RED & DEG. See how we go then .

MRC & Co · 5 April 2008

Uncle Festivus said:
I feel it with RED

This is one of the few goldies I like on the ASX. Been watching it take a beating for a while now, already looks a good price! To be or not to be........

Sean K · 5 April 2008

MRC & Co said:
This is one of the few goldies I like on the ASX. Been watching it take a beating for a while now, already looks a good price! To be or not to be........

Gents, what do you feel with RED?

The volume?

Gotta be an error...

MRC & Co · 5 April 2008

Volume is fukced on all stocks I think! Definately an error.

Uncle Festivus · 5 April 2008

kennas said:
Gents, what do you feel with RED?

The volume?

Gotta be an error...

Yes, BC volume data out by factor of 100. Otherwise see the RED thread Fred

Temjin · 5 April 2008

refined silver said:
Gut is good!

Nice new avatar too by the way!! I like it!

haha thanks, I stole it off from google image.

Maybe my guts could be right.

I have always give little attention to Fibonacci numbers as resistance/support on price actions. (maybe due to my biases in mechanical system heh) But the recent price actions for gold and silver based on the Fibonacci levels kinda surprised me. I should rethink twice about these self-fulfilling indicators.

See how gold bounced off exactly at 50% as support and also at 61.8%.

Same for silver but 61.8% acted as support and 38.2% as resistance.

Hope it holds now.

refined silver · 6 April 2008

Someone prepared to lay 50 years of trading experience and reputation on the line:

Jim Sinclair offers a $1,000,000 bet that gold will reach $1,650 by or before January 2011.

http://www.theglobeandmail.com/servlet/story/LAC.20080404.RBERMAN04/TPStory/Business

Not a publicity stunt but a real wager, looking for a taker.

Serious inquiries on this have been primarily from young derivative dealers, which I was expecting.

By Monday I expect the wager contract to be finalized with a party that has offered to take me up on this bet. Details will be posted once the process is complete.

I believe this is a sucker bet. I am not the sucker.

and...

It is one thing to type on a computer or be a talking head. It is another to bet the ranch on the view you espouse.

The technical procedure of a serious wager is:

1. Prove you can in fact wage the challenge through an attorney's letter.
2. Segregate the funds in cash or near cash in the hands of your attorney.
3. Execute an agreed upon binding contract stating the terms of the wager.

This offer is void in areas where wagering is illegal if any such areas still exist in our algorithm-geek casino world!

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