Gold Price - Where is it heading?

[MRC & Co]

Is that allowed on the forums, telling someone you feel sorry for them and how to use their $$?

While I am getting great results out of T/A recently (with small help by fundamentals), but I do not like the arrogance of some T/A 'aficionado's'.

If your making money, great, but explod has been on gold since the start of the trend, he seems astute at investing to me, so keep your insults and 'advice' off the forum and keep it insightful, respectful and useful for everyones sake!

That was a cheap shot if ever I've seen one!

 

[wavepicker]

Is that allowed on the forums, telling someone you feel sorry for them and how to use their $$?

While I am getting great results out of T/A recently (with small help by fundamentals), but I do not like the arrogance of some T/A 'aficionado's'.

If your making money, great, but explod has been on gold since the start of the trend, he seems astute at investing to me, so keep your insults and 'advice' off the forum and keep it insightful, respectful and useful for everyones sake!

That was a cheap shot if ever I've seen one!

As you know very little about the background to this post you should keep your comments to yourself.

If I put up argument to someones post using overwhelming evidence and then they start crying and complaining in PM's using other reasons as an excuse because they can't "handle it", they should learn to grow up.

While Gold was rising all we heard was "you are wrong for that reason and this reason". Now that it is falling we are l being told that it gonna go to the stars again soon.

This used to be a great thread. Recently you could not put in a word about T/A without getting nitpicked by the long term investors.

I don't know how long explod has been on this trend. Is it 1999 or 2007? You know it ain't my business and how much money he makes or loses is not my business either. He can do what he likes.

Gold is falling and I am stating it how it is and trading the trend.

 

[ShareIt]

Everyone in this thread is invested in Gold by the sounds of it....

so if you call it down, it is still going up and if you call it up, well they ALL knew that!

 

[explod]

As you know very little about the background to this post you should keep your comments to yourself.

If I put up argument to someones post using overwhelming evidence and then they start crying and complaining in PM's using other reasons as an excuse because they can't "handle it", they should learn to grow up.

While Gold was rising all we heard was "you are wrong for that reason and this reason". Now that it is falling we are l being told that it gonna go to the stars again soon.

This used to be a great thread. Recently you could not put in a word about T/A without getting nitpicked by the long term investors.

I don't know how long explod has been on this trend. Is it 1999 or 2007? You know it ain't my business and how much money he makes or loses is not my business either. He can do what he likes.

Gold is falling and I am stating it how it is and trading the trend.

You know well that I have never started crying or needed anyone to stick up for me. I do get a bit tied up and befuddled sometimes but it is good to laugh at oneself and be laughted at, but importantly one learns. I remember a time when the t/a's were stuck up for and who did that behind the scenes. And someone spat the dummy and said they would go away but is back asserting good ideas. The opposing views are what does make this thread great and I enjoy the banter. Anyway enough of this off topic c...p.

Gold is pushing sideways into another flag formation to which it will eventually break up from. A very good post last week (was it Barret?) I will look up and refresh later demonstrated very well what is going on with gold.

 

[explod]

Continuing on from my last post, sorry Barret but my credit goes to Treefrog for his post 5thMay 12.14am. Which clearly pictures the charachter of this gold bull trend that has evolved over the last 7 years.

A short term down trend we may have but it is well contained within the habbits of this uptrend. For those who missed it Treefrog's post is well worth a bit of thought IMHO.

And Wavepicker I think that some of the charts you put up are excellent. Not that I am any great judge but just 2cents.

 

[explod]

From my low corner have been ruminating over the charts and noticed that since last Friday we are in a short term uptrend, it could continue?

Looking at the last 6 months we have a head and shoulders in the making that could take us to US$800.

Oooooorrrr we could bounce off support around 825.

But so what, in the next few years gold will go to the moon.

 

[cuttlefish]

Everyone has their own investment/trading style - based on differing personal objectives which include their own requirements for risk management (market risk, legal risk, political risk, economic risk, personal financial risk etc. etc.), asset protection, income generation and wealth creation. These strategies also depend on the level of capital they are applying to all of this. On that basis nobody can accurately assess or critique another persons strategy without knowing all of these details.

My view in relation to gold (which as I understand it is consistent with explods and others) is that gold is a currency not a commodity and is competing with fiat currencies. In that regard any institutions that have a power base that is based around the value of fiat currencies have motive to do all they can to defend it against competition from gold. In that respect, media spin would form one part of the arsenal of that defence, as would any other activities that can work to the detriment of a strong gold price.

I'm also one of those that believes that gold has a reasonably good potential of putting in massive and unheard of gains over the coming years if the US economy and US currency (and thus all other currencies that are dependant upon it as a reserve currency) shows signs of systemic failure.

Based on that in my view (and in line with one of the inputs into my own goals, one of which is asset protection in all situations) its worth having a portion of funds allocated to a continous open long position on gold because the up moves in the sorts of situations I envisage could occur (given they would really be reflections of a US currency down move) can be sudden and dramatic.

 

[MRC & Co]

Everyone in this thread is invested in Gold by the sounds of it....

so if you call it down, it is still going up and if you call it up, well they ALL knew that!

Not me, though just bought a small stake in SGX, first time I have had any gold exposure since it's blow off top.

I've given up on the gold predictions for the moment. Wait until some firm confirmation one way or the other. At the moment it is more splitting hairs, no confluence for me.

 

[>Apocalypto<]

USD looks ok to me boy's. I'll be holding my shorts.

 

[wavepicker]

USD looks ok to me boy's. I'll be holding my shorts.

But how can that be mate, according to the Gold "experts" the USD is doomed? LOL

 

[explod]

But how can that be mate, according to the Gold "experts" the USD is doomed? LOL

As an old Ex I have lost most of my spert so cant really say. It was your good self if I recall that indicated on your charts that the US$ was going back up.

By Apocalypto's chart it looks to me as if it is in a very firm down trend. Looking back can see all these head and shoulders with a down bias. Looks like it is forming another one at the moment. And since 2001 gold has been the reflection in the sky to the money.

What is happening is just what many economists predicted when gold was removed from support to currencies by the Bretton Woods agreement as presided over by US President Nixon. They will fight it with the printing presses but without value behind the print it will not be accepted much longer as a form of exchange.

If you like to visit the Privateer web page you can read the finer print. It'l come up on Google.

 

[cuttlefish]

yeah thats a very bullish looking USD chart there - starts at the top left and finishes somewhere near the bottom right - I'd be putting the house on USD longs after looking at that one (not).

 

[Uncle Festivus]

USD looks ok to me boy's. I'll be holding my shorts.

Is that from $850?

But how can that be mate, according to the Gold "experts" the USD is doomed? LOL

WP, you say this every time the ol greenback has a rally. All part n parcel of the game - we can all 'trade it' , just not sure if it's sustainable, as per the chart . At the same time, this isn't a solid rally for me until & if it breaches $900 during tonight's trading. After that I can reassess?

Also, there is no hard and fast rule that can't be disconnected ie the connection between the $US & gold, as I think we are near a few 'disconnections' that will confound all.

 

[rederob]

But how can that be mate, according to the Gold "experts" the USD is doomed? LOL

Ther are quite a few years of charts showing the sustained downtrend of the US dollar.
Like anything else traded, it will rise and fall.
The only relevant issue is your interest or investment at the time, and how long you choose to stay in.
The US dollar is "doomed", and will sink significantly below its recent cyclical low, then possibly into the 50cent range within 3 years.
Its descent will slow as a weak US dollar will make US produced goods more globally competitive.
An important contributor to the greenback's demise will be the cost of oil related energy imports and its impact on GDP going forward. I estimate oil related imports will cost no less than $550b in 2008, and contribute almost 50% of the total deficit for the year.
On the topic of gold, its meandering under $900 could soon come to a close, although I always favour strong resumptions in gold prices in the last quarter of each calendar year. Clearly, that's many nonths away.

 

[explod]

There is no doubt that most following this thread know well where gold is going in the next few years. However the following article via the Bullion Desk puts the future beyond doubt. Particularly the need to lean toward having physical and being sure that companies are unhedged.

There is a bit in it so will make it two posts.

"F" is for "Fundamentals"


Golden Gut Check
Why gold is likely to keep moving higher over the long run


"Gentlemen, this is a football."
Coach Vince Lombardi at the start of Green Bay Packer football camp

Occasionally I like to take a close look at gold's fundamentals -- a gut check of sorts. It helps me get a deeper sense of what is driving the market. It also helps me reorganize my thinking around sound principles. Vince Lombardi, the legendary coach of the Green Bay Packers, always stressed knowing and understanding the fundamentals as the key to success on the football field. Likewise, learning the fundamentals is key to knowing and understanding gold. By doing so, you will become a more confident, better informed and successful gold owner.

From scarcity to shortages, the past is prologue

I cannot remember a time when the fundamentals have lined up more favorably for gold. The factors which have driven the price up over 75% over the past few years remain in place and in fact seem to be intensifying. The past, in this respect, could very well serve as prologue. Great forces, mostly benevolent, are at work in the gold market. Demand, as reported copiously by the mainstream financial press, continues to grow steadily on a global basis. It is on the supply side of the equation, however, where we now find the strongest arguments for resumption of the bull market. To come to the point, fundamental trends suggest that the gold market may be moving from a period of general scarcity to outright shortages. Unless some formidable source for gold is suddenly found, the period of shortages could come to full flower as early as 2008.

Though benevolent forces seem to be guiding the gold market at the moment, there is, at the same time, a darker side to the emerging gold story. A shortage raises the possibility that investors who have yet to purchase gold (or plan to purchase more) might be crowded out of the market by major financial institutions and mining firms intent on squaring their physical short positions.

The threat of a gold shortage should not be taken lightly. Recent reports of a rice shortage in Asia are a case in point. Nation states immediately began hoarding rice and governments put incentives in place to encourage production. The possibility for shortages applies to a range of key commodities, not just gold. Along these lines Goldman Sachs recently predicted explosive rallies in commodities led by crude oil rising to $175 per barrel. Shortages, hoarding, rapid price increases, breakdowns in international trade, a collapsing social order and the increased purchasing power of gold -- all typically accompany periods of currency debasement.

The mining companies face reduced production. . .

In 2005, the world's mines produced 2,550 tonnes of gold. In 2007, production had declined to 2,447 tonnes. Production, in fact, has been in steady decline for a number of years. Newmont Mining's Pierre Lassonde, who is generally considered one of the more savvy mining executives, explains why the mines have failed to increase production even with prices at record levels: "When is the last time we had a 30 million ounce discovery in the world? It's not in this decade, I can tell you that (and) it's not over the last 10 years. It's a long time ago. Look at exploration expenditures * they are going up, but we are not getting the discoveries. And not only are we not finding them, but the ones we do find, they take forever to put into production." Lassonde goes on to say that in his view "it's not going to get any better * at least for the next five years, and possibly for as long as the next 10 years."

 

[explod]

. .And forced covering of their forward sales

The steadily rising gold price has encouraged some mining companies (and forced others) to buy back their previous forward sales -- a process called dehedging. Though some analysts in the industry perennially predict the dehedging will slow, it has instead accelerated and become a major factor on the demand side of the gold balance sheet. In 2005, the mines dehedged 86 tonnes of metal. By 2007 that figure had grown to 400 tonnes -- a 465% increase.

When a mining company dehedges, it reverses its previous role as a seller in the fundamentals' equation and instead enters the market as a buyer. The effect on the supply-demand chart has been dramatic. What was once supply which acted to hold down the price has now become demand and an impetus to the price. This role reversal has contributed significantly to gold's steady rise over the past several years.

The plight of African mining giant AngloGold Ashanti is a case in point. Miningmx.com reports that Anglo is currently receiving 20% less than the spot price of gold (assuming a $900 price) due to its contracted forward sales. What's worse is that Anglo is contracted to deliver 60% of its hedge book over the next three years.

To buy its way out of the hedge, one top analyst believes a massive share issue amounting to one-third of the company's equity would be required. "It's a bombshell," he says, "and they are in more trouble with this hedge than anyone realizes." Thus not only will Anglo's shareholders experience hedging losses on the bottom line, they may be forced to suffer serious dilution of their interest as well.

For those who own the metal itself, such problems are grist for the mill. Anglo's forced purchases, no matter how they are financed, go straight into an already buoyant gold market. Keep in mind that the AngloGold Ashanti story is just one among many in the world of gold mining. "Being underwater" is an industry-wide problem. Analysts estimate the complete industry hedge book at roughly 1000 tonnes with additions still being posted annually.

Some key producing countries are keeping production at home

Have you ever asked yourself how much of the gold mined actually makes it to the open market? One would think that all the gold mined makes it to market. However, like much in the gold market, the answer to that question is more complicated than it appears on the surface.

Few people know, for example that China, which became the top gold producer in the world this past year, is a net importer of gold. (Annually, it produces about 275 tonnes and consumes about 325 tonnes.) In short, the biggest market for Chinese gold is the Chinese people themselves, and the demand is large enough to consume everything China produces.

Beyond direct retail demand which is likely to increase as China prospers (the Chinese people have a particularly strong attachment to gold), there is the question what China is likely to do with all the dollar reserves it has piled up over the past few years. There are constant rumors that its huge sovereign wealth fund is buying gold. The central bank has also been cited in press reports as a potential buyer. Should any significant tranche of gold be made available, there is a strong chance that China might be a buyer.

Similarly, Russia, the fifth largest producer, is a net accumulator of gold. Only in its case, acquisitions are being made in the open as part of its central bank operations. In 2005 First Deputy Chairman of the Central Bank Alexei Ulyukayev, undoubtedly with President Vladimir Putin's blessing, said the bank would be purchasing gold "on all markets on which it is available," meaning both domestic and foreign markets. This gold will become part of Russia's national reserves and serve as a bulwark for the ruble.

So, in the case of the world's first- and fifth-largest gold producers, the gold in essence never leaves its borders. What appears to be production that should grease the wheels of international supply is actually gold hoarded by the nations which produce it.

Others face serious limitations on their production

The South African mines have seen their production decline steadily over the years. Labor unrest, political instability and high-cost, deep ore structures have all taken their toll. Now the South African government has informed the mines that they will have their electrical power rationed for the next several years. Experts warn that the power shortages could cut gold production by as much as 15% to 20%. This translates to almost 55 tonnes of gold suddenly disappearing from the supply table -- a not insignificant number. The power supply problem could add to the demand side of the ledger as well. Writing for Financial Times, John Dizard made the following observation: "A lot of South African gold production has been hedged through short sales. It may be the case that the banks who lent the gold for the short sales have suggested that the cutback-plagued mines cover their short sales with open market purchases. That could have fueled part of the gold pop in recent weeks."

The official sector is not as committed to selling as some might think

Central bank, or official sector, sales are governed to a large degree by the Central Bank Agreement on Gold (CBGA). The signatories, which include most of the major European central banks (the primary sellers over the last decade) are restricted as a group to selling no more than 500 tonnes per year. There is also strict regulation of leasing gold -- another method of supplying the market.

When the International Monetary Fund recently announced that it was seeking permission from its members to sell its gold, it stipulated that the sales would be conducted under the guidelines of the CBGA. That said, there is still the possibility that the IMF sales will be blocked by Congress. At a time when other central banks have become reluctant to sell, that could come as a major blow to the supply side of the market.

Some top analysts, like Gold Fields Mineral Services, think CBGA sales could come in at less than the 500 tonnes allowed for the 2007-2008 fiscal year which ends in September. And as for the 2008-2009 CBGA fiscal year, some analysts are predicting a sharp drop off in sales. Virtual Metals stated in a recent report that sales could be as low as 247 tonnes unless some official sector entity, like the IMF, stepped into the breach. As of this writing, the World Gold Council reports only 191 tonnes sold of a possible 500 tonnes in the 2007-2008 CBGA fiscal year -- another indication of the growing reluctance on the part of central banks to sell.



Table courtesy of World Gold Council


______________________

Note: This past week (3/31/08), the World Gold Council reported that Switzerland, one of the primary sellers in recent years, is now approaching the end of its latest 250 tonne selling program. Germany, meanwhile, has announced that it will not sell gold in the new CBGA year beginning September, 2008.

 

[wavepicker]

Ther are quite a few years of charts showing the sustained downtrend of the US dollar.
Like anything else traded, it will rise and fall.
The only relevant issue is your interest or investment at the time, and how long you choose to stay in.
The US dollar is "doomed", and will sink significantly below its recent cyclical low, then possibly into the 50cent range within 3 years.
Its descent will slow as a weak US dollar will make US produced goods more globally competitive.
An important contributor to the greenback's demise will be the cost of oil related energy imports and its impact on GDP going forward. I estimate oil related imports will cost no less than $550b in 2008, and contribute almost 50% of the total deficit for the year.
On the topic of gold, its meandering under $900 could soon come to a close, although I always favour strong resumptions in gold prices in the last quarter of each calendar year. Clearly, that's many nonths away.

Rederob,

Your you have to be careful with your wording. Your post is almost a ramp down for the USD, in particular the "is" and "will" words. I would hate for some inexperienced parties to be following your advice here and get burnt.

It seems to me this sort of investment mentality is almost guaranteed to fail.

The are NO certainties in the market, absolutely no certainties. No matter how hard we try and predict, forecast, and analyse by fundemental or TA there are no guarantees. All it takes one trader who has the volume to move the markets and things can change, so please be careful about what you say.

Only probabilities and possibilities exist and can sometimes be exploited. Trade what you see from the information the market is giving you not what you hope or expect, that is my motto. That is REALITY. It's peoples perception that drives the markets, not fundemental or even Technical Analsyis for that matter. Accept your risk, make a plan, take the trade if it fulfills your requirements and get out if you are wrong.


You are probably right, the USD will sink into oblivion in the very long term. I agree with you. But that does not make it right and ANYTHING is possible at any time in the market. I suggest you think about what I said very carefully next time you decide to take a trade.
As for the USD Index, I stand by my analsysis that is it will rally between now and the end of the year. I am not saying it will be correct, but how I am approaching it and eventually the market tell us. But if it's not I don't care( I have allowed for that scenario), I will simply move onto the next trade. It's that simple, and I ain't gonna get hung up about it.

 

[rederob]

Rederob,

Your you have to be careful with your wording. Your post is almost a ramp down for the USD, in particular the "is" and "will" words. I would hate for some inexperienced parties to be following your advice here and get burnt.

wavepicker
As this is the gold thread, it is important to acknowledge that a weak greenback is a continuing prop to gold.
The US is riddled with debt.
Its consumers are indebted to the tune of $2.5trillion.
It will run a budget deficit in 2008 of over $200billion (pre-sub prime).
It will accumulate a trade deficit in 2008 in excess of $700billion.
Its recent home owners are finding their mortgages are now higher than the property purchase price, and foreclosure filings for the last quarter were almost 650,000: The rate of foreclosure has increased for the past 7 quarters.
I would hate for the ignorant to think that somehow the US is in good shape, and that the greenback was gathering strength: It is doomed, and it will sink further into oblivion over coming years.

That does not preclude traders profiting on trading the dollar, as some will every day of the week. It also does not preclude the dollar from a resurrection within the next 5 years, perhaps longer. Currencies are as cyclical as commodities, as will be proven in Zimbabwe after Mugabe's departure.

 

[M34N]

Anyone got an explanation to what happened in the white circled area? Big sell off then big buying again, makes no sense?

 

[jackjones]

Anyone got an explanation to what happened in the white circled area? Big sell off then big buying again, makes no sense?

View attachment 20834

"Shaking out the weak longs"?

I think if it holds 883 on Monday it will head to 900. If it doesn't it'll test 872 again.