Gold Price - Where is it heading?

[MRC & Co]

Maybe, maybe not. Oil is (short term spec?) overbought, gold is consolidating/proving. If they are going to revert (or even overshoot) to the historic ratio of 14:1 there is room for oil to correct & not effect gold. Something could be about to happen very soon ie this week, possibly as indicated by Bintang's scatters or simply the gold:wtic chart showing indicators extreme 'oversold'? Time for another rotation?

Agreed.

 

[CamKawa]

Maybe, maybe not. Oil is (short term spec?) overbought, gold is consolidating/proving. If they are going to revert (or even overshoot) to the historic ratio of 14:1 there is room for oil to correct & not effect gold. Something could be about to happen very soon ie this week, possibly as indicated by Bintang's scatters or simply the gold:wtic chart showing indicators extreme 'oversold'? Time for another rotation?

Or if you compare not gold:wtic but wtic:gold then the RSI is 65.56. We could just go around and around here. Somethings got to give.

 

[Bintang]

Maybe, maybe not. Oil is (short term spec?) overbought, gold is consolidating/proving. If they are going to revert (or even overshoot) to the historic ratio of 14:1 there is room for oil to correct & not effect gold. Something could be about to happen very soon ie this week, possibly as indicated by Bintang's scatters or simply the gold:wtic chart showing indicators extreme 'oversold'? Time for another rotation?

Is there something sacrosanct about the ratio 14:1? If so, I don't see the evidence. The average trend (long-term) of the scatter plot I posted earlier is US$5.8 increase in gold price for every US$1 increase in oil price. I'm bullish on gold and oil but not to the extent of 14:1 (long term). If it ever reaches that ratio again at close to current oil prices it would have to be a short-term spike, which for me would be another great opportunity for selling.

 

[M34N]

I remain bearish Gold for the medium term, I believe this is just a rally in the the downtrend that started from the $1030 high. For me this rally should find resistance ( and is thus a dud) between $920-940 and will use it as an opportunity to make another short if the right circumstances present themselves( I do however concede that it could also go higher and a retest is possible in the market and thus invalidate my thoughts).

...

My very long term(secular) stance on Gold remains bullish. One reason for this is well represented by the Dow/Gold ratio chart below(chart is not current). If one looks closely at this chart it's easy to see that the average bear campaign since 1896 has been 14 years. The current leg down is only 8 years.

Interesting wavepicker, I read a lot of comments from you + others on here about gold and found that one stood out the most.

So basically you would look at going long on gold pretty much next year? At what price would you consider entering to go long?

I personally went long on NCM a week ago after I saw a big turnaround in NCM and a few other gold stocks, and right up to now gold is up some $50 in the past 2 1/2 days of trading, the sentiment seems to have shifted heaps in the past few days so I'm wondering why people think that gold still looks fragile after such a big rally, and the continuing momentum of commodities (and oil in particular). Commodities boom seems to be never ending and I can't see the justification for selling off gold at the moment when a lot of other commodities seem to be going up too, and the inflation risks that exist now and possibilities of further $US weakness and interest rates dropping for a slumping economy.

All signs look bullish to me? Oh well, time will tell...

 

[CamKawa]

Commodities boom seems to be never ending and I can't see the justification for selling off gold at the moment when a lot of other commodities seem to be going up too, and the inflation risks that exist now and possibilities of further $US weakness and interest rates dropping for a slumping economy.

All signs look bullish to me? Oh well, time will tell...

You would want to be careful thinking like that.

 

[explod]

Continually many make an error in thinking of gold as part of commodities. Gold has throughout history been a backing to legal tender, as money untill the Bretton Woods agreement back in the 70's. However that made money into a paper promise and as economies ebb and flow so now do currency valuations.

The coming of gold again is due to the weakening US dollar, that is the main driver, it has nothing to do with the commodities boom/ or if you like possible bust. Gold is a hedge against inflation, which is actually paper money devaluation. The US has massive debt, domestically, publically and offshore. Production in the US is less than consumption. Debt repayment is now greater than overall income. The US dollar can only continue to go down and in return gold will go up, simply because it has an intrinsic value. There are many other angles to it but in this short explanation these are the prime ones. A scan of this thread is well worth a look to fully understand.

In the short term many will argue all sorts of directions based on technical analysis and time clock and historical wave counts. For trading, these systems are good, but in the longer term, for the investor, it will be gold as a reliable store of wealth that will see it rise to much greater levels as the coming finacial mess unravels and plays out.

 

[ithatheekret]

Gold moving on the hedge front .... inflation hedge .........

But , oil fencing with records , and transport is leading the way .

 

[osmosis]

Continually many make an error in thinking of gold as part of commodities.

So, in terms of asset allocation in a diversified portfolio, in which category does gold come under (ie gold bullion/coins/ETF's not gold miners)?

 

[explod]

So, in terms of asset allocation in a diversified portfolio, in which category does gold come under (ie gold bullion/coins/ETF's not gold miners)?

For me, physical gold in a bank vault. The standard industry advice seems to be between 10 and 20% As the idea of gold for those who follow it is to protect against a full financial meltdown then physical is the only way. Authentic gold and silver coins good. I do save the Aussie 1966 siver coin which is worth about 6 to $7 for its silver content.

 

[explod]

Did someone put a sign up near the bear trap. The chill of the deep water financials bringing on hunger pains.

Anyway, gold advanced 3% on the week but silver's jump of 6.5% is significant. The big moves in this bull have been led by silver breakout, a breakout against very bearish comments on it from Wall Street. Gold will need to break US$850 though. US$ staring down the throat of a new low could just do that. Current treasury yield killing it.

With some of the dire derivative news just breaking we could be in for a very interesting week ahead.

 

[Firdy]

Is there something sacrosanct about the ratio 14:1? If so, I don't see the evidence. The average trend (long-term) of the scatter plot I posted earlier is US$5.8 increase in gold price for every US$1 increase in oil price. I'm bullish on gold and oil but not to the extent of 14:1 (long term). If it ever reaches that ratio again at close to current oil prices it would have to be a short-term spike, which for me would be another great opportunity for selling.

Just coming into this thread, having been an investor in selected junior gold stocks. I thought the accepted rule of thumb goldil ratio was 10:1, but it's been so long since I hear that that I don't even know where I got that ratio from!

 

[M34N]

With some of the dire derivative news just breaking we could be in for a very interesting week ahead.

To say the least, look at what's coming up (taken from CNBC.com):

MONDAY: All U.S. financial markets closed for Memorial Day
TUESDAY: Consumer confidence; new-home sales; S&P/Case-Shiller home price report; Fed's Yellen speaks; Idaho primary
WEDNESDAY: Weekly mortgage applications; durable goods; Fed's Stern and Fisher speak
THURSDAY: Weekly jobless claims; weekly crude inventories; GDP; Fed's Kohn speaks
FRIDAY: personal income and spending; Chicago PMI; consumer sentiment; Fed's Rosengren speaks

That's choca-block full of important data out of the US coming up next week, GDP and home sales will be the most important for gold I would think, oh and oil inventories, any more declines in stock piles and it's up up and away.

Personally I see only more bad news here, lower $US, slowdown in the economy, higher inflation, all good for gold. Anyone else willing to go long?

 

[Bintang]

Just coming into this thread, having been an investor in selected junior gold stocks. I thought the accepted rule of thumb goldil ratio was 10:1, but it's been so long since I hear that that I don't even know where I got that ratio from!

Dictionary: rule of thumb
A useful principle having wide application but not intended to be strictly accurate or reliable in every situation.

Right now the 'world' is changing very rapidly. Maybe using rules of thumb for investment decisions is not such a good idea.

 

[barrett]

An upward-sloping support line that began 16 May was broken a few hours ago (simultaneously also in silver)... at the same time RSI(14) on the hourly broke down out of a wedge.. finally just now, an inverse head and shoulders formed over the past 4 hrs failed to hold... it suggests a quick fall from the current 922

All short term stuff, but pointing to a correction over the next day to say 910 or even 900..... after that, would be looking around to ride a wave 5 UP to 950-960.... I am out of the market for now.

 

[barrett]

that didn't take long... couldn't resist scalping a short on the way down..

Some signs of a bottom beginning to form here.. 906 is 38% retracement of this recent upmove since 865... that would be a reasonable place for wave 5 to begin, with the potential for a quick move to 950-960...

On the other hand if 900 is broken, might need to rethink that bullish wave count..

 

[Uncle Festivus]

that didn't take long... couldn't resist scalping a short on the way down..

Some signs of a bottom beginning to form here.. 906 is 38% retracement of this recent upmove since 865... that would be a reasonable place for wave 5 to begin, with the potential for a quick move to 950-960...

On the other hand if 900 is broken, might need to rethink that bullish wave count..

Nice call there Barrett . A bit of fluster after the break & sliding with oil but held at 904ish, back to 910. Equities still unconvincing so still waiting for the big drop to re-enter? Talk about volatility! Crazy times...

 

[barrett]

Hi UF,wild times isn't it! Here's my hourly chart.. but would probably have to bin this wave count on a break below 897..

Seeing this as a potential roadmap only.. &would go long only if other strong bullish signals come in in the short term... I don't put enough trust in my EW to trade on it alone.. keeps me occupied though

 

[wavepicker]

Interesting wavepicker, I read a lot of comments from you + others on here about gold and found that one stood out the most.

So basically you would look at going long on gold pretty much next year? At what price would you consider entering to go long?

I personally went long on NCM a week ago after I saw a big turnaround in NCM and a few other gold stocks, and right up to now gold is up some $50 in the past 2 1/2 days of trading, the sentiment seems to have shifted heaps in the past few days so I'm wondering why people think that gold still looks fragile after such a big rally, and the continuing momentum of commodities (and oil in particular).

Sorry for the late reply. I figure the market is in the process of answering that question quite well at this juncture.

My target range to position short on Gold again was $920-940 as per the last post in this thread. Nothing has changed, still bearish Gold and target range between $600-700 remains. Not sure how long it will take, just playing it move by move at present. This EW pattern always looked to good, but I once again concede that nothing is cast in stone.

Even if target is not met I feel that Gold will be at the very least range bound for quite a while., so long term bulls, gonna have to do more waiting.

The USD looks like it might be putting in a higher low ATM which backs up earlier analysis and charts. Time will tell, even if a new low comes in the weeks months ahead I feel it will only be a false break or a brief low.

When is it time it time to get bullish Gold again IMO?? When most of the current bulls are washed out of the market and become totally disgusted with their positions.

Commodities boom seems to be never ending and I can't see the justification for selling off gold at the moment when a lot of other commodities seem to be going up too

When you get that "never ending feeling" is enough justification for me to be selling.

All the Best

Wavepicker

 

[explod]

I have said all along that gold will not go far till after the Presidential election and I stand by that. But a retracement to 6 or $700 Wavepicker, you must be dreaming.

 

[wavepicker]

I have said all along that gold will not go far till after the Presidential election and I stand by that. But a retracement to 6 or $700 Wavepicker, you must be dreaming.

Implod,

I was called a dreamer in 2001 when I picked up Gold under $300.
Just remember, ANYTHING is possible. A 38.2-50% retrace since this entire bull started in 1999 is very probable, in fact it is quite typical for a retracement of a completed impulse and happens VERY often at varying degrees of trend. What adds weight to the EW technical argument here is that the span of the previous wave 4 of one less degree is at approximately that level and that is where my eyes are focused. Open your eyes and look what is happening, trade what you see.

Happy holding Implod