Gold Price - Where is it heading?

[josjes]

RobinHood and others who are still skeptical of gold, who are still standing at the train station being left by the gold bull train, whilst you are still wondering when is the gold going to plunge 200% to hell why not take a read at this article.

Take a good long look at the rise in the price of gold over the last six years (since the low of 2001)

The so-called "smart money" began to buy gold driving the price up from the $252.00 low, well into the $500's. Then the institutions began to purchase gold and that drove it up to the recent $1,033.90 peak we saw back on March 17th. That was a new all-time high just in case you want to keep records.

From there gold began the long awaited correction that would take it down to $811.00, $731.00, or the gates of hell depending on who you listened to. Declines in gold are always scary because they are based on fear, usually unfounded, and that fear leads to violent movements to the downside. Hands up who are guilty of this ?? :

Rallies by the way are based on greed and are almost never as volatile as declines.

So the gold price headed down with almost no one paying attention to the fact that gold broke out from the old historical (1981) high of $850.00 and that just might be a logical place for any retracement to stop. That is often a common occurrence after a strong leg up and gold certainly had a strong leg up. No sooner said than done! Gold dipped down to 846.40, looked around for a couple of minutes and then headed back up.

Since then gold has tried to rally only to meet with persistent sellers on more than one occasion. Many took that as a sign of weakness but unfortunately many do not know what they are talking about. Each selling spree produced a series of higher lows all while each buying spree produced a series of lower highs.

Most people seem to go through life unaware of their surroundings and so they failed to realize that we saw this same exact pattern, a series of higher lows and lower highs thereby compressing price, way back in August of last year. And like August of last year, everyone was concerned that price was going to break down and fall to $500.00. In bull markets a formation whereby price is being compressed stands an 80% chance of breaking out to the upside, and gold is more bullish than the most. Today is no exception to the rule and I am absolutely convinced that gold will do the same thing. In fact, as I type the August gold is up $31.00 at $913.00 (on Friday 27 June close up to $931) and has in fact broken out to the upside! Just a couple of days ago gold fell $22.00 in a question of three minutes and that prompted the usual chorus of "we'll see a lower low in a week", but they were of course wrong. I told you to buy gold after the break, and again the next day, and time has proven me correct.

I didn't just discover gold and I want you to understand that I am not a "gold bug" meaning I do not have an emotional attachment to gold, or anything else I invest in for that matter. I look at gold as the only true way I can protect or accumulate real wealth and it is the only real store of wealth.

This guy speaks the same language as me

I do not fear corrections in gold and I also don't blow them out of proportion. You need to understand that the numbers say that the correction in gold is over, the correction was a rather shallow 15.5%, and now gold is being accumulated and it will head higher. Much higher! Higher than even the most dyed in the wool gold bug can imagine. Today the August gold closed up $32.50 at $914.80 and clearly broke out to the upside and out of the pattern of compression. The last time gold did that it exploded for almost $100 in twelve sessions. I am convinced that gold is going higher, higher than the P&F target of $970.00, higher than the $1,033.90 March all-time high, higher than the $1,179.00 Fibonacci resistance. I see gold trading as high as $1,711.00 by this time next year and that is the same target I had three months ago. The reason for the rise is not important. What is important is that gold is going higher, as measured in any currency, and if you want to protect your wealth, you'd better own some. If fact, you'd better buy a lot.

One final word about gold stocks. I am not a lover of gold stocks and have reduced my position in half, but they broke out as well today. I just see too many problems. About one-third of a miner's costs are related to energy, and the price of energy has literally gone through the roof. Aside from that you have increased labor costs and never-ending interference from governments and environmentalists. I much prefer futures contracts or physical gold:

Then you have the issue of the declining Dow and just how much of a drag it will be on the HUI. With the 50-dma now below the 200-dma, you have a much weaker chart than with gold or silver. My best advice is to use any significant rally in the HUI to get out of gold stocks. Stocks in general are not a good place to be and that won't change any time soon. Personally, I would not be afraid to buy gold and silver on a weekly or monthly basis because you can't go wrong over time. Gold stocks don't give me that same comfort level.

-Enrico Orlandini

 

[>Apocalypto<]

well first thing to say right now is that gold is in support on the 8hr and daily chart.

moved out of the down trend and has formed a base.

interesting to see what happens here at the top of the range. I am not making any calls yet as Oil has proved to be a real driver in the spot Gold market.

Based off other analysis I use I think spot will fall back into the range. not without a possible trust out of it first.

I think Spot will sit in the range as long as crude is making it's current drive. A move out of the range with a higher low with resistance as support will show something much more bullish.

Oil is another that is on a road to correct as this thrust is very speculatively driven. I am not calling any tops there!

Cheers

 

[Temjin]

well first thing to say right now is that gold is in support on the 8hr and daily chart.

moved out of the down trend and has formed a base.

interesting to see what happens here at the top of the range. I am not making any calls yet as Oil has proved to be a real driver in the spot Gold market.

Based off other analysis I use I think spot will fall back into the range. not without a possible trust out of it first.

I think Spot will sit in the range as long as crude is making it's current drive. A move out of the range with a higher low with resistance as support will show something much more bullish.

Oil is another that is on a road to correct as this thrust is very speculatively driven. I am not calling any tops there!

Cheers

That is also exactly why I am still on the side line. Gold has always moved in correlation with oil. With the fact that the sentiment with oil is EXTREMELY BULLISH at the moment, and driven by more speculations (not that it is COMPLETELY driven, fundamentals still exist and strong), I have a feeling gold has yet to finish its consolidation.

Another reason is that I am waiting for a more decisive breakout of the US dollars (to the downside obviously) before committing back. The historic cycle of gold prices still points to the July/August month as consolidation periods.

So I'm waiting, but watching if there is a change. Regardless, I'm still following my weekly signals, not quite there just yet....

 

[Uncle Festivus]

I think Spot will sit in the range as long as crude is making it's current drive. A move out of the range with a higher low with resistance as support will show something much more bullish.

Oil is another that is on a road to correct as this thrust is very speculatively driven. I am not calling any tops there!

Cheers

Trying to break the channel top tonight maybe? Or is it too soon?

Some interesting bullish data coming out, even more pertinent with gold at around 935 and oil just breaking $143.

I notice stocks like NEM have been very uncharacteristicly strong for the last week now, and the HUI trying to break out as well.

The gold ETF's are in accumulation mode again (MACD crossing up?)

ETF holdings are up 5% or 39 tonnes from trough levels at the end of May amid profit-taking after $1,000, according to Citigroup.

http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=55618&sn=Detail

 

[>Apocalypto<]

I thought there would be small sought of thrust.

Till it closes out of the range and holds, I still stand by my opinion it's going to return into the range.

Cheers

 

[Uncle Festivus]

Looks like a big week coming up, and gold breaking up & out? Big move so far tonight. Making the gold/oil ratio look a bit better, hopefully a disconnection.

 

[Sean K]

Oil has to correct soon wouldn't you think? Like just a bit? Surely gold will come off with it? USD rally due as well? Perhaps. And won't POG be hurt? Perhaps that's why gold has been stuck in this range, because everyone's thinking there's going to be a correction in POO and USD?

Maybe if Israel (US) do tach nuke Iran we'll have a significant jump.

Or, maybe these things don't matter at all, and the waves are definately pointing to $845 and into the $700s. Or, perhaps the waves are arbitrary? $100 the opposite direction to the wC target, so perhaps.

XAU looks like it could be breaking up. Lots of resistance around 200 though. Maybe equates to $950 ish POG?

 

[Uncle Festivus]

Speaking of the XAU......looks like gold stocks leading gold....into the buy zone.....go NEM :bananasmi

I envisage a period where gold will do it's own thing, regardless of what oil or $USD do (disconnection) as we may be close to the next phase ie $50 daily ranges with bullish bias past & beyond $1k. Waiting for the time when gold is the only and possibly last game in town when everything else is 'worth-less'?

 

[explod]

From Jim Sinclair's webpage, cheers to the bugs, explod:-

Posted On: Tuesday, July 01, 2008, 2:25:00 PM EST

Hourly Action In Gold From Trader Dan

Author: Dan Norcini










Dear Friends,

Gold began a nice recovery from yesterday's mild end-of-month/quarter induced weakness with those same funds moving quickly to re-establish longs as the new month commences. Their concerted buying blasted gold through the resistance zone marked on the chart ($935 - $940) where it was being vigorously opposed by the bullion banks.

It was fascinating watching the battle at that level as gold bounced from it repeatedly until the longs were able to recruit additional reinforcements to their cause. The influx of these fresh troops ignominiously dislodged the bullion banks from their self-appointed defensive fortifications shoving them back to a new line near the $950 level.

The impetus for the bull's victory today was the release of the ISM numbers for June. The number unexpectedly rose to 50.2 from 49.6 in May. Initially, equity traders greeted the news by driving up the stock indices while Forex traders sold down the Euro and bid up the Dollar. That enabled the gold cartel to temporarily stuff the rise in gold and hold it below the $940 level. However, as is so often the case, those who foolishly make their trading decisions based on a headline number saddled themselves with an immediate loss because they failed to look deeper into the rest of the data. What they should have paid closer attention to, and what the market did get around to looking at, was the Index of Prices paid number. I had to double check the number to make certain that it was not a typo! It came in at 91.5, jumping from 87.0 in May and to the highest level since 1979! We all remember well what happened to gold in 1979! The dreaded word, “STAGFLATION”, is back in vogue.

That ISM number shoved inflation fears right back onto the front burner. It also did not hurt gold for traders to then be able to look over at the price of crude oil which once again was busy doing what it seems to be doing best of late, namely, defying gravity and moving higher! As the Dollar bulls suddenly became Dollar bears, the Euro began rising. All of this served to put a stiff tailwind behind gold and pushed it to within a couple of dollars shy of $950

 

[>Apocalypto<]

I envisage a period where gold will do it's own thing, regardless of what oil or $USD do (disconnection) as we may be close to the next phase ie $50 daily ranges with bullish bias past & beyond $1k. Waiting for the time when gold is the only and possibly last game in town when everything else is 'worth-less'?

I still think Gold is being driven off the OIL price or at least helped. last few highs in Oil have really helped hold the Spot price.

back in the range tonight.

 

[josjes]

Alf Field EW update. He's 90% spot on his EW analysis so far. He was calling the low on 30 April at 863, so just $10 off, not bad at all.

http://www.321gold.com/editorials/field/field070208.html

Elliott Wave Gold Update XX

Alf Field
2 Jul, 2008

Update 19 published on 30 April 2008 expressed the view that the there was a strong probability that the correction from the March 17 high of $1,033 was complete. In addition Update 19 contained the following warning:

"As will become apparent from the detailed analysis of the minor waves, there is a small possibility of a slightly lower target price of $855 in the Comex active month being achieved. This would have to happen almost immediately if it is going to occur at all."

Within 24 hours the gold price did indeed decline to $853 (London PM fixing) and $853.9 on the Comex 2nd month futures. The cash market briefly sported prices below these levels but the above levels remain the lows for these bench mark series used to monitor the market. The correction low was achieved 2 months ago but the gold price has not exhibited the sharp upward moves associated with the commencement of Large Wave III of Major Wave THREE. A "third of a third" is expected to be the most powerful of moves.

What happened? The chart below depicts the updated gold price action. The price action over the past 2 months has comprised several corrective 3 wave series which combined to form a triangle. This is not impulsive third wave action. The obvious conclusion must be that this action is part of an extended Large Wave II.

(Click on image to enlarge)

Data updated to 1 July 2008

It seems as if the market deemed the decline to the $853.0 low point to have happened too quickly. The decline encompassed only 31 London trading days. Although the required 16% magnitude of the decline had been achieved at $853.0, the market spent another 35 trading days tracing out a triangle in Small wave C, marked a-b-c-d-e between the red boundary lines above. This used up more time, thus helping to form a firmer base for the coming advance.

A triangle in this position is an unusual occurrence, but there have already been some strange corrective formations in this gold market to date. It is interesting that while the extension of the correction absorbed 35 trading days, the market respected the $853.0 low point during this additional time period and the low price was never challenged.

Once the gold price broke out of the triangle after reaching point e, the market has treated us to some notable gains, including a rise of $32 in one day, the largest one day rise in 23 years. Now that is more like "third of a third" action! This better, more positive, action in the gold price is an indication that the Large Wave III of Major Wave THREE may now be underway.

If this is correct, the market should rapidly move to new highs above the March $1,033 peak. The only word of warning is that corrections can sometimes be extremely complex and are not over until they are over. Nevertheless, the signs look positive that we are finally in Large III of Major THREE.

We can now make the assumption that the low for Large II was at $853.0 on the London fixings. This allows us to update the template for Major THREE. To start with, this is the template that was published in Update 18 on 24 March 2008:

That template forecast a low for Large wave II of $850, so the actual result of $853 is remarkably close to that forecast. The following updated template is not much different from the above one because the low for Large II was very close to the forecast :

Revised Wave Labels

For sake of clarity, the revised naming format for the various waves is outlined once again:

The bull market consists of five Major waves designated ONE, TWO, THREE, FOUR and FIVE. Major TWO and Major FOUR are corrective waves with a 25%-30% magnitude of anticipated decline.

Major upward impulse waves, ONE, THREE and FIVE will each contain 5 Large waves designated in Roman Numerals, I, II, III, IV and V. Large II and Large IV are corrective waves with a 16% magnitude of decline, give or take a couple of percentage points.

Large waves I, III and V will each contain 5 Small waves designated 1, 2, 3, 4, and 5. Small waves 2 and 4 are corrective waves with approximately 8% magnitudes of decline.

Small waves 1, 3 and 5 will each contain five Minor waves designated i, ii, iii, iv and v. Minor waves ii and iv are corrective waves each declining 4%, give or take 1-2%.

The gold market has just completed Large wave II of Major wave THREE. It is currently in the process of commencing Large III of Major wave THREE, which should be a strong upward impulsive wave that could reach to above $1,500 before it is completed. (See the details in the Template above.)

These forecasts are based on the rhythms detected in the gold market during its early stages.

It is too early to produce a template for the small waves within Large Wave III. At this stage all we can say is that there should be two 8% corrections within Large Wave III on its way to the predicted level of $1,572. The first of these 8% corrections is unlikely to occur before the current small wave exceeds the prior high of $1,033.

Alf Field

 

[josjes]

Alf Field EW update. He's 90% spot on his EW analysis so far. He was calling the low on 30 April at 863, so just $10 off, not bad at all.

http://www.321gold.com/editorials/field/field070208.html

Elliott Wave Gold Update XX

Alf Field
2 Jul, 2008

Update 19 published on 30 April 2008 expressed the view that the there was a strong probability that the correction from the March 17 high of $1,033 was complete. In addition Update 19 contained the following warning:

"As will become apparent from the detailed analysis of the minor waves, there is a small possibility of a slightly lower target price of $855 in the Comex active month being achieved. This would have to happen almost immediately if it is going to occur at all."

Within 24 hours the gold price did indeed decline to $853 (London PM fixing) and $853.9 on the Comex 2nd month futures. The cash market briefly sported prices below these levels but the above levels remain the lows for these bench mark series used to monitor the market. The correction low was achieved 2 months ago but the gold price has not exhibited the sharp upward moves associated with the commencement of Large Wave III of Major Wave THREE. A "third of a third" is expected to be the most powerful of moves.

What happened? The chart below depicts the updated gold price action. The price action over the past 2 months has comprised several corrective 3 wave series which combined to form a triangle. This is not impulsive third wave action. The obvious conclusion must be that this action is part of an extended Large Wave II.

(Click on image to enlarge)

Data updated to 1 July 2008

It seems as if the market deemed the decline to the $853.0 low point to have happened too quickly. The decline encompassed only 31 London trading days. Although the required 16% magnitude of the decline had been achieved at $853.0, the market spent another 35 trading days tracing out a triangle in Small wave C, marked a-b-c-d-e between the red boundary lines above. This used up more time, thus helping to form a firmer base for the coming advance.

A triangle in this position is an unusual occurrence, but there have already been some strange corrective formations in this gold market to date. It is interesting that while the extension of the correction absorbed 35 trading days, the market respected the $853.0 low point during this additional time period and the low price was never challenged.

Once the gold price broke out of the triangle after reaching point e, the market has treated us to some notable gains, including a rise of $32 in one day, the largest one day rise in 23 years. Now that is more like "third of a third" action! This better, more positive, action in the gold price is an indication that the Large Wave III of Major Wave THREE may now be underway.

If this is correct, the market should rapidly move to new highs above the March $1,033 peak. The only word of warning is that corrections can sometimes be extremely complex and are not over until they are over. Nevertheless, the signs look positive that we are finally in Large III of Major THREE.

We can now make the assumption that the low for Large II was at $853.0 on the London fixings. This allows us to update the template for Major THREE. To start with, this is the template that was published in Update 18 on 24 March 2008:

That template forecast a low for Large wave II of $850, so the actual result of $853 is remarkably close to that forecast. The following updated template is not much different from the above one because the low for Large II was very close to the forecast :

Revised Wave Labels

For sake of clarity, the revised naming format for the various waves is outlined once again:

The bull market consists of five Major waves designated ONE, TWO, THREE, FOUR and FIVE. Major TWO and Major FOUR are corrective waves with a 25%-30% magnitude of anticipated decline.

Major upward impulse waves, ONE, THREE and FIVE will each contain 5 Large waves designated in Roman Numerals, I, II, III, IV and V. Large II and Large IV are corrective waves with a 16% magnitude of decline, give or take a couple of percentage points.

Large waves I, III and V will each contain 5 Small waves designated 1, 2, 3, 4, and 5. Small waves 2 and 4 are corrective waves with approximately 8% magnitudes of decline.

Small waves 1, 3 and 5 will each contain five Minor waves designated i, ii, iii, iv and v. Minor waves ii and iv are corrective waves each declining 4%, give or take 1-2%.

The gold market has just completed Large wave II of Major wave THREE. It is currently in the process of commencing Large III of Major wave THREE, which should be a strong upward impulsive wave that could reach to above $1,500 before it is completed. (See the details in the Template above.)

These forecasts are based on the rhythms detected in the gold market during its early stages.

It is too early to produce a template for the small waves within Large Wave III. At this stage all we can say is that there should be two 8% corrections within Large Wave III on its way to the predicted level of $1,572. The first of these 8% corrections is unlikely to occur before the current small wave exceeds the prior high of $1,033.

Alf Field

 

[CamKawa]

Just blown the dust off my POG chart and noticed that open interest has fallen off a cliff.

"Increasing open interest shows that there is strength behind the current price movement, and decreasing open interest shows that there is a weakening of the current price movement. For example, increasing open interest along with increasing prices indicates that the upward price movement could continue, but decreasing open interest along with increasing prices indicates that the upward price movement may be about to reverse."

 

[explod]

Although the price of gold is up 43% for the last 12 months it has been largely ignored by the investment community. The other factor is that it is regarded by many as part of the commodities sector, which on current sentiment is out of favour. This, in my view, is wrong and its proper place can be explored on many good sites (and back on this thread) if one puts the subject through Google.

The announcements of IMF sales, CB sale agreements and spin put on news releases such as Nadler. the Senior analyst of Kitco, continue to worry investers at the edges. All this is doing is presenting greater opportunities for those who understand and of course may well be part institutional loading.

I believe the selldown of many very good intermediate gold stocks has been well overdone but seeing some uptick to LGL and NCM in the last week indicates that sentiment, when it does change to gold for itself, will surprise very much to its upside. The huge spike in 1980 was realised by most after the event. Those of us that have been close to this thread for the last year or so need no convincing, but would be keen to hear what others think.

 

[scarfie1]

what the heck just happened? The price just fell $20 within about 2 minutes

 

[wayneL]

what the heck just happened? The price just fell $20 within about 2 minutes

US Jobs report... everything is moving.

 

[MRC & Co]

US Jobs report... everything is moving.

Yeh, and the moves are very very weird!

Apparently it met expectations, so the indices head up, then they retreat! Close will definatley be the big test, though I can't imagine many of the big guns coming in before the extended weekend (perhaps we will close in the red once again, maybe further than expected............), but it doesn't look like all the bad news has been factored in yet.

I still see our market testing 4000 over the coming financial year.

Nice avatar, quiet appropriate!

 

[Temjin]

what the heck just happened? The price just fell $20 within about 2 minutes

Well, the USD had a massive rally last night, and it's negatively correlates with gold prices. Oil somehow managed to hold above the $140 level, so probably provided some support for gold. Technically wise, gold just touched the 50% fib level and probably didn't break through it last night.

I should have got in eariler when it touched the 200 MA level once, now it's more and more certain that it will hold above the USD $850 support.

 

[explod]

Well, the USD had a massive rally last night, and it's negatively correlates with gold prices. Oil somehow managed to hold above the $140 level, so probably provided some support for gold. Technically wise, gold just touched the 50% fib level and probably didn't break through it last night.

I should have got in eariler when it touched the 200 MA level once, now it's more and more certain that it will hold above the USD $850 support.

Yep, agree. Though the US dollar rally was not massive compared to other recent moves and as it all happened on very flimsy data will probably be short lived. I do not prescribe oil as being a major part, it is just one of those things in short supply so is going up for two reason, supply and currency weaknesses.

 

[josjes]

GOLD:OIL ratio is exshibiting encouraging sign for Gold. With the trouble brewing for the Financial in the US, we are likely to see the ratio jump again in the next 2 months, just like Jan-Mar period when it was perceived that we were having financial meltfown.

Look closely Jan - Mar period and compare it with the current one. BKX index in the US is sitting at pre-1998 low. Soon we will hear one of the big banks being bailed out by the Fed. Fannie and Freddie are going into oblivion.

Gold will very likely to start diverge with POO and leave its poor cousin image behind.

Another sign:

Note the Gold ETF (GLD) sucked down another 12 tonnes of bullion yesterday. With GLD's holdings on track for new highs soon, the price of gold can't be far behind in making a similar move. This chart says it all."

http://image.minyanville.com/assets/FCK_Aug2007/File/A1. T.woo/lance 1.jpg