Gold Price - Where is it heading?

[cuttlefish]

Looks like alls well in lala land. Two of the biggest financial institutions in America need bailing out and thats cause for Dow futures and USD to rise.

Y'all move along now, everythings as hunky as good 'ol apple pie over here - you want a US dollar? - there's plenty more out the back.

 

[rederob]

A link between gold & oil or a link to the common unit both are valued in? There's not been much correlation between the 2 for the last 6 months at least going by a cursory glance at a comparison of the 2.

You are right UF.
Correlations break down.
I indicated what what I expected in the "oil" thread in January/February:

However, the longer term correlation is still positive and will continue to "support" each of these commodities for the next few years.
I have to agree, also, that gold will run ahead of oil in the medium term as oil prices are nearing a level where demand destruction will set a temporary price plateau.

 

[So_Cynical]

18 month US Oil v US Gold....gold is clearly lagging.

The up and down relationship is still there but the gap is only just now settling.

 

[cuttlefish]

The response in the US is looking a little more measured now, dow flat and gold strong. Interesting times ahead as this continues to snowball. I don't see a housing recovery happening there any time soon and a continued erosion of both property values as well as the economy will lead to more erosion of the mortgage assets being swapped to the fed for money (and thus held by the fed). It will be interesting to see where this stops - though in the short term this move by the fed will have the effect of sweeping things under the carpet for one more round and so possibly have a short term stabilising effect but longer term it will be negative for the USD to have more money in the system backed by poor quality assets.

 

[subaru69]

Being relatively new to all this I'm getting a bit confused.

With these assumptions:
1. Gold should go up (for a variety of reasons)
2. A$ getting stronger
3. Decoupling of US$ from commodities (in med-long term)

Does this mean that it's GOOD to buy gold/gold miners or it's BAD because as the Aussie gets stronger the value of gold (for the same price in US$) goes down. Then what happens if commodities cut away from the $US?

Can someone smarter than me please comment.

 

[ithatheekret]

A further close above 965 would be good .

But ..... I've got the last 1030 and up to 1033 area as resistance , and believe that the 1045 area is a hidden pivot , that will be reflected in the ensuing runs .

USD is only just seeing a little strength tonight so far , probably thanks to Hank ........

Skippy has manage 97's , a month late on my call and still 100 pips to go on the 98 count . GBP is holding up well though , it will be interesting to see if the Euro can get back up and then past 1.5965 , it looks as though they want it below 1.59 at present ..............

Well it certainly looks like the ugly news has started to arrive now ..... and the greenback strengthened on Freddie and Fannie divorce settlement .

I'm still waiting to see the Dow put at foot through the 11000 plank and it will be interesting to see where oil settles on a shelf this time round .........

 

[Sean K]

GLD, HUI and XAU all looking like potential breakouts, or approaching, but there is a pile of resistance sitting there, as you say. POG breaking $950 might be the catalyst. If they break through.....

GLD maybe breaking up.

GLD looks to have broken.

XAU currently testing $200 after making it's way through the $195-98 Great Wall.

Someone wake up the spec gold sector!

Wonder if this momentum can continue.

 

[explod]

GLD looks to have broken.

Someone wake up the spec gold sector!

Wonder if this momentum can continue.

Has anyone noticed silver lately, as always it indicates and leads the upticks.

But the key is the weakening dollar and gold as a stable alternative to paper money which is being reduced to trash off the printing presses.

The momentum, one can only follow in its wake. The little fry, well apart from SBM the volume (volume is the bread of the market) has been very low so any interest will have effects.

 

[cuttlefish]

Being relatively new to all this I'm getting a bit confused.

With these assumptions:
1. Gold should go up (for a variety of reasons)
2. A$ getting stronger
3. Decoupling of US$ from commodities (in med-long term)

Does this mean that it's GOOD to buy gold/gold miners or it's BAD because as the Aussie gets stronger the value of gold (for the same price in US$) goes down. Then what happens if commodities cut away from the $US?

Can someone smarter than me please comment.

nobody can advise you on what is a good or bad thing to do - i.e. you have to read and make your own judgement - but we can express opinions.

My view is that the printing of massive amounts of money backed by dubious quality debt has a twofold effect - it undermines confidence in the USD as an asset - it is no longer AAA rated debt backed by quality productivity but is now a minefield of junk debt. The secondary effect is that it creates a USD supply that will be inflationary inside the US and again has the effect of creating an oversuppply of USD investments which is deflationary for the US dollar. Thirdly by not taking the pain early and quickly it will prolong the recessionary impact of the US malinvestment in sub-prime mortgages and construction of property for no purpose.

Thus at some stage a flight of capital away from the USD into more tangible investments is likely to occur (note this is opinion only). Tangible investments may be other currencies, other commodities, oil or gold. History shows us that when people are very unsure about the stabilty of a currency and/or an economy or government then gold takes the limelight.

Thus my view is that the current situation will have an effect of devaluing all currencies - primarily because the USD is also a reserve currency. So the USD will fall, but the flight of massive amounts of capital out of the USD into the very small pool of gold investments that are available will cause the gold price to rise much faster than the USD will fall.

How gold juniors will fare depends entirely on the randomness of the market, and when or whether sentiment takes hold - so if you are an investor of my ilk you are looking for investments that will give a return (i.e. generate cashflow/dividends or become a cashbox) regardless of what the market decides - that means quality explorers with a clear path to production or new producers with reasonable reserves, good prospects for increasing their reserves and resources and operating margins that can withstand some input cost increases and production/operating delays/issues, and that also have strong cash positions.

Short summary - in my view if/when the gold run starts the price will rise faster than the USD will fall because there will be many fleeing the USD room through the door into the gold room and the gold room is much smaller than the USD room. At some point the market will no longer ignore a running gold price and it will look attractive for investors fleeing the USD to put money into stocks that can give them the gold they are after by pulling it out of the ground.

If things get bad enough a paradigm shift can occur - at the moment we price things (gold, oil etc.) in terms of the USD and think of 'money' as the valuable thing. Once upon a time long ago people viewed 'gold' as the valuable thing and the money was only a representative of the gold that backed it. We've come along with the money illusion and that has allowed the USD bubble to grow to the extent that it has.

Now there's a ramble for the morning.

 

[josjes]

My post on 9 June:

As a long termer (1-3 yr holder), I loaded up physical Gold (buy the dip) since last April at 868, 880, and today 902 .
Gold TA always looks worst at the bottom, but it almost always surprise on the upside. Just keep it simple TA wise, 65 week MA has never been broken since the bull run 2001, it is now sitting at 786. In two months time it will be sitting at $840-850. IMO unlikely to drop trhu 700 let alone 600 as some members predicted in this forum.

With reports of the biggest jobless increase in over two decades, the largest housing bust since the Great Depression, Contagion spreading across the banking sector, BKX (Banking Index) broke through 5 year support level to the 2003 March level, Bernanke would not dare to increase rates as the severely understated economic contraction will intensify and the downward sliding economic snowball, gathering momentum, will likely burst into a banking/financial system collapse.

Helicopter Ben's recent "strong US dollar" talk is just that -- "talk", so don't expect any change from current policy.

ALWAYS keep the big picture at the forefront of your mind, others are just distractions guarantee to make you lose your position and money.

US BKX banking index dropped another 8% last night to 1996 level with no bottom in sight.

It is not too late to buy GOLD now. Instead of the usual seasonal weekness of summer, gold will have its parabolic run in July/August and continue thru to December. People are scared stiff of the banking run. In Gold we trust in this period of financial turmoil.

 

[Sean K]

My post on 9 June:

ALWAYS keep the big picture at the forefront of your mind, others are just distractions guarantee to make you lose your position and money.

US BKX banking index dropped another 8% last night to 1996 level with no bottom in sight.

It is not too late to buy GOLD now. Instead of the usual seasonal weekness of summer, gold will have its parabolic run in July/August and continue thru to December. People are scared stiff of the banking run. In Gold we trust in this period of financial turmoil.

Nice work josjes.

There was a lot of talk about a much larger correction and you had your plan.

Be aware though, that not everyone's a LONG term investor, and there's nothing wrong with that!

 

[subaru69]

nobody can advise you on what is a good or bad thing to do - i.e. you have to read and make your own judgement - but we can express opinions.
Now there's a ramble for the morning.

Thanks for both the opinion and ramble :
I could not work out why gold was so good before, only from the cliche of holding gold when everything turns pear-shaped. It always seemed that when gold went up, the $US moved ~ the same % thus wiping out any real increase.
I wonder when the world will bite the bullet and start valueing commodities in Euro's. Jay-Z already has...

Rapper Jay-Z dissing the dollar

http://news.bbc.co.uk/1/hi/business/7097736.stm

 

[M34N]

Rapper Jay-Z dissing the dollar

http://news.bbc.co.uk/1/hi/business/7097736.stm

lol that is genuinely funny.

Notice the AU vs US dollar as well, only another 2c to parity! US dollar is really looking bad lately, like I posted a few pages back with the US dollar index nearing its 52-week low, probably going to continue for at least a few more weeks, if not months.

 

[Temjin]

It is not too late to buy GOLD now. Instead of the usual seasonal weekness of summer, gold will have its parabolic run in July/August and continue thru to December. People are scared stiff of the banking run. In Gold we trust in this period of financial turmoil.

I would not automatically assume that the usual seasonal weakness will not come into play this time. A large percentage of gold demand comes from consumers (not investment) anyway, so don't be so quick to rule them out just yet. Mid of July to End of July always result in a decent pull back or consolidation at minimum over the past several years. The odds are against gold will reach new high without taking a short breath.

Regardless, it is extremely easy to justify for long term bullish in gold, but if you were adding in to your existing positions, it would be better not to try to buy at the short term top/strength. I'm just waiting to add in more, missed the last one. Was not as alert over the past several weeks due to study commitment.

 

[josjes]

Previous resistance of 952/3 will turn as strong support. Why the support is so strong? Because it was passed with ease. IMO, last night/today was the last buy at US$960-970 before it reaches 1000.

Gold is not going to put in a lower low and gold is not going to go away in May (or July or August for that matter). What gold is going to do is rally. Last Thursday and Friday’s break out to the upside left what was strong resistance at 945 in the dust and will challenge the 999.40 resistance without any significant setbacks.
IMHO gold will reach a minimum price target of $1200 with no more than 8% correction reaction.

DYODD

 

[MRC & Co]

Why so sure about the run this time josjes?

While in the medium-long term I agree. 1200+ easily, cannot say it won't retace more than 8% with this volatility.

 

[Sean K]

Previous resistance of 952/3 will turn as strong support. Why the support is so strong? Because it was passed with ease. IMO, last night/today was the last buy at US$960-970 before it reaches 1000.

Gold is not going to put in a lower low and gold is not going to go away in May (or July or August for that matter). What gold is going to do is rally. Last Thursday and Friday’s break out to the upside left what was strong resistance at 945 in the dust and will challenge the 999.40 resistance without any significant setbacks.
IMHO gold will reach a minimum price target of $1200 with no more than 8% correction reaction.

DYODD

These 'will do this' and 'will do that' statements are fraught with danger, and are bound to end in egg on one's face. In one sence I hope you get splattered with ovum and membranes, but I'm holding too much LGL and NCM to be completely happy about that.

 

[LeeTV]

From the research I have done on the future price of gold imho it should break the psychological level of $1000 in the next few weeks with silver hot on it's heels to break $20. The recent turmoil in the market is driving investors in to hard asset-based investments. Rumours of US or Israel preparing to attack Iran is also boosting support for gold and silver as a safe haven.

 

[refined silver]

I thought this was a wC down through $845 into the $700s.

So, did a certain fellow who studied the waves. He got pretty aggressive and abusive with anyone who disagreed with him when Au was around $850. Look forward to reading his humble apology which will be graciously accepted.

Gold has hit $990, it might take a little while to take out $1000 decisively and then continue on its way as the financial system melts down.

Sorry Kennas, disagree about being more dogmatic with language. While no-one here is God and knows the future, I have a fair bit of my net worth on the fact that gold (and silver) are going up. It's not a gamble, it has a lot of research, study and knowledge behind it, and while I'm not predicting the next hour, next day, or even next week, I will say gold will be higher next year, the same as it has every year since 2001, and I have no trouble saying it with a lot of conviction either. There is a long way to go.

 

[explod]

So, did a certain fellow who studied the waves. He got pretty aggressive and abusive with anyone who disagreed with him when Au was around $850. Look forward to reading his humble apology which will be graciously accepted.

Gold has hit $990, it might take a little while to take out $1000 decisively and then continue on its way as the financial system melts down.

Sorry Kennas, disagree about being more dogmatic with language. While no-one here is God and knows the future, I have a fair bit of my net worth on the fact that gold (and silver) are going up. It's not a gamble, it has a lot of research, study and knowledge behind it, and while I'm not predicting the next hour, next day, or even next week, I will say gold will be higher next year, the same as it has every year since 2001, and I have no trouble saying it with a lot of conviction either. There is a long way to go.

Agree wholeheartedly Refined silver. I am likewise invested to the hilt in gold and silver for the same reasons. Gold is up 45% just this last 12 months. As chart or trend followers what more do some expect. Not only that the fundamentals to which I have studied for years through and through have screamed recession and loss of fiat currency values.

And as for the other little matter, he in fact sent me very nasty PM's because I disagreed with him on the direction of the US dollar some time back.

Chickens are coming home to roost.

And just my humble opinion based on a lot of facts.