Gold Price - Where is it heading?

[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

I have my eggs ready josjes.

You need to start using words like; 'could', 'should', probably', 'unlikely' and 'perhaps' when describing market movements.

Only three things are certain in life. Death, taxes, and first year phys ed chicks.



I'm obviously hoping it recovers.

 

[explod]

Gold turned down overnight, the following from Jim Sinclair's blog says it well.

Author: Dan Norcini


Dear Friends,

You can almost set your watch by the completely expected parade of talking heads which graced our ears and eyes this morning. The reason for the “sudden appearances” of Paulson and Plosser are obvious. The Dollar made its LOWEST CLOSE in two months in yesterday’s session and was sitting barely a half a cent above an ALL TIME LOW in the USDX chart. Having no other weapon in their bag of recent tricks to support it, they resorted once again to the tried and not-so-true method of currency manipulation, aka, verbal intervention. What a tragic scene to witness – the world’s premiere superpower resorting to spin to prop up Humpty Dumpty.

David Hirst, back page of Business Age well worth a read also. I think it can be accessed on line later in the morning.

The bigger days for gold are getter ever so much closer now.

 

[professor_frink]

sorry explod, I was about to type a reply out in here last night and then of course opened a trade, so had to leave it be until I closed it out. As is usually the case if I want to do something afterwards, the trade lasted until I could barely keep my eyes open

I cant, a bit wild that one and apologise

In fact the gold standard used to keep gold prices fairly stable. There was a bit of a jump around 1936 from $US20 to $35 where it was then held in check by US Government Regulation.

The decoupling of gold from currrency created the conditions on which gold could rise from that $35 to the $800 peak in 1980.

My contention is (and this should be on the gold thread) that this situation is repeating and the ratio says to me that it will go very high indeed this time.

That's alright, I just wanted to know what you were referring to there


You also mentioned that gold holds it's value in a post last night - I wanted to share this chart that I found quite some time ago, but had completely forgot about -

I have no idea how accurate this chart is, but it doesn't really help the case for gold being a store of value.

As to there being a repeat of the 70's, whilst I agree that it's the more likely scenario, I don't think we can completely rule out a deflationary scenario yet. The credit boom that lifted the price of pretty well every asset class over the past few years has busted, we already have house and share prices deflating, and commodities are looking quite weak as well. If pretty well everything rose together, who's to say that it all won't fall together

 

[professor_frink]

Gold turned down overnight, the following from Jim Sinclair's blog says it well.

Author: Dan Norcini


Dear Friends,

You can almost set your watch by the completely expected parade of talking heads which graced our ears and eyes this morning. The reason for the “sudden appearances” of Paulson and Plosser are obvious. The Dollar made its LOWEST CLOSE in two months in yesterday’s session and was sitting barely a half a cent above an ALL TIME LOW in the USDX chart. Having no other weapon in their bag of recent tricks to support it, they resorted once again to the tried and not-so-true method of currency manipulation, aka, verbal intervention. What a tragic scene to witness – the world’s premiere superpower resorting to spin to prop up Humpty Dumpty.

David Hirst, back page of Business Age well worth a read also. I think it can be accessed on line later in the morning.

The bigger days for gold are getter ever so much closer now.

Gotta love the enthusiasm there. What else would this guy expect Paulson to do? It's his job to try and communicate what the govt/fed are trying to achieve. I'm not sure why he would refer to Paulson showing up as a "sudden appearance"- it was in the economic calendar at the start of the week, so of course you could predict it coming

Considering the state of the US dollar right now, he wasn't exactly going to show up and talk the dollar down was he?

Explod, you constantly make comments about the talking heads on CNBC and other mainstream journo's talking the stockmarket up and leading the lambs to the slaughter(or something like that). This is pretty well the exact same type of spin, but aimed at gold bugs

 

[cuttlefish]

The chart doesn't show up on screen for me in prof's post two posts back - is that just me or is there something wrong with the link?

 

[professor_frink]

The chart doesn't show up on screen for me in prof's post two posts back - is that just me or is there something wrong with the link?

It's showing up on my browser, but I'll repost it anyway just to make sure it's there for all to see

 

[explod]

Professor_frink, you make some good points which need to be addressed. Partly trying to be a counter ballance.

Time does not permit me this morning, will come back late tonight.

cheers explod

 

[Whiskers]

The chart doesn't show up on screen for me in prof's post two posts back - is that just me or is there something wrong with the link?

Yeah same here. I just got the little icon with the X on it.

What format was your chart in the first post, prof?

 

[professor_frink]

Yeah same here. I just got the little icon with the X on it.

What format was your chart in the first post, prof?

IMG code. Have done the same thing when posting pictures from other sites before, so not sure why this one didn't work. I'm running on 4 hours sleep and about 5 cups of coffee this morning, so the problem was most likely a picnic problem rather than a computer related one

Did the chart in the second post show up for everyone else?

 

[Sean K]

Did the chart in the second post show up for everyone else?

Yep.

 

[professor_frink]

Yep.

good good

I can go back to bed now

 

[refined silver]

Gotta love the enthusiasm there. What else would this guy expect Paulson to do? It's his job to try and communicate what the govt/fed are trying to achieve.

Considering the state of the US dollar right now, he wasn't exactly going to show up and talk the dollar down was he?

US govt trying to acheive a strong dollar???? Running massive trade, current account and budget deficits, and then monetising every insolvent financial entity from the Treasury?? Or the US monetary authorities lying again?

Explod, you constantly make comments about the talking heads on CNBC and other mainstream journo's talking the stockmarket up and leading the lambs to the slaughter(or something like that). This is pretty well the exact same type of spin, but aimed at gold bugs

Sorry but you can't compare the two, they are poles apart. All the spin 2-3 months ago about the worst of the credit crisis being over, The Bear Stearns collapse behind closed doors, while saying everything is dandy in the week leading up, the Fannie and Freddie collapse while denying their insolvency, the whole lead-up, and denying the size of the bailout after the collapse.

One is purposeful deception, lies, fraud, cover-ups, manipulation, etc. vs another side saying with conviction and honest belief that gold is going up as a result of all currency and monetary shenanigans.

 

[refined silver]

Did the chart in the second post show up for everyone else?

Not sure about the accuracy of your historical gold chart.

Here is a historical one for silver with the gold/silver ratio also there, so you can work out gold's price by multiplying the silver price by the ratio. As you can see, historically the ratio was aorund 15 meaning a silver price of $400 1998 inflation adjusted dollars means golds price was $6,000 of these dollars, or over $9,000 of todays dollars.

Also historically, a day's wage used to be a silver dime, a silver quarter, or maybe a silver dollar. 2000 years ago in Rome, a silver denarius was a day's wage, and that coin was about the size of a silver dime, too. Even as recently as 100 years ago, a silver dime was a day's wage. A silver dime today costs about 50 cents, at $7.20/oz. for silver. Since a day's wage today is say $150 you can see silver is way undervlaued to its historical value and similarly gold would be.

Likewise, Judas betrays Jesus for 30 pieces of silver and buys a field just outside Jerusalem with the money. How much is a field just outside town worth today? Again, silver and gold historically were worth much more than they are now, or stated differently, they are very undervalued at present.

 

[Sean K]

Also historically, a day's wage used to be a silver dime, a silver quarter, or maybe a silver dollar. 2000 years ago in Rome, a silver denarius was a day's wage, and that coin was about the size of a silver dime, too. Even as recently as 100 years ago, a silver dime was a day's wage. A silver dime today costs about 50 cents, at $7.20/oz. for silver. Since a day's wage today is say $150 you can see silver is way undervlaued to its historical value and similarly gold would be.

Likewise, Judas betrays Jesus for 30 pieces of silver and buys a field just outside Jerusalem with the money. How much is a field just outside town worth today? Again, silver and gold historically were worth much more than they are now, or stated differently, they are very undervalued at present.

RS, not sure about the merit of these comparisons without comparing the cost of living between those times and now.

Might be a little more today.

 

[refined silver]

RS, not sure about the merit of these comparisons without comparing the cost of living between those times and now.

Might be a little more today.

It compares the price of silver (and x15 implicitly gold) to real world things like a day's labour and a field.

It shows that 2000 years ago, silver and gold bought a lot more than they do today, or, that they are not at similar buying power prices to what they have been historically.

The 600 silver chart likewise is miles apart from professor finks chart.

 

[professor_frink]

It compares the price of silver (and x15 implicitly gold) to real world things like a day's labour and a field.

It shows that 2000 years ago, silver and gold bought a lot more than they do today, or, that they are not at similar buying power prices to what they have been historically.

The 600 silver chart likewise is miles apart from professor finks chart.

That chart I posted came from http://www.chartsrus.com/, which also had the chart you just posted up there, so I can only imagine that they've come from the same source:dunno:

If the exact numbers for my chart are wrong, then I apologise, I wasn't trying to mislead anyone by posting it. If we use the silver chart you posted and assume the gold/silver ratio is accurate to estimate where gold should have been, it further highlights the point I was making earlier about gold not being a very good store of value.

So the question that flows on from this is why? Why would people perceive something to be a store of value when it has been steadily losing value for the entire modern history of mankind?

 

[Trembling Hand]

So the question that flows on from this is why? Why would people perceive something to be a store of value when it has been steadily losing value for the entire modern history of mankind?

:dunno:
Maybe facts are irrelevant when faith is concerned. :bowdown:

 

[refined silver]

That chart I posted came from http://www.chartsrus.com/, which also had the chart you just posted up there, so I can only imagine that they've come from the same source:dunno:

No problem. I wasn't at all intimating anything other than that chart gave values inconsistent with other charts and other historical evidence. $6-9000 gold shows that today its a long way from its historical norm.

 

[explod]

If we use the silver chart you posted and assume the gold/silver ratio is accurate to estimate where gold should have been, it further highlights the point I was making earlier about gold not being a very good store of value.

So the question that flows on from this is why? Why would people perceive something to be a store of value when it has been steadily losing value for the entire modern history of mankind?

Well I see it another way and this is just one example of my thinking. In 1934 when my Dad was a lad he could buy a meat pie for threepence (2.5cents) Today it costs $3. so in 70 years a pie has gone up more than 1,000 times. Gold has only gone up about 38 times.

So what is losing value, I say the paper money because it is taking more and more of them. And eventually if this rate keeps up there wont be anough dollars in existence to buy all the gold. Or oil, silver, and a pie.

As I said in a recent previous post here, it took a barrow full in Germany to buy a pie in 1924.

You can tell I used to love pies, my Doc wont' let me now.

 

[professor_frink]

Well I see it another way and this is just one example of my thinking. In 1934 when my Dad was a lad he could buy a meat pie for threepence (2.5cents) Today it costs $3. so in 70 years a pie has gone up more than 1,000 times. Gold has only gone up about 38 times.

So what is losing value, I say the paper money because it is taking more and more of them. And eventually if this rate keeps up there wont be anough dollars in existence to buy all the gold. Or oil, silver, and a pie.

As I said in a recent previous post here, it took a barrow full in Germany to buy a pie in 1924.

You can tell I used to love pies, my Doc wont' let me now.

LOL! I had 2 for lunch

That makes a good case for not being long cash explod, but acknowledging that gold can't even keep up with the price of a meat(I use that term fairly loosely) pie isn't really helping the case for being long gold in the long term due to it being a store of value.