Gold Price - Where is it heading?

[subaru69]

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.

I propose adding Meat Pies to the exchange as a new commodity. As the American Indians say in some proverb: 'when the world turns to sh*t, you can't eat money' (or something like that); well at least you can eat your pies.

 

[explod]

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.

OK, what would you rather have, $35 or an ounce of gold from the 1930's?]

I know if I had left my $35 in 1930 at (Ithink you could get 2.5%) the bank and stored an ounce of gold, which would be the better today.

I do not say that gold is the best investment, what seems to be misssed is that at this time I believe gold to be undervalue and that money in the bank, or in bonds etc would be at greater risk. And the stock market, well it sti..s.

In fact I have said many times in this thread that I hope I can recognise when gold has peaked so that I will then turn my attention to property, or oil, or its alternative, or whatever I think then is the safest sleep at night investment.

But that's just me.

ps. someone will do the sum and I may be wrong on that, but I think an ounce of gold was $35 up to 1970, which makes a big difference

 

[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.

I now have pies to throw too.

All support mentioned smashed.
Making a lower low.
Significant pullback.
Off 6.5% ish, so you have one card left.

Better get down the mint again buddy.

Who would have thought a correction in oil would have effected POG.

 

[explod]

This one from James Turk is (pwhew) minus the meat pies.

Putting the Gold Price in Perspective

A note from James Turk – I wrote the following article for “Information Line”, published by Michael Checkan and Glen Kirsch, the proprietors of Asset Strategies International, Inc. in Rockville, Maryland, http://www.assetstrategies.com/index.php

The first thing people usually consider when buying gold is its price, but unfortunately, they are grabbing the wrong end of the stick. Price is of secondary importance. To explain why, one has to examine the reasons for buying and holding gold.

The motivation to buy gold is usually driven by the pursuit of some defensive financial strategy. For example, gold is a proven and time-tested inflation hedge, so people acquire gold if they believe inflation is likely to worsen. This defensive strategy aims to protect your purchasing power because with gold you hold sound money instead of some inflating national currency.

Another defensive motivation to acquire gold is its unique attribute of being money with no counterparty risk. This significance of this risk was highlighted by the bank-run at Northern Rock in the UK last year and more recently, Bear Stearns in the US. People withdrew their money from those banks because they recognized that their ‘money’ was only as good as the financial capability of those banks to make good on their promise. In contrast, gold is not dependent upon a promise because it is the only money that is a tangible asset, and not an I.O.U. of some financial institution.

Another reason people focus on the price of gold is because they consider it to be an investment, but it’s not. Investments generate rates of return because you put money at risk, for example, by lending it or buying equity in a company. If the investment is successful, you will generate a return, increasing your wealth. But gold doesn’t do this. Gold preserves wealth; it doesn’t increase it.

For example, one ounce of gold purchases approximately the same amount of crude oil today as it has at anytime over the past 60 years. Who would want an investment like that? Gold hasn’t generated any rate of return. It hasn’t given its holders the opportunity to buy more crude oil. But because you can still buy essentially the same amount of crude oil, an ounce of gold has done exceptionally well at protecting wealth by preserving purchasing power, which is what money is supposed to do.

Money is a temporary store of value where we place a portion of our wealth while we decide whether to spend, invest or save (hoard) it. So when we hoard gold, we are in fact saving money until that moment in time when we decide to spend or invest it, which brings me back to my basic point.

Does one question the price (i.e., purchasing power) of dollars before choosing to open a savings account? No, of course not. Savings represent the portion of one’s accumulated wealth held as liquidity (i.e., money) either for a rainy day, to accumulate before spending or investing it, or just to safeguard this portion of your wealth safely and securely. But an inflating dollar doesn’t achieve these aims. The dollar – and indeed every other national currency – has severe problems that undermine their usefulness. In contrast, protecting wealth is what gold does exceptionally well by preserving the purchasing power of one’s liquidity, not necessarily from day-to-day or week-to-week, but consistently and reliably over longer periods of time.

So instead of focusing on gold’s price when buying it, focus on what gold is, what it offers, and what it accomplishes for you. Gold is a form of savings that securely preserves that portion of your wealth that you choose to hold as sound money.

I recognize that it is difficult to view gold in this way and to give little regard to its price, particularly because we are so used to looking at prices of goods and services in terms of dollars and not gold. Also, we have been trained to think of gold as an investment instead of what it really is – money. But we can overcome these biases and incorrect conventional wisdoms.

One way to do that is to consider accumulating gold on a regularly monthly basis. In other words, save some money every month, but don’t save dollars, the purchasing power of which is being inflated away. Save sound money instead. Save gold.

When gold is viewed in this way, it is clear that even with the four-fold increase in the gold price since 2001, no one has ‘missed the boat’. Building savings by accumulating gold is always a good thing.

 

[Sean K]

This one from James Turk is (pwhew) minus the meat pies.

explod, the problem with his position is that he is saying gold never loses it's value.

This position is very wrong and deceiving:

So instead of focusing on gold’s price when buying it, focus on what gold is, what it offers, and what it accomplishes for you. Gold is a form of savings that securely preserves that portion of your wealth that you choose to hold as sound money.

Today, gold is not a constant value but goes up and down according to perception of it value. It is perceived to be a hedge against inflation. It does not securely preserve your wealth at all. People who bought gold in 1987, or recently at over $1000 have lost money. It does not matter right now if gold is going up in the long term, or not. It has gone down in value to this point. And, when inflation is curbed, the world economy recovers eventually, and when (if) the USD recovers, then the perception that gold is a hedge will mean it will tank. Might take 20 years, but gold is not a secure, constant, reliable store of wealth.

 

[explod]

explod, the problem with his position is that he is saying gold never loses it's value.

This position is very wrong and deceiving:



Today, gold is not a constant value but goes up and down according to perception of it value. It is perceived to be a hedge against inflation. It does not securely preserve your wealth at all. People who bought gold in 1987, or recently at over $1000 have lost money. It does not matter right now if gold is going up in the long term, or not. It has gone down in value to this point. And, when inflation is curbed, the world economy recovers eventually, and when (if) the USD recovers, then the perception that gold is a hedge will mean it will tank. Might take 20 years, but gold is not a secure, constant, reliable store of wealth.

Dont agree, it is the other things that change in value. When gold went down in late 80s to 90s we now observe that finanicals were being inflated by cheap money, the Dow rose on crap in fact to the Dot.com and now the sub-prime. And it has a lot further to fall. Gold will hold, as it always has, not for profit but as a place to store ones wealth safely.


The question and answers are just not that simple. with due respect.

 

[Uncle Festivus]

Who would have thought a correction in oil would have effected POG.

Or a correction in the Aussie dollar or ..... whatever is on the other side of the $USD

It's a move in the $USD, which both are priced in, plus in the case of oil, fundamental supply & demand (inventories, overbought.. don't know, don't care), and for gold the belief that all is good again so we re-cycle back to general equities, until the next phase of the 'credit crunch', sub prime or whatever the latest flavour of the week financial contagion takes place?

explod, the problem with his position is that he is saying gold never loses it's value.

This position is very wrong and deceiving:

Today, gold is not a constant value but goes up and down according to perception of it value. It is perceived to be a hedge against inflation. It does not securely preserve your wealth at all. People who bought gold in 1987, or recently at over $1000 have lost money. It does not matter right now if gold is going up in the long term, or not. It has gone down in value to this point. And, when inflation is curbed, the world economy recovers eventually, and when (if) the USD recovers, then the perception that gold is a hedge will mean it will tank. Might take 20 years, but gold is not a secure, constant, reliable store of wealth.

It's only wrong or deceiving if your understanding of inflation is that it is prices going up, whereas I understand that prices go up because of inflation. While gold is not perfect with the short term fluctuation ie if you are trading it, over the longer term it should reflect the circulation of fiat currency and or money supply.

The irony is that if the worlds central banks managed their respective money supplies better gold would indeed be 'worthless'. Until that time, & until the worlds reserve currency is not US dollars, gold and 'hard' assets will continue to reflect the over issuance of US dollars and the debasement of all the worlds currencies generally?

I remember some prominent analyst commenting that as far as this contagion goes, we are only up to the national anthem before the real game starts. We will let this cycle play out as usual as it's been a good run. The test for the techies will probably be $850 again, but I don't think it will get that low this cycle, so only choice to make now is when to buy again ie when will the $USD revert to form?

The game is not over, so what flavour pie do you prefer

 

[Sean K]

It's only wrong or deceiving if your understanding of inflation is that it is prices going up, whereas I understand that prices go up because of inflation.

The game is not over, so what flavour pie do you prefer

Inflation drives the prices of goods up? I am confused.

A pie because I don't think we still have the gold standard?

Throw away.

 

[explod]

Inflation drives the prices of goods up? I am confused.

A pie because I don't think we still have the gold standard?

Throw away.

Inflation is the expansion of money (as distinct from its value.) Zimbabwe, billions of paper notes are worthless, that was hyper-inflation. In the US today the printing presses are starting to work overtime and they too are entering the era of hyper-inflation.

On top of that the problems are being componded by a shortage of supply. If you could buy and store a heap of coffee and oil rice you would have a great hedge and store of wealth for awhile. You can of course trade these tangibles but that market is being distorted by considerable manipulation.

Gold is also increasingly in short supply and so is a more practical item in which to hedge against the current financial ravages.

 

[Sean K]

Inflation is the expansion of money (as distinct from its value.) Zimbabwe, billions of paper notes are worthless, that was hyper-inflation. In the US today the printing presses are starting to work overtime and they too are entering the era of hyper-inflation.

On top of that the problems are being componded by a shortage of supply. If you could buy and store a heap of coffee and oil rice you would have a great hedge and store of wealth for awhile. You can of course trade these tangibles but that market is being distorted by considerable manipulation.

Gold is also increasingly in short supply and so is a more practical item in which to hedge against the current financial ravages.

Well, I'm no Monetarist, or Keynesian, and I'm certainly no Economistian, but I know we have inflation, and the perception in the market is that if we have inflation (well, the US) then you go to the mint. And since this perception is strongly inculcated into our psyche, that gold is some sort of 'go to' when the world turns pear shaped, I'm in.

 

[rederob]

explod, the problem with his position is that he is saying gold never loses it's value.

This position is very wrong and deceiving:

Today, gold is not a constant value but goes up and down according to perception of it value. It is perceived to be a hedge against inflation. It does not securely preserve your wealth at all. People who bought gold in 1987, or recently at over $1000 have lost money. It does not matter right now if gold is going up in the long term, or not. It has gone down in value to this point. And, when inflation is curbed, the world economy recovers eventually, and when (if) the USD recovers, then the perception that gold is a hedge will mean it will tank. Might take 20 years, but gold is not a secure, constant, reliable store of wealth.

Wealth is a financial concept.
Value has more possibilities than finance alone.
Gold may alter in value perception, but not in value per se as it has intrinsic qualities to it.
Underpinning gold's value is its rarity and (almost) indestructibility, apart from its metallic lustre (which has feverish qualities).
Most above ground gold is so valuable it is locked in vaults, and regulated strictly by governments.
Gold's price is market driven.
The market is unmet with gold through mine supply, and relies significantly on releases from central banks to satisfy consumer/commercial demand. Central Bank gold sales cannot go on ad infinitum, so gold increases in value as more is released because less is then available.
However, as Central Banks have many, many years of supply to release to market there is always the prospect their actions can collapse the gold price at their whim.
There is little doubt that "speculation" on the known and regulated markets for gold leads to its daily price, and its daily movements.
The question is if this alters gold's "value".
I would argue that it does not.
Moreover, any investor with a long term horizon could buy gold reasonably confidently when it dipped significantly as gold - on a per capita basis - gets rarer by the day.
As a store of value gold has no peers.
As a store of wealth it will remain subject to the vagaries of the market.

 

[Temjin]

Who would have thought a correction in oil would have effected POG.

I'm not surprised at all that oil still has a correlation with POG.

However, I'm more surprised with the recent movement in the POG that has an extraordinary correlation with its "seasonal cycle" taken over the last few years. While history does not usually repeat itself, it just seem that the two weeks from Mid of July to early August almost always registered a drop in POG. Of course, I may suffer from the pattern bias or whatever, but who would have thought the fall in oil prices and temporary rise in USD would have fueled the POG's cyclic trend. Everything just seem to happen so coincidentally.

 

[explod]

Author: Dan Norcini










Dear Friends;

The following is a series of headline alerts and a stories that came down my wire this AM. The reason I have included them is to reinforce what we have been saying about “CHART PAINTING”. You would be a bit surprised to learn that I receive emails from people out there who categorically deny such a thing is possible or that it even occurs in the US markets. They condescendingly assert that our claims about the tactics of the short sellers, both in the Comex gold arena and in the stocks, is merely a case of sour grapes from a frustrated bull. That is naïve at best and just plain ignorant at worst.

While this story deals with the oil market, the tactics employed are identical and reasons behind them are the same in all cases. Why is that? Because today’s markets are dominated by technicians who pride themselves on having no fundamental view whenever they approach a market but claim that all that is necessary to make money is a knowledge of technical analysis. Some of them actually go so far as to boast about their ignorance of the markets that they trade and revel in the fact that they could care less!

We have maintained that those who have no fundamental view are rudderless ships on the ocean of the trading floors. They can be easily blown about by every wind of price behavior. When prices move lower during a price retracement in a bull market, they become morosely bearish. When prices move higher, they are wildly bullish buying blindly into upside strength. Price action alone dictates what they believe! Since this is now the vast majority of traders/investors, it takes little imagination to understand why chart painting on the close is so important to market manipulation schemes.

It is a fact that the closing price is the most important price in any commodity or stock for that day’ session as nearly every single technical price indicator or oscillator uses the closing price in its calculations. Move that strongly in one direction or another, push it as far as possible off the session highs if you are attempting to force price downwards, and all of the technical analysis programs that millions of investors are using will register your efforts. The result is that those software programs then do your work for you as they HERD the INVESTING PUBLIC in the direction you wish them to go.

Manipulation such as is charged above, “banging the closing period”, has ONE PURPOSE in mind – to move the closing price in the direction that the perpetrators desire so as to AFFECT THE MAXIMUM technical damage or effect to a market and to psychologically devastate those on the other sides of the trade.

Now do you see why it is necessary when trading gold to understand the tactics of our trading enemies and to also get a grip on your emotions when trading as well as having a firm fundamental view? Once you understand how the game is played you can also spot the tipoffs that alert you to their activities and protect yourselves accordingly. You can also profit accordingly by using the inevitable lemming like response to your advantage.

Dan

And examples of it going on in other areas are footnoted, go to www.jsmineset.com/

I have noticed the end of day moves on many of our gold stocks of late and have no doubt it is becoming common across the board.

comments? cheers explod

 

[Whiskers]

It is a fact that the closing price is the most important price in any commodity or stock for that day’ session as nearly every single technical price indicator or oscillator uses the closing price in its calculations.

And examples of it going on in other areas are footnoted, go to www.jsmineset.com/

I have noticed the end of day moves on many of our gold stocks of late and have no doubt it is becoming common across the board.

comments? cheers explod

Good post explod.

Precisely why I have adjusted all my indicators away from closing price to muffle out that sort of noise and manipulation to get a better picture.

 

[Sean K]

And examples of it going on in other areas are footnoted, go to www.jsmineset.com/

I have noticed the end of day moves on many of our gold stocks of late and have no doubt it is becoming common across the board.

comments? cheers explod

The vaste majority of traders and investors are technicians are they? Interesting.

Can you clarrify for me, is he saying technicians are manipulating the market EOD to TA?

 

[explod]

The vaste majority of traders and investors are technicians are they? Interesting.

Can you clarrify for me, is he saying technicians are manipulating the market EOD to TA?

Not up to knowing or answering that, but Sinclair himself has his focus on what we term the Plunge Protection Team.

Interesting Wall Street upset at so-called manipulaters taking the POO up but they sure are putting plenty of spin on to take it back down.

I suspect the big players would be making money both ways. At a seminar I attended four years ago I was taught that this is the name of the game. It was BHP we were working at then.

 

[Sean K]

This is one of the better 'media' articles I have read on gold by another self proclaimed guru.

http://www.kitco.com/ind/Stuppler/jul282008.html

Approaching that 8% drop that josjes said would never happen again unfortunately. Unfortunate, unless you've been short. The drop seemed to coincide immediately with his up up and away claim.

Seems when anyone here says POG is definately going in some direction, it turns about. Must keep an eye on those contraindicators for trading opportunites.

 

[explod]

This is one of the better 'media' articles I have read on gold by another self proclaimed guru.

Seems when anyone here says POG is definately going in some direction, it turns about. Must keep an eye on those contraindicators for trading opportunites.

Good one kennas. I think you will find the article collectively mirrors/summarises a great deal of what has been posted on this thread for the last 18months at least.

And few of the consistent posters here call short to medium term direction. I for one have allways maintained that the larger rise will be post US Pres./election.

On most of what I have just stated David Hirst has an uncannily similar article in todays Business Age. In particular the opposing jawboning of both the media and the banks. Should be able to find it online later in the day.

 

[Trembling Hand]

Must keep an eye on those contraindications for trading opportunities.

SHhhhh!! :nono: don't let the secrets out.

 

[Uncle Festivus]

Random rambling again

Gold looks like it might be following the same sideways consolidating pattern as the previous run up through 2006-2007, although with a truncated x-scale (time value) due to the worsening credit/money supply/$USD crisis, a 'creeping stair case' movement with large daily ranges, but higher lows, over a shorter timeframe? Getting closer now?

The double bottom could be in, but a 'rotation rally' for the $USD is possible in a last attempt by the Fed to gyprock over the deep money shuffler contagion taking place in the US.