Gold Price - Where is it heading?

[RichKid]

Re: GOLD Where is it heading?

I have provided a 5 year log chart of gold(just for refernce) based on my interpretation of the Elliott Wave Principle. I have been wrong on many occasions before, and this chart should not be assumed to be 100% correct. This same chart was sent to tech/a some weeks ago when I said to him I beleive we were close to a top ( $660 level) where I liquidated my position...........................
................

Once again, all the above is just my opinion- based on the way I see it to date. I could be very wrong

Cheers

Wavepicker,
Thanks for one of the best posts I've read on this thread and certainly the best chart and commentary on gold that I've seen on EW recently, great proportions. Thanks very much, looks like a high probability count and 'prediction' that you've got there.

 

[rederob]

Re: GOLD Where is it heading?

Wavepicker,
Thanks for one of the best posts I've read on this thread and certainly the best chart and commentary on gold that I've seen on EW recently, great proportions. Thanks very much, looks like a high probability count and 'prediction' that you've got there.

Yes
Well done wavepicker.
As I work off the fundamentals, I see the EW pivots as reasonable, but the time frames and quantum too large.
First, the greenback was due to return to strength simply based on cycles - it's presently in its its strong cycle: However, I doubt it will last long and its trend is likely to be that of enduring weakness (as a result of US monetary and price inflation).
We will know after the event if POG dips under $500 and while it is possible, my targt is a dip under $650 with a possible downside risk to $600.
I note wavepicker has identified an "exhaustion" gap that needs to be filled for the $500 scenario to run to form.
My suspicion is that in a bull market that is more likely to be a breakaway gap.
Getting back to fundamentals, there are two keys:
First, supply is not presently matching demand so we are continuing to rely on above ground Central Bank sales to meet shortfalls.
Secondly, in a few months time we get into the "strong" period for gold - the northern hemisphere summer/autumn - where POG keeps running to all time highs.
This present correction was badly needed and will serve POG well into the future, as there was little chance it could wind much higher than $720 without exhausing its support base.
Stepping right back, if one looks at what is happening in the world generally, it's pretty much business as usual. In fact, May looks rosier than March from a production perspective, with only the inflationary specre hanging over the markets as a whole: And given high oil was the cause, the bout of profit taking on crude has knocked it below $70 again, so it's all good!

 

[ducati916]

Re: GOLD Where is it heading?

rederob

I have to take issue with the demand for gold............75%- 80% of gold demand is from retail, and retail is most definitely not buying, they are actually net sellers from the preliminary data

Therefore the identification of demand as a driver for increased prices of gold is simply nonsense.



It has tracked the PPI, rather than the CPI.

CPI 1950 - 1960 = 2.23%
PPI 1950 - 1960 = 2.00% = 1.11
M1 no data
Gold 1950 - 1960 = 0.00%

CPI 1960 - 1970 = 2.57%
PPI 1960 - 1970 = 1.45% = 1.77
M1 1960 - 1970 = 3.47%
Gold 1960 - 1970 = (-0.01%)

CPI 1970 - 1980 = 7.05%
PPI 1970 - 1980 = 8.84% = 0.79
M1 1970 - 1980 = 6.35%
Gold 1970 - 1980 = 34.46%

CPI 1980 - 1990 = 5.05%
PPI 1980 - 1990 = 3.03% = 1.66
M1 1980 - 1990 = 7.43%
Gold 1980 - 1990 = (-4.86%)




Therefore what is clear is that the ratio of CPI/PPI is the important factor, as when raw material costs rise and squeeze manufacturers profit margins, a downturn within the economy is possible. The factor of M1 liquidity seems irrelevant to the price of gold.

What is highly relevant however is the link with increased liquidity or cheap capital made available to business at recessionary periods.
What has happened of course is the massive liquidity engendered via the BOJ has found its way into consumer asset classes via real estate, and has thus added a new twist.

The retail trader/investor, is again late to the party if considering gold, unless you believe that that you are early enough in the cycle of the PPI, and oil might be the commodity to watch, that you will still have a long term run in gold. At $500+ you missed the boat.

Liquidity is a consequence of a growing economy. If the economy has the potential to grow, then to allow growth, there must be increased liquidity. The figures from 1980 to 1990 confirm that assertion, as liquidity grew, CPI inflation grew, but PPI or manufacturing profitability increased, thus CPI increases flowed to the corporate bottom line.

Current ratios;

CPI 2000 - 2006 = 2.8%
PPI 2000 - 2006 = 4.5% = 0.62
M1 2000 - 2006 = 3.60%
Gold 2000 - 2006 = 9.42%

Liquidity, has been slowed in its creation. Contrary to the popular press, liquidity is currently far below the aggregate of 5.21%, yet due to the falling ratio within the CPI/PPI, inflationary fears, or loss of the purchasing power of big business is the important factor.

jog on
d998

 

[rederob]

Re: GOLD Where is it heading?

ducati
On the gold front you need to do a lot more work to understand the fundamentals.
Frankly, CPI, PPI and money supply data has nothing to do with the daily movements of physical metal, nor aggreagate annual physical supply and demand.
The simple maths for the past 3 years shows that mine supplies of gold were not able to meet demand for jewellery fabrication alone. Industrial and investment demand - and were are talking actual physical metal - adds another 25% to annual demand.
The physical metal shortfall is met from old gold scrap and Central Bank sales.
On the demand side of the equation, all measured sectors are in year on year inclines. The gold ETF may skew demand for the time being, but its share of demand probably only accounts for 5% of total.
On the supply side, remove Central Bank sales from the equation, and we would see gold prices jump considerably.
Physical demand for gold ownership in the Middle East and developing countries is increasing: China has only recently opened up gold for private consumption from an investment perspective.
On the supply side, I would be grateful if you could advise of a world class gold mine that has opened in the past 3 years, or of any mooted near to medium term - I know Oyu Tolgoi copper/gold mine comes on stream late 2008 .
ducati, you still have an opportunity to forecast gold prices beyond this year, as I could not see from your more recent posts that there were forward estimates. You are welcome to put an economic modelling spin on the numbers, but just a simple summary is fine.
Mine is for plus$800 by years end and $1000 to be reached at some point in 2007, for starters.

 

[MARKETWAVES]

Re: GOLD Where is it heading?

Gold and The Elliott Wwave

an update

Here are the original charts # 226 -#227

https://www.aussiestockforums.com/forums/showthread.php?t=2366&page=12&pp=20

 

[kgee]

Re: GOLD Where is it heading?

Rederob "On the supply side, I would be grateful if you could advise of a world class gold mine that has opened in the past 3 years, or of any mooted near to medium term "

I'm not sure when Newcrests telfer dome started producing it can't have been much more than 3 years ago...it's Australia's biggest and maybe the biggest in the southern hemisphere...or has thaT been taken into consideration
Besides that there's a heap of smaller companies coming on stream
I have also read a report (I think by clive maund) that showed jewlery demand was driven by the price of gold rather than the price of gold been driven by jewlery demand...if I can find it again I will post it

 

[rederob]

Re: GOLD Where is it heading?

kgee
Telfer was decommissioned in 2000 due to low gold prices and comparatively high costs.
It was officially re-opened by Premier Gallop in 2005, although was operating in November 2004.
It's a good mine, but has a lot of issues to resolve due to mineralogy.

 

[Smurf1976]

Re: GOLD Where is it heading?

In addition to primary gold mines there is also the production of gold as a by-product of other metallic mining.

For example, Zinifex Rosebery mine is primarily zinc followed by lead then copper (in volume terms) but they do produce enough gold and silver to warrant pouring their own precious metals ingots on site. Admittedly the furnace required to melt the gold and silver is pretty small - it runs from a 45kg LPG cylinder (only 5 times the size of a BBQ cylinder) - but gold is highly valuable on a weight or volume basis and if you add up all such production worldwide then it's quite significant.

To my understanding the mine supply of silver is predominantly a by-product of other mining. It's a less significant percentage for gold where there are more primary gold mines.

Of course, the level of production from this source depends on the level of base metals mining and so doesn't respond to the gold/silver price - hence the possibility that surging precious metals prices don't result in strong production growth.

 

[MARKETWAVES]

Re: GOLD Where is it heading?

Gold Longer Term


Another update

Here are the original charts # 226 -#227

https://www.aussiestockforums.com/fo...6&page=12&pp=20

The Charts by Marketwavez are simply Elliott wave-counts that are believed to be what a given market is tracing out.
Wave counts are highly subjective, and definitely not 100% reliable ...Wave-counts also vary from one person to
another who may be analyzing the given market and can also vary based on the time frames being analyzed .....

THESE CHARTS ARE PUT HERE as a probable Elliott-Wave Count -A sort of road map of what's going on .
-It is not for everyone.....
Only for those who understand that the true Holy Grail of trading is learning to manage Risk vs Reward .
--------------------------------------------------------------------------------------------------------------------

 

[ducati916]

Re: GOLD Where is it heading?

rederob

On the supply side, I would be grateful if you could advise of a world class gold mine that has opened in the past 3 years, or of any mooted near to medium term - I know Oyu Tolgoi copper/gold mine comes on stream late 2008 .

China; Bok Huidong
Panama; PetaQuilla minerals
Argentina; Golden Peaks Resources
Nevada USA; He5 Overman

Frankly, CPI, PPI and money supply data has nothing to do with the daily movements of physical metal, nor aggreagate annual physical supply and demand.

On a day to day basis, of course not, but that's not what was shown was it.
Hedge Fund speculation within commodities; 1999 = $6billion, in 2006 = $140billion. This is hot money, this follows yield and absolute returns.

On the demand side of the equation, all measured sectors are in year on year inclines. The gold ETF may skew demand for the time being, but its share of demand probably only accounts for 5% of total.

Nonsense.

The simple maths for the past 3 years shows that mine supplies of gold were not able to meet demand for jewellery fabrication alone.

Really, where are the figures?

ducati, you still have an opportunity to forecast gold prices beyond this year, as I could not see from your more recent posts that there were forward estimates. You are welcome to put an economic modelling spin on the numbers, but just a simple summary is fine.
Mine is for plus$800 by years end and $1000 to be reached at some point in 2007, for starters.

2008 to 2009 = $350 to $450
For the current term, I'll stick with my previous numbers which were;

Summarising then for ducati:
He puts the speculative range at $418.88 to $769.00
So, support, he would *hope* to materialize at $418.88 odd, and Resistance to materialize circa $769.00 odd. At least we got an answer, so waiting another 5 years won't be too hard now!
Of course, what will ducati do if if gold reaches beyond $770 this year, or next (and I firmly believe it will be "next" year into the $800s)?
No doubt he will revise his figures - but that's just speculation.

jog on
d998

 

[rederob]

Re: GOLD Where is it heading?

ducati
Physical demand for gold, and money "liquidity" are not alike.
You wrote this, " I have to take issue with the demand for gold............75%- 80% of gold demand is from retail, and retail is most definitely not buying, they are actually net sellers from the preliminary data ."

The paper trading of gold instruments is irrelevant to physical demand.

So let's take some of your other points.
I asked about recent or future "world class" gold mines.
You gave examples that do not cut mustard: World class means the company would be a gold mining major player, not a minnow. You should try to back up your examples with actual or proposed annual gold output.

You reply to my claim that increasing demand in the "measured" sectors is nonsense.
No proof of course, but that's your typical response.
Go and find annual (physical) demand over the past 3 years for jewellery fabrication, industrial use and/or investment purposes and then post your reply.

On mine supply you ask for figures. If you do not know what the figures are, then you should not be posting replies on this topic.

On future figures for possible gold prices I am foist on my own pettard.
I took information in your later posts which used $720 as the upside range.

Thank you for revising your out-years: I guess this thread could have long lifespan: 2008 to 2009 = $350 to $450
For the current term, I'll stick with my previous numbers which were;

 

[wavepicker]

Re: GOLD Where is it heading?

The following link(below) is a very interesting article by Adam Hamilton that was posted a few days ago. It talks about the fact that no bullmarket rises like an express elevator. He labels 3 different stages of a bull, and shows an interesting % analalogy of the current bulltrend with that of the 1970's. He says we are now at what he calls stage 2 of the bulltrend. In 1974 gold peaked at $200US before correcting 2 years 50% back to $100US. This correction was the launching pad before it went ballistic in the subsequent years

I beleive Adam is correct and stage 2 is now underway. His timeframes gell with what I have previously posted in this thread.

http://www.safehaven.com/article-5200.htm

 

[YOUNG_TRADER]

Re: GOLD Where is it heading?

Another thing that makes me laugh is how modern players or analysts view gold as an alternative investment to the US $ and protection against inflation only, they fail to recognise a new very powerful force,

About 2.5 Billion people from China and India combined with a few thousand years of belief that gold represents a family's wealth and status,

ie If you are Asian (Chinese/Indian etc) I'm sure you'll know what I'm talking about, but for those who are in the dark, most families from these countries view gold as a good place to store family wealth, don't ask me why but one of the first things a person does from India when their income levels begin to rise is buy gold jewellery, watches, bangles (type of bracelet), chains etc etc,

As the incomes of thse 2.5 Billion people rise slowly yet stedily we are going to see massive organic jewellery oriantated demand for the metal, so just like oil, analysts better re-write their books on prediciting gold prices,

$750 - $800 us/oz will be a good gold price to have going into the new year, anything higher is too high short term,

LT we will definately see $1000

 

[kgee]

Re: GOLD Where is it heading?

for an interesting read that backs up what YT is saying check out
http://www.moneyandmarkets.com/press.asp?rls_id=287&cat_id=6&
it's a good read

 

[MARKETWAVES]

Re: GOLD Where is it heading?

Wave picker

I just started reading this article that you just posted by Mr. Hamilton.

This guy in the first or second paragraph is complaining about a 5% pull back in Gold recently. That it hurt his investments .
Whats that tell you about his market timing?
The time to buy gold was in 2005 when there was a strong base built into Gold ...
I pointed out this base very clearly right here in this forum.
Heres what it looked like .............

I think that he is a good writer but doesn't understand the importance of buying dips, buying on pullback which is always my message.

Look here

Why would someone subscribe to that service of his unless you were new to trading and just didn't know any better.

Trading is about buying low and selling high ......

How do you know is Low ..... (look for sound bases to form) in the chart pattern formation of the given market.

What's a base ?
Elliott waves.... beginning of a 5th wave is one of them
- Double Bottom Formations. Triple Bottom Formations. The list goes on.

Look here at Gold last year - Aug-2005
How could so many traders miss this one?

Simple

They are not looking for bases to form within in a chart ....
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If this Mr. Hamilton had read my post showing this base last yr and acted on it....
There would be no need to be complaining about a 5% pullback in Gold this past week.

 

[wavepicker]

Re: GOLD Where is it heading?

Wave picker

I just started reading this article that you just posted by Mr. Hamilton.

This guy in the first or second paragraph is complaining about a 5% pull back in Gold recently. That it hurt his investments .
Whats that tell you about his market timing?
The time to buy gold was in 2005 when there was a strong base built into Gold ...
I pointed out this base very clearly right here in this forum.
Heres what it looked like .............

I think that he is a good writer but doesn't understand the importance of buying dips, buying on pullback which is always my message.

Look here

Why would someone subscribe to that service of his unless you were new to trading and just didn't know any better.

Trading is about buying low and selling high ......

How do you know is Low ..... (look for sound bases to form) in the chart pattern formation of the given market.

What's a base ?
Elliott waves.... beginning of a 5th wave is one of them
- Double Bottom Formations. Triple Bottom Formations. The list goes on.

Look here at Gold last year - Aug-2005
How could so many traders miss this one?

Simple

They are not looking for bases to form within in a chart ....
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If this Mr. Hamilton had read my post showing this base last yr and acted on it....
There would be no need to be complaining about a 5% pullback in Gold this past week.

Hi marketwaves, you are right in what you say, and that was an excellent call you made last year, well done.

As far as Adam Hamilton goes, I personally am not one of his customers, I just saw that article in passing. I think he caters more for long term investors and he himself sounds like he is long term orientated. Nevertheless he does put forward a very constructive analysis into the 3 stages of a bullmarket, which I think anyone can find interesting and learn from. It's good to be open minded, people like him have been around this business for quite a while. Although they are not market timers( which I must say- can be a very difficult business), they still may have a proven track record over the long term.

Interesting about gold. I went long in gold way back in April of 2001($256), and only just liquidated a month ago.

In September of 1999, gold had a very fast thrust up from nothing(250-340). This was a significant move and happened in the space of 2 months. At the time I did not append an elliott wave label to this upward move, thinking that it was just another bear move. What happened after that was gift, the subsequent move down took 1.5 yrs( 9 times as long) to move back to make a double bottom. This was a real struggle down!!! It was real choppy, overlapping decline. Recognotion of this sort of move really seperates novices from the experienced. The first thing an elliott wave practioner has to master is the difference between an impulse and a correction. If this cannot been done succesfully, then applying elliott is difficult. Now that was a correction if I ever saw one!!!

I labelled this a wave 2 for several reasons:-

-The first was as per I explained above
-The second was sentiment. Believe it or not, the pessimism at the bottom of this wave to was far greater even than the start of wave 1!!!! I remember the financial press really bashing gold back then saying that it was a financial relic with no commercial future. This was the dot. com era and economists were saying "this time it's different" It just went on and on. The same sort of pessimism was evident in the US Dollar in Dec 2004 before it started a rally.
- Most if not all oscillators were showing a bullish divergence (see monthly chart below)

Now it was very hard to trade wave 1 in this instance, especially if you were long term focused. it is very difficult also to trade a wave 2. All that is needed from us as traders is to observe were wave 2 finishes!! That is it. The buy signal for this trade came in at the bottom of wave 2. (Richkid- study those notes)

May the wave guide your trade to all!!

 

[coyotte]

Re: GOLD Where is it heading?

why would traders be wasting time on trying to pick the tops of POG

KISS --- just ride your selected miners to the top and sell @ the stop loss
Then renter for next roller coaster ride --- far more profitable to concertrate on the TRADE than the underlying asset

i have a suspision that the majority of traders who post about their $10,000 plus positions are more likely to be holding min postions --- otherwise whats $40
out and in --- peanuts to what could be lost in even a $2000 trade

 

[MARKETWAVES]

Re: GOLD Where is it heading?

I totally disagree with this guy Hamilton .............

His work is over written also ....Less is sometimes best .

You cant write long episodes -
and expect to keep most peoples interest !
His main problem is he is paying attention to Lagging indicators

He makes refrence to the 200day moving averages -
well guess what? ...... Thats a lagging indicator ....

You cannot watch the westrern oscillators and expect to do well .

again simply because they are all lagging indicators

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THE NAME OF THE B GAME IS TO FIND A SOUND BASE BEFORE THEY BREAK OUT- If a market breaks out its too late .

How many times must I bring this simple message to the table ?

Gold has no base built into right now ....
Long Term or Short term... It's the simple truth ....

 

[MARKETWAVES]

Re: GOLD Where is it heading?

You see this chart-
it is a great example of base building

I have posted it before

Here it is again .....................
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How well would a trader have done looking at Gold from this perspective ?
How many times do you see here that a trader could have had to get in ?

 

[MARKETWAVES]

Re: GOLD Where is it heading?

Wait a minute here Wave picker

Am I reading what you said in the above post right ?
You bought Gold in 2001 and held it to April of 2006?

LET'S PUT THIS IN ITS PROPER PERSPECTIVE .................

.........................................................................................................
Well, I think every Gold trader in here should be listening to you very closely and checking out the Elliott Waves.
After that - Throw out all the News & Turn off the T.V. - This is no laughing matter.

You have just cashed in one of the best bull runs in the history of Gold, since what happend in the 1970's ......

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As for me I started learning ElliottWaves in 2002.... so naturally at that time I was already a year too late ......

I NOW SEE YOU AND YOUR WORK IN AN ENTIRELY DIFFERENT LIGHT NOW .... MORE IMPORTANTLY, YOUR COMMITMENT IS TO BE COMMENDED SERIOUSLY. THIS IS A 5 YEAR HOLDING PERIOD OF GOLD.

YOU GUYS OUT THERE, WATCH - WAVE-PICKER..............
SEEK OUT HIS WORDS

THEY WILL HELP YOU IN THE LONG RUN ....................

Put down the news -
Find and read all you can about Elliott Waves and Fibonacci Retracements.

This chart below shows the power of when Wavepicker bought into Gold. There was a serious wedge formation that had formed in 2001.

Cast your eyes to where you see 2001 at the bottom of the chart.

He held on to Gold until last month when he liquidated....

- Do you see what I am saying about the greatest bull run in Gold since the bull run of the 1970 's

Then why wouldn't you want to listen to what Wavepicker is saying ?

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Remember he is doing this with an outlook of utilizing a tool called Elliott Waves.... with no software... What does that tell you ?

-WAKE UP FOLKS ........ PLEASE WAKE UP !