Gold Price - Where is it heading?

[explod]

Gold is just an item. We trade many items. BHP, buy sell a house, exchange goods, trade our labor with employer. We try to find the best position for monetary gain. The dynamnics or money making potential of these items change. If we want maximum we have to change. Buying a house for the majority has been great value since 1965. Some bumps but consistent. That cycle seems to be in some doubt though. Gold was great from 1970 to 1980, then to 2000 bad. Stock markets then generally very good, now looking not so good.

I think gold is a generally good item at the moment.

It hit a peak of $US730 in April 06 and then plumeted to 545 six weeks later in May 06. That was a short and savage drop of 30%

It hit another peak in March of 08 at $US1029 and since has fallen to $US785, a 25% retrace in 21 weeks. Uh, oh,what do you know, this is not as bad as the other shakeout.

Well it is good to stand back and see the bigger picture.

From 2002 gold has gone from $US260 and ounce to 785. Against most other items that is not bad. Of course many of us have stepped out due to the drop, some have begun to get back in but generally the gold bugs understand the item so is well worth further speculation as we sit at this time.

 

[Uncle Festivus]

What the! Not sure what to make of this new ann posted on Kitco today - supply shortages??? Follows on from Indian supply shortage story recently??? Un-natural forces supressing the natural supply-demand equation?


IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults.

 

[Firdy]

Interesting Auction of Gold Ingots

If anyone wants to have a go at buying some bullion, GBM (Greater Bendigo) put 5 ingots up "to mark the recommencement of production at their historic Maxwells Mine".

Go to trademe.co.nz, search for "gold ingots".

The ingots are 2oz 99.99%, no reserve, currently bidding between $NZ 500 and $NZ 2000.

It's not for me (all my dough is sunk into junior gold miners - including GBM before the share price collapse (which I hope is temporary), but some of you still wealthy buggers might be interested.

 

[Whiskers]

A capitulation will do - then back to trend?

We've just had it Uncle.

It's pretty well back to the longer term (monthly closing price) trend now.

While the strengthing of the USD and falling oil is tending to pressure gold down, dwindling supply I expect will be enough to keep gold tracking sideways to up in the short term until the (lack of) supply issue really starts to bite, then it's off to new record highs again regardless of the USD or oil.

 

[solomon]

Okay, I'm a novice here, so please be kind, that said I have come round to see the value of gold in these uncertain times, I own gold companies and am considering buying physical gold.

I see a weaker USD as even more dramatic events unfold for the US and UK economically and financially.

However, I want to propose a scenario that could see gold range bound for years between say $700 USD and $1000 USD (I've picked the top and what I see as TA longer term support).

I noticed somewhere that the US supposedly has 8,000 odd tons of the stuff lying around and at the same time is throwing money at numerous black holes - bailing out investment banks, consumers, home owners, possibly Freddie and Fannie and they have a war or two that is costing squillions. At the same time they have got an inflation problem and the powers that be are showing that they will do anything to maintain the economic and financial status quo.

So what is to stop the US selling gold into every rise and easing off on every fall so as to fund all of the spending. 8,000 tons is a lot of USD, and it would not be inflationary because they aren't printing money, as they are transferring gold for paper money that is already in circulation. It would be the most profound transfer of wealth and leave the US government with bare cupboards, but it would maintain the economic/financial status quo and in a way that would be anti inflationary.

Why won't they do this?

 

[steven1234]

Solomon, what you say makes sense and may go someway to explaining what is happening atm. If the US is selling part of its holding, this will impact on pruducers and aome will go under as their costs will exceed the price they will obtain for gold.

Does anyone know when and how the US discloses to the public and changes in its gold holdings.

 

[Uncle Festivus]

Solomon, what you say makes sense and may go someway to explaining what is happening atm. If the US is selling part of its holding, this will impact on pruducers and aome will go under as their costs will exceed the price they will obtain for gold.

Does anyone know when and how the US discloses to the public and changes in its gold holdings.

In short, they don't. The exact gold holdings are not made public, so who knows if the 8k tons is still there. Look up GATA for the whole evil conspiracy theories. GATA claim that the US does not have anywhere near what is reported as they (the government/Fed) have been selling and or leasing gold for years (remember Barrick), in order to suppress the price.

But even just the presumption that the global central banks have all this gold in storage just ready to dump on to the market is enough to sow doubts, as per above. Can you imaging what would happen if the amount of gold held by governments was finally made public, and the cupboard was bare, or grossly overestimated?

There will never be trasparency in gold holdings while ever the fiat money & fractional reserve baking systems are in place because it is a direct currency competitor.

 

[Uncle Festivus]

We've just had it Uncle.

It's pretty well back to the longer term (monthly closing price) trend now.

While the strengthing of the USD and falling oil is tending to pressure gold down, dwindling supply I expect will be enough to keep gold tracking sideways to up in the short term until the (lack of) supply issue really starts to bite, then it's off to new record highs again regardless of the USD or oil.

Um, I actually agree with yo there . But I would go even further and say that gold could even go to $600 and still be in the longer term uptrend?

 

[noirua]

In the past when gold was in short supply people purchased paper gold. The weight of the paper on the market brought it down last time.

 

[kbxk508]

Nothing new, but worth reinforcing

Silver & gold remain in a powerful bull market with another seven or more years to run. The bull market is handing you a gift: buy. ...

Dollar rally may carry to 82, but will peter out in 3 months at most, probably sooner. Stocks [DOW] may reach 12,500, but will come down hard thereafter. Franklin Sanders, The Moneychanger

http://goldprice.org/silver-and-gold-prices/

kbxk508

 

[solomon]

I agree that we can't ever know how much gold the US has, but in the report at http://www.fms.treas.gov/gold/current.html the figure is given as 258,641,851.485 troy ounces, which is about 8000 tons at a guess, so that at least would set the upper limit.

 

[cuttlefish]

I agree that we can't ever know how much gold the US has, but in the report at http://www.fms.treas.gov/gold/current.html the figure is given as 258,641,851.485 troy ounces, which is about 8000 tons at a guess, so that at least would set the upper limit.

Solomon - my take on this is thats not a lot of gold and not a lot of money.

258 million ounces = approx $250 billion dollars (a bit less) at current prices - that would cover *some* of the cost of the credit crisis so far and wouldn't come close to matching the amount of USD based investments held by foreign central banks and private investors. If people decide that the USD is toilet paper then they will be happy to take that gold off the US govt's hands and it will go in a flash. Annual world gold production is about 79 million ounces so thats only three years annual production.

If you look in USD terms at how much fiat currency is in circulation in the world in total (remember the USD is the world reserve currency and thus its value underpins all other currencies as well) then $250 billion is a very small amount of money.

This is the direct consequence of abandoning the gold standard -the USD has been able to print far far more money than is backed by their gold.

This is all just my humble opinion - I'm not an economist and don't have any raw figures in front of me.

 

[cuttlefish]

Um, I actually agree with yo there . But I would go even further and say that gold could even go to $600 and still be in the longer term uptrend?

Yeah I think it could - I've got a band of long term support in the $550-$620 sort of range - but it'd probably take a while to recover from that sort of down move.

We've just had it Uncle.

It's pretty well back to the longer term (monthly closing price) trend now.

I agree - and am still hoping this will hold, but the momentum and speed with which its come down to this support level makes me think it might overcorrect past the support line - possibly significantly - but hopefully short lived with a return back into this support/trend band fairly quickly.

In some ways a brief capitulation down to lower levels (low 700's even high 600') would help to close off this corrective phase in the longer term bull run and set the stage for building into the next leg upwards.

 

[Sean K]

Crikey, what's POG up to?

$20 move in a few minutes, smashing up though $800/05 resistance.

Any ideas?

Just a short blip in the downtrend?

 

[wayneL]

Currency related?

Oil, euro, pound, etc doing likewise.

 

[BentRod]

Yep, Euro doing the same .

Might be worth a quick Long.

 

[Sean K]

Yep, Euro doing the same .

Might be worth a quick Long.

I wasn't watching when it broke up, so missed it. But, sure about any sustainable move, even though it looks to have broken a couple of short term resistance lines. Could just as easy flop back over this arvo. Wait and see for me on if that resistance becomes support.

General news in the US today is that the world's imploading. Prices of household staples like rice and potatoes have doubled in Ecuador in the past 3 months. I'm going out to check out bomb shelters this afternoon. Has that got anything to do with gold? Sorry...

 

[BentRod]

Yes we better get back onto Gold Mate...lol

But before we do, 1.48 on Euro must be breached before looking for longs on Oil,Gold,AUD etc(in my view).

Hovering there now.

 

[explod]

Jim Sinclair's web page has two very interesting charts for gold going back to 1970.

There was a retracement 1974 to 76 of 43% prior to the run up to the $700 close in 1980. Notice however how steep the climb in price was between 1970 and 73. If we are not there yet, some of the so called outlandish calls by some pundits could yet have merit.

I cant' paste this over so go to www.jsminset.com

 

[Kauri]

Not one of my most convincing wave setups for Gold... I have been trading the trend in preference to the waves... but maybe the inflation expectations of the unexpected PPI data which lifted gold, oil and base metals higher may give a decent W4?? although considering the powerfull downdraft of the past 4-5 weeks a shallow 4 wouldn't be a big shock... then again,
Cheers
...........Kauri