Gold Price - Where is it heading?

[Sean K]

Which way is this little duck going to break?

 

[Whiskers]

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

Unexpected!... not for this little black duck, but apparently for some 'economists'.

Kauri, I presume you were referring to the economists, not yourself.

Which way is this little duck going to break?

I'm with Kauri, a consolidating, probably fairly wide wave four... but on the daily, going up for me.

I think oil has to rise another couple of dollars to complete it's correction before falling again, and the USDX is probably also just starting a consolidation wave four. Unlikely that oil will move down rapidly again at the same time as the USD kicks higher.

This cycle 2 correction is over. Cycle 3 is preparing for take-off.

 

[bankit]

Finding a bottom in Spot Gold has not been easy with this relentless sell off but we might be there or very close. Compared to the same time last year Spot Gold is 20% higher ($778/650) and our Gold Index (XGD) is 10% lower (4003/4430) – this is a huge disparity and shows us how oversold our Gold stocks are.

POINTS OF NOTE

• 
  Historically the price of Gold usually starts moving up from now into Christmas. I have read that there are some shortages in some areas of manufacturing and this is another positive.
  
  
  [*]We have a possible 1 year low to low cycle (Gann stuff) on both Gold and our Index.
  
  
  
  [*]Last Thursday and Friday there was no evidence of overseas cross trades in our stocks that have been occurring for sometime. If that is the case and they have stopped then it is another plus that a bottom may be in for our stocks. This observation is critical for a turn around in our stocks.
  
  
  
  [*]In our Index there is a cluster of 4 resistances in the 4003/3900 area.
  
  
  
  [*]The target area for the triple top is also complete at that same range.
  
  
  
  [*]The USD could well be at strong resistance in the 77 to 78 ¢ area and this could assist Golds move up. The USD has come a long way in a short period of time. Even if it is manipulated or not it needs to have a breather at these levels.
  

Because of the above points I feel that it is more likely that our stocks could turn around and lead Gold back up, rather than Gold moving down to meet our Index. This thought however is against the current proof that for the last 2 years Gold has lead our stocks (historically it has been the reverse)– timing I feel may be the difference this time around.

We need to be aware that if all Gold stocks start moving up in unison then we could have a bottom in place. Having said that we need to see evidence that it is occurring before we dive into the stocks unless your risk profile allows for it.

Cheers,
bankit.

 

[CamKawa]

Some commentators on Bloomberg aren't that confident about the POG.

Gold Bulls `Running for Cover' Signal Price Drop: Chart of Day

 

[explod]

Some commentators on Bloomberg aren't that confident about the POG.

Gold Bulls `Running for Cover' Signal Price Drop: Chart of Day

Well if Bloomberg are pushing that then it is now time to get back in. All that is left is the jawboning and even that appears to be falling apart.

IMVHO of course.

 

[CamKawa]

Well if Bloomberg are pushing that then it is now time to get back in.

Could well be.

 

[Sean K]

Could that have been a bottom?

Broken through 4 resistance lines on my chart, and made 2 higher lows and highs, so far. If $830 ish is tested and bounces up, then more ammunition.

USD down, Oil up, world decides Georgia is about US v Ruskies, ....what else?

I'm still bearish for some reason.

 

[Paladin]

Could that have been a bottom?

Broken through 4 resistance lines on my chart, and made 2 higher lows and highs, so far. If $830 ish is tested and bounces up, then more ammunition.

USD down, Oil up, world decides Georgia is about US v Ruskies, ....what else?

I'm still bearish for some reason.

Hey Kennas.

I think $840 may well hold a few more assaults. I won't be too surprised either way, given how volatile things are recently.

Personally, I don't think that Georgia is much of a factor here at the moment. If it escalates, maybe. I just think it's being eclipsed by all the other economic clouds on the horizon.

I personally am reading all I can and don't seem to think anyone has clear, demonstrable reasons for the recent bump up.

USD down would be my guess at the major factor that will be at play in the POG over the next months. There's a lot of rumbling about physical scarcities at the moment, but I think that's being overhyped. Much more germane is how shaky the USD is looking. Details that are emerging about, for example, the fannie freddy situation are genuinely alarming.

And here's one very good reason why I think the USD will soften and the POG rise: the fact that the US Exchange Stabilization Fund has recently been selling Euros like mad and buying dollars - a clear case of trying to keep the greenback high (IMO).

Take a peek at: http://siliconinvestor.advfn.com/readmsg.aspx?msgid=24833658

I can't quite reconcile the exact figures quoted there myself, but the raw data is available at:

http://www.treas.gov/press/international-reserve-position.html

(The link in the article quoted is broken)

If you look at the reserve position for 15/08, you'll notice that the fed held 9,567,000,000 Euro securities. Look back at the 6th of June and you'll see that they held 16,192,000,000. That's a difference of 6.6 billion dollars.

Something seems to be afoot.

In short, I'm not reading much that gives me confidence in the US economy. That gives me confidence in the POG.

 

[cuttlefish]

Wow cnn likes their headlines ... "Oil: Biggest Drop in 17 years" ... err in dollar amount not percentage terms ... and only about a buck more than the previous 'biggest drop in 17 years' that occurred about a month ago ... and its still nearly 50% higher than this time last year.


I also like the way that the Dow rises 170 points on the great news that the US economy is a complete basket case and this will spread to the rest of the world and therefore its good to buy stocks because oil prices have fallen to such 'low' levels and there is no inflation because there will be no consumer demand because everybody will be broke which is always great for the stockmarket ... ?!?

Though vs holding the USD itself US stocks might be a better bet.

Is the USD rising because the US economy is a basket case or because no inflation means they won't raise interest rates meaning the yield will be lower ?- I'm not sure which one astute investors prefer - low yields or basket cases.

 

[explod]

Wow cnn likes their headlines ... "Oil: Biggest Drop in 17 years" ... err in dollar amount not percentage terms ... and only about a buck more than the previous 'biggest drop in 17 years' that occurred about a month ago ... and its still nearly 50% higher than this time last year.


.

Jawboning and more jawboning. The great thing is that I no longer need to partake on ASF as we are all now in tune.

The implosion has begun and the world will be very differrrent when the 1000 trillion of derivative/option (you name and quantify it) becomes nothing in the next few months.

 

[explod]

Finding a bottom in Spot Gold has not been easy with this relentless sell off but we might be there or very close. Compared to the same time last year Spot Gold is 20% higher ($778/650) and our Gold Index (XGD) is 10% lower (4003/4430) – this is a huge disparity and shows us how oversold our Gold stocks are.


We need to be aware that if all Gold stocks start moving up in unison then we could have a bottom in place. Having said that we need to see evidence that it is occurring before we dive into the stocks unless your risk profile allows for it.

Cheers,
bankit.

I like your indepth take, a very good post; the directions of which should be heeded IMHO

I think now that Japan and China are becoming concerned about holding US dollars (in spite of the trade issues) means a whole new ball game.

The lift in gold sentiment cannot be too far away.

 

[Temjin]

Interesting things happened in the COT report recently.

http://news.silverseek.com/TedButler/1219417468.php

[FONT=Arial, Verdana, Helvetica, sans-serif]Here are the facts. As of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.

[/FONT][FONT=Arial, Verdana, Helvetica, sans-serif]For gold, 3 U.S. banks held a short position of 7,787 contracts (778,700 ounces) in July, and 3 U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an eleven-fold increase and coinciding with a gold price decline of more than $150 per ounce. As was the case with silver, this is the largest short position ever by US banks in the data listed on the CFTC’s site. This was put on as one massive position just before the market collapsed in price.

[/FONT]


[FONT=Arial, Verdana, Helvetica, sans-serif]Eleven fold increase in SHORT POSITION. I mean...WOW...I don't have the expertise to analysis the COT report, but I really wondered if it is true. Have those US Banks ever make such a significant change in their short contract holdings? I mean if they have done so before and in such a magnitude, perhaps it should be considered normal.[/FONT]


[FONT=Arial, Verdana, Helvetica, sans-serif]Anyway, something to ponder.
[/FONT]

 

[bankit]

Hi Temjin,

Thanks for that excellent report.

http://news.silverseek.com/TedButler/1219417468.php

That ties in with what I suspected and posted on 20th August in this thread.

Quote: Last Thursday and Friday there was no evidence of overseas cross trades in our stocks that have been occurring for sometime. If that is the case and they have stopped then it is another plus that a bottom may be in for our stocks. This observation is critical for a turn around in our stocks.

I had been watching the course of sales on a number of our Gold stocks and had noted there were consistent overseas cross trades that were designated XTSXOS. These trades are designated as “Special Sale Portfolio” by the ASX, in other words a big overseas (OS) seller.

These sales were relentlessly consistent all the time that Gold was being sold down and mysteriously stopped when Gold stopped selling off which was around 14/15th August and they have not returned to date.


This is my assumption and is open for debate.

Who ever was selling down gold was selling down gold stocks as well (world wide). Or alternatively others at the big end of town got a whiff of what was happening in gold and shorted the gold stocks. Whichever way, it was an absolute no risk trade.

The other thought that comes to mind is that it is well known that Gold rises between now and Christmas and the powers to be don’t want Gold to move too high – so a sell off prior to a seasonal move up would help keep the gold price within their “comfort zone” come Christmas. In other words no new highs in Gold at Christmas.

Have another read of my 20th August post and it might now make a bit more sense.

 

[Trembling Hand]

[FONT=Arial, Verdana, Helvetica, sans-serif]Eleven fold increase in SHORT POSITION. I mean...WOW...I don't have the expertise to analysis the COT report, but I really wondered if it is true. Have those US Banks ever make such a significant change in their short contract holdings? I mean if they have done so before and in such a magnitude, perhaps it should be considered normal.[/FONT]


[FONT=Arial, Verdana, Helvetica, sans-serif]Anyway, something to ponder. [/FONT]

LOL the conspiracy theory Bugs are always a good source of amusement if not fact!

The non-Commercials are still net long to the tune of at least 3 to 1.

 

[bankit]

AMATEUR HOUR IN THE PRECIOUS METALS MARKETS


The gold ETF (GLD) and the silver ETF (SLV) were brought into existence and have as custodians JP Morgan and Barclay’s, sworn enemies of gold and silver. What more do you need to know?

Stop making a fool of yourself if you are taking paper for payment of silver and gold and if you simply can not hold physical, buy high quality gold and silver shares and stick with them.



Read what you want into the report but there is a lot of truth in it:

http://www.gold-eagle.com/editorials_08/greene082108.html

 

[amory]

This is a very fine discussion of the POG & I should like to most humbly contribute my first post. for some time now I have been involved in a leading gold-stock known as Lollilegs - ASX.LGL, second largest producer, unhedged etc - & if I may be allowed to make a price prediction, I would say $1.80 in the very foreseeable. this is based mainly on my expectation for the price of gold, where the optimists will have a lot yet to learn.

thank you

amory hill

 

[Sean K]

This is a very fine discussion of the POG & I should like to most humbly contribute my first post. for some time now I have been involved in a leading gold-stock known as Lollilegs - ASX.LGL, second largest producer, unhedged etc - & if I may be allowed to make a price prediction, I would say $1.80 in the very foreseeable. this is based mainly on my expectation for the price of gold, where the optimists will have a lot yet to learn.

thank you

amory hill

Hi amory, were you around Share Cafe a couple of years ago? Good to see you here.

In regard to $1.80, that's a nice guess.

But doesn't seem to correlate to any FA or TA that I can imagine.

Is that from a crystal ball, or tea leaves?

Ah, you also might want to make sure discussion of stocks go in the relevant stock thread. LGL has one, just play around with the search function.

Cheers!
kennas

 

[Real1ty]

Hi amory, were you around Share Cafe a couple of years ago? Good to see you here.

He is also on shares.com.au under gr....basher and is a Gold basher.

He has turned the gold thread there into a load of Jim Sinclair and LGL bashing.

Hopefully he isn't allowed to turn the Gold threads here into the Sinclair and LGL bashing threads he has done elsewhere.

Not that i have any love for either of them but it gets ridiculous when every post is the same thing.

EDIT: I see the post below me he has subtly started already.

 

[amory]

Hi Kennas of Ecuador. yes I have been on any forum you care to name & argued the price of gold ad nauseam. tired of being right every time - the main target of my assertions having been a famous gold-guru whose prediction of 1650 for the POG I managed to undercut, correctly as it turned out, by half - I have now taken my crystal ball over here.

the basis of my reasoning: if you want gold to go up, you've got to first get the USDollar down. this is where there are divergent opinions: there are those who see nothing but doom & gloom for the US & world economies, and then there are those like myself who are convinced that the Fed knows what they're doing.

in the short term, the POG looks mighty sick to me. but for all your sakes, hope I'm wrong, just for once.

and a word to Reality who I wish I knew which one are you of my numerous critics on the other forum? it's not a question of "bashing" a stock or a commodity, it's all about making predictions which are right or wrong. for the benefit of this thread: where gold is concerned, my ones have a habit of turning out to be right.

 

[explod]

Hi Kennas of Ecuador. yes I have been on any forum you care to name & argued the price of gold ad nauseam. tired of being right every time - the main target of my assertions having been a famous gold-guru whose prediction of 1650 for the POG I managed to undercut, correctly as it turned out, by half - I have now taken my crystal ball over here.

the basis of my reasoning: if you want gold to go up, you've got to first get the USDollar down. this is where there are divergent opinions: there are those who see nothing but doom & gloom for the US & world economies, and then there are those like myself who are convinced that the Fed knows what they're doing.

in the short term, the POG looks mighty sick to me. but for all your sakes, hope I'm wrong, just for once.

and a word to Reality who I wish I knew which one are you of my numerous critics on the other forum? it's not a question of "bashing" a stock or a commodity, it's all about making predictions which are right or wrong. for the benefit of this thread: where gold is concerned, my ones have a habit of turning out to be right.

Oh how good thou art, salutaions. I have a habit of not making predictions but discussing what is actually happening for the most part on fundamentals.

I am not one to poke my chest out either but the general thrust of what has been occurring has been correctly anticipated by discussions with my many good friends on this thread. I am a trend follower also and gold has gone up every year since 2002. That has been good for me. The US dollar has gone down every year since that time and because of the huge debt they have in the US my fundamental view is that it will continue.

But I do bow and take my hat off to what you think you have achieved.

"Oh how hard it is to be humble when your'e perfect in aveerrry way..."