Gold Price - Where is it heading?

[Ashsaege]

This is what i found from

http://www.abc.net.au/am/content/2008/s2359228.htm

'Indian wedding season boosts gold price

AM - Tuesday, 9 September , 2008 08:24:00
Reporter: Brigid Glanville
PETER CAVE: Investors are being tipped to watch the price of gold, which is expected to rise by 10 per cent in coming months.

It's not because of the parlous world economy, but because of the Indian wedding season.

Wealthy Indian brides can spend $AU2-million on gold they wear on their big wedding day.

With Indians becoming wealthier every year, there are predictions the gold price will go even higher.'


There are a few videos on youtube proclaiming that 'Illuminanties' own 99% of all the gold in the world and that they are selling to make the price go down. And apparently dooms day is just around the corner too!!! a bit of a laugh really!

 

[Trembling Hand]

This is what i found from

http://www.abc.net.au/am/content/2008/s2359228.htm

'Indian wedding season boosts gold price

LOL.

 

[refined silver]

Its triple (or quadruple?) witching this Friday with options expiry. Gold is normally hammered into this, and goes up the following week. Will be interesting to see what happens today and tomorrow.

 

[cuttlefish]

Yep, and that's a worry for this newly minted gold bug. Where are the new buyers? That's what we need for this to go to 1,000,000/oz or whatever us crazy gold bugs suggest..

There really isn't much of it (gold) so it doesn't need a lot of buyers. If the US goes bankrupt (this won't happen in reality because they can print USD till the cows come home but consider the practical equivalent) whats a dollar worth?

For example there's a lot of oil - billions of barrels? or is it trillions of barrels? - but there isn't much gold. About 150 000 tonnes in the world mined since solomons time. Gold's specific gravity is 19 - so it doesn't take up much space either. You could fit kalgoorlie super pits annual production in the back seat of your car if I've done my sums correctly.

Hey barrett, my theory is that last night Lehman Bros had their trades closed after filing for Chapter 11 and they were net short on gold. This triggered a massive short covering and hence the explosion in price. The timing fits perfectly, and I remember reading that they were short on gold. Nothing else could have changed in the last 24 hours to invoke such as explosive move. Sure the fundamentals are super bullish for gold, but when haven't they been recently? A move like this smacks of manipulation (of the good kind this time) and I am VERY cautious of it as we full well know that it can track to the downside just as quickly if not even quicker.

This occurred to me when watching the move yesterday afternoon (courtesy of my current timezone). It could be related to forced unwinding of Lehman positions or alternately some insto that Lehman is a counterparty to realising that Lehman is going to fail to settle and covering the cost/risk. But with so many major institutions going under or looking shaky counterparty risk must be back on the agenda.

As the gold bugs have been saying - there is no counterparty risk in physical gold.

Also if the US itself goes the equivalent of bankrupt then it won't be whats gold worth in USD any more, it will just be gold and other non-US currencies (which are all pegged against the USD as a reserve currency so what will they be worth).

The US is not looking like a business that is being managed in an orderly fashion at the moment - put it this way, I would be very wary about investing in if it were an ASX listed company. We know what happens to the value of shares in listed companies when they can't meet their commitments. (well actually now in the US they get bought by the govt but before that we know what used to happen to them).

 

[Kauri]

american and UK banks imploding at an alarming rate, cost of money.. if available... astronomical... Russian markets shut indefinitely due to massive falls.... the punters fear sliding into terror.... Bush thinking of reuming Yellowstone National Park to ensure he has enough paper for the presses.... maybe it was/is a safe haven flow that Fed on itself?? or nott..
Cheers
...........Kauri

 

[deadset]

I've got a bad case of the "should of's" right now.

 

[barrett]

Hey barrett, my theory is that last night Lehman Bros had their trades closed after filing for Chapter 11 and they were net short on gold. This triggered a massive short covering and hence the explosion in price. The timing fits perfectly, and I remember reading that they were short on gold. Nothing else could have changed in the last 24 hours to invoke such as explosive move. Sure the fundamentals are super bullish for gold, but when haven't they been recently? A move like this smacks of manipulation (of the good kind this time) and I am VERY cautious of it as we full well know that it can track to the downside just as quickly if not even quicker.

Regards,

Cluster.

Thanks Cluster for the idea. I don't know anything about how quickly trading positions are closed when CH11 is filed for - TH, do you?

TH there were as many sellers as buyers, by definition.. but sellers were as a queue of people being knocked out.. more interested in who was throwing the punches and why.

Traders in general responding to bank/broker/insurer implosions, plunging stockmarket, etc etc. could have bought the day before.

Gartman thought it was started by an article in a Chinese newspaper saying that China will have to diminish the use of the U.S. dollar as a reserve currency. I don't really buy that explanation though!
Cheers

 

[Trembling Hand]

TH there were as many sellers as buyers, by definition.. but sellers were as a queue of people being knocked out.. more interested in who was throwing the punches and why.

Yep true but they both took the opportunity to unleash some wicked volume.

Its not like the sellers gave the bulls an easy ride up, they gave as much as they took. For me its what happens now. Both have spent a lot of bullets. Lets see who has the carry through. For me that is the real story. Like when we get a ripping one or two day rally in the share indexes then days latter take out the lows.

 

[explod]

Yep true but they both took the opportunity to unleash some wicked volume.

Its not like the sellers gave the bulls an easy ride up, they gave as much as they took. For me its what happens now. Both have spent a lot of bullets. Lets see who has the carry through. For me that is the real story. Like when we get a ripping one or two day rally in the share indexes then days latter take out the lows.

Had a look at your good advice web page. Yep just like me. Long time ago threw out the books, phd in hard knocks, lost a lot of money getting there. But my pencil studies of the market were from the persepctive of an old man. Day or week trading too fast for me. Works and made good money at it but blood pressure got to high. Now what I found was find the best item with the greatest potential and look back and see what it did in the past and why, see what it is doing now and why and with that anticipate and watch the smart money. Not going to get it to the day or even the month, maybe, but it all told me for the last few years and probably a couple more years that the big one is going to be gold.

Gold will allow you to sleep at night and prosper steady and sure. But you still have to be alert and watch it every step.

We have more in common than you think my friend just see it from a different age perspective. When you get a bit older learn about the best thing at that moment and study the cr.p out of it

Cheers explod

 

[cuttlefish]

Wouldn't it be interesting if last nights buyers are planning on taking delivery.

 

[lusk]

Hey barrett, my theory is that last night Lehman Bros had their trades closed after filing for Chapter 11 and they were net short on gold. This triggered a massive short covering and hence the explosion in price. The timing fits perfectly, and I remember reading that they were short on gold. Nothing else could have changed in the last 24 hours to invoke such as explosive move. Sure the fundamentals are super bullish for gold, but when haven't they been recently? A move like this smacks of manipulation (of the good kind this time) and I am VERY cautious of it as we full well know that it can track to the downside just as quickly if not even quicker.

If you read about them being short its most probably wrong and they were actually long gold. Maybe what occurred was them creating demand to off load into.

 

[refined silver]

Wouldn't it be interesting if last nights buyers are planning on taking delivery.

At some stage when Russia, China, Japan, Korea, OPEC countries decide to diversify from the dollar, and many of them are openly stating thats their intention, I've often thought, the best way to diversify quickly is to buy a load of paper contracts then suddenly stand for delivery. It has to happen sometime.

Again, its interesting how close to option expiry this rally has taken place. There are going to many out of the money calls, that are in the money on gold shares, if this price holds, which will need a big cover.

 

[M34N]

If you read about them being short its most probably wrong and they were actually long gold. Maybe what occurred was them creating demand to off load into.

Good point, that's a possibility, but I suspect the combination of the past few days of people dumping stocks and currencies into cash, then piling it all into gold; the traditional safe haven, lead to this. The shoe has finally dropped, perhaps.

BTW as I'm typing this, +$17 gain for gold and it's only 4:20AM in New York. What an unbelievable run, lets see how it fares in NY trading tonight and if the gains hold. Also looks like the USD index just got pushed down in line with the spike in gold just then, well only time will tell!

 

[Trembling Hand]

Wouldn't it be interesting if last nights buyers are planning on taking delivery.

That is if the buyers were opening position rather than closing position. Its very probable that there are far less contracts open today than two days ago.

 

[cuttlefish]

Again, its interesting how close to option expiry this rally has taken place. There are going to many out of the money calls, that are in the money on gold shares, if this price holds, which will need a big cover.

Interesting point about the proximity to options expiry it could create some interesting outcomes. The paper has been pushed back and forth for so long that its probably unexpected to see real buying volume in the market. Its a tiny market so real volume can create serious volatility. I'm always surprised at the daily volumes in the gold market given the limited actual world production. There is the equivalent of over a quarter of annual global production being traded daily if I've got my numbers right.

That is if the buyers were opening position rather than closing position. Its very probable that there are far less contracts open today than two days ago.

Sure it could be short covering - which to create this sort of rally could mean there were positional longs (as in real buyers) on the other side of the original short sales, or the short covering rally drew out additional buyers as well. I would have thought the level of open short positions for something that has very little physical supply creates the potential for significant volatility if there are genuine buyers taking supply out of the market (the actual mine supply vs the actual volume of positions is tiny - I'm assuming the majority of the daily supply comes from leased gold - not sure how this compares to other commodity markets but it seems quite extreme).

 

[cuttlefish]

Maybe the "plunge protection team" hit gold prior to, and during, AIG and Lehmans, and this was their cover - powder dry again for the next iceberg.


Maybe this, maybe that. Time will tell but I'll stay long. This has only confirmed for me the view that if gold decides to leave the station it will be over the horizon before those on the platform have noticed it left.



Collapse of the USD isn't a two way street imo - i.e. if the USD goes into a proper cliff dive there won't be a 'recovery party' in two years time - the world will have changed and we'll live in a different global economy dominated by different players and a different form of currency (not necessarily gold but it will feature in the transition).

 

[refined silver]

HUI up 18pts or 6% in first 20mins in US, even though gold fairly flat.

Looks like there's a reasonable chance of follow through in this rally.

 

[refined silver]

The Bank of Scotland is collapsing, only option is a takeover by Lloyds.

A dark day for Scotland, the bank has been around since 1695! (Over 80 yrs before Cook came here!)

(Not RBS, but HBOS)

 

[refined silver]

Another $240b in CB cash today!!

Yesterday the US Treasury had to recapitalise the US Federal Reserve with $40b and gives another $60b on Thurs!!

The Fed had an $800b balance sheet before it opened its windows with all the different begging bowl facilities for insolvent financial institutions. Now the authorities are just having to print money to liquify all the debt. Very inflationary.

 

[refined silver]

From Adrian Ash:

US Treasury bond yields crept higher as Wednesday's "safe haven" panic subsided, but three-month notes still offered just 0.03% to new buyers – up from yesterday's six-decade low of 0.003%, the lowest level since the London Blitz drove investment cash to seek shelter in government debt across the Atlantic.

and

Meantime in London, ETFS Ltd. – the market-leading issuer of exchange-traded commodity note (ETCs) – said it was "trying to get market makers back in the market" after they stopped making prices in response to the collapse of American insurance giant AIG.

"We can give no assurance as to whether these...alternatives can be implemented at this stage," said the chairman, Graham Turkwell, on a conference call this morning.

He stressed that the loss of liquidity in ETFS's so-called classic, forward, inverse and leveraged DJ-AIG commodity index notes has "absolutely nothing to do with the metal or oil securities" such as its Gold ETF.