Gold Price - Where is it heading?

[Ageo]

Re: GOLD Where is it heading?

This thread is too technical for me to jump in on but i will add my


My mother is in the wholesale Jewellery business and imports 18ct gold from Italy. Her partner has been in the industry for over 30 yrs and every year the biggest Jewellery fare is held in Switzerland (late in the yr usually). He says all the big chiefs usually wait for the fare to make there purchases. As christmas is around the corner aswell, wholesale's stock up big time buying gold by the kilo (sometimes up to 10 or even 100 kg per order) and just to let you know a 1kg gold bar is around $28,000. Billions of dollars are stocked and bought each time as the heavyweights fly in from around the world to the biggest fare.

I have noticed in the last 2 yrs when this fare has taken place gold has taken a surge up in price. (Its around November time). This year i will be attending and will see at 1st hand how big this place really is.

It probably means nothing, but i think the heavyhitters in the jewellery business have a better understanding of where gold is going than you or i since its there business to know and they have been doing it for many many years it large quantities.

Adrian

 

[rederob]

Re: GOLD Where is it heading?

Adrian
Does that mean prices are being led by fundamentals, or speculation?

 

[Ageo]

Re: GOLD Where is it heading?

Personally i have no idea but i would assume a bit of both. Remember as demand increases so will supply and hence drive the price up.

Im gonna find out some more info from a few big hitters in italy, they said wait till Tuesday and they will have a better idea.

Ill keep you posted.....


Remember one thing thow that a commodity has and always will have more value over a dollar in the long run simply because its a resource that is limited in supply whereis cash can be printed. Gold is also a universal currency and you will be welcomed by it in basically every nation whereis AUD will be useless in alot of nations. If a depression hit tomorrow ask yourself what will have more value? (Gold or Cash?) that will give you an indication as what the price might do.

As for gold prices being too high, well inflation actually forces prices to move with the times. i.e what buys you 1 oz of gold today will cost way more in 10-20 yrs as with most things. So if inflation drives gold prices up over a period of time and gold is a precious commodity then i suspect it will in the long run always have value.

thats my

 

[ducati916]

Re: GOLD Where is it heading?

In an effort to boost business, Indian Bank is hoping to increase retail sales of its gold coins, which it launched in March.

The government-owned bank has so far sold over 20,000 coins across its 1,400 branches but with new plans to introduce more high-value coins, it expects to have made a net income of 100 million Rupees from the coins by April next year.

A spokesman for the bank told Reuters that since margins on other banking products have been falling, selling gold was seen as a positive business decision.

Banks in India are allowed to freely import gold and sell it on. Initially, they operated as channels for jewellers, importing the precious metal only after jewellers placed an order to eliminate price risk.

However, with prices at an all-time high, increasing numbers of Indian banks are now selling to the general public.

Oh dear, the general public, the last bastion of utter stupidity.

rederob

What about ducati's supply and demand data?
Where is it tabled as it des not tally with anything from WGC?

But of course it does my good fellow, it comes directly from the table that you posted on pg24.
Here is my post #485

Nonsense, the figures come from your own data;
Jewellery consumption, from Q4 2004 to Q4 2005 has fallen 15%
All the other figures also come from your own data.

What has obviously confused you is Q4 2004- Q4 2005 you must read the whole sentence if it is to make any sense. Therefore while total demand in 2005 as compared to 2004 grew by 5% (revised to 4%) the figure is deceiving, as demand was not growing at the trend pace, it had dramatically slowed.

That trend has been continued in 2006;
Q1 2005 to Q1 2006.......(-22%)

Continuing to use quarterly data to prove a case means that one fails to account for "averaging" of data, which reduces statistical volatility.
This is imperative as gold prices change considerably in the course of a year.
ducati's analysis continues to be deceptive and deficient.

Nonsense.
Using quarterly data is the only real chance you have of the price reaching, and exceeding your $800+ targets. If I were to use *long term averages* then the price would fall to absurdedly low levels.

For example;
If we said that Gold tracked inflation, then taking the long term trend of inflation at 2.5% and utilizing $700 as the *price*;

Let's look at some very long term data. If an individual purchased an ounce of gold in 1802, it would have cost him about $20. Today, that ounce is worth over $700, a return that is well under 2% a year. Twenty dollars put in the bank at compound interest would be worth almost $100,000 today. And if our investor bought $20 of stocks in 1802 and reinvested the dividends, those stocks today would be worth over $200 million! That is a return of over 8% per year. Gold doesn't measure up in the very long run.

Therefore, even the central argument of Gold being an inflation hedge, just doesn't work out. If for 20yrs you had held it at $350'ish, then you were in dire trouble

A person who believes that a commodity is in oversupply because people are selling their jewellery to meet demand and Central Banks are releasing stocks into the market, deserves to be treated accordingly by the market.

Seemingly the laws of supply & demand have simply passed you by.
Assuming supply from mining is fixed at level *X*
When price is low, and demand is higher, price will rise, and continue to rise until demand is satisfied.
Demand will be satisfied when supply from any source, exceeds the demand. Eventually, at some price, the price induces existing owners to sell (provide supply) to satisfy the demand.

Therefore, by definition supply has increased.
Should price fall, then the supply exceeds the demand, until again, price finds an equilibrium, when demand, again exceeds the supply, or, that supply will not provide that supply below a certain price level, thus, demand will again exceed supply at a specific price point, that will be equilibrium.

Therefore WHO constituted the DEMAND that was causal in the rapid price rise? You say fundamental demand; jewellery, industry, investment.

Only one area demonstrated growth far above trend, and that was investment. The component of investment that grew was speculative, viz. $140 Billion supplied via Hedge Funds etc to the commodities markets.

Jewellery, the industries largest sector, has shown shrinking demand, and increasing supply, ergo, the current price is speculative, and will become increasingly volatile as the drama plays out.

Ducati has called my analysis shoddy in the past.
I do not however mislead people into thinking that income dictates demand: It is a factor, but there are other factors that have great importance and must not be ignored.

And it is continuing in the same manner.
Income quite clearly does dictate demand
Your statement is so devoid of thought, as to be nonsense.
If I can't afford it, I can't buy it. If I can't buy it, my vote doesn't count.

The *other factor's* are negatives.
Competition from other luxury items, but more importantly,competition from better investment asset classes

To remove the egg from his face, ducati should now extrapolate the differential of income growth between USA and India to determine which nation is likely to have a greater impact on gold demand going forward.
Ideally he can also look at their comparative population growth rates to complete the picture.

If I could find the egg, I most certainly would.
Again your analysis is devoid of thought. You have assumed that as income growth grows in India & China, which is probable, that their ownership of gold will increase proportionally.

There are two factors to consider;
1.....Will they pay above the inflationary rate? History suggests that they will not do so, that they understand quite clearly, the price you pay, governs any returns that you may realize.

2....Will they continue to view gold as an investment?
I do not think that they will. Indians in particular are astute when it comes to finance, and they will increasingly eschew gold, for more lucrative asset classes.


jog on
d998

 

[rederob]

Re: GOLD Where is it heading?

ducati
You need to ask yourself why the quarterly data and the averaged annual data tell different stories.
All readers by now will have seen the folly of your selective use of information.
Why obfuscate readers with irrelevances, and distort information I have provided:
What you proclaim repeadly as nonsense needs to be exposed for what it is, so below in "blue" is data you drew from somewhere and then proclaimed to tell all it came from the WGC table I posted at #484:

 

[rederob]

Re: GOLD Where is it heading?

ducati
May I suggest you start to be honest with the information you offer and relate it to my points directly, rather than create "facts" and total diversions to support your points.
When your "facts" are supported by long term trends, and you can present these simply (as distinct from your long and winding missives), other readers might be able to get involved in this discussion.

Let me take one of your most recent responses, below, to demonstrate my concerns:
Nonsense.
Using quarterly data is the only real chance you have of the price reaching, and exceeding your $800+ targets. If I were to use *long term averages* then the price would fall to absurdedly low levels.
ducati, please explain to readers how, if the price of gold reaches $800 (or $600, or $700), this is influenced by "quarterly data".
My view is that market forces will determine prices.
Can you also explain how using "long term averages" will lead to gold prices falling to absurdly low levels.
Using averaged data reduces the chance that "seasonality" or "volatility" is mistaken for trend. It does not remove the actual prices attained for the data set at any point in time.
This will be my last post on this thread until spot gold reaches $800.
This should allow the (bull) dust to settle.

 

[tech/a]

Re: GOLD Where is it heading?

rederob.

Think what Duc is getting at is the comment by Adam Hamilton that gold could fall to its 200ma level.
If you work with shorterterm ma's then these levels are going to be more representative than longerterm levels.As the mas are based upon less data.

Personally Im interested in why a 200ma and not a 250 being yearly or a 125 being 6 mthly.

On another line.
From a fundamental view point which companies are on your watch lists or trade lists in
(a) Gold
(b) Nickel
(c) Copper
(d) Zinc

 

[ducati916]

Re: GOLD Where is it heading?

rederob

ducati
You need to ask yourself why the quarterly data and the averaged annual data tell different stories.

Simply for the reason that they have different starting and finishing points.
But, they are still not telling different stories are they, just the *amount* varies.

Demand for jewellery 2003 to 2004 increased 5.6%
Demand for jewellery 2004 to 2005 increased 4.5%
Therefore demand fell by 1.1% between the two comparison years.

However, if you look at the demand on a rolling quarterly basis, that falling demand can be seen to be accelerating from YOY quarterly comparisons.
This is all rather basic.

Why obfuscate readers with irrelevances, and distort information I have provided:

Because I consider your interpretation severely biased.
Your judgement seems to be impaired from the large positions you seemingly carry within gold. I on the other hand, have no gold exposure at all, and can bring a little more objectivity to the party.

ducati
May I suggest you start to be honest with the information you offer and relate it to my points directly, rather than create "facts" and total diversions to support your points.

If you post figures, I am happy to.
However you are regressing back to *opinion*, and unfortunately there seems to be no evidence to support your *opinion* currently.

When your "facts" are supported by long term trends, and you can present these simply (as distinct from your long and winding missives), other readers might be able to get involved in this discussion.

And I take it that this trend is not long enough for you?

Let's look at some very long term data. If an individual purchased an ounce of gold in 1802, it would have cost him about $20. Today, that ounce is worth over $700, a return that is well under 2% a year. Twenty dollars put in the bank at compound interest would be worth almost $100,000 today. And if our investor bought $20 of stocks in 1802 and reinvested the dividends, those stocks today would be worth over $200 million! That is a return of over 8% per year. Gold doesn't measure up in the very long run.

That's 1.7% compounded. Does not even return inflation.

ducati, please explain to readers how, if the price of gold reaches $800 (or $600, or $700), this is influenced by "quarterly data".
My view is that market forces will determine prices.

Because the only way gold will reach those prices is based upon a speculative blowout, and the speculative money pushes the price to whatever figure you wish. But you will see this in the Q by Q figures, and it will be evidenced by *investment demand* increasing by large amounts.

Can you also explain how using "long term averages" will lead to gold prices falling to absurdly low levels.

Because in the long term, gold returns a euphamistic 1.7%
That is based on a price of $700.
If you take the average price through the years, it is much lower, therefore, I have been generous.

Using averaged data reduces the chance that "seasonality" or "volatility" is mistaken for trend. It does not remove the actual prices attained for the data set at any point in time.

Just so.
And what is the average price?
$700, $800, $1000..............
Don't make me laugh, it's circa $300 to $350 and possibly a lot lower if you include the *gold years*

This will be my last post on this thread until spot gold reaches $800.

I'll see you in 20yrs then?

jog on
d998

 

[Ageo]

Re: GOLD Where is it heading?

This will be my last post on this thread until spot gold reaches $800.

I'll see you in 20yrs then?

hehe Duc, are you willing to bet your balls on it? (perhaps confidence can be overused especially when precious things are on the line)

 

[chemist]

Re: GOLD Where is it heading?

Demand for jewellery 2003 to 2004 increased 5.6%
Demand for jewellery 2004 to 2005 increased 4.5%
Therefore demand fell by 1.1% between the two comparison years.

That's nonsense. The rate of increase in demand fell; demand continued to rise.

cheers,
Chemist

 

[Bobby]

Re: GOLD Where is it heading?

ducati
May I suggest you start to be honest with the information you offer and relate it to my points directly, rather than create "facts" and total diversions to support your points.
When your "facts" are supported by long term trends, and you can present these simply (as distinct from your long and winding missives), other readers might be able to get involved in this discussion.

Let me take one of your most recent responses, below, to demonstrate my concerns:
Nonsense.
Using quarterly data is the only real chance you have of the price reaching, and exceeding your $800+ targets. If I were to use *long term averages* then the price would fall to absurdedly low levels.
ducati, please explain to readers how, if the price of gold reaches $800 (or $600, or $700), this is influenced by "quarterly data".
My view is that market forces will determine prices.
Can you also explain how using "long term averages" will lead to gold prices falling to absurdly low levels.
Using averaged data reduces the chance that "seasonality" or "volatility" is mistaken for trend. It does not remove the actual prices attained for the data set at any point in time.
This will be my last post on this thread until spot gold reaches $800.
This should allow the (bull) dust to settle.

Understand you Rederob,

Hey duc your credibility rests on your posts.

What are you trying on ? , is it restitution from the past.
Or are you a sophist ?

Bob.
P.S. Be care'ful G.

 

[wayneL]

Re: GOLD Where is it heading?

Looking bullish again IMO (technically)

 

[RichKid]

Re: GOLD Where is it heading?

Looking bullish again IMO (technically)
..........

Wayne,
Do you mean on the dailies or weeklies?...or was that a jibe? I still see it coutinuing to correct as it has failed to regain the highs after that blowoff top. I've checked your usually updated blog for your view on gold but no one is home

 

[markrmau]

Re: GOLD Where is it heading?

I think you'll find Wayne posted as it was powering past $660 . Things didn't turn out so well later.

 

[wayneL]

Re: GOLD Where is it heading?

...or was that a jibe?

Me? Jibe? Surely you jest!

No, I thought it was looking bullish at the time (for a swing trade) . The action later that day made me change my mind... back on the sidelines. (in other words... NFI)

 

[RichKid]

Re: GOLD Where is it heading?

Me? Jibe? Surely you jest!

No, I thought it was looking bullish at the time (for a swing trade) . The action later that day made me change my mind... back on the sidelines. (in other words... NFI)

I had a feeling it was one of your ram raid set-ups, far too swift for my slower trades. btw, I'm a lifetime member of the NFI club too. This messyness is confusing, I might find some succour in the COT charts & EW. Still bearish imo and more pain to come.

btw, check out the cover of this week's Economist, it has a bear looking for a stockmarket, nice caption!!

Thanks Mark, I didn't check the time, d'oh.

 

[Sean K]

Re: GOLD Where is it heading?

Best to be bearish, and be surprised! Likewise, NFI. Hence, the bear. Be prepared to attack like a grizzley however!!! Or a koala on heat.

 

[wayneL]

Re: GOLD Where is it heading?

Best to be bearish, and be surprised! Likewise, NFI. Hence, the bear. Be prepared to attack like a grizzley however!!! Or a koala on heat.

The grizzly's are ambushing gold :

 

[wayneL]

Re: GOLD Where is it heading?

The grizzly's are ambushing gold :

The bears are having their way with gold atm. Nice, after having been faked out the other day.

 

[wavepicker]

Re: GOLD Where is it heading?

Gold has had a pretty rough ride the last 2-3 weeks. Although not completed just yet, wave 5 on the 4hr bars chart attached seems to be playing out.
Although wave 5 is incomplete as I write this post and price still looks like it could be heading south first, perhaps to $600/10(as sometimes wave 5's do extend-especially in commodities.) If this wave count turns out to be correct then a rally must be on the cards soon back up to at least the $650-680 level .