Gold Price - Where is it heading?

[barrett]

Yeah, was wondering that afterwards.

Gold, oil, base metals all went down but the USDX is up and looks like the US indicies are going up again.

I know... musta been the PPT dumping some gold etc to pump up the stocks... er buy into their banks cheap.

$40 down in 10 minutes = a run of sell stops after it broke through the neckline of the 3-month H&S, no mystery there IMO.

 

[Whiskers]

$40 down in 10 minutes = a run of sell stops after it broke through the neckline of the 3-month H&S, no mystery there IMO.

Oh yeah, I see your H&S chart now. That suggests heading for the low 700's.

I'm hopin it works out somethin like this.

 

[Indie]

I think Gold is about to crash, get ready for $600. The fight to cash continues.

 

[explod]

I think Gold is about to crash, get ready for $600. The fight to cash continues.

They are printing too much money, so cash is trash. Short term fear drives the cash but when the penny really drops watch out.

I THINK gold is about to go up.

I KNOW that gold has been the best performer throughout the rout of the last 18 months even if only holding its own

So we shall see.

Notice the long term pennant formation was not broken to the downside but a break one way or the other by March next year will occur.

 

[Ageo]

I think Gold is about to crash, get ready for $600. The fight to cash continues.

lolol who would want worthless pieces of paper?

 

[GreatPig]

They are printing too much money, so cash is trash

What about all the billions, possibly trillions, that has been lost recently? Is that not contracting the money supply (the total money supply, including credit)?

GP

 

[Garpal Gumnut]

It will be 600us maybe a bit lower by Christmas.

it always tanks after times like this.

gg

 

[explod]

What about all the billions, possibly trillions, that has been lost recently? Is that not contracting the money supply (the total money supply, including credit)?

GP

It is now becoming clear that most of what has been lost was not there in the first place. What is now junk debt was counted as part of a companies assets.

Most of the trillions were computer entries with no physical backing.

I have trotted this out before: Allen Bond who went to gaol for it, brought a house, with that equity he borrowed to by three more houses and with that counted as equity he brought 9 more houses, you get the drift, then 27 houses. Will they send Wall Street to gaol (maybe a few isolated CEO's) ???

Analogy a bit rough on the edges but is the best I can do to understand the mess.

More paper money being printed now to kick start the economies. Like shares, more issues dilute the value of the whole.

 

[metric]

cash was cool in trem deposits that were (are) paying 7-8%....but that wont last much longer. soon rates will fall and the massive ammount of cash being 'invented' will increase inlation.

gold is good. now is the time to buy...


.

 

[Reealjrd]

Hello All,

Very correct gold is going up. But this does not indicate that it is going to again cross the $800 mark so soon. It will cross this mark by Mar or April of 2009.

 

[Reealjrd]

Predection about gold vewing this present market is very risky. Because market is very uncertain. Any prediction on gold might be risky for trading.

 

[Indie]

They are printing too much money, so cash is trash. Short term fear drives the cash but when the penny really drops watch out.

I THINK gold is about to go up.

I KNOW that gold has been the best performer throughout the rout of the last 18 months even if only holding its own

So we shall see.

Notice the long term pennant formation was not broken to the downside but a break one way or the other by March next year will occur.

Credit is money in western economies.

Also, the amount of printing is a drop in the ocean compared to the implosion of credit taking place. Besides, the credit markets are frozen. The mechanism (banks) that is used to distribute newly printed dollars is broken. It's one thing for governments to guarantee savings, but they need to guarantee debt just to keep prices at par level. Debt is 30 or 40 times deposits. By now everyone should be able to see that governments are powerless to stem the tide.

Gold is going to hammered. It will have it's day again but no way I would by gold or CHF right in this environment.

But as you say, we shall see.

 

[barrett]

I think Gold is about to crash, get ready for $600. The fight to cash continues.

The way US gold stocks are behaving, down 10% night on night, and silver falling to $9.20, I'm looking to hedge with a short around 825 if possible. The initial target would be the pennant support at around 750. Happier if I'm wrong though!

 

[GreatPig]

It is now becoming clear that most of what has been lost was not there in the first place.

While I've seen that stated before, mostly by proponents of the inflation argument, I can't see how that can be the case. If that money was only fairy tale money, then the loss of it is only a fairy tale loss, so banks aren't really going broke, and the Fed is only pumping fairy tale money into them as compensation.

OTOH, if they are real losses, then they must represent a contraction of the money supply. And if the rescue packages won't be enough, then the contraction must be greater than the expansion caused by the bailouts, giving a result of net deflation.

More paper money being printed now to kick start the economies. Like shares, more issues dilute the value of the whole.

I think wrong on both counts. More money being put into circulation now to counter the deflation caused by credit contraction. I don't think the economy has stopped yet to require kick starting. The main problem is that a bubble is a bubble, and keeping it inflated (but not necessarily inflating it further) doesn't get you back to a better situation.

As for shares, issuing more doesn't dilute the value of the whole provided they are issued at market value. If you double the number of shares, you also double the value of the company, since it now has all that cash which all shareholders own a part of. If they are issued below market value, or for nothing (say an executive just gets given some as part of his salary package), then yes, they do dilute the remainder.

I think the risk of hyperinflation will be at the end of the credit crunch, once the deflation stops. By then the economy may be so depressed that the central banks may want to continue to pump money into it for stimulus.

GP

 

[hitmanlam]

Some good points Great Pig.

I agree with your point on inflation. For the near term, inflation will not be the major issue in the US. Energy is falling, the whole economy is slowing down. In fact, deflation could be occuring at this point. So as long as the US is in a recession, inflation will not be the issue. Only once we see the economy start kicking again (late next year) will we see the full effects of the government pumping money into the system. Its abit weird to say this but only when the economy starts recovering again do i see the POG going up (due to inflation reason). Until then, I am actually quite bearish on gold for now. Any push up will be met by a bigger push down. In the near term, i think its heading south.

Short term, I certainly wouldn't be going long at this point as i think theres too much risk and abit more downside to go. Maybe 6 months from now, I'll be reconsidering buying gold again. All imo ofcoarse.

 

[Indie]

Most of the trillions were computer entries with no physical backing.

This is incorrect.

The money, including computer entries, was issued against physical assets, such as stocks and property. Otherwise it's unsecured credit. Alan Bond borrowed money against assets. He didn't just say "give me a million bucks!". The bank put his equity on their books as collateral. And that included whatever asset he was using the credit to buy.

In an environment where M3 money supply is climbing at a higher rate than inflation, cash is trash, and hard assets are the place to be. This is the perfect environment for speculative borrowing since interest rates are effectively negative. This was what the last 25 years was all about.

As credit shrinks the total pool of available money that is used to price these assets is shrinking. Right now the stock market is the harbinger wholesale asset re-pricing. Cash is king.

 

[Indie]

In an environment where M3 money supply is climbing at a higher rate than inflation, cash is trash, and hard assets are the place to be.

Sorry, meant to say when M3 money is rising faster than INTEREST RATES, cash is trash.

 

[barrett]

potential bullish wedge support here. Fib levels are WRT recent 736-930 move.
4hr Alpari

 

[rederob]

Most of the trillions were computer entries with no physical backing.
This is incorrect.
The money, including computer entries, was issued against physical assets, such as stocks and property. Otherwise it's unsecured credit. Alan Bond borrowed money against assets. He didn't just say "give me a million bucks!". The bank put his equity on their books as collateral. And that included whatever asset he was using the credit to buy.

Nice in principle.
In practice these "assets" were actually debt instruments.
No different to the subprime debt repackaging principles that the former Fed head considered as foundations of the investment market.
Indeed, the financial meltdown remains in its infancy because the game of pass the parcel has had few layers unwrapped to date.
More downside will remain with gold as funds try to claw back cash from past bets.
Am amazed gold has not fallen further!

 

[hitmanlam]

Well it doesn't look good for gold bulls right now. Price is now drifting down in a current downtrend. Next strong support is at 750. Buyers will try and come and try and hold that price. I dunno what will happen if prices don't hold up there. I'd be shorting it now definitely.