Gold Price - Where is it heading?

[Trembling Hand]

Must be time again to short gold.

Lets call it short at 857 stop at 867.

 

[aleckara]

Must be time again to short gold.

Lets call it short at 857 stop at 867.

Well assuming the world doesn't crash down and GM, Ford and whoever don't go into bankrupcy then this would be the best thing. I would join you TH if America had its act a little together which they don't.

The stop is there at least if you are game.

Maybe its a leading indicator of the US dollar going down rather than anything else.

 

[cuttlefish]

Must be time again to short gold.

Lets call it short at 857 stop at 867.

TH - what is your view on this whole backwardation topic?

Let me play devils advocate and parrot the current view going around - people like yourself are shorting gold via futures contracts - but none of you actually have gold to deliver if a delivery call is made. What if there are calls for delivery and nobody, or very few, who are interested in selling you back the 'pretend' gold you sold?

And this is supposedly the reason for the backwardation - people want physical gold but don't trust that they will be able to acquire actual physical via the futures market and will be cash settled instead.

So this is the current line being peddled by the gold bug ('nutters'?) ... just curious on your thoughts on this.

 

[explod]

Anyone who reads the written works of our Fed Chairman will know that Bernanke's long term plan involves devaluing the dollar against gold. This is the exact opposite of the position of most prior chairmen. He has overtly stated his intentions toward gold, many times, in various articles, speeches and treatises written before he became Fed Chairman. He often extols the virtues of F D Roosevelt's gold revaluation/dollar devaluation back in 1934, and credits it with saving the nation from the Great Depression. According to Bernanke, devaluation of the dollar against gold was so effective in stimulating economic activity that the stock market rose sharply in 1934, immediately thereafter. That is something that the Fed wants to see happen again."

It is only a matter of time before gold is allowed to rise to its natural level. Assuming that about one half of the recent increase in Federal Reserve credit is neutralized, the monetized value of gold should be allowed to rise to between $7,500 and $9,000 per ounce as the world goes back to some type of a gold standard. In the nearer term, gold will rise to about $2,000 per ounce as the Fed abandons its hopeless campaign to support Comex short sellers in favor of saving the other, more productive, functions of various banks and insurers.

Revaluation of gold, and a return to a gold standard, is the only way that hyperinflation can be avoided while large numbers of paper currency units are released into the economy. This is because most of the rise in prices can be filtered into gold. As the asset value of gold rises, it will soak up excess dollars, euros, pounds, etc, while the appearance of an increased number of currency units will stimulate investor psychology; and lending and economic output will increase all over the world. Ben Bernanke and the other members of the FOMC Committee must know this, because it is basic economics.

From the Asia Times today, well worth checking out IMVHO

Opening paragraphs answer a lot of questions on backwardation also.

Article titled "Gold fever sets in" by Ankel Fekete

 

[cuttlefish]

Re: my post two above - I should probably have added ... once you've managed to settle down from the full belly laugh ... please enlighten us on your thoughts on this.

 

[Glen48]

Peter Schiff in his book Crash Proof is quoting it could reach $36,000.00 an Oz

 

[aleckara]

you would think though that if this ever was the case then platinum and silver would follow it. platinum is affected by short term concerns and once those are over (i.e cars not being produced/them saved). It might be worth doing a pair trade on these metals if you had the guts that is.

 

[Trembling Hand]

What if there are calls for delivery and nobody, or very few, who are interested in selling you back the 'pretend' gold you sold?

What if the long fut were asked to take delivery?

 

[cuttlefish]

What if the long fut were asked to take delivery?

They can cash settle, there's plenty of cash in the world available to use in settlement, then if they don't want the gold they've taken delivery of they can sell it on the spot market.

(and if the counterparty is unable to settle due to solvency issues I'm assuming there's an exchange fund similar to the ASX's fund to cover failed settlements to maintain an orderly market while the exchange pursues the party for the settlement funds).

And I'm assuming in the case of inability to deliver physical gold they'll come up with some sort of substitute cash settlement figure - but wouldn't it kind of defeat the actual pupose of the exchange if both long and short positions are always cash settled?

 

[Trembling Hand]

They can cash settle,

shall I say any more.

 

[chops_a_must]

shall I say any more.

Gold miners use it for their delivery prices though...

Can't imagine them taking out hedges in a market that doesn't allow delivery.

 

[cuttlefish]

From the Asia Times today, well worth checking out IMVHO

Opening paragraphs answer a lot of questions on backwardation also.

Article titled "Gold fever sets in" by Ankel Fekete

cheers explod - interesting article - I'd seen part of it reproduced in another column, but not read all of it.

 

[ned_beaty]

If anyone's interested I found this web site on the Comex inventory.

http://meltdown2011.wordpress.com/2008/12/16/vaporize-comex-2008-12-16/

 

[sinner]

cheers explod - interesting article - I'd seen part of it reproduced in another column, but not read all of it.

Also worth reading this and the exchange that spurred it

http://globaleconomicanalysis.blogspot.com/2008/12/no-fever-like-gold-fever-response.html

 

[Whiskers]

'A break above the green line and we are off'... after extending my ESP and 'L' plate EW last night, I'm also still leaning to the northern trajectory in the short to med term... but if my count is right, or at least partly right, the little diag triangle suggests a max of 871 for leg v of 1.

But that would be ok... wave 2 retrace a little before 3 attacks the high again.

Well, so far it's pulled up a couple of bucks short of the max of 871.75... and I'm getting sell signals everywhere.

Could be back to the 770's for wave 2 pretty smartly.

 

[bankit]

Hi All,

Back in my post #5864 of 28th November I expected gold to reach $855/860 before turning down. Instead it was the first resistance at $835 that it reacted to and then it retraced 61.8% of the range WX shown in the chart below. It was a stronger pullback than I expected but we still have had a good increase since then.

Where we are at the moment is a strong resistance level for the following reasons:

* Range AB = CD
* Range WX = YD
* The trendline across the highs could also be resistance
* Last night was 8 days up from the low at Y

Now if gold is in a high momentum move then we need to see the previous high at X ($834) becoming support. Should gold move below that critical level then it is in a much weaker position.

Bankit

 

[sinner]

Gold miners getting losing a lot of ground they made up in the last two days right now! I guess the bet was low AUD high POG high USD. Now looks like maybe higher AUD is pushing AUPOG down much closer to cost of production for some miners.

 

[MRC & Co]

Gold doing well lately. I'm surprised.

Looks like the fall of the USD has some thinking where next to place their hard earned mulla, writing off the worry of deflation.

Heard gold being talked about for the first time today as a longer-term long, amongst a serious group of traders.

A few idle thoughts.

 

[chops_a_must]

Like I've said elsewhere here MRC, inflation although obviously eventually a concern, in the short term, gold is purely a currency destruction play... and that is it really...

 

[MRC & Co]

Like I've said elsewhere here MRC, inflation although obviously eventually a concern, in the short term, gold is purely a currency destruction play... and that is it really...

Yes, but with it's recent declines, and the rise of the USD, it was obviously being viewed, by the movers and shakers, as too risky due to the risk of deflation.

Now perhaps, sentiment is changing to a purely currency destruction play, exactly the debate amongst these traders, who ultimately, are the kind of guys who decide whether or not gold will break back above it's highs anytime soon.

Should be good to watch play out. It's definately back on my radar now, especially if it can form an uptrend (form a HH and HL).