Gold Price - Where is it heading?

[wayneL]

Re: GOLD Where is it heading

There have long been suspicions of gold market manipulation, here is some grist for the mill.

http://www.enthios.com/notfreenotfair_letter.pdf

Note: It's 71 pages.

Cheers

 

[RichKid]

Re: GOLD Where is it heading

Looks like Gold is range trading again- keeps hitting $430. With the US$ looking doomed I have a feeling it'll go through before long. BUT a lot of profit taking by speculators as it approaches $430. Only difference is the range has tightened, no more falls to below $400 like earlier in the year.

Gold 100 oz. (GC, COMEX)
Daily Commodity Futures Price Chart: Dec., 2004

 

[RichKid]

Re: GOLD Where is it heading

Looks like that longterm resistance at about $430 is now going to be solid support. US dollar not looking good either so the stronger the Euro gets the higher the gold price.

 

[RichKid]

Re: GOLD Where is it heading

Gold has jumped and fallen since the last chart (above). Currently about 437, IMO it's mainly a US dollar story (ie stronger USD, weaker USD gold price) but the oil price drop has also helped claw back the gold price. Interesting to see if it breaks below about $430 as that price level provided strong resistance for a long time. I don't expect the US dollar to go up for much longer, especially with the US not that worried about it's decline.

USD- General view is that traders were covering short position in the USD. USD chart still looks bearish.

Any views? Or maybe we should give this a week to settle before commenting further.

 

[wayneL]

Re: GOLD Where is it heading

Interesting, if not amusing article about POG-

"Just to cover this year's foreign trade deficit of $600 billion would require $2,294 gold," he says. One lousy year's trade deficit! I have to laugh to keep from crying, although I end up doing both, and it must have looked pretty weird, because Mr. Casey actually turned away from me in disgust. He addressed the rest of the crowd and concluded his remarks about the trade deficit with, "And that's not the accumulated deficit, or those that may be run in the future." So it just keeps getting better and better! Finally, and I am all out of breath with excitement, he says, "If gold were simply to return to its 1980 high, it would be close to $2,000 in today's dollars - and the situation is much more serious now that it was in 1980."

It should be worth $2,000 today? If the telephone were ringing right now, it would probably be you, calling me up, and asking "Hey! Mogambo! Did you know you were an idiot?" and I would say "Yes" and then you would want to know "Why isn't gold selling for $2,000 today?" And that, my little grasshopper, is the big question that GATA wants answered, because it looks like the whole thing is being manipulated, and if there is one sure-fire lesson about manipulations, they never last. And that means that, one day, gold WILL rise to its true value. And then we will see how accurate Mr. Casey is! If we can stop dancing for joy, that is.

http://kitco.com/ind/Daughty/jan0502005.html

 

[RichKid]

Re: GOLD Where is it heading

Yes, interesting!! On a technical note Gold is flirting with falling below that long term resistance level, mainly driven by us dollar's recent fall imo. I wont be surprised if it falls below 420 and ranges about before breaking 500 sometime next year. It seems to go in little runs and then big ones like last year last big run. Oil and more instability will help gold too.

 

[markrmau]

Re: GOLD Where is it heading

I think BGF is undervalued at the moment. However gold seems to be gapping down. Do your own research etc.

 

[RichKid]

Re: GOLD Where is it heading

Well, Gold has fallen through some key levels. Heading south alright, let's see how long it takes to stabilise and turnaround. Recent rumour about IMF selling (or about to sell) some gold to help out tsunami hit countries didn't help price. But US dollar may resume fall again and even things out. Might be some bargains soon in local gold stocks that are highly leveraged to the gold price.

 

[brerwallabi]

Re: GOLD Where is it heading

Rich, imo $450 is back on the cards, expected the drop could fall further, i am looking for an entry on Lihir and will watch carefully, LHG might fall back to low 90's and when gold heads north again so will Lihir. There are a few things spooking gold atm, IMF is one but won't amount to much, expect US$ to be in the doldrums, but don't forget the Euro and its impact in gold.

 

[markrmau]

Re: GOLD Where is it heading

You heard it here first: Gold reversal on the cards.

Maybe a little early to call, and may be the low volume on some of these contracts is giving rubbish results.

 

[RichKid]

Re: GOLD Where is it heading

Rich, imo $450 is back on the cards, expected the drop could fall further, i am looking for an entry on Lihir and will watch carefully, LHG might fall back to low 90's and when gold heads north again so will Lihir. There are a few things spooking gold atm, IMF is one but won't amount to much, expect US$ to be in the doldrums, but don't forget the Euro and its impact in gold.

Agree with you and Markmau's chart (approaching a congestion zone below 420), down for now but will be up again to test $450 plus imo. Short term my energies will be in seeing when this bottoms out and starts reversing, gold still too high unless US$ weakens again. LHG does move well re the gold price but I prefer OXR, I suppose we can fine tune our entries once it goes lower. Won't be surprised if it heads much closer to $400, when gold moves it MOVES!

 

[Cosmos]

Re: GOLD Where is it heading

I am not a fan of gold nor do I bother following it much or trade it directly, but one thing that does show that gold is significantly weak atm is the fact that the USD has been heavily sold off and only come off the bottom slightly taking into account its fall, however gold went up and has now come all the way back again without the USD advancing far.

Question is, what’s going to happen when conditions are not favourable for gold??

 

[markrmau]

Re: GOLD Where is it heading

Question is, what’s going to happen when conditions are not favourable for gold??

We'll all sell our gold shares

I'm not so big on LHG either RK. I have just read too many comments about how the SP should only be 80-90c, and that they have a large hedgebook liability (though hedging of course is sound buisness practice). Arguably however, the POG is built into BGF and NCM already, and perhaps not so much into LHG. OXR looks good to me as well because of the additional copper play.

 

[brerwallabi]

Re: GOLD Where is it heading

Well its over $420 and the US dollars little recovery is looking very fragile, I dont suggest anybody should hold LHG, but if you get Lihir right its worth it, its not one for the nervous or unexperienced, my track record on LIhir has been average 2 wins to every loss in 2004 over 19 trades. If gold goes on a little run so will LHG (picked up Friday) and a $1.21 looks good to me initially. Be careful.

 

[brerwallabi]

Re: GOLD Where is it heading

Just some goldies I am holding atm
NMC
BMO
OXR
who warrant some investigation i think,
NMC due goldpour May,SED trying to buy out will fail, shares are trading between 5.7 to 6.0cps range, maybe a little fall back when SED bid fails, mid teens is mine own expectation.
BMO another near producer looks safe to me (all australian like NMC) just fallen below 30cps will test high 30's again soon.
OXR, dont need to say anything here

CMX not holding just sold, looking to reenter.

 

[JetDollars]

Re: GOLD Where is it heading

I have been holding LHG for a while now for covered calls, must admit that I haven't making any money for it since.

I am trading this stock a lot without successful and still have many position open.

I still believe LHG able to bounce back to $1.18, but there is a huge resistance at $1.11.

Very interesting to watch LHG this week.

 

[brerwallabi]

Re: GOLD Where is it heading

Gold edging up right now 11.18pm 14/02/05, hope you find this interesting.
Gold investors should realize that Central Bank and IMF gold sales are already factored in and discounted by the gold market and have been for the last 40 years. This has been a constant and long-term discount and it has always been in the market. If all the official gold were not in the hands of these government institutions gold would most likely already be trading at over $750 an ounce.

The government of South Africa will not allow in the world of public opinion their most important industry to be once again rocked by any gold sales or “dumping” for political reason that would upset the price of gold, especially with the Rand so strong.

Black Empowerment Groups in South Africa which now own billions of dollars worth of gold mining assets will not sit around while a few European bureaucrats attempt to try and destroy their piece of the South African pie that they have been fighting for and struggling to attain for over a century. This group will rally a huge support base of international conservatives and liberals to their cause against the latest IMF scheme.

Politically in the U.S., the IMF would have tremendous opposition from both Democrats and Republicans in both the House and the Senate. For starters, here are just a few of the opponents who have voted against gold sales in the past and have expressed very strong opposition to any IMF gold sales. The bankers would have to run over this group to get the U.S. Congress, which has voting control over any and all IMF voting. The U.S. controls 17% of the voting rights of the IMF Charter and 85% is needed to sell any gold, therefore the U.S. controls this issue. Below are just a few of the opponents to the idea.

Senator Harry Reid (D – Nevada) already has voted against past sales and he is now Minority Whip, one of the most powerful positions in the U.S. Government.

Senator Tim Johnson (D- S. Dakota) ranking member of the Financial Institutions sub-committee of the Senate Banking Committee.

Congressman Tom Delay (R- Texas) House Majority Leader the second most powerful legislator in the House.

Congressman Jim Saxton (R- New Jersey) Chairman of the powerful House Armed Services Committee and ex-Vice Chairman of the Joint Economic Committee. One of the most powerful elected officials in D.C.

Congressman Ron Paul (R – Texas) Vice Chairman of the Oversight and Investigations sub-committee on Financial Services, past sponsor of the Gold Coin Act of 1984, which passed by one of the widest margin of any monetary bill.

These men and many others have plenty of distrust for paper money schemes and understand that gold is an important monetary and reserve asset and should not be used to pay off bad loans made by the bureaucrats at the IMF.

The issue of helping poor third world countries to get debt relief could easily be accomplished by revaluing the gold held by the IMF (103.4 million ounces) and using the new value, a $42 billion asset, to balance the complete write off of the poor country loans. The IMF balance sheet would not feel the write off at all. Since many of these loans were quasi grants in the first place there would be no need to sell any gold. The money has already, in essence, been written off.

Some gold could be sold off-market directly to central banks. This was proposed by IMF deputy director Alassane Ouattara in 1999 but was quickly denounced by the IMF, as it would create a big headache for the banking establishment. This action would have opened up a philosophical can of worms. The perception of official recognition and validation that gold is a valuable reserve asset from some of the central bankers (those buying) and the opposite from the selling group (the IMF). Also the action of a central bank somewhere printing a few billion dollars worth of their currency and taking the gold would create a field day for the few dozen of the more or less rogue member countries of the IMF who would enjoy exchanging some paper and ink for some real money.

The poor countries in question that are referred to as HIPC’s (heavily indebted poor countries) owe about $11 billion to the IMF. At current prices this would amount to about 889 tonnes of gold. If this debt relief was to actually be accomplished by selling the gold it could surely take place over a 5 year period or about 175 tonnes per year that would equal 4% of the current annual global supply of gold.

It could have an effect on the price as supply is supply, but the gold would be surely snapped up by the bullion banks and mining companies that are “short” somewhere between 10,000 and 12,000 tonnes according to some very savvy analysts such as Frank Veneroso, John Embry and others.

The IMF can actually write off almost all the poor country debt right now because they have large loan loss reserves already set up. According to Professor Jeffrey Sachs, in 1999 the IMF had in the Reserve Account (General Department) $2.9 billion set aside, and in the ESAF (Enhanced Structural Adjustment Facility) Trust Fund another $2.8 billion plus 30 % of all money owed to this Facility was actually grants so that would add another $1.5 billion. That would total about $7.2 billion and is probably much higher today. This could be used for the debt relief.

Special Drawing Rights (SDR’s) were a monetary creation by the IMF to handle trade imbalances after WW II. This quasi-money allowed countries to manage temporary international trade liquidity problems with loans and credits to avoid the problems associated with maintaining fixed exchange rates at that time. Today the IMF has on its books 21.4 billion SDRs valued at about $1.50 each or $32.1 billion. Currently the IMF is attempting to double the SDR amount via a special amendment and has received the approval from 131 members out of 185 countries. The U.S. Congress must approve this new increase for this amendment to the IMF Charter to go into effect. If so, then the new SDR’s would add another $32.1 billion of funds to the IMF’s ****nal of paper money.

This so-called reserve asset would be available for future needs. Certainly a portion of this could be used for debt relief. The U.S. Congress will probably go along with this increase but it could be a trump card used by the Congressman and Senators to bargain against any possible IMF gold sales. This group will “sort of” have the moral high ground. “OK you need to print more money – fine - just don’t sell the gold”. As an aside, this doubling of the SDR quasi money reserve most likely means the bankers are worried about future international monetary problems. In that regard you would think they would want to hold on to as much gold as possible.

Since central banks can literally create as much money as they desire, it would be very easy for them to add funds via the IMF’s NAB facility. (New Arrangement to Borrow) This is a facility set up to allow the IMF to borrow money from certain member countries to handle any crises that may occur internationally. It has been used 10 times since 1962. The amount of money available and standing by if needed is about $51 billion. The IMF could easily change a few by-laws and tap into this system instead of selling gold.

The highest portion of the IMF gold is from the U.S. and belongs to the U.S. taxpayer. This argument is a powerful point to be made. It brings up the question of why should the U.S. taxpayer pay for all these bad loans made by a non-U.S. organization? One would think that if the loans were properly structured they would create wealth, aid in poverty reduction in these poor countries and be paid off. The fact that an abnormally large percentage of IMF loans did not work shows that assets from U.S. citizens should be used in more efficient ways. A Joint Economic Committee Study in 1999 stated that “ the central IMF budget is treated as a classified document and IMF finances are very difficult to evaluate because of the obscurity of IMF financial statements”. The U.S. Congress and the gentlemen mentioned above will surely have the upper hand in any hearings on this subject and they will use it to beat back the gold sales scheme.

IMF Gold was supposed to be used for foreign exchange stability in the past. Since the IMF is now a global lending institution and fixed exchange rates are no longer a responsibility of the IMF, it should not be selling gold assets to pay off bad loans. It should return the gold to member nations or at least use the gold as a reserve asset as it was meant to be. Maybe the IMF should actually be buying gold to shore up its balance sheet.

The political and social pressure on the U.S. Congress from citizens that own gold and gold mining companies as an investment will be very strong as we go forward. Since many times congressional elections are decided by only 500-1,000 votes in many districts, Congressmen do not upset apple carts that are bi-partisan and since gold is owned by liberals and conservatives, republicans and democrats the best possible and potent political force in America will be at work against the IMF gold sales…..and that force is unstoppable. The force is a coalition. When the right and left get together in this country on any issue it is all over but the shouting. Since the IMF gold sales will harm the pocketbooks of Democrats as well as Republicans, it would seem the IMF votes needed to sell gold will not happen.

Central bankers will most likely continue, as usual, to scare the price of gold down from time to time by statements of gold sales. But they are all too keenly aware of the growing number of people who realize that the gold not paper and ink is the real stable monetary element. They also realize that the gold market should not be manipulated when it effects the global mining industry (not just gold), dozens of poor countries that rely on mining for the livelihood of it’s people and tens of millions of retirement and investment accounts of ordinary people the world over.

 

[markrmau]

Re: GOLD Where is it heading

The poor countries in question that are referred to as HIPC’s (heavily indebted poor countries)

This made me laugh - remember TPLAC and HRRC?

 

[Bingo]

Re: GOLD Where is it heading

Could anyone provide a graph of the price of gold for the last 5 years or tell me where I could find one. I would like it in in both $A and $US if possible.


Bingo

 

[brerwallabi]

Re: GOLD Where is it heading

Bingo try this link it will give u current charts in both US & A dollars
www.the-privateer.com/chart/twogold.html

Regards
brer