Gold Price - Where is it heading?

[Naked shorts]

The resistance of $US840 in late 07 now forms part of strong support and all other indications to me say it will hold these levels. We are now looking for a weekly close above US880 to 890 for the next upleg to commence.

IMHO it will be soon and as I have maintained for eight months now, after the new administration takes over.

Jimmy Carter got the cuts for the sins of his predecessors and Obama will get the same. Stand back for the bad news after 20th instant.

I thought that everyone is pretty confident that Obama will make everything better again. Im expecting this move up to happen when the reality kicks in (a few weeks after his inauguration).

 

[explod]

The resistance of $US840 in late 07 now forms part of strong support and all other indications to me say it will hold these levels. We are now looking for a weekly close above US880 to 890 for the next upleg to commence.

IMHO it will be soon and as I have maintained for eight months now, after the new administration takes over.

Jimmy Carter got the cuts for the sins of his predecessors and Obama will get the same. Stand back for the bad news after 20th instant.

Further to the post yesterday, remembered overnight that the $US 850 area was about the closing high in 1979/80 and became resistance on two further occasions in 1980.

The US dollar index is the other point of interest. At the current .82 it sits at the same level as it did in late 2007 when gold broke above the $US 840 area. The index has hit this level in the last couple of days and is falling back. My view is that these factors, taken together, are bullish for gold going forward, and yes the new President my well herald the event.

 

[Naked shorts]

Further to the post yesterday, remembered overnight that the $US 850 area was about the closing high in 1979/80 and became resistance on two further occasions in 1980.

The US dollar index is the other point of interest. At the current .82 it sits at the same level as it did in late 2007 when gold broke above the $US 840 area. The index has hit this level in the last couple of days and is falling back. My view is that these factors, taken together, are bullish for gold going forward, and yes the new President my well herald the event.

...not to mention that a Merrill Lynch exec said that its wealthy private investors are buying up gold instead of paper assets.

 

[boyley]

Has anyone got some evidence that gold and copper are linear, just curious as copper is surging as we speak

 

[Naked shorts]

Has anyone got some evidence that gold and copper are linear, just curious as copper is surging as we speak

I would think not boyley. if copper going because of increased demand. that would mean companies have a good economic outlook, good economic outlook means less demand for gold.

 

[boyley]

I would think not boyley. if copper going because of increased demand. that would mean companies have a good economic outlook, good economic outlook means less demand for gold.

Fair enough, so I will stay with my copper futures for now then.

 

[MRC & Co]

I would think not boyley. if copper going because of increased demand. that would mean companies have a good economic outlook, good economic outlook means less demand for gold.

Good economic outlook also means inflationary pressures = demand for gold. I think Wayne said it best in another thread, don't just check your brain at the gate. Every scenario calls for a different approach. No scenario is exactly the same as previously.

 

[bankit]

Has anyone got some evidence that gold and copper are linear, just curious as copper is surging as we speak

Hi Boyley,

It might have something to do with the US Index rebalancing?
http://www.rgemonitor.com/us-monitor/255006/here_comes_the_commodity_index_rebalancing

In part the article reads:

The weightings for both indices are released ahead of time, but begin to kick in the first few working days of the new year. In the case of the DJ-AIGCI ”” which JP Morgan estimates has $25bn in funds tracking it ”” the new weightings come into force during the roll period that begins January 9th. The S&P GSCI index weightings kick-in after its January roll which commences January 8th. JP Morgan estimates about $50 bn of investment into that index… Accordingly, JP Morgan sees the most significant change coming in the DJ-AIGCI rebalance. Here the market weight of crude oil is expected to increase from 9.6 per cent to 13.8 per cent, gold from 10.8 per cent to 7.9 per cent, copper (COMEX) from 4.5 per cent to 7.3 per cent, live cattle from 6.4 per cent to 4.3 per cent and sugar from 4.7 per cent to 3.0 per cent. Meanwhile, S&P GSCI crude oil weight will go from 32 per cent to 33.8 per cent…Nevertheless, gold tanked on Monday on expectation of a weighting reduction of gold in the DJ-AIGCI Index …This harkens memories of July 2006 when Goldman greatly reduced the weighting of gasoline, which precipitated a huge collapse in gasoline prices ahead of the 2006 midterm elections.

Bankit

 

[Naked shorts]

Good economic outlook also means inflationary pressures = demand for gold. I think Wayne said it best in another thread, don't just check your brain at the gate. Every scenario calls for a different approach. No scenario is exactly the same as previously.

::
it takes a while for inflation to hit after good a "good economic outlook" sentiment is reached.
...but you provide a very good point.

 

[Page]

Gold prices cannot say where it is heading. The world market conditions are getting worse. This is affecting the prices of gold too. We can see the prices of Crude oil getting worse day by day. This has affected the economical conditions of US and the market status is getting worse.

 

[Naked shorts]

Gold prices cannot say where it is heading.

Last I checked people flock to gold when times are bad

 

[explod]

Merrill Lynch says rich turning to gold bars for safety
Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies.

By Ambrose Evans-Pritchard
Last Updated: 10:32AM GMT 09 Jan 2009

Rich investors are spurning gold exchange traded funds in favour of krugerrands.
Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses.

"They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said.

Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.

The metal should do well whatever happens. If deflation sets in and rocks the economic system it will serve as a safe-haven, but if massive monetary stimulus gains traction and sets off inflation once again it will also come into its own as a store of value. "It's win-win either way," said Mr Dugan.

He added that deflation may prove the greater risk in coming months. "It's very difficult to get the deflation psychology out of the human brain once prices start falling. People stop buying things because they think it will be cheaper if they wait."

Merrill expects global inflation to hover near zero, with rates of minus 1pc in the industrial economies. This means that yields on AAA sovereign bonds now at 3pc will offer a real return of 4pc a year, which is stellar in this grim climate. "Don't start selling your government bonds," Mr Dugan said, dismissing talk of a bond bubble as misguided.

He warned that the eurozone was likely to come under strain this year as slump deepens. "There is going to be friction as governments in the south start talking politically about coming out of the euro.
I don't see the tensions in Greece as a one-off. It is a sign of social strain in countries that have lost competitiveness."

Yes it is the only show in town now.

I am often wrong, but, we indeed live in interesting times

 

[uzumaki]

check out www.theinflationist.com - they subscribe to the hyperinflatino theory and are stocking up on gold too! it just seems too easy though, so many goldbugs, who is gonna lose money if everyones buying gold?

 

[explod]

check out www.theinflationist.com - they subscribe to the hyperinflatino theory and are stocking up on gold too! it just seems too easy though, so many goldbugs, who is gonna lose money if everyones buying gold?

Gold is a very scarce product. At this time only .005% of the total investment pool is into gold(Actually that figure has probably changed since the contraction of assets over the last 6 months, and as many on here know, the fabricators cannot keep up to the demand for 30 kilo bars for the wealthy.

Anyway, almost no one is into gold compared to the bigger picture. If only a further .005% got interested in gold it would go through the roof because it is so scarce. Imagine what would happen if 1% became interested. It is just these dynamics of supply and demand and then add sentiment towards it and ....bbaaaannngggg...

Yes there will be a day when gold blows off its top and it will be time to get out. When it reached a peak in 1980 there were a number of opportunities to cash out at a good price. I look forward to the day but we have a long way to go yet, you can be sure that the current financial system will still have a few cards up its sleeve to hoodwink the sheeple for awhile yet..

 

[Page]

Gold is a very limited product. It is true that this time only .005% of the total investment is into gold. Leaving the bigger pictures, no one is involved in gold trading. Imagine if only .005% of people go for gold trading what will happen if few people get interested for it. Seeing the present conditions of gold one cannot imagine were is gold heading. Small investors are not seeing any suitable price for trading this product.

 

[explod]

In the US, Merrill Lynch is predicting that $US Gold will hit a new all time high (above the $US 1030 intraday high it hit in March 2008) "soon" and will reach $US 1150 by June. Increasingly, customers are insisting on buying physical Gold and are shunning Gold Exchange Traded Funds (ETFs). The median prediction from US analysts is for Gold to average $US 910 an ounce in 2009. Predictions ranged from a high of $US 1200 to a low of $US 780. Given the fact that Gold closed 2008 at a spot future closing price of $US 884.30, the median is a conservative estimate.

On another front, the global hedge book of producing Gold mines had fallen to 585 tonnes at the end of June 2008. That is the lowest total since 1987, the year when Gold plummeted, falling below $US 300 by the end of the year on its way to the $US 250 lows it hit in 1999 and almost duplicated in 2001.

And then there is Gold's major "competitor", the US Dollar and US Treasury debt. Many analysts both inside and outside the US are pointing to the HUGE borrowing requirements of the US government over the coming year as the straw that will finally break the US Dollar's back. The Office of Management and Budget has already predicted a 2008-09 fiscal year deficit of more than $US 1 TRILLION, and that does NOT take into account the Obama "stimulus" package universally expected to be somewhere between $US 800 Billion and $US 1.25 TRILLION more. As far as US Treasuries are concerned, Barrons' cover story in their first issue of 2008 was headlined "Get Out Now!" Get out of what? Get out of the "bubble" (Barrons' description) which is the market for US Treasury debt. As one sign of trouble for US Treasuries, Barrons cited: "...the resilient price of gold which has risen $150 an ounce since late October despite weakness in most commodity prices."

We cannot remember the start of any year since the US Dollar and Gold were divorced in 1971 when more people were more "bullish" on the prospect for Gold over the year to come. It is disquieting, to say the least.

Given any amount of comprehension of what is now going on in global financial and political circles in general and the US in particular, it would be very difficult NOT to be "bullish" on Gold. Even if this comprehension was lacking, the mere fact that Gold weathered the commodities bloodbath of the second half of 2008 so much better than anything else is a powerful mark in its favour. On an annual basis, Gold was outperformed by only two other "investments" inside the US over the year just ended. One was the US Dollar itself. The other was US Treasury debt paper.

What is even more interesting is that there is an even bigger chorus than the one in favour of Gold circulating today. This is the chorus warning of the great danger of holding US Dollars and Treasury debt paper in the face of the unprecedented funding demands that the US government will be putting forward this year. Again, this caution is well founded.

As we pointed out here last week, 2008 was the ninth year in the past decade during which the $US "price" of Gold has gone up. But 2008 stands alone because it was the first year since the $US Gold bull market got underway in 2002 during which Gold has gone up in the face of a deflationary bloodbath with $US TRILLIONS being wiped off the valuations of "assets" of all descriptions. 2008 was the year in which Gold proved beyond doubt its quality of preserving purchasing power in the face of ANY type of financial and/or monetary chaos.

Ever since we began these reports well over a decade ago, and long before that in The Privateer, we have been urging the ownership of Gold. The fundamental reason to own Gold is not as an "investment", after all, money is not an investment. Gold should be held primarily as financial "insurance".

Above courtesy "the privateer newsletter"

I have grave fears for my family and friends, Glad that I saw a lot of it coming but must admit I did not honestly think it would be(financially be so succint) so sudden and deadly as it is in fact playing out.

 

[uzumaki]

thanks for that article. enlightening indeed. have been buying gold companies, but not gold itself or the etf. how are you guys buying gold?

 

[Whiskers]

Still looking at a bit more of a fall in the POG I think before it bottoms out this leg.

I suspect the main trigger atm is the potentially huge rescue package Obama is talking about. If it comes to full fruition it likely will cause some inflationary expectations in the short term.

The USDX still looks like it will recover .84ish in the next few weeks which seems to gel with this scenario.

I've used this chart again for clarity, as opposed to my cluttered trading chart, and also I find this one gives better big picture analysis.

On the weekly spot chart we had an evening star almost formed a few months back that didn't quite make it on my trading chart either, but this week there is an evening star on both, (although the numbers are a little different).

Obviously the evening star is not at the main peak, but even on these minor peaks we usually get at least a few candles of reversal.

 

[sinner]

how are you guys buying gold?

Hi uzumaki, there is a "buying gold" thread, check it out. Beware the goldbugs, gold threads have a tendency to bring them out of the woodwork

As with all other investments, DYOR, never trust the goldbugs!

Still looking at a bit more of a fall in the POG I think before it bottoms out this leg.

I suspect the main trigger atm is the potentially huge rescue package Obama is talking about. If it comes to full fruition it likely will cause some inflationary expectations in the short term.

The USDX still looks like it will recover .84ish in the next few weeks which seems to gel with this scenario.

I've used this chart again for clarity, as opposed to my cluttered trading chart, and also I find this one gives better big picture analysis.

On the weekly spot chart we had an evening star almost formed a few months back that didn't quite make it on my trading chart either, but this week there is an evening star on both, (although the numbers are a little different).

Obviously the evening star is not at the main peak, but even on these minor peaks we usually get at least a few candles of reversal.

Thanks for the continued analysis Whiskers, much appreciated. Even though I read 5 or 6 different gold T/A and EW analysis on a weekly basis already it's nice to have an ASFers take on it.

I decided to not take profit on my gold miners, even though all had increased 25-55% from Nov lows when I went long. Prefer to buy-hold-bottom-drawer them as I feel they are all quality stocks rather than seeking short term profits.

Instead have taken out a small short position on the mini contract Spot Gold CFD on IG Markets, entry at 855.8 with a stop placed at 867.

I figure it should be a nice hedge, if gold price is pushed above recent intraday highs the gold miners will continue their brisk upward pace. Otherwise if technical factors take over from macro factors and we see a drop into the 700s short on gold should cover any short term losses.

As always my goal is simply to beat inflation by 2-3% re:

http://www.nakedcapitalism.com/2008/12/secret-to-investment-longevity.html

 

[jackson8]

morning all

just an article i have just read from news.au site
may be of interest to some

http://www.news.com.au/business/story/0,27753,24894346-462,00.html