Gold Price - Where is it heading?

[wavepicker]

Re: Cliff Droke - Gold Bottom Due in Early Sep 2006

Just read Cliff Droke's "A look at the upcoming 8-year cycle bottom" (June 14, 2006).

http://www.clifdroke.com/articles/jun2006/061406/art061406.mgi

"The past few weeks have seen stocks and commodities (notably gold and silver) take a beating. After peaking in May (April in the case of the NASDAQ), several major indices have declined to lower lows and most recently hit lows for the year on Tuesday, June 13. The culprit behind this decline is the 8-year cycle. This important cycle is due to bottom in September.

A word about the 8-year cycle itself is in order. The 8-year cycle is a composite of the 2-year cycle, which bottoms in even numbered years. It's a component of the Kress 120-year cycle series with a total of 15 of these 8-year cycles within a given 120-year cycle (the most recent 120-year cycle began in 1894 and is due to bottom in 2014). The 8-year cycle tends to bottom sharply but usually gives way to sustained rallies in the months following the bottom (as in the months following 1998).

The coming 8-year cycle low due around the early part of September this year should allow for a similar opportunity to buy the lows of this important longer-term cycle, and hopefully ending what has been an extremely volatile period for stocks and commodities."

He is new to me so I can't judge his accurancy.

But his tendency to cite various multi-year cycles casts doubt in my mind... akin to astrology.

Gold and the 6-year cycle (September 27, 2005)
http://www.clifdroke.com/articles/sep2005/092705/art092705.mgi

The 10-year cycle and its effects (April 7th, 2004)
http://www.clifdroke.com/articles/sep2005/092705/art092705.mgi

wavepicker, your thoughts?

Cliff and a whole host of other gold bug rampers in gold forums have been bullish for as long as I remember. As for a 120 Yr cycle, one has to laugh!! I did not know we market data on gold going back more than 120Yrs was available?

 

[Sean K]

Re: GOLD Where is it heading?

Holy goat batman! Has the dead cat just woken up and started scaling next doors tree? Or, is it just a spasm? Come on cat, keep climbing; but a little more steadily this time!

 

[BlueDaze]

Gold Rally - Danger or Opportunity?

In the short term, this wave A "washout" will find support between this price and $530, and will base for a strong sucker rally.

Do you mean it will rally up then fall back to below $530?

I regularly read tonyc's blog, and deeply respect his contributions. That price-chart he posted is certainly "alluring".

I am really tempted to buy a bit of GLD now... at least at $55 or $53, if there is a pullback.

Greed and fear are such strong pullers.

 

[coyotte]

Re: GOLD Where is it heading?

IMHO the 1st query I would have of any cycle is WHY ?
The 4 year SP500 / DowI cycle is answered by US Pres Elections -- heance a simple logical explanation
Just to say it is allways so , harks back to a lecture I attended decades ago on "Probability Therory " a underlying point was made
( for decades it had been noted that Sun Spots occured @ regular intervals --- so it had become simple to PREDICT when the next one would occur --- well apparentlly this theory got blown out the water when they started to appear out of sync. --- It took a UK Uni Prof to come forward with the Theory that they were caused by excess gas pressures building up & working their way to the surface --- now they where predictable , because aparentlly they can measure these gas pressures --- hence predict the size & timeing

 

[Sean K]

Re: GOLD Where is it heading?

Coyote, What the?

No more wine for you!

Actually, I heard tonight that the tsunami off Sumatra last year was caused by a sun flair! Is that the same as a sun spot?

How does that effect the POG?

Interesting..........

 

[BlueDaze]

Wave After Wave

Another POG cycle-theory by Stephen Rinehart (December 19, 2005)

http://www.financialsense.com/fsu/editorials/rinehart/2005/QL/1219.html

The passage of time shows a number of forecasts are off. Eg. understimating the POG in 2006.

But these are the parts that interest me:

"We continue to believe that the real Stage II rally will launch off the coming bottom of the 86-month cycle in July/Aug 2006.

The chart shows a predictable growth in the price of Gold from August 2004 with a mid-2006 correction and a strong move upwards to over $600 an ounce by late 2007.

The Stage II parabolas will be setting up with this bottom in 2006 and the gold rush is on for years to come but with a lot of volatility (especially in 2009).

Chart 4 shows the detrended price of Gold from August 2007 thru 2009. It is predicting a wild downside move in gold after Feb 2009. It could happen six months early or late."

Was 12 May 2006 the correction, 13 June 2006 the bottom, and now the start of another gold-rally?

Oh, if only I've a crystal-ball to see the future!

 

[michael_selway]

Re: Wave After Wave

Another POG cycle-theory by Stephen Rinehart (December 19, 2005)

http://www.financialsense.com/fsu/editorials/rinehart/2005/QL/1219.html

Chart 4 shows the detrended price of Gold from August 2007 thru 2009. It is predicting a wild downside move in gold after Feb 2009. It could happen six months early or late."

6 months early I think!

thx

MS

 

[crackaton]

Re: GOLD Where is it heading?

So we still have two years of good times

 

[Dr Doom]

Re: GOLD Where is it heading?

I have to clarify a previous post of mine where I think it was misunderstood. It seems to have been interpreted that previous tech analysis/cycle theory was not valid. What was intended was that technology may these days distort cycle lengths due to speed of information and greater liquidity, ie bigger, sharper movements within a shorter timeframe.

History can indeed be a precurser to the future. Back in the crash of 29 gold stocks were sold off along with other stocks but eventually rebounded to outperform the rest of the market.
-------------
There seems to be a theory that rising interest rates will/should put a dampener on the pog. In a 'normal' market this would probably be the case; just look at how effective Paul Volcker was when he raised rates aggressivly, which killed the last gold bull. But 'this time it's different' I think, as we may be witnessing the slow demise of the current world currency, the $US. So the question is wether interest rates are being raised to ward off inflation or to prop up the $US. This is critical in determining the future pog, irrespective of technical analysis and cycle thoeries, in that what's happening now has not had a (recent) precedent, apart from the decline of the British pound some 80 years ago.
-------------
I follow Paul Van Eedens commentaries which seem to make sense to me, without the usual gold bug hype.
http://www.paulvaneeden.com/index.php

PS these cycle theory 'predictions' are very amusing - how does anybody know what's going to happen in the future eg big crash after such n such a date??.

 

[lewstherin]

Re: GOLD Where is it heading?

An interesting news bite about gold sales for the rest of the year:

http://www.sundaytimes.co.za/zones/sundaytimesNEW/business/business1150721240.aspx

Comments?

 

[Sean K]

Re: GOLD Where is it heading?

Interesting that China, India, Taiwan haven't increased their holdings this quarter. There was a lot of talk about that occurring. Is this article 'the facts'?

It does say also they are expected to increase reserves due to weakening US$, but as yet no move...

 

[scsl]

Re: GOLD Where is it heading?

speaking of a weakening USD, does the following point in this article still apply? i'm just a bit confused because i read in the lead on to the below article that:

More confusion will come when the dollar starts to fall in the face of rising interest rates (see: http://www.paulvaneeden.com/displayArticle.php?articleId=101) and that is when gold will truly shine. When that happens we could very well see the gold price rise while other metals prices fall since gold, unlike the other metals, is not a commodity.

...and then i have read recently that "the Aussie dollar rose on interest rate concerns in the United States". i just thought that the dollar would fall with rising interest rates.

Dollar weakness and higher interest rates: how it works
February 10, 2005

For more than a year now I have been commenting that the dollar has to decline in the face of rising interest rates for the gold price (in US dollars) to sustain a meaningful rally. Every time I make that comment, someone points out that rising interest rates typically result in stronger currencies. Therefore, why would the dollar fall if interest rates are rising?

History repeats, but never exactly. While there are often precedents for current situations the circumstances are rarely identical, so we have to be careful when we make assumptions based on past experiences or events.

It is true that higher interest rates typically lead to stronger currencies, but the US balance sheet, income statement and dollar are in uncharted waters and never has globalization been as prevalent as it is now. Japan owns roughly seven hundred billion dollars worth of US Treasury securities and China has in the order of two hundred billion dollars.

Were it not for Japan and China, the US dollar would be trading a lot lower than where it is today. During the past decade the United States has racked up enormous trade deficits with those two countries. Under normal circumstances the net amount of dollars (trade deficit) paid to foreign corporations would be sold on foreign exchange markets. As the trade deficit widens, ever more dollars are sold, putting pressure on the dollar to decline. Eventually the weakening dollar would cause the prices of imported goods to rise and the rising costs of imports would ameliorate the trade deficit. This is the free market's natural balancing system.

But Japan and China wanted to prevent their currencies from appreciating against the dollar. Put another way, they wanted to prevent the dollar from falling in response to the rising trade deficit. So instead of selling the excess dollars into the foreign exchange markets they used them to buy US Treasuries. This kept the dollars out of the foreign exchange markets and helped the US finance its budget deficits.

It was a win-win situation -- or so it seemed. The US could spend, and spend, and spend... and Japan and China would send their savings over to finance the binge. Now, however, the situation has gotten so out of hand that there is mounting pressure on China to let its currency, the renminbi, float against the dollar.

Calling for a stronger renminbi is in essence the same as calling for a weaker dollar. Now let's go back to the mechanism that kept the renminbi, and the Japanese yen, from rising against the dollar: excess dollars were invested in US Treasuries instead of being sold into the foreign exchange markets.

If the Japanese and Chinese are to let their currencies appreciate against the dollar it also means that they will start selling more dollars into the foreign exchange markets and that means they will have less dollars to invest in US Treasuries.

This is not trivial matter. Between January and November last year, Japan and China bought about thirty percent of all the new Treasury securities the United States issued. Even a small decline in the amount of US Treasury purchases by Japan and China could have a dramatic effect on US interest rates.

If the demand for US Treasury securities (bonds) declines then bond prices are likely to decline as well. US interest rates are determined by US bond prices: if bond prices fall, interest rates rise. Therefore a decline in demand for US Treasuries from Japan and China means an increase in interest rates for the US.

Now let's go back to the free market mechanism again. If Japan and China allow their currencies to appreciate against the dollar it also means that they will sell more of the dollars that are accumulating from the US trade deficit into the foreign exchange markets. This additional dollar-supply will result in the renminbi and yen strengthening, and the dollar weakening. It is precisely what the US and Europe are asking China to do.

So a revaluation of the renminbi will cause more dollars to be sold (downward pressure on the US dollar exchange rate) and less US Treasury securities to be purchased (downward pressure on bond prices and upward pressure on interest rates). Also, if China lets its currency appreciate then I doubt that Japan will continue to try and support the dollar by itself. So the same goes for Japan.

Now, we can argue for days and weeks about how severe the dollar decline will be, how high interest rates will go, what impact that will have on the US economy and, by extension on the global economy. The bottom line is that China will most likely allow its currency to rise this year; Japan will follow suit. That is the same as saying the dollar will continue to decline only this time against the Asian currencies as opposed to the euro and other Western currencies. And, as you saw, the decline in the dollar will occur simultaneously with rising US interest rates.

As a result the gold price, in US dollars, will continue to rise, punctuated perhaps by talk of IMF gold sales and other miscellaneous events.

This rise in the gold price, as has been the case for the past three years, is mostly a dollar phenomenon. It's a bear market in the dollar, not a bull market in gold.

Paul van Eeden

http://www.paulvaneeden.com/displayArticle.php?articleId=101

 

[wavepicker]

Re: GOLD Where is it heading?

sooo much negativity on the US Dollar!!

Does not surprise I guess, as most punters like projecting the current trend into the future. Would not surprise me to see things pan out quite differently however.

 

[Sean K]

Re: GOLD Where is it heading?

0015 GMT [Dow Jones] Spot gold last $575.20/oz, holding most of gains in NY after probing below $560 in HK yesterday. Macquarie Bank says general mood towards gold positive, fundamentals still strong, but investors so far cautious moving back into market. Notes spot gold's bounce last week off $543, near upper end of trend channel, just above key support where prices started latest cycle of multiyear rally in February. Also says short-term moving average has started to turn up, which might be initial signal immediate price downturn might have ended; adds buy signal will emerge once price pierces longer-term averages.(RCB)

 

[GreatPig]

Re: GOLD Where is it heading?

On the Kitco chart, gold is currently flat-lining.

Any ideas why?

Cheers,
GP

 

[Magdoran]

Re: GOLD Where is it heading?

GP,


Just looked at it too - thanks for the heads up - I was kind of wondering why my gold tracking on my toolbar was static!

This is very odd... investigating...


Magdoran

 

[Magdoran]

Re: GOLD Where is it heading?

Hello GP,


COMEX seems to have been trading all this time, maybe it's at Kitco...

Kitco's charts are functioning now.


Magdoran

 

[wayneL]

Re: GOLD Where is it heading?

There's a bit of promise in gold staging a decent rally here.

There's that capitulation low we all saw a few days ago, now a higher low in place as of yestarday, and a near vertical $17 move since shortly after the open of the pit session.

New highs??? Dunno 'bout that, but a useful rally hopefully.

Got my genuine imitation bull horns on for now

 

[GreatPig]

Re: GOLD Where is it heading?

I'm all for that, as I bought a few of those ZAUWBA call warrants a few days ago.

If it breaks the down-trend line soon, I might buy a few more.

Cheers,
GP

 

[michael_selway]

Re: GOLD Where is it heading?

I'm all for that, as I bought a few of those ZAUWBA call warrants a few days ago.

If it breaks the down-trend line soon, I might buy a few more.

Cheers,
GP

http://www.gold-eagle.com/editorials_05/maund061406.html