Gold Price - Where is it heading?

sinner said:

Hi Cooks,

I don't mean to have a back and forth with you like this really so will keep it quick.

Can see your chart now that I'm home, thanks for that.

Actually, the indicator linked used in the article is an independant (i.e. not government) one, if you had read it

Yes I am serious about food prices falling, do you trust the ABS or are they too governmental for you?

http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6401.0?opendocument?utm_id=LN

Q on Q growth price increase down on all sectors (incl food), my guess is will record negatives next Q. This is when you will see actual ticket discounts at Woolies or Coles. You can see the trend ahead by examining futures for soft commods like wheat, soy, cattle, etc. They have all taken a big hit.

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It's good to hear other voices and you make a good case... I will end with this, I don't need to look at reports to tell me if food prices are going up and going down. The best evidence I have is what I see on the street, what I actually used to pay and pay now, and what others are paying / complaining about the current food prices. As you said earlier, the charts tell the truth... the chart I posted on food looks very similar to another price index about 10 years back... can you pick it? It was the home price chart which broke out exponentially when all the nay sayers were going "prices will come down". Yes, prices have come down only now, but guess what... WE NEED FOOD and population isn't getting smaller! Don't fight the trend as it will steam roll you like a train as Mike Shedlock has mentioned

just to return briefly to the dollar-yen/Gold correlation, Sinner's charts (post #6193) are as good as any I've seen. it is on the major moves & turnarounds that they work best, such as April 08 ... very sick JPY which was good for gold, but then it went & picked itself up off the floor & gold came to a standstill.

on the 2nd chart, a similar pattern to the above, during Dec 08/Jan 09.

the 3rd chart is as yet unresolved. Gold as I see it, is sensing the weakness in the JPY that is occurring right now & moving up in anticipation of an early victory. if the JPY manages to hang in there, then Gold will surely recede.

that dollar weakness ... the next few days will be instructive. I am not trying to prove any particular theory, only observing that inverse dollar-yen/Gold correlation. FWIW

Hi All,

The attached chart is a (cleaner looking) update of a previous chart where I mentioned the strong resistance at the $900 level. When Spot Gold breaks through this resistance and the other strong resistance in the $920/930 area (more on this later) then the indication will be much higher prices and these levels should become major support.

By the way the worlds largest Gold EFT Fund http://www.spdrgoldshares.com/ purchased 27 tonnes (approx USD 825m) last week, their biggest purchase in a single week from what I gather and their holdings now stand at 833 tonnes. So the demand for Gold continues to rise.

Bankit

bankit said:

By the way the worlds largest Gold EFT Fund http://www.spdrgoldshares.com/ purchased 27 tonnes (approx USD 825m) last week, their biggest purchase in a single week from what I gather and their holdings now stand at 833 tonnes. So the demand for Gold continues to rise.

Bankit

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Thanks Bankit for the chart and update on SPDR. Their situation is a very interesting point in the bigger picture. I read an article showing how their gold holdings were on a consistent increase despite price falls on the COMEX and other gold exchanges.

It will be interesting to see how gold ETFs and other "paper gold" instruments pan out if there is a run on gold. If the US government makes it illegal to hold gold they will have to default all those holdings and pay everyone in paper. I doubt those people will be happy.

I just whipped this chart up from their website data. Vertical lines in the chart are holidays (no data). Y axis: Black mountain is price in USD, green line is raw tonnage.

You can see the direct correlation between price and tonnage was broken when the price shot up over 800 in Sept-Oct. This was a bit of a fakeout as the price quickly dropped back down, but this time the tonnage did not drop with it! It barely registers a bump down and continues climbing.

As an interesting aside, you can also see how when gold hit $1000, nobody was really interested in holding gold ETF so they did not increase their holding significantly. Just like nobody was interested in longing the USD or Yen

Dataset from
http://www.spdrgoldshares.com/assets/file/csv/gld_all_data.csv
Cut to start from 01/01/07 (dataset starts from 2004).

sinner said:

I just whipped this chart up from their website data.

Click to expand...

Hi Sinner,

Excellent post and your chart says it all.

Bankit

My extrapolated thoughts -

Inflation/deflation - Inflation in not the issue anymore for gold. In a 'normal' cycle/system it would be and has been a hedge, up until about 12 months or so ago, and finally finished with the oil price 'correction'. The amount of zero backed fiat money lost up till now globally far exceeds the amount of money 'created' to try to prime. The priming money effectively has zero velocity in the economy due to hoarding by financial companies who's liabilities suddenly far outway their assets, if they could even value them in this climate?

Flight to quality - As fast as things have been happening, it is but a slow motion move from or between paper backed currencies, the commodity flavour of the month, the least worthless currencies, and finally, the ultimate store of independent wealth - gold!

Bankruptcy contagion - As the cycle continues to break down completely, we will get the bankruptcy 'spiral of influence' moving from companies to municipalities to state governments to national governments. This is happening now in various stages around the globe ie California state (the worlds 5th or sixth largest economy) is close to bankruptcy. Great Britain is a basket case.

Exchange rate - Australia has lagged these effects because of the commodities spike, but will probably won't be immune, and the onset of a calamitous recession will be swift and literally unbelievable. This is when the exchange rate will crash. (The RBA should leave interest rates at 4% because it's not going to have any more effect at zero - those who are responsible savers should at least be able to be rewarded and spend the interest into the economy?)

Cash - what is it good for? - As interest rates progressively become zero bound, there will less inclination to keep cash in the bank, esp if it becomes widely known that government bank guarantees are physically impossible to enact.

Breakdown of the 'free' market - The gold ETF's are both the biggest threat to gold and it's biggest support point, but only while the party continues. Central banks and governments will be given powers to control/manipulate anything that threatens stability, more than what has happened up till now. This will include currencies (competitive devaluations) stock markets, commodities and gold. Gold is both the riskiest asset & the one asset that could make bonaza, one-in-a-lifetime profits from either stocks or bullion, but if markets are frozen then all bets are off, all strategies are useless, all things are worthless?

The best hope we have is that they (the same buffoons that got us into this mess in the first place) will be successful at re-flating the worlds economy's' so we do in fact have inflation again? In the meantime, deflation is the enemy, so gold seems a good bet , after all, what else is there?

Uncle Festivus said:

My extrapolated thoughts -

In the meantime, deflation is the enemy, so gold seems a good bet , after all, what else is there?

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The paper promise money across the globe is backed by massive debt. Soon only assets that you can hold, see, eat or stand on will have any value at all.

A well backed and thoughtful post Uncle.

cheers on this Australia Day

explod

This could be a pivotal week for GOLD, and the EURO, if the flight to safety wanes a bit then a rally could get some traction.

Cheers,


CanOz

Barghh. I told myself no trading today, and had a party to play at anyway. But could not resist placing a blind short right before I left the house at 892. Stop loss at 906. Was just playing with a couple of minis on my profit pool so was not too worried because I figured any losses would be made up in the morning by my gold miners. I really did not anticipate continued strength! I always forget how the Tokyo session usually ignores price weakness and gobbles it up anyway!

Came home to a loss which stings a bit anyway (but them's the cost of tickets to this show!), so let that be a lesson kiddies, no discipline to follow your strategy = lose.

So given a rather pitiful "retracement" to where I decided to go short whats our opinion for the night fellows? I won't be playing along (prefer to sleep tonight and keep my remaining profits ), but watching from the sidelines is still fun.

Will be interesting to see if there is a strong downward move in gold tonight during the NY session will Friday nights sentiment still carry on for the ASX gold sector tomorrow?

sinner said:

Barghh. I told myself no trading today, and had a party to play at anyway. But could not resist placing a blind short right before I left the house at 892. Stop loss at 906. Was just playing with a couple of minis on my profit pool so was not too worried because I figured any losses would be made up in the morning by my gold miners. I really did not anticipate continued strength! I always forget how the Tokyo session usually ignores price weakness and gobbles it up anyway!

Came home to a loss which stings a bit anyway (but them's the cost of tickets to this show!), so let that be a lesson kiddies, no discipline to follow your strategy = lose.

So given a rather pitiful "retracement" to where I decided to go short whats our opinion for the night fellows? I won't be playing along (prefer to sleep tonight and keep my remaining profits ), but watching from the sidelines is still fun.

Will be interesting to see if there is a strong downward move in gold tonight during the NY session will Friday nights sentiment still carry on for the ASX gold sector tomorrow?

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Very bold move Sinner considering gold is bullish on the daily, hourly, 30min and 15 min charts i.e. bullish alignment on all time frames. On Friday the daily also broke the downtrend line and note that it is also the break of a neckline of the inverse head and shoulders. Projected target for gold is most likely to test the all time high... as for tonight, further upside is my call. Good thing you had a stop

Cooks said:

Very bold move Sinner considering gold is bullish on the daily, hourly, 30min and 15 min charts i.e. bullish alignment on all time frames. On Friday the daily also broke the downtrend line and note that it is also the break of a neckline of the inverse head and shoulders. Projected target for gold is most likely to test the all time high... as for tonight, further upside is my call. Good thing you had a stop

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Hehe like I said, it was blind didn't even look at a chart. Was not attempting a ballsy move, although I guess departing from strategy is ballsy in a dumb way. I was just being greedy, didn't want to miss out on a strong retracement down! What are profits for, if not to make bets? :

Have a good night everyone, I had a loverrrrly Australia day! Thank the Commonwealth for stops :

I'm no T/A guru, far from it, but a little voice in the back of my head keeps saying "gaps get filled" and on a long term AUD gold price chart there's a very noticeable gap around $1000.

I can follow all the fundamental arguments, but the chart in AUD has me thinking that maybe there's a dip coming and that would be a better time to add to positions? Or have I got it all wrong? I'm no chart expert as I said.

Dunno about the next 24hrs, but since gold is hitting new highs in GBP, Euro, Canadian Dollar, Ruble, and AUD, I think that is signalling inflation coming. (Probably still a fair bit of downward movement left in debt based asset prices though)

This from Money & Markets if true should push Gold up???
But just to give you a sense of the magnitude of the problem, Bank of America and Citigroup's combined credit default swaps are more than sixty times larger than the $90 billion they've received so far in capital infusions from the Treasury Department.

Smurf1976 said:

I'm no T/A guru, far from it, but a little voice in the back of my head keeps saying "gaps get filled" and on a long term AUD gold price chart there's a very noticeable gap around $1000.

I can follow all the fundamental arguments, but the chart in AUD has me thinking that maybe there's a dip coming and that would be a better time to add to positions? Or have I got it all wrong? I'm no chart expert as I said.

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The trend is your friend, ride it up until it shows the first signs of lower highs followed by a lower low... the daily is in an uptrend as are the smaller time frames... if there is a dip, buy it as it would be classed as a pullback in an uptrend, provided it doesn't violate the previous pivot low

"To Infinity And Beyond !

Glen48 said:

This from Money & Markets if true should push Gold up???
But just to give you a sense of the magnitude of the problem, Bank of America and Citigroup's combined credit default swaps are more than sixty times larger than the $90 billion they've received so far in capital infusions from the Treasury Department.

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And the last shoe to drop, interest rate swaps, are an order of magnitude (10fold) bigger than Credit Default Swaps.

The Interest rate swaps will go when the US treasury bond market turns. Then everything truly goes nuclear.

Cooks said:

The trend is your friend, ride it up until it shows the first signs of lower highs followed by a lower low... the daily is in an uptrend as are the smaller time frames... if there is a dip, buy it as it would be classed as a pullback in an uptrend, provided it doesn't violate the previous pivot low

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The daily chart hasn't even breached the last Lower Low yet and is yet to make a Higher High.

Needs to break $930 to get bullish.

Glen48 said:

This from Money & Markets if true should push Gold up???
But just to give you a sense of the magnitude of the problem, Bank of America and Citigroup's combined credit default swaps are more than sixty times larger than the $90 billion they've received so far in capital infusions from the Treasury Department.

Click to expand...

This might be true, in terms of pure $ amounts but we saw the same massive numbers (and sky is falling commentary) with Lehman, maybe it was bigger, I can't remember. In the end the total liability winded up as a small number like $20mil because there was CDS on CDS (i.e swap on a swap) and this sort of shenanigans!

As long as the owners of the CDS are willing to get their payment in USD then this "should" hold up, low counterparty risk with the US govt and their lovely printing press as the guarantor!

still seems to me that the Gold-price reacts most strongly to any weakness in the USdollar. today for inst, this weakness is apparent against the Euro & the Aussie, although not to any great extent. not much change vs the Yen.

the firming Pog might be in expectation of further dollar weakness. but must admit that there could be many other factors at work.