Gold Price - Where is it heading?

[sinner]

Hi guys,

Just a reminder for all you goldbugs out there, of where we are as part of a longer term picture...

This weekly chart is so beautiful it makes me cry.

If anyone watches and believes Lundeens step sum indicator, then the fall from 931 to 682 (and the preceding falls of similar magnitude) makes a lot of sense. Certain large market players are net short and have been for a long time.

Unlike the previous drops however, this time gold has clawed its way back to the previous high.

I leave the question of "now what?" to you!

 

[cogs]

Cup and handle I see.

 

[Wysiwyg]

Hi guys,

Just a reminder for all you goldbugs out there, of where we are as part of a longer term picture...
I leave the question of "now what?" to you!

So sinner, (return of serve ) continuation of a downtrend from the March 08 high?A new high to come this year? A sideways trend for a few months?

I trust you will come to the net and volley this one.

 

[Uncle Festivus]

9th Feb, eh!

I've got the POG starting leg iii of a mojor leg 3 up soon.

It also suits my view that the AUD has a bit more to fall, I think to 61 or slightly below should pull it up... a major leg 2, with the turnaround from about 61ish the start of a major leg 3 up... in time for a recovery with the 'explode' in gold price.

How low for the AUD are you thinking Uncle Festivus?

There seems to be a fair corelation with the AUD and Gold atm and with China in relatively good shape to boost domestic consumption to dampen any recession like Aus, I'm thinking, assuming the worst being over for metal prices, renewed demand for the AUD, 60/61 should pull it up before heading north again.

PS: Just noticed Mineweb reporting China surpassed SA for the second year as the Worlds biggest gold producer.

Just out of curiosity who knows how much the Chinese gov benifits from gold royalties and direct interest in gold projects?

We Aussies have twice the amount of work to do coz we have to figure out the 2 variables ie $US gold price & $AU gold price after currency conversion. The US price will look after it self I reckon so my focus is on the Aussie and what will affect it.

My reasoning to why the Aussie will literally tank is that if it couldn't reach parity at a time when interest rates were 7% and our terms of trade were the best they had been in years, AND the US was already in recession, then it never will, at least in the next few years anyway?

Conditions have become dramatically worse since then (and China is not in good shape) so we got the dump from 98c to current levels. Interest rates are falling. The stimulis won't work because it's top down via retailing - it needs to be bottom up through construction?

I can see the Aussie testing previous lows ie lower than 50c by the 3rd qtr.

The US stimulis won't work either so the US price could be back to 4 figures again leading into the bull period of August onwards?

We're talking global depression here; data coming out is usually compared to periods in the past of similar scope - a lot of those comparisons have to go back to 1928/29 to find similar conditions!

And no shortage of takers for gold equity funding -

SBM $120M
NCM $750M

[FONT=Verdana, Geneva, sans-serif]Investment bankers smell a big run up in the gold price coming. They are raising money for gold companies like there is no tomorrow. Look at some of the money pouring into the sector right now: [/FONT]

• [FONT=Verdana, Geneva, sans-serif]Newmont announced a $1.2 billion equity issue[/FONT]
• [FONT=Verdana, Geneva, sans-serif]Kinross Gold - $360 million[/FONT]
• [FONT=Verdana, Geneva, sans-serif]Silver Wheaton - $250 million[/FONT]
• [FONT=Verdana, Geneva, sans-serif]Red Back Mining - $150 million[/FONT]
• [FONT=Verdana, Geneva, sans-serif]Endeavour Financial - $100 million[/FONT]
• [FONT=Verdana, Geneva, sans-serif]Alamos Gold - $75 million[/FONT]

http://www.resourceinvestor.com/pebble.asp?relid=49014

 

[Nyden]

My reasoning to why the Aussie will literally tank is that if it couldn't reach parity at a time when interest rates were 7% and our terms of trade were the best they had been in years, AND the US was already in recession, then it never will, at least in the next few years anyway?

Can't that same sort of logic be applied to the price of gold? With the US facing a depression, 100s of thousands of jobs being lost left, right, and center - why has the POG yet to skyrocket?

Honestly, what would it take for it to hit the $2000 price goldbugs are calling for? Mass lines at the soup kitchens? The modern day US would simply not allow these levels of depression to be reached.

 

[explod]

Can't that same sort of logic be applied to the price of gold? With the US facing a depression, 100s of thousands of jobs being lost left, right, and center - why has the POG yet to skyrocket?

Honestly, what would it take for it to hit the $2000 price goldbugs are calling for? Mass lines at the soup kitchens? The modern day US would simply not allow these levels of depression to be reached.

Be aware that fundamentally all is not well with the financial system world wide. A visit to the supermarket finds lamb chops at more that $40 a kilo. Businesses are going to the wall and jobs are being lost. The United states cannot stop this rot either. Cyclone Katrina was well beyond their resources, they left elderly to die whilst JWB fiddled. If you read back on this thread the evidence is that the wealthy people in the know are accumulating gold faster than the fabricators can smelt it into bars.

Gold bugs do not will things to be bad or for gold to go to $2000 an ounce, I do not know where it will go, but the trend is up. Most gold bugs just want to preserve financial health. As the cost of items are going up it is in fact the case that money is losing value. Gold is not, in fact since 2002 it has gone up about 300%.

And in the US the soup kitchens are not able to cope with the people down and out coming in hungry. I hear also that here too, the Salvation Army, St Vincents and others are having problems keeping up to the growing numbers of real poor. Not sure what planet you reside on but things are in a sorry state. Gold bugs are just a part of the investment community that have worked the fundamentals out for themselves.

But do not be glum, study and look for the opportunities. A few weeks ago I loaded up with LGL and it is proving to be a good trade.

Welcome aboard with us Nyden

explod

 

[sinner]

Can't that same sort of logic be applied to the price of gold? With the US facing a depression, 100s of thousands of jobs being lost left, right, and center - why has the POG yet to skyrocket?

Honestly, what would it take for it to hit the $2000 price goldbugs are calling for? Mass lines at the soup kitchens? The modern day US would simply not allow these levels of depression to be reached.

Wysiwyg, can I return the ball with this question?

We have to take the chart I posted in two sections. Pre-October and post-October. In the first section, we can see XAU and AUD behaving identically. As part of a longer overall trend, most favorable currencies trending up to all time highs against the USD. Some might see this as USD "weakness" but to me it seems obvious the US was exporting inflation, to all market sectors, through cheap credit and increase in the money supply via derivatives (net ~USD70trillion, gross several hundred trillion).

At this point the money markets get choppy due to this severe dislocation. Things are in an unnatural state, but nobody is really watching because they are all too excited about their +55% SP500 contract or FMG shares.

Suddenly in July, the smart money begins to leave the market. By October end, 2/3 of the leverage in the money market has either evaporated or taken the remaining profits and run (depending on entry time). To illustrate the leveraged net long positions behaving similarly across a few instruments I have included a quick chart below.

Now we can consider the second part of the chart, where things get interesting. If we jump forward to the current day, we can see gold has taken back all its losses since the leverage left the market. This is despite an acknowledged net short position by the largest bullion and investment banks.

Can't remember if anyone posted this here yet. Barrick gold is one of the largest net short positions for gold on the market, they also loan out huge amounts of gold derivatives (more than they have physical) for others to lay OTC short positions.

Here is the CEO of that company professing gold will hit new all time highs due to debt monetisation. In fact according to him, Barrick have even stopped "hedging" gold (what they mean is shorting). He actually said "I'm not a gold bug, but it would be dumb to hedge".

http://www.guardian.co.uk/business/feedarticle/8333051

So as you can see Nyden, gold could not rocket while leveraged positions were leaving en masse. The fact that previous losses are now essentially eliminated indicates non-leveraged demand for gold is high anywhere near 682 and above (and can be supported by examining the net tonnage of SPDR, now the world 5th or 6th largest holder of physical gold).

Hope that helps.

 

[Page]

Will gold touch the mark of $1000/oz.Gold has troubled business persons and affected their business. The gold market has become voliatle.

 

[sinner]

Hi guys, just pulled this off Kitco, an interesting one for sure.

Have snipped out the non gold related bits to keep it relevant (other bits address BDI and wheat ETFs)

http://www.hedgeweek.com/articles/detail.jsp?content_id=291483
ETF Securities gold equity fund up 90 per cent

ETF Securities says it has seen strong outperformance in various recently-listed commodity-themed equity ETFs, Ucits III equity funds tracking companies in a range of global commodity sectors including coal, shipping and agri-business.

The new ETF platform offers exposure to a range of thematic global commodity sectors and has taken in approximately USD30m since its launch, in addition to almost USD9bn invested through the firm's exchange traded commodities.

The ETFS Russell Global Gold Fund, which tracks global gold mining companies, has been the best performing ETF, rising by 90 per cent since 28 October 2008. This compares to a 22 per cent rise in the gold price over the same period.

ETF Securities says gold companies have benefited from investors' increasingly bullish view on the gold price, with gold companies providing leverage on further gold price gains. Even after recent increases, global gold companies are still trading at a discount to their levels versus the gold price.

...

'The ETFS Russell Global Gold Fund, which tracks global gold mining companies, has been the best performing ETF, rising 90 per cent since the 28 October 2008. Even at current levels, it is trading at a discount relative to its historic relationship with the gold price.

...

It seems gold itself is not the only thing regaining losses post-October...

 

[Uncle Festivus]

Can't that same sort of logic be applied to the price of gold? With the US facing a depression, 100s of thousands of jobs being lost left, right, and center - why has the POG yet to skyrocket?

No, the logic mostly only applies to Aussie dollar?

Honestly, what would it take for it to hit the $2000 price goldbugs are calling for? Mass lines at the soup kitchens? The modern day US would simply not allow these levels of depression to be reached.

What would it take? A realisation that $US are in fact worthless (worthnought? a new word?) and the priming/bailouts won't prevent the US transitioning from reccession to depression? We're talking about the integrity of wealth preservation becoming 2 choices - 'printed' IOU's or gold. The test comes when you try to redeem each one; the test to come is who is willing to 'loan' the US their hard asset backed currency in return for US dollars? They could demand gold as payment except there are suspicions that the US has depleted their stocks attempting price suppression?

The gold funny games are close to seeing who will be victorious - who will get the gold medal, or who will get the paper certificate

 

[GumbyLearner]

Marc Faber's outlook for Jan 2009 - includes discussion of gold, government interventionism, fiscal stimulus and the S.E.C
Interview from Bloomberg

Part1


Part2

 

[Uncle Festivus]

....and Fabers trade for 2009 - short US gov bonds...big time!

 

[GumbyLearner]

....and Fabers trade for 2009 - short US gov bonds...big time!

Right UF with emphasis on BIG TIME! Talk about flogging a dead horse..wait till the naysayers have no physical readily available to buy! I can hear it now...no I can't but it now no-one wants to sell. I refuse to listen to that **** later!

 

[Phillip]

Bonds have been a good short over the past two weeks, but unsure of the crash talk unless treasuries were rising in tandem with inflation. There is no bubble in bonds imo.

 

[kransky]

nymex opens and capow! LOL

 

[explod]

Bonds have been a good short over the past two weeks, but unsure of the crash talk unless treasuries were rising in tandem with inflation. There is no bubble in bonds imo.

Something that is happening to the bonds that I think is quite significant – they have broken down below the 100 day moving average with every one of the major moving averages that I track now having turned decidedly down. There is a bit of support near the 123^00 level but frankly, it is not much. The 200 day moving average, a huge area from a technical perspective, is down near the 120 ^28 region. If bonds were to break down below that, I think the Fed would either have to move in and begin buying up the long end of the curve or face a crippling rise in the interest rates. It appears that the porkulus bill coming out of Washington has bond traders rightfully anticipating a tidal wave of supply which will be far too massive for current demand to absorb. People are wondering whether or not the bond market bubble has popped – guess what – it has. Bond traders might just now be attempting to draw out the Fed and see if they will make good on their prattle about actually buying bonds to force down interest rates. Speculators and monetary authorities have this understanding… the monetary authorities make noises and the specs test them to see if there is anything of substance behind their bluster.

From Jim Sinclair's site this morning.

 

[sinner]

nymex opens and capow! LOL

CAPOW!

 

[Uncle Festivus]

CAPOW!

Take that nasty Federal Reserve!

The Bank Participation Report for positions as of February 3, indicates that three or fewer U.S. banks hold a record short position in COMEX gold futures of 111,190 contracts (over 11 million oz). an increase of 28,690 contracts from the January report. The previous record short position by U.S. banks was 86,398 contracts in the August Bank Participation Report.
http://www.cftc.gov/marketreports/bankparticipation/index.htm

Get ready for a smackdown??

 

[drillinto]

Bullion sales hit record in rush to safety
By Javier Blas in London
Published in Financial Times: February 9 2009

Investors are buying record amounts of gold bars and coins, shunning risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system.

The US Mint sold 92,000 ounces of its popular American Eagle coin last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007.

Other countries’ mints have also reported strong sales. “Large purchases of coins are perhaps the ultimate sign of safe-haven gold buying,” said John Reade, a precious metals strategist at UBS.

Inflows into gold-backed exchange traded funds surged in January, pushing their bullion holdings to an all-time high of 1,317 tonnes. Last month’s flows of 105 tonnes were above September’s previous record of 104 tonnes, and absorbed about half the world’s gold mine output for January, said Barclays Capital.

“We estimate that investment demand [into gold] could double in 2009 compared to 2007,” said Mr Reade. “Purchases of physical gold have jumped over the past six months as investors’ fears about the current financial crisis ... have intensified.”

The move into gold is being driven by the very rich, with bankers saying that some clients are hoarding gold in their vaults. UBS and Goldman Sachs said last week that investor hoarding would drive prices back above $1,000 an ounce. On Monday gold was trading at $892 an ounce.

Traders and analysts said jewellery demand, historically the backbone of gold consumption, had collapsed under the weight of the high prices. Sharp falls in demand in the key markets of India, Turkey and the Middle East have capped the potential of any price rally. But the lack of jewellery demand has not discouraged investors.

Jonathan Spall, director of commodities at Barclays Capital in London, said: “We have seen more new enquiries about investing in gold so far this year than during the whole 2008.”

Philip Klapwijk, chairman of GFMS, the precious metal consultancy, said that investors were buying gold because of fears about the global financial system rather than looking for a quick gain.

“This is a new round of safe haven buying,” Mr Klapwijk said.

GFMS estimated bullion coin demand last year reached its highest level in 21 years.

 

[Ageo]

Well i dont always believe stats etc... but when i see it 1st hand i know its happening. In the last 2 weeks i have bought over 20kg of scrap (over $500,000 worth) and its not stopping, people are simply cashing in their scrap and alot are using the cash to buy bullion/coins.

Although i think i have purchased 25 sovereigns in these last 2 weeks (but just on the gold value).

Says something about the general feel in society.