He has been calling for gold correction for a couple of weeks now, so wrong on that count. But his basis is the HUI:GOLD ratio, which indicates gold has been outperforming gold stocks for the last two months. This is generally not bullish for gold. His charts still have a little bit of room to move before being right or wrong.
The HUI is also in a bearish rising wedge.
i.e. something will either happen, or it won't
Respect your take, I have none, just go with the flow. But would be interested in why you think 3 most likely?
However I do think there is some momentum in this move and eyes are looking at opportunities and to where the only show in town is at at the moment. At the end of the day we really are only followers.
Auction-Rate Bonds Claim Victims Year After Collapse (Update1)
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By Michael McDonald
Feb. 20 (Bloomberg) -- Mike Stelzer expected to retire after selling his cattle ranch south of Bakersfield, California. Instead, the 73-year-old is raising Holsteins on leased land, unable to quit because a chunk of his $2 million nest egg is stuck in auction-rate securities paying next to nothing.
“I have lost all faith in bankers and Wall Street,” said Stelzer, who invested the proceeds from the sale of his ranch in the securities through San Francisco-based Wells Fargo & Co.
A year after collapsing, the one-time $330 billion market for debt with rates typically set every 7, 28 or 35 days is still claiming victims. Investors are stuck with as much as $176 billion of the securities even after regulators forced banks to buy back more than $50 billion of auction-rate debt that was marketed as safe, cash-like instruments.
The market’s meltdown, the result of the seizure in credit markets, initially left investors with bonds they couldn’t sell, though the securities paid interest at rates as high as 20 percent. Now, rates on securities auctioned every seven days pay an average 1.36 percent, according to an index from the Securities Industry and Financial Markets Association, after central banks slashed borrowing costs.
Investors are stuck because interest on auction-rate securities is lower than what issuers would have to pay on new borrowings, giving them little incentive to refinance.
Because the odds are on my side. markets spend most of their time filling in from where they have just come. Which is the basis of most of my trading.
On your following theory you want to have a look at FrankD's work. You may change your mind about us all just following. Ain't nothing new under the sun and that includes the metal used to symbolise the sun - Gold.
There was some discussion a month or two ago on this thread about the safety of bonds, the following is from Bloomberg today:-
The article continues but you have the meat of it. T Bonds appear headed for the same fate as the yields decrease by the day. (happened in the great depressionbut the lessons are forgotten in good times) Gold will soon be seen as the only alternative to paper money backed by no promise anymore because most of the banks and governments are broke.
What happened to 781 Whiskers!
Man... I've worked the count over and inside out every which way and I reckon it's the most plausible scenerio.
And if it doesn't play out like that?
So how do you set/get a selling price for your gold - spot, futures??? Could you outline a typical cycle you go through for the scrap you get eg buy scrap for $???? based on ??? price then melt it down?? then sell it to ??? for $?????
nice post... you have to ask yourself right now, would u trust the US Gov to pay u back on a T bond??? ha ha ha
Very interested in the performance ratios of various gold indices to the gold price so I quickly ran these charts. The only one I could not make a chart for was ASX XGD:GOLD because stockcharts.com doesn't have data for ASX XGD. So if anyone can provide charts for XGD.AX:GOLD that would be excellent!
To me it looks like it just broke up through a rising wedge (bearish?), then again I've given up on the tech analysis of gold, just sit back & enjoy the ride?
Thanks UF. Great chart. Is that gold priced in USD or AUD? Either way looks like we are pretty much in the same boat as the other gold indices.
We are at an important point I would say. The new trendline needs to be respected or this was probably a fakeout. My guess is if we fall through here we could go to fill the gap at 960 and possibly lower from there.
The gaps really bug me. Here is a chart snippet from Brian Bloom highlighting the gaps. (One at 850 also)
From http://www.321gold.com/editorials/bloom/bloom022309.html
He also notices the HUI:gold wedge but reckons this could be the one that didn't behave like it should (i.e. wants it to go up rather than down like normal analysis would suggest).
Comments?
Markets these days, they've just go no respect for the pretty lines we like to draw!
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