Gold Price - Where is it heading?

[Sean K]

Old man Buffett is saying inflation is on the horizon, and USD is going down.

Does that mean gold goes up?


Warren Buffett: Inflation on the horizon

The Berkshire Hathaway chief says policymakers will have to raise money to pay off costly rescue plans - one way or another.

OMAHA, Neb. (Fortune) -- Berkshire Hathaway chief Warren Buffett defended the government's handling of the economic crisis, but warned that the purchasing power of the dollar may fall as policymakers stretch to finance expensive rescue plans.

Reflecting on the near implosion of the financial system last fall, Buffett said officials should be judged more leniently when facing "as close to a total meltdown as you can imagine."

But he warned that efforts such as the Treasury's $700 billion Troubled Asset Relief Program and the $787 billion fiscal stimulus plan passed this year by Congress will have to be paid for, one way or another.

And with political leaders showing little inclination to raise taxes, one sure way to pay for excess spending is to inflate the value of the currency, Buffett said. The biggest losers in a surge of inflation, he added, would include holders of bonds and other fixed-income assets.

"I haven't had my taxes raised," said Buffett, who has run Berkshire for more than four decades. "My guess is the ultimate price will be paid by a shrinkage of the value of the dollar."

 

[lookout]

Until asset deflation is finished I don't see how inflation can be a threat to cash. Once equity and real estate prices stabilize those asset classes will provide alternatives to gold, so there won't be the need to use gold to protect against inflation. The only reason I see for gold to make significant new highs is fear of a failing financial system (whether the failure ultimately happens or not).

note: the main reason I air my views here is to see if someone shoots me down with logical reasoning. I figure we're all wrong more often than we like to admit.

 

[explod]

No surprises with this little fact....

As the Gold price drops off so does Explod

Spot has a decent strength trend down on 1 hour... it's holding up now on a low could show a minor double bottom but overall still in a selling move.

not at all, have just shifted home and having a bungled internet chagneover is not helping matters. but its good to see lively kicking of the explosives.

880 is holding well, a watch of US treasury bonds is worthwhile at the moment. Too much for me to explain at the moment but sure other bugs are watching. Am writing this from my daughters place but keep stoking Apo.., the questions and answers helps us all.

 

[>Apocalypto<]

short term Spot Gold.

Looking for a short term rise in gold.

Price was very bearish with lower lows and a support point becoming resistance. This stayed inline with the current short term down trend.

after a double bottom to rally that broker the short term trend the price has found support on 800 and made a second higher double bottom. this is starting a creeping trend, with a look to $900 if the price keeps rising.

All the above lines up with the 38.2 Fib point of the current rally from 680.

cheers.

 

[cooper1308]

That $890 level has become somewhat of a magnet.. I'm bullish but happy to see it trade past $960 before getting long

 

[Glen48]

We need the USD to tank before Gold will rise and as the other currencies as weaker than the USD it could be some time.. would hate to wake up one morning and find it 1K ++up

 

[>Apocalypto<]

We need the USD to tank before Gold will rise and as the other currencies as weaker than the USD it could be some time.. would hate to wake up one morning and find it 1K ++up

shares tanking will also help.... not just about the USD ATM

 

[Borrachobob]

Hey Guys found this on another forum makes interesting reading

http://marketforceanalysis.com/index_assets/COMEX GOLD SILVER OPTION OI 2009.pdf

 

[Uncle Festivus]

Buffett hint.......

In the 44 years he's been building a reputation as the world's savviest investor, Warren Buffett has rarely offered any good news on gold.

Until now.

The two key messages he delivered to 35,000 shareholders at Berkshire Hathaway's AGM in Omaha over the weekend were inflation is coming back; and the US Dollar is headed lower. Both predictions, if fulfilled, are powerfully positive for gold.

Buffett, who has delivered compounded returns exceeding 20% a year to shareholders for more than four decades, did not mention gold by name. But that will matter little to the yellow metal's continuously growing group of supporters. They are sure to interpret this as further evidence that gold's best days lie ahead.

http://www.mineweb.net/mineweb/view/mineweb/en/page31?oid=82710&sn=Detail

Newmont Mining President and CEO Richard O'Brien says the company has noted a decoupling of the traditional relationship between the weak U.S. dollar and gold prices.


However, O'Brien expects them to re-couple in the near future, bringing the inflation risks that will continue to prompt investors to invest in gold. In fact, investment demand continues to support gold prices despite other factors, he noted.

http://www.mineweb.net/mineweb/view/mineweb/en/page34?oid=82660&sn=Detail

......and Comex spreads getting close to backwardation, again?

 

[lookout]

Hey Guys found this on another forum makes interesting reading

http://marketforceanalysis.com/index_assets/COMEX GOLD SILVER OPTION OI 2009.pdf

Thanks for posting the link - looks compelling on face value. Would be great if one of the long time traders could comment on how significant this is in the bigger picture.

 

[>Apocalypto<]

Thanks for posting the link - looks compelling on face value. Would be great if one of the long time traders could comment on how significant this is in the bigger picture.

Both Wavepicker have looked and discused Gold over the next 6-8 months. Both leaning towards a sidways movement.

could have a wide range....

 

[SGB]

Any takers for a breakout of the channel tonight or will there be some more downward movement...bit of a battle at the moment.
Watching with interest.

 

[MRC & Co]

Gold going up, markets going up, what is this telling us, if anything?

 

[explod]

Gold going up, markets going up, what is this telling us, if anything?

Well the US indecies and the silver price are leading gold this time, tension in the Middle East rising (particularly Pakistan) so who knows. I will let someone else sticj thier neck out for thr short term. The longer term, gold will keep going up whilst money keeps losing value. Studied the Supermarket price rises lately.

 

[explod]

Have been off the net at home for some four weeks and just catching up with my signals.

Notice the bottom of the uptrend channel on the US$ index has just broken to the downside. In my view this is very significant and if it continues further tonight a move up in the gold price will be most likely.

 

[jonojpsg]

Any takers for a breakout of the channel tonight or will there be some more downward movement...bit of a battle at the moment.
Watching with interest.

Well it certainly seems to be having a good crack at staying over 920 - maybe the potential inflation ogre is rearing its ugly head and scaring people?

 

[SGB]

Well it certainly seems to be having a good crack at staying over 920 - maybe the potential inflation ogre is rearing its ugly head and scaring people?

Yep,

920 is the tester, needs to hold tonight.

 

[MRC & Co]

Yep,

920 is the tester, needs to hold tonight.

Yep, good call.

 

[refined silver]

I will let someone else sticj thier neck out for thr short term.

No problem!

My guess is we are forming the final upward part of the right hand shoulder on a large Reverse H&S formation.

That means we mirror the last move down from $1000, back up, and then this 3rd tilt at $1000 will break through and keep going.

 

[explod]

From Jim Sinclair's Minesite, Dan is always well worth a read, thought I would post todays. There is a bit more to the article with charts if you go to the site.

cheers explod

Hourly Action In Gold From Trader Dan
Posted: May 07 2009 By: Dan Norcini Post Edited: May 7, 2009 at 2:17 pm

Filed under: Trader Dan Norcini

Dear CIGAs,

The big news today was the price action in the bond market. They were OBLITERATED at noon, CDT, as demand for the auction was much weaker than expected. Bonds were mercilessly murdered once news about the poor demand hit the market wires.

With commodity prices across most markets moving higher today and the CCI again strong, I think it is safe to say that fears of deflation have now given way to fears of inflation. Quite simply – bond traders are terrified that the plague of locusts loosed upon the nation by the Administrations’ insanely reckless spending orgy, are now going to devour the sustenance of the land. Investors are positioning themselves accordingly.

Today, the worst of all possible worlds hit the monetary authorities – the equity markets dropped, the bond market collapsed, the dollar was weaker continuing its recent slide and commodities were all higher. I am not sure what trick they intend to pull out of their hat but whatever it is, it had better be good because the market is speaking in no uncertain terms that the jig is up and no one is swallowing the line that we can borrow our way into prosperity. Heaven help us especially the mortgage industry which must be spinning in their rooms at what they are witnessing in the interest rate markets.

I am still short pressed for time so I am going to include just a few charts but these charts paint a pretty decent picture of what is taking place.

Look first at the CCI – The Continuous Commodity Index. We have been watching this index slowing grinding higher now for most of this year. This week’s price action showed a gap higher than was above the recent highs. Clearly, there is very strong buying in this sector as investors who can read the trends are now positioning themselves in advance of the coming wave of inflation.


Gold closed above the downsloping trendline but not in a convincingly enough fashion to constitute a bona fide breakout. It must still take out $920 on a pit closing basis to start an uptrend. The price action however is friendly and gold is slowly grinding higher even in the face of obvious official sector opposition to the price rise.