Gold Price - Where is it heading?

[explod]

Beaten about the ears I have moved into the corner. The following will be of interest to those believing the mighty US can save the dollar:-

Dollar Is Dirt, Treasuries Are Toast, AAA Is Gone: Mark Gilbert
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Commentary by Mark Gilbert



May 21 (Bloomberg) -- The odds on the dollar, Treasury bonds and the U.S. government’s AAA grade all heading for the dumpster are shortening.

While currency forecasting is a mug’s game and bond yields can’t quite decide whether to dive toward deflation or surge in anticipation of inflation, every time I think about that credit rating, I hear what Agent Smith in the “Matrix” movies called “the sound of inevitability.”

Several policy missteps suggest that investors should stop trusting -- and lending to -- the U.S. government. These include the state’s pressure on Bank of America Corp. to buy Merrill Lynch & Co.; the priority given to Chrysler LLC’s unions over the automaker’s secured creditors; and the freedom that some banks will regain to supersize executive bonuses by giving back part of the government money bolstering their balance sheets.

Currency markets have been in a weird state of what looks almost like equilibrium for the past couple of months. What’s really going on is something akin to an evenly matched tug of war that fails to move the ribbon tied around the center of the rope, giving the impression of harmony while powerful forces do silent battle until someone slips.

“All currencies are being debased dramatically by their central banks at extraordinary speeds and so in relative terms it appears there is no currency problem,” Lee Quaintance and Paul Brodsky of QB Asset Management said in a research note earlier this month. “In reality, however, paper money is highly vulnerable to a public catalyst that serves to acknowledge it is all merely vapor money.”

Flesh Wounds

Why pick on the dollar, though? Well, not necessarily because the U.S. economy is in worse shape than those of the euro area, the U.K. or Japan. The biggest problem is that external investors -- particularly China -- have more skin in the dollar game than in euros, yen or pounds, which makes the U.S. currency the most likely candidate to meet the cleaver in a crisis of confidence about post-crunch government finances.

China owns about $744 billion of U.S. Treasury bonds in its $2 trillion of

there is more to the article if you want at : magilbert@bloomberg.net

 

[Uncle Festivus]

Except the price of gold. :

So as a trader you have active shorts on gold? I can see it going back to the high 800's in the short term at least? Always Black Swan insurance eh?

For non followers the big decider that gold has failed would have been it's inability to pass the magic $1k? But it doesn't really have to - even if it just maintains purchasing power relative to everything else (see chart) it will have done it's job? It may not beat an active traders returns but again, it doesn't have to.

It's all relative I guess - I trade & invest. My gold investing portfolio has been positive for each of the last 10 years or so despite the negative returns of the general market - but as of now I only have 1 stock in it - NEM cdi's. Gold has been showing too much correlation with equities for my liking so I'm happy to sit on the sidelines & wait for another opportunity for gold equities, if & when that arises.

General equities are looking for another excuse to advance higher, but the green shoot brigade - fuelled by little more than hope - look a bit jaded at the moment, so goldies may get taken down with them? Aussie dollar getting a push from the 'second commodities coming' mob looks to have lost a bit of momentum recently?

Paper money is a huge Ponzi scheme with the USD at the very center. How long will central banks continue to trust The Fed & Treasury to maintain fiscal order & support the USD by buying bonds etc? Check out how much they put out for 'sale' each week - several 10's of BILLIONS!

Though, for the first time in 12 months I bought some (more) physical this week.

Have a look at the MACD on the chart - interesting, considering that it could turn off a base in the high 800's low 900's???

 

[Uncle Festivus]

May want to check the latest bid/cover ratios and foreign participation in US bond auctions. As reflected in the falling yields.

From my understanding, it's quite the opposite to what you are saying over the last couple weeks.

Though, some pretty big auctions coming up yet.

Well I guess you have to wonder who is actually buying the things then? China says 'we no want no more, please, thankyou!'

BEIJING (AFP) — A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday.
The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction.
"China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," He Maochun, a political scientist at Tsinghua University, told the Global Times.
According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March.
It was the first month since June 2008 that Beijing failed to purchase more US T-bills.

http://www.telegraph.co.uk/finance/economics/5586543/Is-this-the-death-of-the-dollar.html

 

[MRC & Co]

Well I guess you have to wonder who is actually buying the things then? China says 'we no want no more, please, thankyou!'

Yes, you do have to wonder, but it is being done.

Longer-term, I am with you guys, I think the USD still has a lot further to fall to create any sort of trade balance and stimulate domestic production.

 

[Trembling Hand]

So as a trader you have active shorts on gold? I can see it going back to the high 800's in the short term at least? Always Black Swan insurance eh?

Come on Unc admit it. You are annoyed & frustrated that gold isn't at $3000 and the dow at 3000.


Funny though you bring up Japan, more on that latter.

 

[explod]

Come on Unc admit it. You are annoyed & frustrated that gold isn't at $3000 and the dow at 3000.


Funny though you bring up Japan, more on that latter.

Dammned hard to knock the bugs off T/H. This PPP role is a tough call but you do it well

Think Uncle has the handle on it myself, gold support about 880, resistance about 980, looking for some volatility in the currrencies and exhaustion of the jawbone cover.

 

[Uncle Festivus]

Come on Unc admit it. You are annoyed & frustrated that gold isn't at $3000 and the dow at 3000.


Funny though you bring up Japan, more on that latter.

No, I don't think I'm annoyed or frustrated, learned to de-emotionalise to a certain extent some years ago. Probably surprised that the money shufflers have & can still call the shots, whatever disguise it goes by?

I really think the Fed knows what they are up against, even as far back as the 'contained' announcements some years ago - either that or they don't really have a clue and it's far worse than even an avid gold bug would have dreamt!

It really is an 0 or 1 game coming up pretty soon - they either hold it together or they don't, only the time frame is unknown. So in the meantime gold is still part commodity, part currency. When it becomes solely a currency due to USD liquidation then let the real game begin - tis only a matter of time if you keep a track of the US debt juggernaut?

What's happening with Japan? Another lost decade for the restofus?

 

[Sean K]

No, I don't think I'm annoyed or frustrated, learned to de-emotionalise to a certain extent some years ago. Probably surprised that the money shufflers have & can still call the shots, whatever disguise it goes by?

I really think the Fed knows what they are up against, even as far back as the 'contained' announcements some years ago - either that or they don't really have a clue and it's far worse than even an avid gold bug would have dreamt!

It really is an 0 or 1 game coming up pretty soon - they either hold it together or they don't, only the time frame is unknown. So in the meantime gold is still part commodity, part currency. When it becomes solely a currency due to USD liquidation then let the real game begin - tis only a matter of time if you keep a track of the US debt juggernaut?

Any way out of it UF?

How can the US get out of such debt and still keep the currency alive?

Any solution?

Or, do we just all fall into oblivian...

 

[Uncle Festivus]

Any way out of it UF?

How can the US get out of such debt and still keep the currency alive?

Any solution?

Or, do we just all fall into oblivian...

I'm not seeing any 'green shoots', but then again I'm just a dumb ass pyjama trader

US debt = current PLUS UNFUNDED future liabilities == $100 TRILLION!

Each day get's closer to a full on flood of baby boomer retirees (that's if they can afford to?), not to mention the next round of ARM's reset's, AS WELL AS falling tax income revenue from increasing unemployment, and the final nail in the coffin - US consumer indebtedness from decades of OVER consumption on credit from other countries.

Other than that I think they should do fine

As for Oz, don't get me started on the China scam to save us using worthless USD's to buy tangable physical assets before time runs out - only a few hundred billion USD's or so left spare in the kitty after the first stimulis goes through the system making mini bubbles everywhere. Do we even want to be paid in USD's?

 

[Real1ty]

I'm not seeing any 'green shoots', but then again I'm just a dumb ass pyjama trader

Of course you can't as 'green shoots' can only be viewed when both eyes are open, not just one

Whether these 'green shoots' take hold or wither and die is the issue.

 

[Uncle Festivus]

Of course you can't as 'green shoots' can only be viewed when both eyes are open, not just one

Whether these 'green shoots' take hold or wither and die is the issue.

True, but what exactly are these green shoots? All I see is lessening worseness & better-than-expected low balled estimates so far, like some weightless moment on a roller coaster maybe, before the next bit.....

I would really like to see some hard evidence of data that is actually continually being revised positively, not just getting less worse - anybody? That is, if anybody actually believes all this data is as good as they make out, and is in fact not substantially worse due to statistical aberrations ie the birth/death estimate joke?
After all, these are Ruthless People with their backs to the wall.....

 

[Nyden]

Oil was sold down because demand vanished - economics 101 - just check the figures for global trade the last year or so, gone off a cliff. Oil is back to break even for producers.

You talking about the 'green shoots, second half' recovery? The one where the US has to find an extra 2 TRILLION paper IOU's to get someone to give to them, or recently, print!



'when the world recovers'? You mean if the world recovers? The cycle theory is busted, we are at the start of Japanese stagnation on a global scale?
California, the 5th largest economy in the world, is bankrupt! Federal income tax receipts for April were a shocker, creating a net deficit for the first time in several decades!
Unemplyment - the real figures are somewhere around 15%! The Fed are now paying the unemployed $2000 a month benefits trying to prime the economy, as compared to normal benefits of around $500/m! I'm sure they all go out and buy the latest flat screen TV or a second investment property?

Income is falling while debt & unfunded liabilities is rising at an parabolic rate. The real game on Wall St is to get as much of the billions getting handed out before the hole jalopy comes crashing down. One estimate was that $50 billion was going to be 'collateral' wastage!! by scammers and corporate looters!



The show aint over yet, not by a long way! The 'insurance policy' is still current and there is a sizable client base taking out new policies every day - ie check the ETF's etc. The US gives the OK for the IMF to sell it's gold - gold barely flinched.

The USD - China has suddenly gotten a bad case of USD indigestion recently, something to do with someone printing more of them (helicopter Ben has come through with his promise), hence diluting the value of existing USD's??

Bond yields say that creditors want a higher return for the junk now.



"how many people seem to have most of their money, and all of their portfolio in gold, or gold stocks!"
This is interesting? Is this data published by the ASX or someone? Or are you assuming?

PS - just aboout everything the 'gold bugs' have been saying for the last few years has come true - why start to doubt them now? The game continues........

Hi Uncle,

I must say, I entirely anticipated your snap-defense of gold, you've become a touch predictable!

Firstly, I wasn't really making reference to green-shoots, but merely the fact that the market has got the idea of a possible recovery; and how this belief alone has been enough to spur a fantastic equity recovery - and enforces my opinion of just how quickly productive commodities will recover when the time comes.

No, I do mean when the world recovers. I can safely say, with complete certainty - that one way or another, the world as a whole will recover. Individual countries may not, granted - but I honestly know that the world will. Growth is an unfortunate fundamental of life on earth, and an ever-increasing population can only lead to an increase in prices. An increase in demand, versus a dwindling supply (as is the case with oil, at least) will result in an increased share price, simple as that. Of course, issues with currency aren't equated for here; but so long as the price of commodities out paces any currency depreciation ... it'll all be good, for our market at least. This probably won't lead to an economic recovery, though - in fact, it might just be a hindrance; but so long as I'm making money; who cares?

Well, I don't have any data to backup my claim of certain individuals holding all-gold portfolios, but I did state that it was a case of many individuals, not most, or any proportion of substance. It was merely an observation of mine, that I had noticed over on that "Your portfolio" thread, as well as this thread. I'm sure if you sift through the posts here, you'll see a few people mentioning they've sold houses to buy gold, and have nothing but gold stocks and gold holdings. These might not be accurate, but I found it disturbing, none the less.

I encourage any sort of debate Uncle, and I have no issue with individuals investing in gold. In fact, even though I would completely discourage it - I don't even have a problem with people falling in love with their gold, and believing with all of their being that it'll one day skyrocket; why? Because it's really none of my business. I just get frustrated sometimes, is all.

Although, I must say - I was quite pleased to read that explod would sell his holdings if gold began to deteriorate. I confess, explod - I've held a fear for a while that you would end up keeping the stuff until the day you died!

 

[explod]

Hi Uncle,


Although, I must say - I was quite pleased to read that explod would sell his holdings if gold began to deteriorate. I confess, explod - I've held a fear for a while that you would end up keeping the stuff until the day you died!

Well now, you will be even more pleased to know that today I sold all of my gold stocks. I am out. I will not sell my physical as that is a longer term thing. The market though is very spooky and last Octobers fall has sounded an alert button even to old Plod.

The Dow is on the verge of a total collapse in my view and all stocks will take an enormous bath.

Thank you for the concern old son. Because we know we will be fine. I feel very sorry for the poor devils that dont'.

 

[GumbyLearner]

Well now, you will be even more pleased to know that today I sold all of my gold stocks. I am out. I will not sell my physical as that is a longer term thing. The market though is very spooky and last Octobers fall has sounded an alert button even to old Plod.

The Dow is on the verge of a total collapse in my view and all stocks will take an enormous bath.

Thank you for the concern old son. Because we know we will be fine. I feel very sorry for the poor devils that dont'.

You're joshin'

 

[explod]

You're joshin'

Mostley tounge in cheek as you all know, but never more serious in my life on the last.

We are in for a bath, prontus asorus.

And the gold price tonight, DOWN, the great US dollar UP, the world is crazy man. Read the posts of Uncle above, dont' peddle or follow him, but his info is spot on in my view.

 

[GumbyLearner]

Mostley tounge in cheek as you all know, but never more serious in my life on the last.

We are in for a bath, prontus asorus.

And the gold price tonight, DOWN, the great US dollar UP, the world is crazy man. Read the posts of Uncle above, dont' peddle or follow him, but his info is spot on in my view.

Yeah Unc, is the ultimate equalizer to derivative traders.
Irreplacable General Market Contrarian no doubt
I know TH is not a bullion fan, but a fantastic trader no doubt.
I'm sticking with patience
Cheers mate

 

[refined silver]

Couldn't have said it better myself:

"All Eyes on The Record $104 Billion Treasury Auctions Tuesday, Wed. and Thurs!

http://www.cnbc.com/id/31454369

That leaves TODAY for TPTB to slam gold and silver one more time. Failed auctions will cause an abrubt end to the dollar 'rally' and cause gold and silver to reverse.

Always darkest before the dawn. This week precious metals end up. imho."

 

[Uncle Festivus]

No, I do mean when the world recovers. I can safely say, with complete certainty - that one way or another, the world as a whole will recover. Individual countries may not, granted - but I honestly know that the world will.

Have you even contemplated that one of those countries that will not recover is the USA?

Waiting, waiting.....bargains to be had soon.... but not in pleb equities...

Glad Gamers repent, it's not too late

 

[Trembling Hand]

Have you even contemplated that one of those countries that will not recover is the USA?

Yes and have you considered that it could be a positive - one day. Just like Japan the second biggest economy going nowhere for two decades.

It created the biggest boom in the last 30 years for investors, the carry trade.

Are we about to get the next carry trade to push the next bubble/bull?

 

[sunshineboy]

I am sure this year gold will hit $1500 an ounce. Do your research and find it out just like last year.