Gold Price - Where is it heading?

[wayneL]

Check out option volatilities.

I've done a post on my blog but here is the HV/IV graph of GLD over the last three months:



....and skew

 

[Gar]

ignore the articles...

do you not find a realtime chart of the US POG against a major currency index useful?

I fail to see how you could see that as propaganda

ps. I am a bull, I just thought this might be useful to anybody who has not found a chart with an index price

 

[wayneL]

ignore the articles...

Here's anothe article to ignore from MISH

Gold and the watched pot theory

It's a long article more on economics than gold, but here's a bit on the yellow stuff.

SNIP:

Message Of Gold

The reason for the strength in gold is not US inflation. As I have pointed out many times, gold fell from 850 to 250 over the course of 20 years, with inflation every step of the way. Thus, the inflation story just does not fit.

However, it should be clear that a major financial crisis is in store following a long period of competitive currency devaluation and massive debt and derivatives expansion by nearly every major country on the planet.

The G-7 agreed to do nothing to fix this mess, nor did the previous G-20 meeting. Countries are going to do what they are going to do: follow misguided Keynesian logic that suggests one can spend one's way to prosperity even though the problem is excessive spending across the board.

Might the US dollar blow up? Yes it might. But so could the RMB if China floated it, and so could the British pound. No one seems to see the crisis brewing in Japan with a huge demographic problem, a shrinking population, falling exports, and no way to pay back its national debt.

There is seldom a mention of the problems in European banks who foolishly lent money to the Baltic States in Euros or Swiss Francs and now those Baltic country currencies have collapsed and the loans cannot be paid back. European banks also lent to Latin America and those loans are also suspect. Arguably, European banks are in worse shape than US banks, but no one talks about it, at least in the US.

Spain has unemployment approaching 20% yet must suffer through the same interest rate policy as Germany. Seldom does one hear about this either.

Certainly the UK is a complete basket case with its banks on government life support. Iceland has already blown up, who is next?

Most are not aware of the problems in China, Japan, or Europe. However, the problems in the US are universally well understood. Indeed all eyes are on the dollar and everyone is talking about deficits, monetary printing, and especially unfunded liabilities even though the latter is tomorrow's problem, not today's.

Watched Pot Theory Revisited

A watched pot may boil, but it's not likely to explode, especially when everyone watching the pot expects an explosion any second.

Indeed, it would be fitting if the Ridiculous Hype Over Secret Oil Meetings, helped form a bottom on the US dollar.

Yet, it's easy to see that a financial crisis is brewing.

Somewhere, something is going to blow sky high, but from where I sit, it's as likely to be in the Yen, the Swiss Franc, the British Pound, or something no one is watching at all as opposed to the US dollar specifically.

 

[Gar]

Sorry wayne that wasn't a response to you (if that's what you thought)

It was directed to explod

 

[wayneL]

Sorry wayne that wasn't a response to you (if that's what you thought)

It was directed to explod

No worries mate, I've got a thick skin. I wasn't offended anyway, just a little tongue in cheek ... and it is only someone's opinion after all.

 

[So_Cynical]

Just had a big LOL at the TV...some expert on late line business saying that the go was
to invest in gold miners like LGL, KCN and NCM because they are actually making money and
paying dividends.

Since when has Lihir ever payed a dividend?

 

[Timmy]

http://www.kitco.com/kitco-gold-index.html

I've been looking for something like this for a while so I thought I'd share

Thanks Gar - good resource (no pun intended).

 

[Ato]

Here's anothe article to ignore from MISH

It's a long article more on economics than gold, but here's a bit on the yellow stuff.

SNIP:

Sorry, I'm not quite following you, Wayne. That article (bit you snipped?) you are saying is not worthy of being read?

If it is worthwhile, what are the implications of the yen going belly up, or Japan not being able to pay back all the money it owes? I live in Japan, and upon reading that I suddenly feel ill...

 

[wayneL]

Sorry, I'm not quite following you, Wayne. That article (bit you snipped?) you are saying is not worthy of being read?

If it is worthwhile, what are the implications of the yen going belly up, or Japan not being able to pay back all the money it owes? I live in Japan, and upon reading that I suddenly feel ill...

Oh very worthy, just not directly so much about gold, the topic of the thread.

 

[Dark1975]

Here's anothe article to ignore from MISH

Gold and the watched pot theory

It's a long article more on economics than gold, but here's a bit on the yellow stuff.

SNIP:

Enjoyed the thread.Is it as simple as Gold is looked upon as a old solid War-time stock?What i mean is,In times of uncertainty people turn to commodities that they could trade in war?(As a paper currency would has no value).Not that im suggesting we are at war(just a cliche),But in uncertain times?

 

[Ato]

Oh very worthy, just not directly so much about gold, the topic of the thread.

Fair enough. My comment is OT too. I'll repost it in the imminent & severe market crash thread. If you've got an opinion on it, I'd love to hear it.

 

[explod]

From Sinclairs Minset today.

cheers on this fine morning, and with the currency differential notice fuel has been dropping in my area

Hourly Action In Gold From Trader Dan
Posted: Oct 08 2009 By: Dan Norcini Post Edited: October 8, 2009 at 2:06 pm

Filed under: Trader Dan Norcini

Dear CIGAs,

It would appear that the decision by the Reserve Bank of Australia to raise interest rates has set a fire under the Aussie and added further to the bullish tone in regards to the entire Asian currency block. It soared to just shy of the 90 level early last evening when news of an unexpectedly vigorous employment report from down under hit the wire. The surging Australian Dollar pulled the entire Asian block of currencies higher sending the US Dollar swooning in the process as even the Euro got in on the action. Traders want to own Asia as they see it recovering from the global economic slump much more quickly than the heavily indebted West.

So strong are the Asian currencies against the US Dollar that THREE Asian Central Banks were all actively intervening in the Forex markets in an attempt to stem the Dollar’s decline against their currencies.

South Korea, Taiwan, and the Philippines were all three buying Dollars last evening as they struggle vainly to keep some sort of export competitiveness by weakening their currencies. The problem they face is that no one wants to own the greenback and any rallies that these banks create by their bid on the Dollar are being met by speculators eager to sell the Dollar down from a higher level.

We have been saying for many years now at this site that the Dollar was headed for a Humpty Dumpty like fall but I am astounded at how rapidly sentiment has turned against it. The foolish lemming-like panic into it as a “safe haven” that dominated the Forex markets for much of the last year has abruptly shut off to be replaced by a sort of disdain and contempt reserved for the currencies of banana republics. The current US Administration seems to have turned a blinded eye to the Dollar’s woes but then again, they are mainly the cause of its demise what with their insane spending binge and reckless concern for fiscal budget deficits. The Fed cannot help either because they are locked into low interest rates for fear of squashing any nascent economic improvement.

This is why the rally in gold is so impressive – the Forex markets are setting the tone and because of their immense size, the gold price managers at the Comex are being overwhelmed.

Gold is taking out overhead resistance levels as the sentiment against the Dollar is so strong, that traders are bidding it up even before the Dollar cracked key technical support near the 76 level. If the Dollar fails to close back above that level, and it is looking increasingly likely that it will fail spectacularly there, gold could easily shoot to $1,100 in the blink of an eye.

The rise in Euro priced gold through the 700 level has been rapid as expected once that formidable barrier gave way. British Pound gold looks like it wants to move on towards the 700 level and go on and make another all time new high in the process. Things are happening very quickly now exactly as Jim has been saying for the last few months. There might be some Central Bank intervention on occasion to attempt to prevent a plunge in the Dollar but any blips produced by such actions will be short-lived as the Dollar carry trade will be merciless without any sort of higher interest rate support for the Greenback. Witness just how ineffective was ECB President Trichet’s attempt at jawboning the Euro lower. Traders slapped him in the face and told him to go back home and playh with his marbles. If traders feel that Asia has the strongest probability of raising rates in that corner of the globe compared to the West, they will continue capturing interest rate differentials producing a relentless stream of pressure against the US Dollar, all comments from Central Bankers notwithstanding.

Technically gold is performing with remarkable resiliency as intraday dips are seized by would-be buyers forcing short term oriented bears to cover repeatedly. There are plenty of analysts advising clients to wait for a pull back towards $1,020 before buying but the market thus far has not accommodated them. It is entirely possible that the longer gold refuses to see any decent sized price retracement, these sideline sitters are going to fear missing the move and will come in and force an acceleration sharply higher. We will just have to see whether or not gold will dip down far enough to let them get in near that level. With so many looking for such a move, the odds are high that they are not going to get it.

It will take some sort of stronger bounce in the Dollar to unnerve the gold bulls. It is so deeply oversold that it is due for a blip up but short sellers are eager to sell it on any move upward.

Last night Alcoa reported a decent profit and that had the equity world ablaze with happy thoughts which led to more risk trades and further US Dollar carry trade increases. The tone has thus far continued in the equity world in today’s trading session but interesting enough, the gains in gold are outpacing those of the DOW with the DOW/GOLD ratio currently running in the vicinity of 9.3. If you recall that chart I sent up earlier this week, the level near 9.0 has been a decent support level for this ratio. If the ratio breaks down near there, the implications are foreboding indeed as the inflation genie will not only have gotten out of the bottle, but will be climbing up and down the walls and breaking dishes on the floors!

The HUI today cracked that stubborn resistance level centered near the 440 level and in the process ran to make a new yearly high. I want to see how it can close both today and tomorrow for the week for if it sustains its level above 450, then next week has it primed for a run to 480 which is the last defense line between it and its all time high. It has been lagging bullion instead of leading it but one of the things that I believe which explains this is that we now have the ETF’s around. Money flows into the gold mining stocks tended to lead the metal in the past but that was because institutional investors and some funds were not allowed to buy futures because of their charters. If they wanted exposure to gold, they were forced with the default option of buying the mining shares. That is no longer the case – they can plow into the ETF instead, which by the way now claims to hold over 1100 tons of gold. While I have more than a few doubts about the ETF’s, tracking it is a much better way of analyzing the gold market from a technical perspective than are the shares as indicated by the both the HUI and the XAU. They remain very valuable as confirmation tools but I am of the opinion that more weight is being placed upon the ETF’s when managers are looking for technical clues.

Gold faded a bit going into the close of the pit session but still retained the bulks of its gains from overnight and early in the session. That bodes well for tomorrow which will be a good test of how strong the conviction of the bulls is as the opportunity to book some profits from this week’s enormous move higher will be tempting.

 

[Boyou]

I have to say i am totally gobsmacked by the lack of interest in Gold.

With the metal continuing to reach new heights,no one,apart from Explod seems to be remotely interested in it ,either from a price action point of view or fundamentally .
This could be the start of the PMB (Precious Metal Bubble)

It looks like groundhog day from where I sit!

 

[Uncle Festivus]

I have to say i am totally gobsmacked by the lack of interest in Gold.

With the metal continuing to reach new heights,no one,apart from Explod seems to be remotely interested in it ,either from a price action point of view or fundamentally .
This could be the start of the PMB (Precious Metal Bubble)

It looks like groundhog day from where I sit!

That's coz of the $AU negating any benefits for us AU's - still cant crack $1200. May have to wait till we bubble our way into a bust? That's if Glen Stevens can't control the property beast the KRudd has created?

Our exporters - commodities & manufacturers - not only have to deal with rising interest rates but also a rising exchange rate - straight from the bottom line. All is good again?

There's also the short DX squeeze that must run it's course on another 'flight to safety' market retracement event.

Also waiting for an attempt at a knock out punch attempt to capitulate the bugs, but the new world order may just gladly step in and take the lot, and say thank you very much indeed. Who really knows these days?

 

[explod]

I have to say i am totally gobsmacked by the lack of interest in Gold.

With the metal continuing to reach new heights,no one,apart from Explod seems to be remotely interested in it ,either from a price action point of view or fundamentally .
This could be the start of the PMB (Precious Metal Bubble)

It looks like groundhog day from where I sit!

Actually my real interest is in silver, the ratio is way out and I believe due to its coming shortage will go to 15-1

The lack of interest is due to enormous jawboning by the popular press to point out all the risks and downside to gold, not once mentioning the good side and its enormouse growth over the last 8 years in real terms, I think Uncle touched on this in a post above recently.

 

[jancha]

Actually my real interest is in silver, the ratio is way out and I believe due to its coming shortage will go to 15-1

Interesting point explod & nice ratio. What silver mining companies would you recommend looking at?

 

[explod]

Actually my real interest is in silver, the ratio is way out and I believe due to its coming shortage will go to 15-1

Interesting point explod & nice ratio. What silver mining companies would you recommend looking at?

Cannot recommend. Someone on one of the Silver threads in the last day or so indicated the main players in silver, and there are very few pure mines in Aus.

I have put them on a watch list for future consideration when silver may make a break. They were BSM CXC EUG and TRY. You might try to locate the thread as there was more to it that would be of interest.

But on past action getting back to topic, I expect the US gold price to move up to 1600 in the next six months. I do not expect the Australian currency to appreciate at that pace so Aus gold ought to improve a lot in value as well. Just my humble opinion

 

[Boyou]

Actually my real interest is in silver, the ratio is way out and I believe due to its coming shortage will go to 15-1

Interesting point explod & nice ratio. What silver mining companies would you recommend looking at?

Good to see someone is following this thread.Thanks for your input Uncle and Explod.I am also expecting some re-alignment of the gold/silver ratio.Have been spending my spare cash on Perth Mint Kilo bars of Silver.
Jancha ,In answer to your question the only pure silver producer in Aus (I think) is Macmin Silver. At the moment they are in administration ,but ,as I posted in the MMN thread today ,it looks like they could be resurrected with a new name and more cash to continue production.

 

[explod]

Good to see someone is following this thread.Thanks for your input Uncle and Explod.I am also expecting some re-alignment of the gold/silver ratio.Have been spending my spare cash on Perth Mint Kilo bars of Silver.
Jancha ,In answer to your question the only pure silver producer in Aus (I think) is Macmin Silver. At the moment they are in administration ,but ,as I posted in the MMN thread today ,it looks like they could be resurrected with a new name and more cash to continue production.

Agree, I have an interest lost in that, but like Orion Gold, at Walhalla, MMN will come back as the price of silver improves. Off topic, will go over the the other one.

 

[explod]

US Dollar Crashes Through Major Support Level
Posted: Oct 14 2009 By: Dan Norcini Post Edited: October 14, 2009 at 12:51 am

Filed under: Trader Dan Norcini

Dear Friends,

This evening in Asian trade, the Japanese Minister of Finance once again restated the new view out of Japan that the level of the Yen is no longer an obsession with the monetary authorities of that nation. His comments were interpreted by the Forex markets that intervention to stem the advance of the Yen is most unlikely. With that, market participants wasted little time bidding the Yen into a strong advance.

Those statements of his, combined with that of Federal Reserve Vice Chairman, Donald Kohn, that the US economy would not experience a quick or sharp recovery out of its recession, were both read by traders that US interest rates were not going anywhere anytime soon. Carry traders then beat the Dollar down below critical support near the 76 level on the USDX as they rushed into higher yielding currencies such as the Aussie and Loonie. The Euro also shot up to another new yearly high.

It is looking more and more like the current Administration has set on a course of deliberate destruction of the US Dollar and with it, the economic might that the US has enjoyed since post World War II. As said many times on the pages of this web site, the profligacy of the US has inescapable consequences and we are now seeing a rapid acceleration of the same. The fall in the Dollar is picking up momentum and that is why we are witnessing gold moving into new highs.

But gold is more than a Dollar phenomenon – Gold priced in terms of British Pounds and in Euros is relentlessly moving higher as both Great Britain and Europe, the fading West, are debasing their currencies as well.

Protect yourself from the theft of your wealth by these conscienceless politicians and monetary officials for they have sold their citizenry down the river and plundered them in the process far more thoroughly than Attila and his army of Huns ever did to Rome of old. At least the Roman inhabitants were aware of the rape and pillaging of their substance – when the general public finally awakens to the despicable looting of their treasures by these reeking buzzards, they will rush into gold with a fury that will shock even many of the readers of this site.

Dan says it all, the days we have patiently waited for are on our doorstep,

cheers to all the goldbugs on ASF

Having said that, the toll on ordinary citizens from the currency debasements and the policies to encourage people to borrow and spend instead of save takes the shine off.