Gold Price - Where is it heading?

[sinner]

It was a period driven by money inflation and now we have the opposite.

The money injections are diluting the real values of intangibles, gold is gold and cannot be diluted, it is the real tangible.

That is absolute incoherent rubbish.

Will repost this chart from 5y+ because you obviously didn't get it the first time

 

[explod]

That is absolute incoherent rubbish.

Would you care to elaborate on that without throwing up a few charts of the past.

Sure the Dow looks fantastic, on the borrowed money, the jawboning and the promise to pay what they cannot.

Will be intersting indeed to see where we are in a year or two from now.

And on the Dow, the weekly shows a clear evening star with the volume at half that of the start of the recovery, be interesting to see if they can make it to Thanksgiving without having to put up another scaffold to stop the topple.

 

[sinner]

I thought it would be obvious? From the first chart, since the 1980s inflation adjusted gold has been in an extreme down-trend. That means the current trend of gold which you attribute to "monetary dilution" which you somehow also claim is the opposite of "monetary inflation" (rediculous) is not even keeping pace with official inflation figures, let alone real inflation. That means if you had bought gold at 850 20-30 years ago and sold it at the current high you would be making a LOSS.

You can confirm this by looking at the second chart, dow (or many other instruments, like some commodities which meet your definition of "tangible") CPI adjusted down from 1980 to current has made gains over inflation. At least if you bought the Dow or real estate or ANYTHING BUT GOLD REALLY 20-30 years ago and sold it today you could have made a profit.

I have to say explod, I'm really bored by having the same argument with you.

 

[explod]

The following chart is the inflation adjusted.

Yes we have had a servere correction along the way but the savvy would have sold the peaks and brought the dips.

From 1970 as a long term investment gold has gone from US$35 an ounce, not a bad little nest egg. And on the inflation adjusted well under value today. This bull has legs and a long way to run.

 

[sinner]

Yes we have had a servere correction along the wa

There is no 'but' explod: the severe correct you refer to completely blows your argument that monetary dilution (whatever that is, since you say it happens in the opposite time of monetary inflation) is the cause of gold price jump over the last 10 years out of the water.

 

[explod]

If this is the "real factor" then please explain how gold fell from 850-260 in the first place during the largest inflationary period of the last 200 years?

The following is courtesy of the Privateer Newsletter:-

The HIDDEN Gold Wars
In the early 1980s, when world stock markets boomed in tandem everywhere in the world, Gold reached the $500 level twice. The first time was in early 1983, just as the global boom was getting started. The second time was at the end of 1987, two months after the infamous crash of October 1987. From $499 in December 1987, Gold fell throughout 1988 and dipped below the $400 level in January 1989. Gold has only ever regained the $400 for four very short periods since then.

Gold traded as high as $422 in December 1989 - January 1990.
It reached as high as $415 in the lead up to the Gulf war in August 1990.
It reached $408 in August 1993.
And finally, Gold reached a high close of $414 in February 1996.

But Gold's history in the years since the 1987 crash is that at all the actual crisis points, the Gold price has not risen, it has fallen. The best single example of this phenomenon remains Gold's performance on January 17, 1991, the day that the "air phase" of the Gulf war began. On that single day, Gold fell $30 from its previous close. In fact, it fell $40 from its intra-day high. Gold had been rising in the months leading up to the war. As soon as the war started, Gold plummeted.

The Gold price has failed to respond to the fact that Gold demand has exceeded newly-mined Gold supply in every year since 1988. It has, consistently done the opposite of what all of its previous history shows that it "should" do. Why has this happened?

From Overt To Covert
As we have documented in this series, in the 1960s and 1970s, governments fought Gold in the open. They announced what they were going to do before they did it. Of course, they failed miserably. But people in government, just like the rest of us, are quite capable of learning from their mistakes, The first thing they learned was that the best way to "fight" Gold was to go underground. They did so, with great success.

The plan adopted was to fight Gold on their own ground. In order to do this, they greatly expanded the ways in which Gold could be traded. More important, they introduced and developed an indirect market for Gold, they invented a Gold "derivatives" market.

The Paper Blizzard - "Derivatives"
Forward and futures markets were not, of course, an invention of the 1980s. What was an invention of the 1980s was the massive increase in paper trading instruments. These instruments, which became known as "derivatives", were first developed in the currency and debt markets. They then spread into the equity markets and into the Gold market.

The advantage of "derivatives" in the paper markets was twofold. First, they provided more and more leverage for more and more aggressive trading. Second, and far more important, they provided a method to hugely expand the amount of money in circulation without expanding the "money supply"! The traditional measures of money in circulation (M1, M2, M3, M...) expanded much more slowly. What did expand was the blizzard of "derivative paper" using paper money as its underlying "asset". This was one of the main reasons why "inflation" (defined as rising prices) slowed down.

The advantages of a Gold derivative market were similar. Governments learned in the 1960s and 1970s that it was impossible to meet an increased demand for Gold with physical Gold. They needed a paper substitute. Gold "derivatives" provided that substitute. With more tradeable alternatives to physical Gold, it became far easier to control the Gold price. But on top of the derivatives themselves, other specific mechanisms were developed to help control the price of Gold.

One of these methods was forward selling by Gold mining companies. This practice began with Gold's retreat from the $500 level in the wake of the 1987 crash. By the mid 1990s, Gold companies everywhere, but notably in Australia, were routinely forward selling years worth of their projected Gold production.

As the performance of Gold in the fifteen years between the market crash of 1987 and the start of the current $US Gold bull market in 2002 illustrates, these mechanisms worked very well indeed.

 

[Ageo]

In my opinion the majority of recent gains have been from the sheeple following the hype. I've just returned from a major shopping centre in which there was a stall paying cash for gold. Surely this is a sign that a correction is due?

In Parramatta westfields yeh?

I might go and buy it off em

 

[SuperGlue]

"Jim Rogers, former partner of George Soros, says buy gold, not gold stocks.

He sees the metal going to $US2000/oz in short order, so you'll make more money buying the physical market.

On the other hand, he argued, so many gold company stories never pan out. It also happens that Baring Asset Management agrees with Rogers.

Dow Jones reports this London firm is recommending investors should switch from mining equities into bullion."


http://www.theaustralian.com.au/bus...rce-volumes-ease/story-e6frg9if-1225801820737

In my search for most active gold futures code/symbol for IB (TWS trading platform), it is GC any others anyone?

If not I'll run down to Aust. Mint to buy the really thing.....haha

 

[explod]

Yes the physical possession is the only sure way. The Gold ETF thread could not even be bothered with. The physical backing to many, particularly the US is said to be very dodgy indeed. Perth mint should be sound enought, but the rest would not touch them.

 

[Ageo]

Remember if you guys need physical get a price from anywhere then come back to me before you buy it. I deal with major refiners all the time and refine all my scrap so my bullion will be at competitive prices.

<shameless plug ended>

 

[barrett]

Yes the physical possession is the only sure way. The Gold ETF thread could not even be bothered with. The physical backing to many, particularly the US is said to be very dodgy indeed. Perth mint should be sound enought, but the rest would not touch them.

Yes I had a look at the ASX one a while back, there's three directors. With all due respect to them, I don't know them, never even heard of them.. probably OK but if they turn out to be the next Bernie Madoff, WineOrb, HIH etc. I'm left with nothing! Go the safety deposit box or better yet grandma's back yard!

 

[explod]

Gold in the Limelight

Courtesy of www.adenforecast.com

Gold is soaring, hitting new record highs almost daily. This C rise is going strong. Our initial $1200 target level for this year's rise has nearly been reached, but gold could go higher.

This is good news for all of us who have been invested in gold for the past eight years. But even for those of you who invested in more recent times, gold has been a good and profitable investment.

We feel strongly that this will continue in the months and years ahead. And there are many valid reasons why.

Most important, the unprecedented monetary policy currently in force is inflationary. The same is true of the weak U.S. dollar, negative interest rates, rising oil and commodities. Gold buying by central banks is also boosting the gold price higher.

Even though gold is still relatively unknown in mainstream investment circles, it’s starting to attract some attention. As this interest grows, momentum buying will pick up and the exchange traded funds are another big positive, simply because they make it easy to buy gold. The improving economy is another positive factor.

The Aden Sisters have always been bullish on gold but conservative. Gold is certainly making continued moves on the upside now since breaking the grand mark. Aussie gold is also putting up a good run in spite of the currency strength(a concern of a lot of recent posters). Good stocks(IMHO) such as OGC and RSG making solid upticks.

Just my humble opinion.

Full Arden report can be found on Kitko.

 

[brty]

The Aden Sisters have always been bullish on gold but conservative.

While I'll agree with the first part about being bullish, I'd question the 'conservative' part.

Nearly 30 years ago the Aden sisters were predicting gold at $4,000 within a short period of time. I thought their credibility had gone out the door with the 20 plus year bear market that followed.

brty

 

[explod]

While I'll agree with the first part about being bullish, I'd question the 'conservative' part.

Nearly 30 years ago the Aden sisters were predicting gold at $4,000 within a short period of time. I thought their credibility had gone out the door with the 20 plus year bear market that followed.

brty

If you read back to about 2 of my posts back (Pravateers article), the Aden Sister's had not counted on the market manipulation of Governments and banks . I feel confident the result may have been far different.

 

[sinner]

I am so sick of this manipulation crap, it doesn't even make sense and the main argument "that banks have been net short for 10 years" is JUST THE FUNCTION OF A CENTRAL BANK! If retail/hedge funds are long then CBs will be short. Go look at the SWFX sentiment indicator for forex, banks are ALWAYS providing the liquidity so they will ALWAYS be doing the opposite of retail traders. Gold is just another currency to CBs, world central bank gold reserves are 10% of total reserves completely in line with a sane money policy. I wish you would find something else to rant about explod, you don't even provide any real evidence to back up your statements.

Anyway, the reason I even bothered to come back to this thread (trust me I really didn't want to, because of you explod) was to revisit 2 old posts of mine and update the chart.

On 12th Feb 2009 I wrote a post about the gold "super cannon" chart formation. You can click here

https://www.aussiestockforums.com/forums/showpost.php?p=397131&postcount=6305

to see those two charts showing the formation. Back then what I was suggesting didn't look probable and most people didn't believe it would play out liek this.

Well, here is the updated chart, still using the same parallel lines:


I have also included a new chart with possible cannon lines which looks a bit cleaner.

 

[explod]

Sinner'
One of the things that I abhore is the notion of shorting. It is nothing short in my view of legalised criminality. It is probably why we disagree as our outlook is so different. I believe when the whole financial system finally collapses (as I beleive it will) that shorting (and some Government questions arising allready) will be outlawed. It goes against democratic free/value markets.

It would be best if we ignored each other; but when you call me rediculous, I have no alternative but to answer from my perspective.

Gold is as you say a currency and it will outlive and grow well beyond the current papaer system.

However, I have been wrong before and will be again. But to me gold is a good bet as part of my portfolio. AAnd its great to discuss.

 

[Edwood]

I don't really follow gold so excuse me for butting in over here, but that chart sinner is starting to look very much like a 3 peaks doomed house. obviously they don't always play out but worth keeping an eye on it
Ed

 

[sinner]

Sinner'
One of the things that I abhore is the notion of shorting. It is nothing short in my view of legalised criminality. It is probably why we disagree as our outlook is so different. I believe when the whole financial system finally collapses (as I beleive it will) that shorting (and some Government questions arising allready) will be outlawed. It goes against democratic free/value markets.

This is stupidity at its finest. How the hell do you expect to be able to buy gold if nobody is shorting?

Maybe you were referring specifically to naked shorting or forward selling of a commodity. In which case it is blatantly apparent that this had NO long term effect on the gold price, otherwise we would NOT be at all time highs.

As we say in the forex market, fade the manipulation. Every time BoJ or SNB steps in to support USD against their currency you can fade it to make money because MANIPULATION IN A FREE MARKET NEVER WORKS FOR LONG. Yes, central banks are shorting gold. That is their job. If everyone else is buying gold, then someone needs to be there to sell *GASP THEY WILL BE SHORT* it to them. Just like on the forex, if you are the central bank and everyone is buying your currency then you SELL IT against that. I don't see you complaining about the RBA selling AUDUSD at 0.93 when everyone else is buying nor did I hear a peep out of you when they were buying 0.65 even though for all intents and purposes it meets your exact definition of "manipulation" which you level at the central banks, and actually had more effect on the gold you hold as an Aussie than the actual price of gold has had in the last 12 months.

 

[explod]

In my humble view there should be no currency control, like China is pegged to the US currency. Banks are supposed to take money for those who want to keep it there and pay interest and to loan it at an interest rate a bit above, no more no less. Banks trading with or against the market, hedging is wrong in my very humble view.

Just my take

Gold to me is a tangible currency as cattle were when as a child I went with my farther to market once a week. In the beginning of course it was barter of goods then gold became an exchange, then notes to the exact value and promise of gold came in as it was more convienient, then some smarties started to take advantage of that and real value in my view broke it down. One day someone will want their value again, wonder when they try to draw down the promised physical if it will all be there.

Gold will hold up for me and the bell has only started for the beginning of the game as far as it is concerned.

 

[Whiskers]

From my post on the XAO thread... for those 'blinkered' gold bugs. :

I'm watching for the AUD to fall against the USD pretty soon fundamentally, technically it's also indicated because of an ascending wedge, some MACD divergance and a reasonable looking H&S on the hourly, which would bring it back into the .80's.

I'm also looking for the XAUUSD to peak probably below 1,200 and generally go sideways for some time based on both my alternate counts looking for a corrective wave and the 1.618 mark just above 1,200. A similar scenario with all other metals.

This would also be consistent with the USD firming particularly against the AUD which I think was bought up heavily because we didnlt go into recession and raised interest rates first and likely to pause for a bit while the rest of the world recovers.

The net effect, all other things being equal, should be better returns for our exporters a minimal (comparatively) rise in imports and a strengthening XAO.