Gold Price - Where is it heading?

[Mr Z]

You'd need to run a correlation on decent data set to support that. Aside from 'the' GFC crunch I don't really see it in that chart.

 

[explod]

they do align - when volatility increases gold gets dumped

As MrZ says, we need more data from you to be convinced. What is your time frame ?

I see gold as a backstop (20% being recommended by a lot of advisers) to an overall portfolio. Since 2001 it has gained an average of 17% per year. Except for sitting on the screen 5 days a week, this has been a very good strategy for my family and I.

Gold is and will continue to be on this steady rise as governments continue to spend beyond their means and keep printing paper money to disperse as a stimulas.

 

[explod]

For newer members to this thread, the following is a good all round article on gold versus currencies overall and the $US particularly.

http://www.fool.com/investing/inter...ng-dollar.aspx?source=ifesitlnk0000001&lidx=2

 

[Mr Z]

I sincerely hope all shorts have been covered & guys... don't consider shorting this thing until May 2011. The odds will be stacked against you, I'd rather play chicken with a bullet train.

For a big clue pull up a monthly USDX and have a look, chuck a momentum oscillator on it or try slow stochastic... that is what you are fighting short gold at least for now, while Europe is relatively calm.

 

[ASFASF]

Can anyone explain this to me?

If you bought physical gold at the beginning of the financial year you would be up about 6% now in US dollars terms yet the AUD is up against the USD about 11% meaning a net loss of about 5% in AUD. However in AUD all gold stocks are up 20% plus. Why are investors not discounting gold stocks for the exchange rate movements?

Thanks for any insights

 

[explod]

Can anyone explain this to me?

If you bought physical gold at the beginning of the financial year you would be up about 6% now in US dollars terms yet the AUD is up against the USD about 11% meaning a net loss of about 5% in AUD. However in AUD all gold stocks are up 20% plus. Why are investors not discounting gold stocks for the exchange rate movements?

Thanks for any insights

Most of the gold produced is sold in US dollars.

Of course as our dollar becomes stronger then the spending power of our money (and gold) is greater. Is why this week fuel is getting cheaper too.

 

[ASFASF]

as our dollar becomes stronger then the spending power of our money (and gold) is greater.

Sure spending power goes up but export revenue decreases in real terms. So shouldn't gold miners' stock prices be reflecting less revenue (in AUD terms) and falling?

Thanks

 

[explod]

Sure spending power goes up but export revenue decreases in real terms. So shouldn't gold miners' stock prices be reflecting less revenue (in AUD terms) and falling?

Thanks

Sheer increase in good sales overcoming that, demand for physical gold outstripping demand and world gold production decreasing as mines are exhausting. Gold is Australia's third largest commodity export earner so very good for us all.

Of course the other thing that hits is gold fever, sentiment. In the gold bull run from 1970 ending with the top in 1980 some aussie gold stocks increased 100 times. Some who remember do not want to miss it this time around.

DYOR

 

[ASFASF]

Sentiment and speculation must be the drivers as the cost of producing an oz. in AUD is rising and the revenue per oz. in AUD is falling.

I'm a believer in gold btw.

Thanks

 

[skyQuake]

Actually its Anglogold doing a cap raising to close their hedge book

And its a heck of a hedge book!

 

[So_Cynical]

Can anyone explain this to me?

If you bought physical gold at the beginning of the financial year you would be up about 6% now in US dollars terms yet the AUD is up against the USD about 11% meaning a net loss of about 5% in AUD. However in AUD all gold stocks are up 20% plus. Why are investors not discounting gold stocks for the exchange rate movements?

Thanks for any insights

Big picture .. POG goes up in USD > POG goes up in AUD...a new world record in one currency leads to new world records in others.
~

 

[Logique]

....In the gold bull run from 1970 ending with the top in 1980 some aussie gold stocks increased 100 times. Some who remember do not want to miss it this time around.DYOR

My hearing must be going...I thought you said 100 times there Explod. But that outcome would be fine by me.

It's funny listening to various media outlets for the latest price of gold, they clearly have little idea of recent history. 'It's weaker' they say, when it was actually stronger. 'Stronger', when it was actually weaker. Or the classic this week, 'gold is softer at 1268/oz'.

 

[Mr Z]

Sure spending power goes up but export revenue decreases in real terms. So shouldn't gold miners' stock prices be reflecting less revenue (in AUD terms) and falling?

Thanks

If their costs are in USD their profit rises in USD. This happens faster than the AUD clips it back. So it makes sense for certain gold stocks to follow USD Gold. What tends to happen once the rally gets going is the wider public get involved and don't make any distinction between the good and the bad. Make sense...

 

[ASFASF]

If their costs are in USD their profit rises in USD.... Make sense...

Agreed that for those predominantly mining overseas things would be somewhat better off but the local producers have to pay costs in AUD.

Funnily enough Michael Pascoe wrote an article on the subject after I raised the topic (is he lurking here? )

link: http://www.theage.com.au/business/f...old-is-well-off-its-highs-20100916-15d9r.html

 

[explod]

This of course is fluoro red rag stuff to the gold bugs, many of whom believe there is some intrinsic value in the yellow metal and some of whom think capitalism is about to come to an end. But perhaps the most curious justification I've seen for buying gold was attributed to the seriously rich and eccentric Jim Rogers, that it has further to go because it's still well down on its inflation-adjusted 1980 peak of $US2300 – in which case tulip bulbs should be in for quite a surge one of these centuries.)

To pick up on Pascoe in the quote above, (my highlighting) is typical of most journo/financial gurus of our time.

For five thousand years gold has been a means of exchange for goods. If you wanted a pig once you had to trade something, perhaps a bag of spuds. Eventually, if you were the local medical man, that was found wanting so gold became the medium as it was rare and it was a tangible good of exchange. That is not the case with paper money, it can be easily printed and when things are tough (like now in the US) the value is diluted by over printing. Just like the issue of new shares, it dilutes the overall value.

Gold will continue to rise whilst we have quatitative easings, stimulus programms and excessive borrowing by governments. It is time that financial journalists faced up to reality IMHO

However I have always had respect for Pascoe and learnt a lot from his commentaries, he is just doing his job and part of that is to maintain the status quo; and I do not think that the popular press would print some of the real truths anyway.

However, I do think down the track that panic is going to be a problem because few understand the real danger that the US Federal Reserve is bringing upon us. Herd sentiment will be the problem and gold as they are seeeing it will overshoot above current expectations IMHO.

 

[Mr Z]

Agreed that for those predominantly mining overseas things would be somewhat better off but the local producers have to pay costs in AUD.

Funnily enough Michael Pascoe wrote an article on the subject after I raised the topic (is he lurking here? )

link: http://www.theage.com.au/business/f...old-is-well-off-its-highs-20100916-15d9r.html

The locals are discounted... some are cheaper than when gold was $600... FWIW.

 

[Mr Z]

To pick up on Pascoe in the quote above, (my highlighting) is typical of most journo/financial gurus of our time.

Pascoe isn't even a starter when it comes to gold, he just does not get it at all. To equate gold going up with the end of capitalism is as simplistically naive as it gets. The guy, like some many of his colleagues, has no idea about money, what it is, how and why it works. They get it at a high level but their foundational understanding of money is zip.

10 years Mr Pascoe, compounding at 17%... you find another investment that has done that! :

 

[iced earth]

GOLD- WEEKLY CHART:18 SEPT 2010:

Bullish H&S with the target around 1331 $. Also uptrend channel with higher target...

 

[Mr Z]

Are we ready for a short breather?

 

[Logique]

Bullish H&S with the target around 1331 $. Also uptrend channel with higher target...

Many thanks for the chart Iced earth. Like Mr Z I've been wondering what to do from here.

Found this article, one of many similar others out there: http://www.kitco.com/ind/Wieg_cor/roger_sept132010.html Sept13, 2010 - interesting long term price history charts for gold and silver there.

So we read everything with a critical faculty, and the author is a clear gold bull, but what are we to make of articles like this? And surely we'll see a breather some time?

(My bolds).

http://www.kitco.com/ind/Wieg_cor/roger_sept132010.html Sept13, 2010
A September Surprise Is Coming...As Stunningly Stupid Politics Spreads...If you study the weekly 30-year bond chart and review trading action in the December bond futures, Mr. Market is telling us this game has more than a tummy ache. It’s got food poisoning...........

.....So now the Federal Reserve crowd and New York global banksters will be holding capital that turns to zero-as in wiped out. Do you really think there will be buyers for bonds when the credit and bond markets crash? This is going to be breath-taking indeed. You don’t even have to buy tickets. This is going to be the super bowl of all crashes. The national bonds of Greece and their neighbors crash first; then those in junk bond land follow.....

.....Now, more than ever, it is important to take the immediate necessary precautions to protect yourself and your families and friends. Traders and investors should be buying precious metals and select shares right now....Meanwhile, you can never go wrong buying physical precious metals and holding them for security. We’ve had a constant run of nearly ten years in gold rising 15% per year so this remains a good trade. In the last twelve months, gold rallied over 34% and is going ever faster.

It’s not going to stop any time soon. In fact, we predict those annual percentages will rise even more and this offers a chance, arriving only once in 25 years on the historical cycles.