Gold Price - Where is it heading?

[explod]

well, credit is due to explod, I was personally disagreed with him over the last few years in regards to Gold, and I sure got it wrong. I didn't believe it would reach the highs it has so well done explod for sticking to your guns.....

at this point if I had to make a call i would say a correction is more likely but that's a rough call from me.

Thank you Apocallypto.

However the credit is due to those who I have learnt from over the years. This learning has, in the last year or so, started to reward my wife and I very well. We lost nearly all of our money about seven years ago and it has been a long hard road back in many ways. In fact the fact that we are still married to each other and happy is a miracle. We took advice from others and lost it all in property, wonder why I fight with Robots, hey.

The formula is very simple. Fundamentally you have to identify and invest in that which is in the most demand. You then simply apply the methods of trend following. But above all you listen to no one else, it must be worked out and understood by yourself. It is your money that you are protecting. And where you have doubts do nothing till you are confident in yourself that you should and can proceed. However it is not easy to get yourself into that state. We tend only to hear what we want to. That is why some of us so called doom and gloomers are picked on, we say things that people do not want to hear or to accept.

Gold is in a strong uptrend and the fundamental reason for that is that currencies (in spite of all the unqualified news hype by the so called qualified economists) are being debased by the enourmous computer expansion of it to whoever needs it.

Making money is about putting in a lot of hard yards to learn what is real value, where it can be found and buying into it.

I have no association with, but acknowledge the following. On the forums a few years back was the wisdom of Uncle Festivus, "The Privateer" newsletter and "Trend Following" by Michael Covel.

As silver was strong on the close of New York Saturday morning our time we will see a continued strong showing for gold in the short term. It will surpass US$1700 this year and our dollar will rise to $1.30 against the greenback. Silver is going to be in such short supply that it will rise substantaily, even against the Aussie dollar.

Just my opinion based on what I have learnt from the opinions of others. And what is learned is great to pass on. But once again, they are just opinions; you must act only on your own established facts.

I hope that everyone has a great trading year in 2011.

 

[Mr Z]

About 9 years ago I was buying silver and gold for long term investment... if we want to compare credentials... my averaged core position in gold is at $273 and silver it is at $4.34.

That guy is still talking tripe...

 

[explod]

About 9 years ago I was buying silver and gold for long term investment... if we want to compare credentials... my averaged core position in gold is at $273 and silver it is at $4.34.

That guy is still talking tripe...

Sound like you had the perfect insight there Mr Z. So very well done indeed.

Who is the guy talking tripe ?

as there are rather a lot of them.

 

[GumbyLearner]

About 9 years ago I was buying silver and gold for long term investment... if we want to compare credentials... my averaged core position in gold is at $273 and silver it is at $4.34.

That guy is still talking tripe...

That's fantastic investing Mr Z. I wish I could have picked the PMs up at those prices myself.

With regard to the youtube video. I do find it interesting that the guy alluded to shorting US Bonds. Also, I noted that Jim Rogers recently said he was short US Bonds and Schiff has said the 10 and 30 year notes are a bad deal. I suppose it all depends
on whether one considers the US Dollar/treasuries as 'safe havens' compared to say the euro or shares.

I watched an interesting program called Addicted to Money on Australia Network recently. There was one segment where a Chinese factory worker was interviewed and asked about the purchase of US Tbonds. Which he associated with a delayed form of printing money.... He works for roughly $7 a day and saves most of his income.

I also came across a great interview with an American Professor based in China by the name of Dr. Patrick Chovanec.

November 8, 2010

http://siciliandefence.wordpress.com/2010/11/08/chinas-dangerous-addiction/

China’s economy is dangerously addicted to cheap money’

What will the second round of Quantitative Easing in the US (QE 2) achieve? Is it a case of throwing good money after bad?

This is an experiment based on a theory that (Fed Chairman) Ben Bernanke developed when he was a scholar of the Great Depression: his conclusion was that the Fed had not been aggressive enough in injecting liquidity into the economy to fight deflation. He vowed that if he became Fed Chairman he would take “extraordinary measures”. That’s in the realm of theory. The critical aspect is that if he overshoots or gets his timing wrong, he will – instead of fighting deflation – end up creating inflation. That’s one challenge.

The other danger is of asset bubbles. The policy is intended to lower interest rates on Treasuries and direct investments elsewhere. If those are productive investments, they’ll achieve the goal. But the danger is that it creates asset bubbles. Alan Greenspan was criticised for doing precisely that after the dot-com bubble crash; by being too aggressive in reflating, he helped create the housing bubble. Instead of correcting the underlying problems in the economy, the money just went from one bubble to another.

When there is a credit meltdown in the economy, one of the immediate problems it faces is of liquidity; everybody hoards money. Injecting more money into the economy might address the liquidity crunch. But if there are other issues that need to be addressed – like excess debt or finding new sources of competitiveness – it won’t do that.

As we move into recovery, maybe some of the scepticism is that the problem isn’t necessarily of liquidity but deeper than that, and injecting more liquidity just creates inflation without addressing the underlying problems.

So are there risks on both sides of QE 2: that it could underperform or overshoot?

If the diagnosis is right, the theory is sound, and this is the right prescription. But it’s not clear that that’s all that’s wrong – or even primarily what’s wrong – with the patient. And even if it’s the right kind of medicine, there’s a danger of overdosing.

It’s not just about risks to the US economy. QE 2 creates complications around the world, which other countries aren’t too happy about. The most direct and obvious – and the most immediate – is that the bubbles it creates won’t be just in the US. Money taken out of Treasuries might go into emerging markets, and in that case, you have hot money fuelling growth or potentially feeding bubbles in other countries. And if the Fed decides at some point later to raise interest rates, you cut the legs out from under the flow of capital into that other country.

We’re getting to a point where the US dollar may – because of QE 2 – become the focus of a ‘carry trade’. It won’t necessarily help the US recovery, and it will fuel very fragile growth abroad. I say ‘fragile’ because it could be a bubble – and even if it isn’t, it’s vulnerable to monetary shock from the US. US monetary policy doesn’t just affect the US; it affects the rest of the world and that’s why developing countries, in particular, are concerned.

India, China and other developing countries are at a stage where they are more concerned about inflation than deflation. China effectively had a huge QE over the past year: it had a big monetary expansion, and is trying to deal with the consequences of that and rein in inflation by raising its rates and tightening. That creates incentives for money to flow from the US to China. It’s also true of India and any other country that’s raising interest rates.

There’s of course a very easy answer to this: allow your exchange rate to adjust, and allow your currency to appreciate. If you keep the exchange rate fixed, you’re going to import inflation from the US. That’s the real bind: you either import inflation from the US or you appreciate your currency and make your export orders less competitive. It’s not just China; a lot of developing countries don’t like being put in that bind by the Fed. That’s why they are upset.

--------------------------------------------------------------------------------
One of the new catch words of 2011 will be chinflation. IMO

DYOR

 

[skcots]

As silver was strong on the close of New York Saturday morning our time we will see a continued strong showing for gold in the short term. It will surpass US$1700 this year and our dollar will rise to $1.30 against the greenback.

If the AUD buys $1.30 US then I hope the gold price is greater then $1700 USD per ounce.

 

[Mr Z]

Sound like you had the perfect insight there Mr Z. So very well done indeed.

Who is the guy talking tripe ?

as there are rather a lot of them.

Nope not perfect... I could have done better had I known what I now know about the market. Skype me if you don't believe me... PM me for the handle, you cans ask anything thing you might want BUT don't you dare insinuate I am talking tripe.

As for the tripe talking the guy in the video is doing it... anyone who thinks that the Fed would actively undermine the US stock market to support UST's has rocks in their head.

 

[Mr Z]

That's fantastic investing Mr Z. I wish I could have picked the PMs up at those prices myself.

Actually in AUD terms is was tough going for a while... in AUD terms I could have done better.

 

[explod]

If the AUD buys $1.30 US then I hope the gold price is greater then $1700 USD per ounce.

I do not think the US$ will rise as high against most other currencies. I the aussie is a bit on its own due to our own resources, both food and commodities. We are one of the few nations that still does have some intrinsic value in GDP.

The price of gold against the USD will gradually lose relevance to to us here IMHO.

 

[Mr Z]

I suppose it all depends on whether one considers the US Dollar/treasuries as 'safe havens' compared to say the euro or shares.

In part the safety comes from the depth of the market, there are very few places you can park big money fast without distorting the market and be sure that you will largely get it back. In 2008 rates went negative for that very reason, they where willing to take a haircut over risking cash in the banking system. That is the main issue with other things like commodities, placing really big money fast in most things would create a problem. Nothing rivals the US bond market in that ability, so in a panic and short term money will still run and hide there if it is nervous about other areas... with all its flaws.

 

[qe2infinity]

IMHO, i think that it won't be long before the gold price sky rockets as investors finally realise that the only real currency and commodity in this era is GOLD.

where is it heading? i think $1600 by the end of this year but who knows? $1800?
last night's 2pc correction should be seen as a buying opportunity for keen investors who don't want to miss the boat.

disclaimer: please DYOR.

 

[explod]

IMHO, i think that it won't be long before the gold price sky rockets as investors finally realise that the only real currency and commodity in this era is GOLD.

where is it heading? i think $1600 by the end of this year but who knows? $1800?
last night's 2pc correction should be seen as a buying opportunity for keen investors who don't want to miss the boat.

disclaimer: please DYOR.

Yes and has been its habit for awhile now, it continues to bounce from support in the USGold $1,380 area. Watch the US$ index over the next day or so and if it fails to breach resistance at around .80 (where it is struggling) gold will continue its steady climb.

Big efforts to scare would be players in the Nadler blog, we have extremes on the bull side but the Kitco spokesman must be close to the prize bear.

http://www.kitco.com/ind/nadler/jan042011.html

 

[nukz]

Anybody notice that large spike down in gold in AUD, really strange because our currency has not moved at all and gold in USD has not moved...

There must be some news that has come out or something has happened but its very strange for gold to make a large move without any move in currency.

Edit: update the market dropped from approx $1385 > $1369AUD then sat there for approx 5 minutes and has not shot back up to 1385AUD again....

Could we be seeing some massive manipulation of the gold market in AUD? there is no effect on the gold market in USD or any moves in AUD currency right now.

 

[Logique]

MarketWatch: http://www.marketwatch.com/story/harry-schultz-last-investment-testament-2011-01-10?link=kiosk

By Peter Brimelow, MarketWatch - 10 Jan 2011
NEW YORK (MarketWatch) — After 45 years, Harry Schultz has just published the last issue of his International Harry Schultz Letter. He’s superbearish but opportunistic.

In his last issue, Schultz does not attempt a grand summing-up. But he does observe this:
“Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched & where the rot is by far the deepest.”
..............
“Stockman replied (to my huge surprise, coming from a former top government official) ‘Get some gold, beans, water, anything that Bernanke can’t destroy. Ron Paul is right. We’re entering a global monetary conflagration. If a sell-off of U.S. bonds starts, it will be an Armageddon.’”
About gold, Schultz retains his long-term bullishness. He quotes the respected Seeking Alpha service:
“For gold to match the growth in US M1, M2, public debt & budget deficit, gold will have to reach $1,800, $2,400, $7,800 & $13,200, respectively. While I can’t imagine gold going to $13k, these numbers tell me that calling gold a bubble is a bit premature. In my view, money supply, public debt & the budget deficit are in a bubble, not gold, not yet.”
Schultz’s comment: “Wake me up at $2,400 gold.”
...............
“It’s a stock market index for Europe, Australasia and the Far East. Chart shows massive bullish base. If it breaks upside, these areas are where we should buy some new investments. Some modest pre-emptive buying in stocks there, having good chart patterns, is justified.”

Schultz’s final investment allocation recommendation:
..............
- 50% gold stocks & bullion: 15% blue chips, 5% junior, 5% bullion via futures, 25-35% in physical bullion.

 

[Trembling Hand]

There must be some news that has come out or something has happened but its very strange for gold to make a large move without any move in currency.

Could we be seeing some massive manipulation of the gold market in AUD? there is no effect on the gold market in USD or any moves in AUD currency right now.

"massive manipulation of the gold market in AUD" Hmmmmm?

That would be something. Considering that there is no actual market to manipulate. I guess your looking a a quote from a CFD provider? (probably CMC?)

There is no spot/futures AUD gold market. They just make a 3 way synthetic price out of a CFD linked to the Comex GC contract and then converted to AUD via the spot AUDUSD price.

Most likely a bad tick/data/contract roll somewhere in the bowels of your dodgy so called "broker" rather than those evil wall streeters manipulating the poor 50 cent AU retail traders.

 

[nukz]

"massive manipulation of the gold market in AUD" Hmmmmm?

That would be something. Considering that there is no actual market to manipulate. I guess your looking a a quote from a CFD provider? (probably CMC?)

There is no spot/futures AUD gold market. They just make a 3 way synthetic price out of a CFD linked to the Comex GC contract and then converted to AUD via the spot AUDUSD price.

Most likely a bad tick/data/contract roll somewhere in the bowels of your dodgy so called "broker" rather than those evil wall streeters manipulating the poor 50 cent AU retail traders.

Thanks for the reply Trembling,

Was really quite strange because there was almost no move in AUD/or gold in USD at the time so it was strange to have it spike down(not sure if you saw the same thing i did) or this was central to only CMC customers... which may explain something.

If it was indeed a error with CMC what would have happened if i had a margin call? that would have been interesting

 

[Trembling Hand]

If it was indeed a error with CMC what would have happened if i had a margin call? that would have been interesting

You would have to ring up and argue with them that their data was wrong.

In the end you have already agreed to accept the price they give to you, although they are the ones making it, so its up to them whether or not they would scratch any problems from such a move.

Surely though a 1% move while you are holding outside cash shouldn't cause to much of a problem?

 

[nukz]

You would have to ring up and argue with them that their data was wrong.

In the end you have already agreed to accept the price they give to you, although they are the ones making it, so its up to them whether or not they would scratch any problems from such a move.

Surely though a 1% move while you are holding outside cash shouldn't cause to much of a problem?

Yea no problems

What provider do you use? by the looks of your replys CMC may have had these issues before?

 

[Trembling Hand]

Yea no problems

What provider do you use? by the looks of your replys CMC may have had these issues before?

I don't/wouldn't use a CFD providers for data nor to hold a trade. I would only ever use the exchange data. In golds case COMEX.

EDIT: Which by the way so should everyone. Especially if you are long and holding for some time. 7% interest compounded daily plus a MASSIVE spread for CFD gold. You need to look elsewhere.

 

[nukz]

Hey Trembling,

I had a look at the gold AUD cfd this morning and it had price spikes again, quite interesting. It appears as though CMC's data is quite crap

This is really off topic but do you know any providers that provide CFD's for yuan? it could be vs. USD/AUD i'm not really fussed. If they are simply synthetic products then surely a cfd can be created for yuan vs.aud?

 

[Trembling Hand]

This is really off topic but do you know any providers that provide CFD's for yuan? it could be vs. USD/AUD i'm not really fussed. If they are simply synthetic products then surely a cfd can be created for yuan vs.aud?

yeah the USD/AUD. Since its pegged to the USD :