Gold Price - Where is it heading?

[explod]

Nice charting Sinner, thanks.

The post from InTheMoneyStocks on the 'Commodity Stocks Get Rocked' thread is interesting, explaining the negative effects on increasing interest rates in Asia. Thread at: https://www.aussiestockforums.com/forums/showthread.php?t=21690

Thanks Sinner and Logique for the interesting insights therein.

On the commodity pressure scenario I see gold and silver as more and more in the currency sector. I think that the general finance community believe that inflation will pop the p/m's. It is my take that debt has become an impossible problem, not just in the US but many western countries. A rise in interest rates in these nations will pop the cork and debt defaults will become the overiding factor.

Gold will then become the safe haven and not the US dollar as is now still the case in many minds.

Very interesting times

 

[professor_frink]

http://www.thereformedbroker.com/2011/01/26/investing-insights-from-top-newsletter-writers/

Investing Insights from Top Newsletter Writers!


We turn now to Augustus Yellowgleam of the Super Gold Boom Quarterly Letter...
TRB: Hi Augustus, what's your favorite investment here for people worried about deflation?
Yellowgleam: We would be buying gold here to protect against deflation.
TRB: Ah. And for those concerned with the dollar plummeting and a nasty bout of inflation, your recommendation?
Yellowgleam: That's easy, we would tell investors to up their allocations toward gold here.
TRB: And if the troubles in Europe ameliorate and the US deficit is cut in half, where would you be positioned?
Yellowgleam: We'd be positioned in gold in that scenario.
TRB: At 1300?
Yellowgleam: Yes.
TRB: How about at 900 or 2900?
Yellowgleam: Yes, we'd be buyers.
TRB: I see, and in a hypothetical environment of disinflation, or some sort of alternate reality that involved a perfect Utopian harmony between supply of money and cost of goods?
Yellowgleam: Yeah, so in that scenario, we'd be recommending gold.
TRB: Gotcha. And if gold broke into your house and killed your family?
Yellowgleam: Gold is a hedge against both breaking and entering and it also works well in a homicidal environment, so yes, we'd be buying gold under those circumstances absolutely - silver too.
TRB: OK, thanks Augustus.
Yellowgleam: Gold.
TRB: What?
Yellowgleam: I meant Thanks.

 

[Logique]

... the following article on the recent manfactured correction sums up some good points in my view:- http://www.sprott.com/Docs/InvestorsDigest/2011/MPLID_012811_pg003Emb.pdf

Explod, John Embry seems to know his stuff. His 'drivel' points 1.) to 5.) on page one are instructive. Doubt that many would disagree with his overall LT secular trend comments, and '..QE to infinity..'.

But he is looking out to a longer horizon.

'..2.) The misguided suggestion that gold supply is going to rise because of large increases in mine production..' - We can guess Embrey's reasons, but would have liked to see him elaborate on that point.

 

[Uncle Festivus]

Interesting move up in gold and silver in the last hour.

However the following article on the recent manfactured correction sums up some good points in my view

I couldn't see any evidence that it was 'manufactured', rather just an ordinary bout of profit taking after a good run?

".... the anti-gold cartel unleashed a vicious paper driven attack......"

While I agree with the points raised, I get a bit tired of the usual 'bug' talk about 'us' & 'them'. The truth is, the gold market, when compared to the entire global liquidity market, is like a mozzi bite in the big scheme of things - hardly going to be a concern for the plunge protection team or the Presidents working party or the work experience kids running the Feds POMO ops.

We only have to look at global equity markets to see a genuine 'manufactured' market, as Sinner points out, when compared to gold the Dow etc is primed for a correction, or gold could take off again? But, it looks to me like a bearish rounding top for gold so we can just chill out and wait for the market to bottom out around either $1200 or in the bearish of cases, $900. Baring some outbreak of rationality and non ignorance of economic reality of course......

Having trouble deciding which chart is more interesting, decided to post them all.

Gold bounced last night at technical support
View attachment 41049

My 2c......

 

[explod]

Could that also be a reverse candle at the end of your weekly there UF, similar to the one at the start of your curve.

Note a few more tail downs stand out if you look back on the chart. We shall see.

Anyway, back into some OGC today.

 

[GumbyLearner]

".... the anti-gold cartel unleashed a vicious paper driven attack......"

These guys seem to confirm that - Go to the 11th minute mark of the vid to hear an analysts opinion.
Gee Max looked chubbier when he was a younger broker on Wall St in 1987.

Trading Fraud Phantom Money OH WELL Don't be scared everyone, get some physical PM's it has to finish somewhere. Sympathy goes out to "ordinary" honest Irish taxpayer(non-bond holder) citizens.

 

[sinner]

(will post the ASX:XGD reaction to last night's action this arvo after the ASX close I guess)

As promised

XGD in black HUI in red, you can see that the XGD printed a reversal pin and higher low one day prior to HUI so the strong buying shown today was not just a reaction to last nights action in HUI but also the markets own technicals.

 

[GumbyLearner]

China Investment Head Gao Says Quantitative Easing Devaluing Paper Money



By Simon Kennedy

http://www.bloomberg.com/news/2011-...ing-is-devaluing-money-stoking-inflation.html

China Investment Corp. Vice Chairman Gao Xiqing said that central banks’ quantitative easing policies are hurting the value of money just one day after the Federal Reserve maintained plans to buy $600 billion of Treasuries.

“You know money is gradually becoming not worth the paper it’s printed on,” Gao said at an event sponsored by HSBC Holdings Plc at the World Economic Forum in Davos, Switzerland today. Recent gains in commodity and food prices reflect the “long-term view” of investors that prices will accelerate, he said.

The Fed and the European Central Bank have kept their benchmark interest rates at record lows to spur their economic recoveries, triggering concern in emerging markets that the resulting flood of capital will undermine currencies such as the dollar and spark inflation.

“We’ve started collecting Zimbabwe notes,” Gao said, referring to an economy whose currency was scrapped in 2009 after inflation reached 500 billion percent. He noted investors are also discussing whether central banks will pursue more rounds of quantitative easing.

The Fed yesterday reiterated its intention to keep its benchmark “exceptionally low.”

Gao, whose sovereign wealth fund manages about $300 billion, signaled that while industrial nations are now more welcoming of China’s money following the financial crisis, their past criticisms may hurt their ability to attract it.

 

[GumbyLearner]

Cool finally someone with some throw in China has admitted it.

 

[Whiskers]

Gold taking a bit of a beating the last hour again (daily chart), testing support.

It's gonna break soon. EUR/USD starting to weaken also, so is the last gasp surge in the USD imminent ?

 

[GumbyLearner]

Gold taking a bit of a beating the last hour again (daily chart), testing support.

It's gonna break soon. EUR/USD starting to weaken also, so is the last gasp surge in the USD imminent ?

A healthy correction to US $1240 is the target IMO. This is not financial advice. I make my own money without government guarantees or printing presses.

DYOR

 

[Whiskers]

Yeah, 1240 seems a reasonable start. But I reckon we've got a bit bigger correction on our hands than that.

If I'm right, the USD will rally a bit starting the rebalanceing currency dance and probably start a bit of a panic sell-off in USD terms, but the AUD POG graph curve should kick up a bit and maybe overlap the USD for a bit before this correction is over... maybe close to 1,000 USD.

 

[Whiskers]

Checking the US economic calender, the release of GDP figures there tomorrow night might just be the cue to get it moving.

 

[Uncle Festivus]

You've got to give them credit - everything that has been threatening to take down the 'recovery' ie food & commodity inflation, long term rates eg treasuries, has just been comprehensively smacked down, all the while keeping the one metric that matters, equity indexes, bubbling along nicely. And I use the word bubble deliberately as it's only a matter of time before all those US debt buyers at first slowly, then at a quicker pace, start to 're-balance' their treasury holdings to reflect their true worth ie big fat zilch!

$1310 and still shaky?



PS It would be ironic indeed if the US Fed didn't make it to it's 100 year anniversary???

 

[sinner]

Yeah, 1240 seems a reasonable start. But I reckon we've got a bit bigger correction on our hands than that.

If I'm right, the USD will rally a bit starting the rebalanceing currency dance and probably start a bit of a panic sell-off in USD terms, but the AUD POG graph curve should kick up a bit and maybe overlap the USD for a bit before this correction is over... maybe close to 1,000 USD.

Dude, please revisit your previous gold calls for us. You often seem to post the same call without ever revisiting your thoughts.

My own opinion, in response to Uncles chart, we are still shorter term support zoneish as long as trading remains above 1310.

Other parameters marked. Trendlines are 45 degree P&F trendlines, different from a normal price chart trendline. If we make it to the trendline in this current downswing I would expect chop at 1260-1290 as support before a bounce to new highs.

Currently I think the highest probability scenario is still bounce from right here to new highs rather than heading into 1200s but not holding a position either way for now.

 

[pixel]

A healthy correction to US $1240 is the target IMO. This is not financial advice. I make my own money without government guarantees or printing presses.
DYOR

Based on Fibonacci Analysis, I have the closest support "within walking distance" to your 1240. But based on the Bearish MACD Divergence on the yearly scale, I'd be prepared for a much deeper fall. see attached chart.

 

[Whiskers]

Dude, please revisit your previous gold calls for us. You often seem to post the same call without ever revisiting your thoughts.

I've been tipping a significant correction for a few months now. As Uncle mentions the markets seem to be defying the economic data of late. I feel the POG ought not to have reached these levels but for the US rather extreme monetry policy, and corrected back somewhat earlier.

I have posted longer term charts (probably in different threads) where I expected the USDX to rally a bit again to complete a wave 'e', the final wave of a wave 4 Triangle, before continuing it's decline. Conversly, the EURUSD which makes up abt 40% of the USDX the wave 'e' decline before a push up again.

I've also mentioned (wherever it was I posted the USDX chart), that the candle formations suggest the market ought to have turned (yellow) earlier in a couple of instances but for US intervention, the trade war... hence we have ended up with what I believe is exaggerated market swings in the USD for domestic US political adgendas and reflected in all commodities and gold in particular being over stated, but for the necessary currency exchange. The USDX chart below is the old chart I posted showing the position where I believe the candle formations suggest it ought to have turned.

In short (and it may be a long bow interpreting the formations) I suggest that by using monetry policy to devalue the USD more agressively for self interest, the (natural) ebb and flow as in EW analysis has been interrupted, ie the over movements had to rebound somewhat to end up with a more complex Triangle 'B' wave of the correction.

I have also pointed out typical bear turning point formations in gold and silver that have continued to show up and be countered bullishly for some months.

The bottom line, as I have mentioned earlier also, is sooner or later the artifically lower (too soon) USD will hurt the US economy via price inflation if they persue this policy for too long. I think they need a bit of respite pretty soon to put some purchasing power back into their domestic economy. That's what I mean by the market, primiarily the USD rebounding more than probably most expect in the medium term and knee jerking the POG into a significant correction as a consequence.

 

[sinner]

Big dramas in gold town overnight

Over the past several weeks there had been rumors that the reason for the precipitous drop in gold was primarily driven by a hedge fund liquidating its futures positions. This has now been confirmed: "Yeah, that was just me liquidating my spread position," Mr. Daniel Shak, [of SHK Asset Management] 51 years old, said in an interview. "I had a significant, fully margined position. The dollar amount of the gold liquidation was very small, it was just a lot of contracts."

http://www.zerohedge.com/article/meet-man-behind-liquidating-hedge-fund-blew-gold-market

For those curious the trade in question was a 10mio calendar spread...

Meanwhile Adrian Douglas on the other side of that...

Everyone is happily touting this story to explain the 81,000 OI cratering on Monday which was the biggest one day drop of OI in history. http://www.gata.org/node/9540 . NOT SO FAST. This is baloney in my opinion.

The last COT report shows total spreads in managed money were 63,507 contracts. This "Shak" dude is a money manager so how did he liquidate 81,000 contracts? The total reported spreads were 103,947…are we meant to believe that this one dufus from Las Vegas had 80% of all spread contracts!!??

The WSJ article just stinks. For example people don't say things like "Yeah, that was just me liquidating my spread position," Mr. Shak, 51, said in an interview. In the article it says he was down 70% but quotes him as follows: "I just chose to close, I didn't like my positions so I chose to liquidate, I wasn't forced. I was in the process of closing anyway."...You have to be kidding me!...70% down "he didn’t like his positions"!! That’s just the sort of thing an average Joe will say!

The Commodity Exchange Act provides anonymity for traders …we are still waiting for the investigation from 2008 in what happened in silver and who did what yet WSJ in a matter of days gets the name and all the trading info about the "Shak Attack". This is an early April Fool’s spoof and very conveniently put out to kill everyone’s curiosity…move along nothing to see here just one guy liquidating 81,000 spread contracts!

Let’s hear it for the CFTC and the gold cartel and Obama’s goal of more transparency!

Cheers
Adrian

We traded below 1310 last night, so I am cautious, but still siding with bullish probability from these levels as marked on p&f chart.

 

[Mr Z]

Hi there...

Wait for it... wait for it! Another week or two should see it done.

 

[Mr Z]

On the Shak hedge fund --->

Mr Shak controlled in the order of 6500 contracts by my reckoning given the figures made public. He must have hit a bucket load of stops to trigger an 81000 contract decline in OI OR IMO the most likely explanation is that the spread trade he took was a little crowded and the small ranging price of gold across the New Year period blew the spread they had setup. They needed a bigger move and it didn't eventuate, that is probably closer to the truth. Mr Shaks position should have cost him in the order of 1.5m and he blew 70% of that, in the order of 1m. Much more sensible numbers for a 10m hedge fund than the article kind of implied @ zero hedge.

All blown out of proportion I think...