Gold Price - Where is it heading?

explod · 25 August 2011

Tysonboss1 said:
No doubt you can put the physical gold in a safe place for 10years and it will still be there, But whether or not you can sell it at todays record levels depends on alot of factors, many of which are not guaranteed as you seem to believe.

Inregards to selling up into cash and placing it under the matress, if you look back at my comments you will find I have never suggested this, I have only compared gold to other assets which will achieve the same inflation protection while also generating income.

Saying that, holding cash under the matteress would have been better than holding gold under the matteress for over 2 decades if you bought in the late 70's peak.

In the interim, at best these other assets are going sideways to down at the moment, property in particular is looking overbought. That will one day change but till its in an uptrend it is not for this ole black duck. I do recommend you search for some discussions on the current property situation. The drop off in real jobs and many loans being reviewed on lower property values is starting to bite. Not saying we will drop the 80% as has happend across many parts of America and also now in the UK, but the orgy of using the house equety as a teller machine is going to hurt us a great deal soon in my opinion. But yes in the long term freehold property will survive.

Your example is weak and extreme, a good investor would have known when to sell his gold in 1980 and there were still opportunities to get out at a good profit then for some months after the blow off top.

Did you check out Michael Covel on "Trend following" ?

Protecting yourself financialy merely requires some study, common sense and being your own adviser. That is fairly basic. Selling my bullion only takes a few hours to the vault then ten minutes to the dealer. Have done it many times now.

Inflation adjusted, todays prices are not at record levels. There is a growing shortage of gold, mines are being depleted and for whatever reason more and more people are wanting to buy it.

Though a few are starting to talk about it now there is little yet in the business sections of the daily newspapers. Maybe then and for many other reasons one can start to look at gold as overbought.

Tysonboss1 · 25 August 2011

Billyb said:
1, Who cares if emotions/fear/speculation are driving gold? The only thing that matters is that GOLD IS CURRENTLY LIKELY TO BE PROFITABLE, based on data from the previous 10 years of our lives. TEN YEARS. That's a lot of data in our favour.

2, If you think the bubble is going to pop now - then all you are doing is trying to predict the future which you CANT possibly know - the bears have been trying to do this for the last 10 years in fact - saying "gold is in a bubble and it will pop soon" every single time they were wrong. What's the chances they are right this time? It's only the 1000th time they are making that prediction. Even if they are right their hit rate is 0.1%. I like those odds.

3, Alas, eventually they will be right and gold will start going down, but by that time evidence will probably be starting to appear that this will happen (markets will stabilise and gold will start trending down) so there will be the chance to get out before it gets ugly.

1, By this statement it looks to me like your falling into a massive trap, probably the biggest mistake there is.

when Markets ( any market ) sees strong gains over a long period of say 10 years it transform the asset in peoples minds into a strong, reliable and sound investment right when it is dangerously high and due for a big correction.

The same goes when markets fall, After an asset class suffers a big fall from grace in peoples mind it becomes risky, unsafe andnot investment grade just when it is selling at the most attractive levels and due to increase in value over time.

2, If you think gold will continue to rise you are trying to predict the future, I have never said gold is in a bubble in the past years only recently have I said it.

3, You haven't been around markets long have you, the more people that try an exit the harder and faster it falls, and it is mathamatically impossible for the majority to bail with their tail feathers intact.

explod · 25 August 2011

Tysonboss1 said:
Yes I am aware that central banks lease gold to each other at rates of less than 1%, Not really enough to get me to by into an over valued asset, which is pittiful compared to what you can earn on other assets classes with the same inflation hedging and are currently less frothy.

But people are talking about holding physical under the materess because they don't trust the central banks, so leasing gold is not really an option for them

Can you tell us about the other asset classes that are better than gold right now ?

Do you trust the central banks ?

explod · 25 August 2011

Tysonboss1 said:
If you think gold will continue to rise you are trying to predict the future, I have never said gold is in a bubble in the past years only recently have I said it.

3, You haven't been around markets long have you, the more people that try an exit the harder and faster it falls, and it is mathamatically impossible for the majority to bail with their tail feathers intact.

Thinking gold will rise is not the issue, nor is predicting because we cannot. But following a strong uptrend is following what is going on. When it starts to go down then one follows that. That is trend following.

The uptrend in gold is very much intact and as said earlier it would require a breach of $1500 for that to change. The sentiment for gold as a safe haven is far too strong for that to happen in the medium term, in my view, based on current evidence.

Well I have been around markets since 1968 and a good investor knows when to get out and whilst there are plenty of buyers. Its not rocket science

Chalea · 25 August 2011

skc said:
Next support ~$1670 will be tested tonight by the looks. And then it's ~$1625 and $1575

Bearish Head & Shoulders Reversal forming?

Target = $1530 approx.

Tysonboss1 · 25 August 2011

explod said:
Can you tell us about the other asset classes that are better than gold right now ?

There are many quality companies who shares are well off their highs who will be producing earnings the will compound over time and out pace Gold.

Even Property although it is marginly over valued is not super inflated like gold, and again it will have earnings that will compound.

As much as I don't like holding to much cash ( more than say 12months living expenses in personal account and 25% in investment account ),

I think at present interest rates, even cash will out perform gold over the next 10 years, simply because of the gold bubble pop.

disarray · 25 August 2011

Tysonboss1 said:
Do you have facts and figures on that.

yeah i've weighted what i can see.

you still haven't answered where you have your money parked.

explod · 25 August 2011

Tysonboss1 said:
I think at present interest rates, even cash will out perform gold over the next 10 years, simply because of the gold bubble pop.

I do not think gold is in a bubble pop situation and I have provided many reasons for this assertion.

What are your reasons, apart from what you think, for gold being overbought or in a bubble pop situation ?

Chalea · 25 August 2011

explod said:
What are your reasons, apart from what you think, for gold being overbought or in a bubble pop situation ?

MACD/MACD Histogram bearish divergence, (anticipates signal line crossovers), a ST sell signal.

Time for a pull back to the rising 200 SMA...

Click

Billyb · 25 August 2011

Tysonboss1 said:
1
when Markets ( any market ) sees strong gains over a long period of say 10 years it transform the asset in peoples minds into a strong, reliable and sound investment right when it is dangerously high and due for a big correction.

Why do you say it's dangerously high? How do you know this? It sounds like you have made a prediction. I dont believe that a single person can predict when gold is dangerously high - they can only hazard a guess.

I have only been in the markets a few years, mostly casual, so yes I am inexperienced. But I don't think this is a difficult decision. You either ride the trend that's going up, or you avoid the ride because you 'guessed' that the price is now dangerously high.

Tysonboss1 · 25 August 2011

disarray said:
yeah i've weighted what i can see.

you still haven't answered where you have your money parked.

I own my own home, as well as some investment property,

I have a diversified stock portfolio, which I consistently add using a value investing approach.

I own a successful business throwing of cash each month.

I hold some cash, but not excessive amounts just 12 months wages and some business profits not yet allocated.

I also have a conservative option writing operation.

tothemax6 · 25 August 2011

Tysonboss1 said:
Saying that, holding cash under the matteress would have been better than holding gold under the matteress for over 2 decades if you bought in the late 70's peak.

Tysonboss, perhaps you forget why there was a huge run up in gold in the 1970s, which then collapsed at the turn of the decade. The 1970s was highly inflationary, and the prices of gold and silver reflected similar concerns to that which people have today (today due to international loose monetary policy). The run up in gold was terminated when Paul Volcker became chairman of the US central bank and terminated the inflation with hard-line monetary tightening (interbank rate forced above 20%).

I believe you said that gold is useless and produces nothing (or something to that effect). Relatively speaking, this is true. However, the same applies to anything used as a money or a store of value. All monies sit in storage facilities, be they banks or wallets, and achieve no productive work. It is is not the purpose of money to produce, it is merely to provide: a store of value; a unit of account; a means of exchange. To the extent that paper money inflates, the more people move back towards the previous monetary unit which did not inflate (gold).

You say that it is better to own stocks than gold because stocks are part-ownership in something that produces (which should theoretically also rise in value with inflation). However in economic environments of high inflation and high uncertainty, one does much better to take a position in the finished products themselves - commodities. In an inflationary or uncertain environment, a wheat futures contract will outperform a wheat farming stock.

Gold is unlikely to be a legitimate bubble until most of the worlds real interest rates (including all of america, europe, east asia) cease to be non-positive.

DB008 · 26 August 2011

Talking about history and it's relevance in regards to trading with trends (i.e. GOLD), here is a paper that 'The Chartist' found from Frankfurt, Germany.
Trend is your friend....maybe not.
http://www.frankfurt-school.de/clicnetclm/fileDownload.do?goid=000000311260AB4

awg · 26 August 2011

Tysonboss1 said:
I own my own home, as well as some investment property,

I have a diversified stock portfolio, which I consistently add using a value investing approach.

I own a successful business throwing of cash each month.

I hold some cash, but not excessive amounts just 12 months wages and some business profits not yet allocated.

I also have a conservative option writing operation.

Fair enough for a value investor to question the PM price ATM

Do you take the same view with gold stocks then?

There most certainly has been some opportunities over the last few years

Real business, making real profits, leveraged to an increasing price, and returning on capital by acquiring more assets.

There is still some anomolies between the PM and some gold mining shares that would give rise to many INVESTORS doing their sums carefully.

However you have stated $800 oz as your approx value, so I guess you wont be rushing into them either

DB008 · 26 August 2011

Good analysis - and it's a freebie.

Gold Silver Copper Crude

IraEpstein Youtube Futures's Channel.

[video]http://www.youtube.com/user/IraEpsteinFutures#p/a/u/1/KgVyKI1LFpw[/video]

Tysonboss1 · 26 August 2011

awg said:
Fair enough for a value investor to question the PM price ATM

Do you take the same view with gold stocks then?

There most certainly has been some opportunities over the last few years

Real business, making real profits, leveraged to an increasing price, and returning on capital by acquiring more assets.

There is still some anomolies between the PM and some gold mining shares that would give rise to many INVESTORS doing their sums carefully.

However you have stated $800 oz as your approx value, so I guess you wont be rushing into them either

If i were valuing a gold company I would not be using current prices to assess it future earning power, I would use a much more conservative gold price,

i mean look at the oil companies, they seemed super under valued when oil was $145 a barrel, but oil then dropped to $50 a barrel and so did the value of the oil companies.

When valuing mining companies it is important to use conservative commodity prices.

I personally would much prefer to invest in a diversified miner, so as to not have the risk of a single commodity.

Tysonboss1 · 26 August 2011

explod · 26 August 2011

The following link is a fascinating discussion between James Turk and James Mcshirley on his close observations of the gold market since 2004. Fairly compelling that someone has been trying to hold the gold price down and they may well be losing their grip.

http://www.goldmoney.com/video/mcshirley-turk-interview.html

explod · 27 August 2011

explod said:
A very healthy correction as it was overheating. Some consolidation around this level will provide good support going forward. And also a good opportunity to top up. However we could well see moves further down going into this weekend.

Benanke "the helecopter tanki" speaks this weekend so we should expect some gobbledegook words of wisdom to cover some more money printing (QE3) but may be dressed under another name I would say. Gold will not rest for too long after this.

And volatility yes, to be expected and will increase. Five to ten dollar moves in silver and $100 moves in gold will become the daily norm before it really takes off.

In my humble opinion.

It is merely two days ago since I posted this and following Benanke's speach today both gold and silver have begun to rise strongly.

Expect them to go to new records next week and beyond as the real game is just beginning.

tothemax6 · 27 August 2011

Tysonboss1 said:

Whats your point Tysonboss? Is yours Bernanke's position?
The most interesting thing is this, from the US constitution:

Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

It is explicitly mentioned that gold and silver is money as far as the US is concerned as of inception. It is important information that the head of the US central bank does not recognize this. Indeed what Bernanke said in this video is an outright lie - the central bank does not hold gold 'out of tradition'. It holds gold because prior to 1971 gold was the monetary base - a situation terminated by their default. The fact that gold is no longer money in the US results from a crime - an outright theft and coercion of peoples gold out of their hands and into the possession of the state (FDR 1933, completed by Nixon 1971), and not from people willingly choosing bits of paper that are irredeemable (US notes) as money.

I guess 'because we stole it from you all' is not as politically palatable as 'its just there because of tradition'.

Gold Price - Where is it heading?

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