Gold Price - Where is it heading?

[Billyb]

1, "Eventually" look at the gold chart from it's first peak, that was a very steep decline, and that was without the modern mouse click dump we can see today. In my humble opinion Buying somthing just because it has gone up is as dumb as selling something just because it has gone down.

2, "Depression", It wasn't even the worst recession we have had,

3, I wouldn't call it healthy,

1. If mouse clicking had anything to do with it than it would have an even STEEPER INCLINE than the first peak!!! You can't have your cake and eat it too!

2. See above. The point is that the All Ords went down because of one of the greatest global financial crises we've ever had/have - everything was going down at that time. If you wanna call that a bubble then you might as well say almost everything was in a bubble.

3. You probably wouldn't have called it healthy at $1200 either.

4. Do you know why bubbles burst? Because of some fundamental reason. You call yourself a fundamental investor but I don't see you coming up with ANY fundamental reason for why it is gonna pop soon, other than 'the graph looks that way'.

 

[Tysonboss1]

I was referring to the period of time rather than the location. Crisis would have been a better word than depression, but it really doesn't change the point. Some people just like to pick a bone for the sake of picking a bone, don't they.

Heres the thing, don't think of it as a crisis or a freak event that may not happen again. A

s long as humans are involved there will always be bull markets followed by corrections, the bigger and badder the bull the more savage the bear to the point it becomes not a correction but a crash.

It's just the way it is, now the current bull market in gold is pretty big, history says the bear will be pretty big, and as always the bull comes up the stairs the bear goes out window, don't bank on being able to make a level headed exit at the top.

 

[Billyb]

1. Heres the thing, don't think of it as a crisis or a freak event that may not happen again. A


2. It's just the way it is, now the current bull market in gold is pretty big, history says the bear will be pretty big, and as always the bull comes up the stairs the bear goes out window,

3. don't bank on being able to make a level headed exit at the top.

1. It could still be happening, although for slightly different reasons

2. Of course it will correct significantly - ONE day- but unlike you I do not try and predict the future when it's an impossible thing to do. I am not saying "It is going to crash SOON". I am instead saying 'the trend looks strong, the fundamentals suggest it will continue to stay strong" and if my analysis suggests the trend is reversing then I'm out. I wait for confirmation that the trend is reversed instead of just assuming that it's going to reverse tomorrow, which, figuratively speaking, is what you're doing.

3. of course not, you can't pick a top - YOU ARE the one who thinks he has predicted the top!!

 

[Tysonboss1]

1, If you wanna call that a bubble then you might as well say almost everything was in a bubble.

2. You probably wouldn't have called it healthy at $1200 either.

3. Do you know why bubbles burst? Because of some fundamental reason. You call yourself a fundamental investor but I don't see you coming up with ANY fundamental reason for why it is gonna pop soon, other than 'the graph looks that way'.

1, just about everything was overvalued in the stockmarket just prior to the GFC, Companies were selling a huge multiples to their earnings, some of the biggest names were selling at over 25 times annual earnings, and those earnings were based on a boom year.

2, to be honest it didn't alarm me in the way $1950 does, I think we will see $1200 gold again, probably even $800 gold.

3, Do you know what makes sustainable growth? Fundamental reason, and their is no longterm fundamental reason for gold's growth to be sustained. It will POP, it is not a matter of if, but when.

 

[explod]

1, "Eventually" look at the gold chart from it's first peak, that was a very steep decline, and that was without the modern mouse click dump we can see today. In my humble opinion Buying somthing just because it has gone up is as dumb as selling something just because it has gone down.

2, "Depression", It wasn't even the worst recession we have had,

3, I wouldn't call it healthy,

We discussed this very point a week or so back, the decline was not as rapid as the ascent if you look close and as I said then any chartist worth his salt could have got caught in the first drop but would have exited with a good profit during the second. It was on the recent action at that time a drop of some 50%

You are clutching at straws in my view as the gold rise at this time, in spite of how it looks on the long term chart is still gradual. It is just that the shift this time is so very great overall that the older part of the chart hardly relates.

But surely you can see that the former rise at the end was nearly a straight line up, (in fact it went from $400 to $800 in just four days. The current period is still just a steep hill. So a blow off like that would be a ratchet in a few days to $3,500. We are awhile off from that and you could rightly say, maybe it is different this time. But if that does happen I will be ready to exit on such a rise immediately.

And in this I am not making projections or forcasts. I do not know I can only follow after the action.

 

[Tysonboss1]

2. the fundamentals suggest it will continue to stay strong"

3. of course not, you can't pick a top - YOU ARE the one who thinks he has predicted the top!!

Care to name some of those fundamental reasons,

I have said multiple times I am not predicting the top, and I don't know how high it will continue to boom.

But unlike you I see the fact that I can't predict the top as a reason not to get on considering it can happen at any time, I would much rather buy an asset at a fair price outside of bubble conditions.

 

[Tysonboss1]

We discussed this very point a week or so back, the decline was not as rapid as the ascent if you look close and as I said then any chartist worth his salt could have got caught in the first drop but would have exited with a good profit during the second. .

No they sit there like you and say it's just a small correction and the next rally is only months away.

 

[Billyb]

3, Do you know what makes sustainable growth? Fundamental reason, and their is no longterm fundamental reason for gold's growth to be sustained. It will POP, it is not a matter of if, but when.

My question to you is what fundamental reason has caused gold to rise from $400 to $1600 over 10 years - which I'm sure you would classify as 'sustainable growth'. I think you will find there must a be a reason for gold to have maintained that sustainable growth for so long, and that reason is still there today.

 

[explod]

My question to you is what fundamental reason has caused gold to rise from $400 to $1600. I think you will find there must a be a reason for gold to have done that, and that reason is still there today.

It is a mirror image of the fall in value of the US dollar. I am not able to post charts from my puter but if you check that is what you will see. It is all about the tangible/ or lack of value in money. And as helecopter Ben keeps printing so will gold continue to rise and the sentiment for it goes with other currencies too.

I kow it sounds too simple, but it is

 

[explod]

No they sit there like you and say it's just a small correction and the next rally is only months away.

If there was a correction of 50% I can assure you I would not be sitting there.

 

[Tysonboss1]

My question to you is what fundamental reason has caused gold to rise from $400 to $1600 over 10 years - which I'm sure you would classify as 'sustainable growth'. I think you will find there must a be a reason for gold to have maintained that sustainable growth for so long, and that reason is still there today.

No, in no way would I class that as sustainable growth. Even the best growth businesses, in the best industries, with the best work force would not beable to sustain a growth rate of 30%pa

And if a growing business can't sustain that growth what makes you think a bar of gold can.

I mean a business can actually grow, a gold bar does not.

 

[Tysonboss1]

It is a mirror image of the fall in value of the US dollar. I am not able to post charts from my puter but if you check that is what you will see. It is all about the tangible/ or lack of value in money. And as helecopter Ben keeps printing so will gold continue to rise and the sentiment for it goes with other currencies too.

I kow it sounds too simple, but it is

The USA dollar has not fallen to the extent of the gold rise, no where near it.

And the chart is in Australian dollars anyway, so it kinda blows your little conspiracy theory out the water, infect you would have to wait for decades for inflation to catch up.

 

[explod]

http://www.chartingstocks.net/wp-content/uploads/2009/09/US_dollar.png

http://www.kitco.com/charts/popup/au3650nyb.html

If we look at the last 10 years on the two charts we see gold and the US dollar index going in the opposite directions. Almost like the reflection of a hill in the water.

And "conspiracy theory": dah

 

[Mr Z]

You can in no way connect the value of gold to any idea of "sustainable growth" in the sense that a company achieves. That is comparing chalk with cheese!

Gold will continue to rise in value until our monetary system is fixed (well more like patched) and lower risk returns that exceed the real rate of monetary inflation are available. Up until that point gold will appreciate.

FWIW I believe that although the Americans started this bonfire but that the Asians will put it out. Look for the emergence of a real contender for the role of world reserve currency backed by a country with an economy that can cash the cheques it is writing and that can and does return a real positive interest rate. Then you will have the conditions to stop this gold bull. The US can't do it this time, there will not be another Volcker, there instead will be financial repression. Study that concept and you may start to get this gold bull market, which, by the way, has 5 figure USD gold written all over it.

 

[Mr Z]

The USA dollar has not fallen to the extent of the gold rise, no where near it.

How can you expect a linear relationship between two forms of money that vary significantly in the volume available? To expect that is childishly simplistic, gold will rise far more that the US will fall.

The other issue is that this is not all about the USD anymore, this is about the global monetary system. That fact puts this gold bull market on steroids! Having said that we are probably working our way toward an intermission in golds progress but in 2013 I would expect things to warm up significantly.

 

[explod]

How can you expect a linear relationship between two forms of money that vary significantly in the volume available? To expect that is childishly simplistic, gold will rise far more that the US will fall.

The other issue is that this is not all about the USD anymore, this is about the global monetary system. That fact puts this gold bull market on steroids! Having said that we are probably working our way toward an intermission in golds progress but in 2013 I would expect things to warm up significantly.

It is just the overall long term trend my friend, and yes it is simple.

Gold is a rare resource and for some reason people will continue to flock to it as they have for 5000 years as solid tangible money.

And the markets as well as gold is in a state of pause the last week. Could it be a calm before the storm. Dont' know but we shall see.

No conspiracy here.

 

[jancha]

Dont know about anyone else but i'm enjoying this thread.
Probably a silly question fellas but hyporthetically what would happen to the price of Gold if say Greece Portugal and others alike happen to sell off their gold reserves at the current gold price to lessen their debt? Could that be a possiblity and if so would it drive the gold price down?

 

[Mr Z]

It is just the overall long term trend my friend, and yes it is simple.

Gold is a rare resource and for some reason people will continue to flock to it as they have for 5000 years as solid tangible money.

And the markets as well as gold is in a state of pause the last week. Could it be a calm before the storm. Dont' know but we shall see.

No conspiracy here.

Mincing my meaning AGAIN... the relationship between the value of gold and the value of the USD is not a 'simple' linear relationship EVEN when it is the dominant force in setting the price of gold. Due to the state that the worlds currecny systems have gotten themselves in it is no longer the USD that is THE dominant force driving gold. That honor is now shared between the USD and the Euro!

Once you get that into your head you will understand why it is possible for the USD and gold to rally together and fall together. There is nothing simple about these relationships anymore, at a minimum we have a four cornered fight. If you persist, as some do, in defining Golds price action solely in terms of the USD you will end up being wrong footed.

 

[Mr Z]

Dont know about anyone else but i'm enjoying this thread.
Probably a silly question fellas but hyporthetically what would happen to the price of Gold if say Greece Portugal and others alike happen to sell off their gold reserves at the current gold price to lessen their debt? Could that be a possiblity and if so would it drive the gold price down?

You would probably get a short term reaction BUT countries like China and India are actively increasing gold as a % of foreign reserves. The short answer is that there are ready customers for big lots of gold that can be acquired without driving the market higher. China would relish such an opportunity, India has already availed itself of one such opportunity. However I have no doubt that it would be spun negative for gold and short sold hard so as to shake the weak hands loose.

It would be temporary!

 

[explod]

Mincing my meaning AGAIN... the relationship between the value of gold and the value of the USD is not a 'simple' linear relationship EVEN when it is the dominant force in setting the price of gold. Due to the state that the worlds currecny systems have gotten themselves in it is no longer the USD that is THE dominant force driving gold. That honor is now shared between the USD and the Euro!

Once you get that into your head you will understand why it is possible for the USD and gold to rally together and fall together. There is nothing simple about these relationships anymore, at a minimum we have a four cornered fight. If you persist, as some do, in defining Golds price action solely in terms of the USD you will end up being wrong footed.

I do understand that Mr Z. The correlation I am talking about was more pre 09. However there are so many overall factors (as you point out) now, that one either has to go all the way, or for mine, maintain a grasp of the larger picture for the long term.

The strong correlation between the US$ index and the gold price broke at around the time the US rating agencies began to attack the Pigs. However thier own back yard has not improved in that time but attention has been deflected away to some extent for awhile.

The chart for gold and the sentiment tells me at this time to keep holding.