Gold Price - Where is it heading?

[explod]

On the 12 month chart we have a well defined pennant which is now closing. The current upper is at about US$1600 and the bottom now about 1540. See:-

http://www.kitco.com/charts/popup/au3650nyb_.html

We have had five such pennants since the gold bull run began around 2000 and all have broken out to the upside. Will this be any different is the question.

On the current trajectory it has to burst out one way or the other within about the next month.

Anyhow, just 2 cents on a Tuesday.

 

[Mr Z]

Upside break... eventually. You can expect a little pain first by the look of the current lay of the land.

 

[Steve C]

Interesting read:
http://www.wabusinessnews.com.au/ar...A&utm_medium=email&utm_campaign=article_click

 

[Uncle Festivus]

Interesting read:
http://www.wabusinessnews.com.au/ar...A&utm_medium=email&utm_campaign=article_click

Not yet, I haven't finished loading up on NCM

 

[Joules MM1]

still too many bulls?........does the worm need to turn a bit more to allow for another run-up?

2012 gold price forecasts cut further: Reuters Poll



By Jan Harvey

LONDON | Tue Jul 17, 2012 9:04am IST


http://in.reuters.com/article/2012/07/17/precious-poll-gold-idINDEE86F0CE20120717

excerpt

While gold prices have averaged just over $1,640 so far this year, beating last year's record average spot price of $1,565, their overall performance has been unimpressive.

Gold ended June little better than flat on the year after its worst first-half showing since 2007.

Prices are expected to climb to $1,677.50 in the third quarter and $1,750 in the fourth. In 2013, the 29 forecasters surveyed expect them to extend their rally with another record average price of $1,791.25.

 

[Joules MM1]

'Game Changer' For Gold In UK As New Regulation Favours Gold
07/18/2012 09:15 -0400

http://www.zerohedge.com/news/game-changer-gold-uk-new-regulation-favours-gold

Gold may also receive safe haven buying from the LIBOR scandal and crisis which deepened yesterday when Bernanke’s testimony conflicted with the Bank of England’s King and Bernanke appeared to admit that Fed employees were involved in the manipulation of Libor.

Also extremely bullish for gold was Bernanke’s admission that Libor is “structurally flawed” and an international effort would be needed to restore the rate’s credibility as the leading benchmark for mortgages, derivatives and corporate lending around the world.

Gold bullion is set to benefit from the axing of commission for IFAs and the implementation of the RDR “should be regarded as a game changer” for gold as an investment in the UK, according to the World Gold Council.

In its latest report ‘Gold as a strategic asset for UK investors’, the World Gold Council rightly points out that the current commission structure in the UK narrowed the range of products recommended “which has been suboptimal for clients’ risk preferences and diversification prospects”.

The World Gold Council backs the new regulation*, arguing that it will lead to a broader range of assets including gold being recommended by advisers.

Gold as a strategic asset for UK investors: portfolio risk management and capital preservation

http://www.gold.org/investment/rese...rsification/strategic_asset_for_uk_investors/

* surprise surprise

 

[explod]

Popped in for a yarn with my local coin dealer last Tuesday. He agrees based on his own signs within the trade that gold is set to rise. But like you Z, thinks the first breakout will be down (out of my own rough pennant) then later in August will be up in earnest.

We will see.

By the way Graeme has been a coin dealer and traded physical bullion for 50 years and is now teaching his Grandson the trade too. I think it is well worth while seeking out someone in the trade that you can get to trust to reinforce you own take. The danger of course is taking the word of others without knowing how to properly do you own research.

 

[Mr Z]

Yeah well, if only we could be certain! Options expiry is the 26th, the geeks will have targets, lots of puts @ 1400, 1450 and 1500. Many of them are there to provide exit liquidity for short positions, they are near enough to be targets...

To be exact...

1400.0P 9764
1450.0P 7576
1460.0P 1255
1500.0P 7527

IMO this is the mattress the short side intends to land on ---> 1460 is a number that my T/A has thrown up as a target, but as with young blondes and road rules it is to be treated as merely a suggestion!

This is how the game is played so it has rarely paid to bet against it, however I get the sense that this move is all but done and they are struggling to reach the objective. The floor @ ~ 1530 ish could well be it if those fat government buyers turn up again.

Who really knows... eh?

 

[Uncle Festivus]

Looks like some Realist Cordial is finally being passed around the Euro zone today and a commensurate re-adjustment in all things risky?

Is it :flush: as :fan??

China is :horse:

While Americans just can't help themselves

:shoot::badass:




:cowboy:

 

[Joules MM1]

we made it to the outside of the infamous triangle thing......what a Dragho......if we can stay above here for the next 24 hours, strap on yer harness

 

[Mr Z]

Steady on chappy, a few near term hurdles yet... options expiry this session then we have the high probability of a disappointment at the July/August FOMC meet. There is NO Wall St loving for Obama ergo the Fed will be unlikely to make any supportive moves this far out from the election (JMO!).

So far the option expiry session looks like it is going to be ruled buy the bulls BUT they can turn really brutal, really quickly.

I was hoping for more clarity by now but it still looks like at least the first part of August could be a slow slog.

I just want to see a capitulation flush out so we can get on with it... this corrective phase is getting really old and tired, but it is still kicking!

 

[Joules MM1]

I just want to see a capitulation flush out so we can get on with it... this corrective phase is getting really old and tired, but it is still kicking!

the last time we came out of a similar phase pre equities low of 2009 (gold led recovery instead of banks...there's a thought!), the last time the corrective phase was technically dragged upwards.....this is probably the case now, too......when the commercials roll into the fray as theyre at lowest short pos since that low (pre mar 2009) i'm favouring a slow grind up.....why rush when there's continuous cheap supply falling into your hands from the money managers......

 

[Joules MM1]

Mr Z,

first set of trees to chop thru 1625's

a weekly close above this area looks like the next stepping stone

 

[Mr Z]

Yes.

We stopped on cue last night. Some caution being shown by the lesser shorts into the FOMC meeting IMO. If Ben disappoints the short side will hit all guns blazing. IMO the best we can hope for from Ben is some vague statement that leads the market into a state of confusion. That was Greenspan's expertise, alas Ben is not very good at it!

At this point I am plumbing for FOMC disappointment, reaction low early August, Jackson Hole QE3 mutterings in late August and some QE3 type action so late in the election cycle that it can't help Obama --> Wall St has an Obama voodoo doll just riddled with pins and they do own the Fed! Either way, Democrat win or Republican win, the dollar seems due to start it's march south again, only the reason will alter slightly... not the result. Can the Euro crisis over come this developing USD head wind? Maybe, but not for long IMO the USD is hitting the Feds pain levels, too much higher and that will be a QE3 trigger.

The (correction!) end is nigh!

but not quite yet IMO

but then who am I to pass such judgments? :

 

[jancha]

From Callum Newman in St Kilda:

Gold is in danger of ending its 12 year run of higher prices. Or is it? A quick look at some recent research shows that not only is nothing wrong with gold, but the conditions are in place for much higher prices.

That might sound like wishful thinking. Gold has been consolidating for a while now ”” longer than any other time since the current bull market began according to Ronald Stoeferle in a recent report, 'In Gold We Trust'. The gold price peaked in September last year at $US1920 and is now trading around $US1615.

That's a fall of about 16%. That's not pretty for anyone who bought at the top. But it does look mild so far compared to the previous 1970–1980 bull market when gold went down 50% before going back up over eight times in value.

Bullion Vault also pointed out recently that in the last ten years every time the gold price has effectively gone nowhere for twelve months, gold gained 33% on average in the following year.

In the report 'In Gold We Trust', Stoeferle argues that 'the foundation for new all-time-highs is in place.' His main gist is that interest rates have to be kept low so governments can continue to finance their huge debts. And that's just for those already on the books. The future trend is falling growth but rising costs (healthcare, social security), which means more and more debt.

Even a modest rise in interest rates will force a big increase in debt servicing costs. So expect governments and central banks to act in concert to hold borrowing costs down, by printing currency to buy bonds. That means major central banks are going to keep debasing their currencies.

Welcome to 'financial repression'.

It's in times like these you get negative real interest rates and a transfer of wealth from savers to debtors. This is what Diggers and Drillers editor Dr. Alex Cowie is talking about with his Dutch Anomaly.

When yields are below the rate of inflation, like most government bonds and bank deposits in the US, UK and Europe, investors and savers are actually taking a loss. This sets up gold (and silver) as a logical alternative that can preserve purchasing power. As long as this goes on, it's bullish for precious metals.

Negative real interest rates are already a big factor in the two big gold markets, China and India. In the last five years, emerging markets drove 70% of the demand for gold, with China and India accounting for half of that.

Stoeferle reckons that, if you think incomes in China and India are going to keep rising, it stands to reason a lot of money will continue to flow into gold. 'The gold price in terms of purchasing power in China and India is currently about 80% lower than in 1980. This means that, to Asian investors, gold is still amazingly cheap.'

Diggers and Drillers editor Dr. Alex Cowie is saying the same thing about gold stocks. He plucked out a graph for his subscribers the other day that showed gold stocks have dropped to GFC lows as the falling gold price and high production costs have turned gold mining investors as pessimistic as the English about a warm summer for the London Olympics.

Stoeferle also likes the look of the gold mining sector. 'We believe that solid mining shares in politically stable regions currently represent a high-leverage bet on the gold price, with an attractive risk/return profile. We therefore believe that the current, historically low valuations offer a good opportunity to invest.'

How long gold continues to show its current weakness is uncertain, but this bull market looks far from over.

Enjoy your weekend!

Regards,

Callum Newman
for The Daily Reckoning Australia

 

[Joules MM1]

.....

We stopped on cue last night. Some caution being shown by the lesser shorts into the FOMC meeting IMO. If Ben disappoints the short side will hit all guns blazing. IMO the best we can hope for from Ben is some vague statement that leads the market into a state of confusion. That was Greenspan's expertise, alas Ben is not very good at it!

At this point I am plumbing for FOMC disappointment, reaction low early August, Jackson Hole QE3 mutterings in late August and some QE3 type action so late in the election cycle ....

going by some of the price action this morning (i closed screen at 3am ish aest) there appears to be a few traders in agreement with you......some heavy sells came in right at that res high, once the false break was made seems the personality of exchange was def different compared prior to the news spike where all the energy that brought price into that level was exhausted......

 

[Mr Z]

We also need to keep in mind that 20/8 is about the time the Greeks need to pony up and if history is a guide they won't. That puts the Euronuts on the back foot and in a reasonable world they should be ejecting Greece from the Eurozone. As things stand dramatic action will be needed to stop Spain following them, we may see exits in quick succession if indeed Spain is "too big to bail". The market will front run this with all sorts of bets... the first half of August could be violent chop city as confusion reigns supreme, we have never quite been here before ---> all the more reason that Jackson Hole could deliver some big and coordinated international monetary policy announcements.

Government bonds in the stronger countries and those that can print $$$ are at unreasonable levels given the fundies of most if not all of the countries. It is a rare thing to see a bubble driven by FEAR! So how does it end? Do "safe haven" bond markets go higher? or do we start a head long rush into assets that can't default on you? I think we will thrash around a bit before direction becomes clear, thrashing and leverage will kill you! Gold will have to be OK..... in the end, but suffering may occur first! Some gold, some other tangible related stuff and some cash to pick up bargains is the current strategy but I admit to having never been quite this confused as to what I think will happen. My best guess is ---> "Welcome to fake out city" or a be right hold tight market, but you don't know for sure what will be right in the end!

This is about to get exciting in a bad way by the looks of things.

 

[Joules MM1]

We also need to keep in mind that 20/8 is about the time the Greeks need to pony up and if history is a guide they won't. That puts the Euronuts on the back foot and in a reasonable world they should be ejecting Greece from the Eurozone. As things stand dramatic action will be needed to stop Spain following them, we may see exits in quick succession if indeed Spain is "too big to bail". The market will front run this with all sorts of bets... the first half of August could be violent chop city as confusion reigns supreme, we have never quite been here before ---> all the more reason that Jackson Hole could deliver some big and coordinated international monetary policy announcements.

Government bonds in the stronger countries and those that can print $$$ are at unreasonable levels given the fundies of most if not all of the countries. It is a rare thing to see a bubble driven by FEAR! So how does it end? Do "safe haven" bond markets go higher? or do we start a head long rush into assets that can't default on you? I think we will thrash around a bit before direction becomes clear, thrashing and leverage will kill you! Gold will have to be OK..... in the end, but suffering may occur first! Some gold, some other tangible related stuff and some cash to pick up bargains is the current strategy but I admit to having never been quite this confused as to what I think will happen. My best guess is ---> "Welcome to fake out city" or a be right hold tight market, but you don't know for sure what will be right in the end!

This is about to get exciting in a bad way by the looks of things.

on the upside, strategy-wise, we can use the time frame as a guideline for set-ups....right now, at least on a small time frame, the instrument is moving nicely.....i think i'll be sidelined at the bogus moments...

 

[Mr Z]

http://www.financialsense.com/contr...al-interest-rates-argue-for-new-highs-in-gold

 

[Joules MM1]

anecdotal opine:

http://www.zealllc.com/2012/goldcot4.htm