Gold Price - Where is it heading?

[sinner]

If silver goes to $300, which I expect down the track who cares.

More like 50c!

 

[explod]

More like 50c!

A joke perhaps

In 1946 a floren was 2 shillings, today $5, up 2500%, but agree, everything is a punt

 

[sinner]

A joke perhaps

In 1946 a floren was 2 shillings, today $5, up 2500%, but agree, everything is a punt

http://fofoa.blogspot.com.au/2015/06/silver-dollar.html

I highlighted that bit at the end about $10,000 gold and 50 cent silver because I want to explain my take on it. On the day FOA wrote that post, gold was $261 and silver was $4.37. FOA was talking about a revaluation, so I think that if we want to get inside his mind and see what he was envisioning, we should pay more attention to the revaluation multiples than the nominal prices he mentioned.

For gold to go from $261 to $10,000 would be a revaluation multiple of 38.3 (10,000/261=38.3). And for silver to go from $4.37 to 50 cents would be a devaluation divisor of 8.74 (4.37/8.74=0.50). Based on today's prices, that's gold at $45K "at the very least", and silver at $1.85 per ounce. If we want to put that in ratio terms by weight (which is a metric that doesn't make sense in Freegold because they will be used in different ways, it only makes sense for things being used in the same way, i.e., as an investment), that's a GSR of 24,324:1. At $10K to 50 cents, it's 20:000:1. And at $55,000 gold, 20,000:1 silver is $2.75 per ounce, one of the slight differences being that the GSR was 60:1 when FOA wrote his post, and today it's 72:1.

...

FOA (08/09/01; 10:27:19MT - usagold.com msg#93)
"everything to do with a gold bull market"

[…]

This not only has "everything to do with a gold bull market", it has everything to do with a changing world financial architecture. And I have to admit: if you hated our last one, you will no doubt hate this new one, too. However, everyone that is positioned in physical gold will carry this storm in fantastic shape. This is because the ECB has no intentions of backing their currency with gold and every intention of using gold as a "free trading" financial reserve. None of the other metals will play a part in this.

Clearly, the coming drastic constriction in dollar financial trade will trigger a super "print press" response from the Fed. They will not be pushing on a string; rather picking up the ball of twine and throwing it! All the while using the old 1980s "monetary control act" that opens their use of monetizing almost anything and everything. They won't be adding reserves to the banking system in the future; rather buying any and all debts from anyone that needs fresh cash. Believe it!

For the first time,,,,,,,, our industrial production, along with the demand for industrial metals like silver, will fall away even as hyper inflation in prices takes hold.

For the first time,,,,,,,, demonstrating that no other asset is equal to gold, even though promoted to be!

When the coming paper illusion price of gold is destroyed, sending its trading price way up and way down, several times, before shutdown,,,,,,,,,,,,,, the thinner paper markets of lesser metals will be absolutely devastated. Yes we will see $50.00 silver in our time,,,,,, $50.00 for a hundred ounce bar,,,,, that is! No less a relative price decline for the other metals is in store. Even if these actual dollar numbers prove incorrect,,,,,, relative inflation adjusted prices will show the exact same ratios to gold. The gain will truly be in gold!

 

[sinner]

Just for fun...

 

[sinner]

I do not want the price of gold to go up, it just makes accumulation more difficult.

But this does not exactly look bearish. To me it looks more like a 4 year long accumulation pattern, unless we are heading back towards ~1350 from here.

 

[explod]

View attachment 64045

I do not want the price of gold to go up, it just makes accumulation more difficult.

But this does not exactly look bearish. To me it looks more like a 4 year long accumulation pattern, unless we are heading back towards ~1350 from here.

Agree on both points.

It is a very volatile chart but as you say the direction is clearly up. But a real break to the upside could be a fair way down the track yet. Good stacking weather.

 

[sinner]

It is a very volatile chart but as you say the direction is clearly up.

What I said is that it looks like an accumulation pattern (to me). That's a type of range.



But looking at the above diagram, perhaps the entire period 1982-2002 was the accumulation and this is just 're-accumulation'.


(h/t goldprice.org)

 

[gartley]

I follow and trade gold with great interest. Here I want to look at gold from various angles and methods to see if the different forms of analysis can show some sort of confluence. The 3 forms of analysis I like to look at are pattern, price and time.

Firstly pattern.The first chart is a long term EW chart which I have labelled together with various alternates. At this juncture the 3 alternates that I am looking at do not conflict with the primary impulse wave count. All 3 suggest gold is coming into a low or some sort of low (not necessarily THE low) in the months a head. It's been a long and brutal bear market the last 5 years especially for the gold miners. It does not look like it's quite there yet. Regardless which wave count is chosen it has to be quantified by other methods which we will look at later in order to be the most probable count.

From an EW perspective IF supercycle wave 1 completed in 1980, then what followed was supercycle wave 2 which lasted 19 years(in delta terms a metonic cycle- more on this in later posts). This second wave was classified as a sharp correction as it was very deep. IF supercycle wave 3 completed in 2011, then the subsequent fourth wave ( if we are in fact dealing with an impulse here) should be sideways relative to wave 2 if one follows EW guidelines. It most likely will take the form of a contracting triangle, flat or irregular flat ( we can't tell yet).

For those who are Ellioticians, my apologies for not following the standard EW Nomeclature. It was impossible to do with Motivewave software and I have differentiated the varying degrees of trend by different colours and font sizes with Red being Supercycle degree. In the next post I will attempt to drill down to a lower timeframe.

Ultimately in the end what we hope to do is plan to build a case or not for entry possibly by years end

 

[Uncle Festivus]

Some big moves coming up soon - not for the faint hearted......

Supply does not equal demand, finally?

 

[gartley]

In post #11328 we looked at spot Gold on a monthly basis and tried fit our best EW count into the pattern. From and EW perspective the pattern looked incomplete. I did say in that post that we would try and zoom into the smaller timeframe next to try and quantify this wavecount because it's only that a "wave count" and it's my opinion.

It's not enough information to build a case for entry so before we zoom into the lower degree wave count we want to look at Spot Gold from a Cycles viewpoint to try and quantify that wave count and it's alternates to either keep it or discard it.

I have attached a monthly cycles analysis in Spot Gold. Taking these charts at face value, by every measure in this analysis Gold has either bottomed at these levels OR is in the process of bottoming before a major countertrend rally to the upside starts. The 86 Bar cycle is rock bottom relative to previous extremes and the 22 and 43 bar cycles have been already trending up since last year. The momentum divergence cycles show divergence to the upside.
Most important the price projection targets have already been met and the FLD( Future lines of Demarcation) are at opposites suggesting a reversal is imminent.

So exciting times ahead and we should be closely looking at the gold miners for reversals here IMO

 

[Uncle Festivus]

So exciting times ahead and we should be closely looking at the gold miners for reversals here IMO

Already started? NCM up 7% yesterday, 20% off the lows, with volume.

Move along, nothing to see here.........?

So the biggest 'macro event' of the century crashed & burned? No normalisation of US rates, as predicted? They have now admitted that things are not as rosy as they have previously portrayed, only they have not had the fortitude to blame it on themselves, instead citing concerns about everybody else's worsening predicaments.

And so the formerly all powerful US Fed has now been reduced to the laughing stock that it really is, only that now the sheeples are beginning to catch on that they don't have a clue about what to do from here. They are financial eunuchs now (you too Janet ) with ever reducing credibility, at the mercy of the bond markets who will start to make the decisions for them.

Along with the Comex 'not a problem', it will be an interesting next few weeks/months for gold.

 

[lftrader]

I liked the price action in gold last week and I will start buying some GLD on Monday. I believe the US Fed made a mistake not raising rates and soon inflation will pick up and they will be forced to move. But I am not going to risk more than 5% total on gold.

 

[CanOz]

I liked the price action in gold last week and I will start buying some GLD on Monday. I believe the US Fed made a mistake not raising rates and soon inflation will pick up and they will be forced to move. But I am not going to risk more than 5% total on gold.

If your hypothesis about inflation is correct, we should have seen the short end of the yield curve spike higher, not drop lower....or are you the first person on this trade?

 

[sinner]

If your hypothesis about inflation is correct, we should have seen the short end of the yield curve spike higher, not drop lower....or are you the first person on this trade?

Should we have? Not sure how you came to that conclusion.

The short end of the curve is controlled by the Fed.

The long end of the curve is marginally controlled by growth and inflation expectations.

Yes, yields went down on the long end as well. But I think reading too much into short term moves in bond markets for the type of inflation that is coming would be a big mistake.

The inevitable "inflation recognition moment" (as the inflation [of the global reserve reference point, i.e. US base money] has already actually happened over decades) will not occur in the financial plane (cash v bonds) but rather in the physical plane (USD vs real goods and services which make up the US trade deficit) as the ever expanding volume of marginal deficit dollars finds fewer and fewer foreign sector bids, requiring an ever expanding volume of base money to make up the difference and thus leading to the worst kind of feedback loop.

Those looking to financial markets to try and time this recognition moment, at least personally I feel, will be sorely disappointed as it is likely to be a rather sudden phase transition from "USD, global reserve asset" to "US Peso vs gold" (along with most currencies probably). My opinion being that it's best to deleverage and lay claim to stuff in the physical plane while the music is still playing than attempt to find a chair once it stops.

If only there was a discrete, durable and portable wealth asset which could fulfil this role :dunno:

 

[CanOz]

Good points Sinner. I guess my point was that when and if (a big if) inflation is thought to appear, then why would bond yields not reflect this at some point on the curve? They always have before have they not? Yeah, short term on the front end its all fed.

 

[sinner]

Good points Sinner. I guess my point was that when and if (a big if) inflation is thought to appear, then why would bond yields not reflect this at some point on the curve?

As FOA once said:

"My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)"

In case the above is too cryptic for you:

debt == US bonds
fiat == money supply
cash == base money

Bond yields live in the financial plane. In the financial plane, the Fed dominates and is undefeatable. They do after all, control the supply of the global reserve asset.

Now, if the financial plane controlled the real/physical plane, then that would be that and the MMTers would be right. But I guess by now you know that I think that's rather silly, merely an illusion caused by recency bias of ~50 years of foreign sector support for the USD.

The physical plane controls the financial plane. In the physical plane, the Fed + USG is a kitten, only able to ever expand the USD in volume, not value. All that matters here is what medium the marginal producers/savers of the world choose to do their saving (read, reserve asset) in.

They always have before have they not?

define always? define inflation? We've had essentially 100 years of "good inflation", so I guess most could be forgiven for assuming we'll never see "bad inflation" ever again or even knowing that such a thing exists.

 

[CanOz]

n case the above is too cryptic for you:

debt == US bonds
fiat == money supply
cash == base money

Thanks for pointing that out....

Yeah, i get that this time is very different. Thanks.

 

[sinner]

Thanks for pointing that out....

Yeah, i get that this time is very different. Thanks.

No offense meant, it was too cryptic for me for a long time, just trying to explain for those playing at home.

More on the topic of "inflation v hyperinflation" here

http://fofoa.blogspot.com.au/2012/05/inflation-or-hyperinflation.html

 

[Uncle Festivus]

Good points Sinner. I guess my point was that when and if (a big if) inflation is thought to appear, then why would bond yields not reflect this at some point on the curve? They always have before have they not? Yeah, short term on the front end its all fed.

Depends on which inflation you are referring to? With the emergence of an alternative reserve global currency Asian Infrastructure Investment Bank (AIIB) the US will fight to the last to maintain the USD role in support of it's financial & political agendas enabled by having the global reserve currency?

As Sinner points out, I'm not sure the 'flip' point will be a gradual affair, and they will have to 'inflate' to pay the for the shortfall as 'others' decide they no longer need USD's?

I think there will be some good returns to be made from gold but more leverage from gold companies, as usual?

 

[sinner]

That's a lot of question marks there UF...

Depends on which inflation you are referring to? With the emergence of an alternative reserve global currency Asian Infrastructure Investment Bank (AIIB)

Why would the world ever adopt another currency as the global reserve when all the marginal producer blocs have all been moving towards using gold as the reserve asset and setting their currencies free?

A: they wouldn't, they won't.

http://fofoa.blogspot.com.au/2011/07/euro-gold.html?m=1

You see, there are two fundamental differences between the euro and the dollar that most Westerners simply can't grasp, no matter how many times you try to explain their significance. Wim Duisenberg, the first ECB president, stated them pretty clearly in this 2002 speech:

"The euro, probably more than any other currency, represents the mutual confidence at the heart of our community. It is the first currency that has not only severed its link to gold, but also its link to the nation-state. It is not backed by the durability of the metal or by the authority of the state. Indeed, what Sir Thomas More said of gold five hundred years ago – that it was made for men and that it had its value by them – applies very well to the euro."

You ask

the US will fight to the last to maintain the USD role in support of it's financial & political agendas enabled by having the global reserve currency?

Nope. Why would they do that?

A: they wouldn't, they won't.

In my 2009 post Gold is Money – Part 2, I wrote, "And it was always known, but has now been proven, that the system will be saved at ANY cost." When I wrote that I was discussing the dollar and the dollar system, aka the $IMFS, aka Wall Street. But this applies to any monetary and financial system. The system always takes political precedence over the currency. The currency will always be debased if that is needed to keep the system functioning nominally. This is nothing new and it should not be surprising, yet it's apparently very surprising to 99.9% of all financial analysts

You ask

I think there will be some good returns to be made from gold but more leverage from gold companies, as usual?

This was not logically congruent before when I asked you and it is no more congruent today. Gold mining companies will underperform not outperform physical gold. More likely they or their output will be nationalised.