Gold Price - Where is it heading?

[rederob]

What I said was that currently they are not confirming one another

I have several times shown through posted charts that this is untrue.
I won't be responding to your other points.
What is happening to gold is wholly consistent with a well-based bull market trend.
I have posted charts which show 2 separate starting points and propose these only as guides to likely price-banded action. Conformance is not difficult to appreciate.
I will continue to post gold charts here that give my ideas on what I regard as explanatory or probable, and expect they will have the same weight of any crystal ball reading people choose.

 

[ducati916]

1. I have several times shown through posted charts that this is untrue.

2. I won't be responding to your other points.

3. What is happening to gold is wholly consistent with a well-based bull market trend.

1. So here is your chart:



This is your evidence for demonstrating that Silver and Gold are correlated currently and even...that silver is outperforming gold currently.

So here are some more charts in the same time frame:




They are all (in this timeframe) indistinguishable. They are Gold v SLV, XLF, XLY.

This timeframe is meaningless, hence why I discount your chart.

2. Of course you won't.

3. Well I disagree. I think the bull move is extremely weak and suspect, for all the previously stated reasons.

jog on
duc

 

[rederob]

1. So here is your chart:

View attachment 102280

This is your evidence for demonstrating that Silver and Gold are correlated currently and even...that silver is outperforming gold currently.

So here are some more charts in the same time frame:


View attachment 102281 View attachment 102282 View attachment 102284

They are all (in this timeframe) indistinguishable. They are Gold v SLV, XLF, XLY.

This timeframe is meaningless, hence why I discount your chart.

2. Of course you won't.

3. Well I disagree. I think the bull move is extremely weak and suspect, for all the previously stated reasons.

jog on
duc

Perhaps you can find somewhere that suggests gold increasing by 9% in 2 weeks is "weak" given that would be a nice earner for 12 months!
Or should we consider an increase of 36% in 12 months a better time frame and equally weak?
My definition of "currently" would be now, but given we need a time frame to show the trend unfolding in recent days, I have provided the comparative metal's performance for April:



Despite what is evident, you still want to insist that silver is not yet confirming gold's bull market.
I am not interested in what silver is doing because I cannot see that it is important to gold's bull trend.
However, if we were to use pattern analysis, then in 2 years silver will significantly outshine gold's performance.

 

[ducati916]

1. Perhaps you can find somewhere that suggests gold increasing by 9% in 2 weeks is "weak" given that would be a nice earner for 12 months!

2. Or should we consider an increase of 36% in 12 months a better time frame and equally weak?
My definition of "currently" would be now, but given we need a time frame to show the trend unfolding in recent days, I have provided the comparative metal's performance for April:



3. Despite what is evident, you still want to insist that silver is not yet confirming gold's bull market.
I am not interested in what silver is doing because I cannot see that it is important to gold's bull trend.
However, if we were to use pattern analysis, then in 2 years silver will significantly outshine gold's performance.

1. Given the 'perfect' conditions for gold currently, pandemic, economic contraction, credit expansion and gold isn't even at all time highs. Don't you consider that odd?

2. See above.

3. So here are 2 charts Gold/Silver. Same timeframe: (a) is based on price, (b) is a percentage



So silver 'appears' to be correlated and actually outperforming gold, at least until last couple of weeks.



But on a % basis, badly lagging. That is the trap of looking at short/intermediate time frames with price. Silver is simply not (atm) confirming the move in gold.

Why not?

jog on
duc

 

[ducati916]

Ray Dalio likes gold:

• Ray Dalio of Bridgewater Associates said in an interview with Bloomberg on Wednesday that investors would be "pretty crazy to hold bonds" in this period.
• "If you're holding a bond that gives you no interest rate, or a negative interest rate, and they're producing a lot of currency and you're going to receive that, why would you hold that bond?" Dalio said, referring to government bonds.
• Dalio said he liked gold, stocks, and some corporate bonds in the current environment.
• Ray Dalio, who leads Bridgewater Associates, the largest hedge fund in the world, said investors would be "crazy" to hold government bonds in the current environment where central banks are printing money and interest rates remain at historic lows.
  
  "If you're holding a bond that gives you no interest rate, or a negative interest rate, and they're producing a lot of currency and you're going to receive that, why would you hold that bond?" Dalio said in an interview with Bloomberg on Wednesday.
  
  "This period, like the 1930-45 period, is a period in which I think you'd be pretty crazy to hold bonds," he added.

jog on
duc

 

[ducati916]

1800 is the test. If it breaks through and runs, then the argument is far stronger for a 'bull market'.



jog on
duc

 

[rederob]

1800 is the test. If it breaks through and runs, then the argument is far stronger for a 'bull market'.

Well, that is your idea, but I doubt it fits most investors understanding of what a bull market entails.
The genesis of this bull market goes back to 2016 where a long-term market bottom occurred and was followed through to May 2019 with a rolling series of higher lows. A month later POG broke above a previous high from 5 years ago. Then 3 months later it had added another 10% to its price, and continued from there to peak almost $200 higher again just over 6 months later. This bull run has been in play for a long time.
You will only find more confirmations in a Church.

 

[ducati916]

1. Well, that is your idea, but I doubt it fits most investors understanding of what a bull market entails.

2. The genesis of this bull market goes back to 2016 where a long-term market bottom occurred and was followed through to May 2019 with a rolling series of higher lows. A month later POG broke above a previous high from 5 years ago. Then 3 months later it had added another 10% to its price, and continued from there to peak almost $200 higher again just over 6 months later. This bull run has been in play for a long time.

3. You will only find more confirmations in a Church.

1. I can accept that.

2. That is your interpretation, not mine.

3. I am an atheist and a chart is agnostic.

jog on
duc

 

[ducati916]

So for Mr Rederob:



Our Ben,
Who art in heaven,
Hallowed Be-nanke,
Thy auctions come,
Thy Bill’s be done,
In Twos as they are in Sevens,
Give us this day our daily FED,
And forgive us our Treasuries,
As we forgive those that default against us,
And lead us not into recession,
And deliver us from deflation,
For thine is the borrowing, the easing, and the printing,
For ever and ever.
Amen.

jog on
duc

 

[ducati916]

Peter Schiff argues for US hyperinflation continuously in his myriad YouTube videos and that gold, due to the impending hyperinflation will become more valuable by multiples of the current value.

Historically:



The evidence does not support the assertion. This chart is probably a little out of date, there may be some later examples. But you get the gist.

jog on
duc

 

[ducati916]

When the Hunt brothers tried to corner the market in silver, the high price brought out all the sellers, breaking the corner: currently https://www.barchart.com/story/news...gh-thais-with-dwindling-incomes-sell-off-gold

BANGKOK (AP) — With gold prices rising to a seven-year high, many Thais have been flocking to gold shops to trade in their necklaces, bracelets, rings and gold bars for cash, eager to reap profits during an economic downturn.

They are unable to carry out their normal practice of quickly reselling the gold abroad because of the greatly reduced number of flights to ship the gold and a shortage of buyers in other countries, who are restricted by lockdown orders and market closures.

Jitti Tangsithpakdi, chairman of the Gold Traders Association and owner of Chin Hua Heng Goldsmith Co, told The Associated Press that more than 90% of recent gold shop customers are sellers.

Many Asians hold gold as savings and investments. In Bangkok, gold shops are clustered in Chinatown, where long lines were stretched even further by social distancing. Jitti said he believes the current wave of sellers mostly are seeking to profit from the high price.

However, some of those waiting said they were selling their gold to get cash to support their families since many have lost their jobs.

Saranya Prasert, a fruit exporter, said the COVID-19 crisis has halted her business and her family is struggling for money. They are selling gold jewelry that they had kept for more than 10 years as savings.

What think ye?

jog on
duc

 

[aus_trader]

When the Hunt brothers tried to corner the market in silver, the high price brought out all the sellers, breaking the corner: currently https://www.barchart.com/story/news...gh-thais-with-dwindling-incomes-sell-off-gold

BANGKOK (AP) — With gold prices rising to a seven-year high, many Thais have been flocking to gold shops to trade in their necklaces, bracelets, rings and gold bars for cash, eager to reap profits during an economic downturn.

They are unable to carry out their normal practice of quickly reselling the gold abroad because of the greatly reduced number of flights to ship the gold and a shortage of buyers in other countries, who are restricted by lockdown orders and market closures.

Jitti Tangsithpakdi, chairman of the Gold Traders Association and owner of Chin Hua Heng Goldsmith Co, told The Associated Press that more than 90% of recent gold shop customers are sellers.

Many Asians hold gold as savings and investments. In Bangkok, gold shops are clustered in Chinatown, where long lines were stretched even further by social distancing. Jitti said he believes the current wave of sellers mostly are seeking to profit from the high price.

However, some of those waiting said they were selling their gold to get cash to support their families since many have lost their jobs.

Saranya Prasert, a fruit exporter, said the COVID-19 crisis has halted her business and her family is struggling for money. They are selling gold jewelry that they had kept for more than 10 years as savings.

What think ye?

jog on
duc

Well this kind of explains, why there was a dive in Gold and Silver as the markets tanked. People sold down Gold jewelry and even the family Silver ware to raise cash or in technical terms to ensure liquidity in difficult times.

 

[ducati916]

Well this kind of explains, why there was a dive in Gold and Silver as the markets tanked. People sold down Gold jewelry and even the family Silver ware to raise cash or in technical terms to ensure liquidity in difficult times.

$1800 was (is) a major resistance point on the chart. First tests tend to fail. I'm sure there will be future tests of this level. It is just interesting that holders of physical gold chose this moment to sell. As the article alludes, necessity rather than a chart based level drove the selling, but interesting nonetheless. It does confirm this chart however:



Where small businesses (some of the sellers identified in article) would utilise personal funds to keep their business solvent.

jog on
duc

 

[ducati916]

I was hoping Mr Rederob would become involved in a discussion that involved something else rather than here is my 15 min gold chart. That does not seem to be the case, so...

From earlier in the month:



Now this chap raised the issue of silver.

Why might silver be important? Both silver/gold have historically been used as money. They are both still held to be money equivalents (except by Mr Rederob).

In an inflationary environment (diminishing purchasing power due to credit expansion) then these money equivalents (should) rise in value and can rise even faster if the animal spirits become involved with additional speculation. However in a deflation, where the purchasing power of money falls due to credit destruction, then you would not expect to see the speculative element enter the market.

Currently, the market is pricing deflation.



Only gold has that speculative element. Silver, currently, sees no inflation. The 30yr Bond has the highest duration and is the most sensitive to inflation (expectations). Currently it is not signalling much if any inflation.

The 30yr Bond and other Treasury instruments are also the 'run to safety' trade when uncertainty rules markets. Gold can also fulfil this 'run to safety' trade. So although gold is not rising (currently) on inflationary expectations, it could legitimately be rising on the run to safety.

What happens if the all clear is sounded in the markets to the POG?

If the commodity markets start to signal inflation, then silver is the trade.

jog on
duc

 

[rederob]

If the commodity markets start to signal inflation, then silver is the trade.

Silver has outperformed gold for the past month, but you refuse to acknowledge this or, instead, indulge in what you seem to think offers meaning.
As this thread is about where gold is heading, not silver, I try to stay focused.
Perhaps you should open a new thread and see who wants to discuss your specific interests.

I post charts that show a range of features and describe their significance, if any.
In a trending bull market a simple reality is that price action is constrained within "boundaries" or channels. When this pattern fails then we play a new ball game.

I reckon next week is prime time for picking up good gold producers, given a big dip in POG overnight. I posted elsewhere on EVN to show the disparity between equity prices and spot gold. A similar disparity exists across many of our producers and, with luck to date, few have been impacted to any degree by COVID-19 that I am aware.

As a general comment, there will be elements of the US market that latch on to Trump's attempt to reopen States for business over the next week. I see that as likely to hold gold back in the immediate term. However, in the longer term it is even better for gold because COVID-19 needs to be under a semblance of control, otherwise it will linger a lot longer. Modelling data show that each day a nation holds back on a lockdown it adds a week to recovery. The problem in the USA is that there are no border controls and this virus will keep multiplying when States let their guard down.

 

[aus_trader]

Silver is considered more of a speculative play as it is also considered an industrial metal as well as an investment vehicle. Gold is the primary gauge of precious metal investing sentiment. But I have noticed a theme in the past that may play out once again. That is Silver will follow Gold price with a lag. i.e. plays catch up.

Like rob, I like the leveraged plays of mining companies that are exposed to Silver and Gold. Plenty of Gold stocks on the ASX and all are rallying with POG at the moment except a few that are left behind or smashed like DCN

However, you have to search under every rock to find a good Silver play on the ASX. I have done that over the years and there are a few stocks with base metal mining exposure that has a Silver exposure but almost no pure Silver mining plays, except just a couple. Probably the pick of the bunch is
Silver Mines Limited (SVL) which has the largest undeveloped Silver deposit called 'Paris' which I have discussed in the past in Speculative Stock Portfolio.

A good pure play Silver stock if searching the entire world would be the Canadian Silver miner First Majestic Silver Corp (AG), appropriately with Symbol Ag which is also the code for Silver in the Periodic Table

These guys will provide leveraged bang for buck if Gold has another multi-year bull market and Silver follows eventually...

 

[ducati916]

1. Silver has outperformed gold for the past month, but you refuse to acknowledge this or, instead, indulge in what you seem to think offers meaning.
As this thread is about where gold is heading, not silver, I try to stay focused.
Perhaps you should open a new thread and see who wants to discuss your specific interests.

2. I post charts that show a range of features and describe their significance, if any.
In a trending bull market a simple reality is that price action is constrained within "boundaries" or channels. When this pattern fails then we play a new ball game.

3. I reckon next week is prime time for picking up good gold producers, given a big dip in POG overnight. I posted elsewhere on EVN to show the disparity between equity prices and spot gold. A similar disparity exists across many of our producers and, with luck to date, few have been impacted to any degree by COVID-19 that I am aware.

4. As a general comment, there will be elements of the US market that latch on to Trump's attempt to reopen States for business over the next week. I see that as likely to hold gold back in the immediate term. However, in the longer term it is even better for gold because COVID-19 needs to be under a semblance of control, otherwise it will linger a lot longer. Modelling data show that each day a nation holds back on a lockdown it adds a week to recovery. The problem in the USA is that there are no border controls and this virus will keep multiplying when States let their guard down.

1. So here is Gold as against Silver in the last month:



Silver (-15%) +/-
Gold +11% +/-

2. Which is fine. However (it is interesting to me) what drives that movement? The question is cyclical or secular? Gold is having a cyclical moment, but secularly, the bull is over, at least as far as commodities and silver indicate.

3. Which if gold truly is in a new (or continuing) bull market, should do well. If gold is not, then they will be crushed as gold falls/collapses (my opinion).

4. If the US reopens, the fear trade is pretty much over. That is a negative for gold, not a positive.

jog on
duc

 

[ducati916]

1. Silver is considered more of a speculative play as it is also considered an industrial metal as well as an investment vehicle. Gold is the primary gauge of precious metal investing sentiment. But I have noticed a theme in the past that may play out once again. That is Silver will follow Gold price with a lag. i.e. plays catch up.

2. Like rob, I like the leveraged plays of mining companies that are exposed to Silver and Gold. Plenty of Gold stocks on the ASX and all are rallying with POG at the moment except a few that are left behind or smashed like DCN

3. However, you have to search under every rock to find a good Silver play on the ASX. I have done that over the years and there are a few stocks with base metal mining exposure that has a Silver exposure but almost no pure Silver mining plays, except just a couple. Probably the pick of the bunch is Silver Mines Limited (SVL) which has the largest undeveloped Silver deposit called 'Paris' which I have discussed in the past in Speculative Stock Portfolio.

4. A good pure play Silver stock if searching the entire world would be the Canadian Silver miner First Majestic Silver Corp (AG), appropriately with Symbol Ag which is also the code for Silver in the Periodic Table

5. These guys will provide leveraged bang for buck if Gold has another multi-year bull market and Silver follows eventually...

1. Agreed re. industrial/speculative. As to lagging gold:

(a) In the 1970 Silver leads gold;
(b) In 1983 Silver lagged;
(c) Lagged 2008;
(d) Currently lagging (significantly)



In 2008, there was a lag, but the lag currently would concern me as it is materially different type of lagging.

3. Paradoxically, the best plays are the most leveraged (debt) companies. There is a definite fundamental reason for this, but it is a bit long winded.

4. I'll have to take your word on that.

5. I don't see any debt on the Balance Sheet (quick look).

jog on
duc

 

[rederob]

So here is Gold as against Silver in the last month:

Except that for a comparison to be valid it needs to index each metal from the exact same starting point, and you did not do that. Moreover, ETFs are not spot prices.

Choosing a starting point (both time and date) for indexes can significantly affect the ultimate outcomes as if 15 March was chosen instead of the next trading day, then gold would have significantly outperformed silver.

 

[aus_trader]

1. Agreed re. industrial/speculative. As to lagging gold:

(a) In the 1970 Silver leads gold;
(b) In 1983 Silver lagged;
(c) Lagged 2008;
(d) Currently lagging (significantly)

View attachment 102427

In 2008, there was a lag, but the lag currently would concern me as it is materially different type of lagging.

3. Paradoxically, the best plays are the most leveraged (debt) companies. There is a definite fundamental reason for this, but it is a bit long winded.

4. I'll have to take your word on that.

5. I don't see any debt on the Balance Sheet (quick look).

jog on
duc

Good chart, I remember the Silver lag in GFC quite well. At the moment it is also lagging by a fair bit and the USD Gold/Silver Ratio is quite high historically speaking:

All in USD -> Gold Price / Silver Price = 1694/15.34 = 110.4

Live calculation using spot prices, not Google search.