Gold Price - Where is it heading?

[TheAnalyst]

Re: Gold Price in 2006.

Hi everyone,
I decided to join up today to learn (i am a newbie) about stocks...
Just regarding gold..
I think Gold Should finish at just under or equal to $500 this year..
I have read many reports saying $525 -$550 with political tension and a weaker US Dollar backing this..

Just wanted to know whether it's worth holding on to Gold Stocks due to the lowest price of Gold since Nov 21st.

have a merry christmas and a happy new year

Hi

The price of gold in its current cycle is dependent upon the size and the compounding increases in the US deficit, so wherever the deficit goes thats where gold will go.

 

[mime]

Re: Gold Price in 2006.

Gold dropped alot recently. I'm not so sure about what the future is. I thought it wouldn't rise above $450 an oz for some time. I was wrong. I think the US ecomomy has a positive future so with that inmind gold probably won't do that much.

 

[TheAnalyst]

Re: Gold Price in 2006.

US central bank keeps increasing interest rates which attracts foriegn dollars into the US to meet the shortfall of the deficit and as the US does this and the deficit gets bigger the yanks keep buying gold as a deficit devalues the price of the US dollar and institutions have set formulas that automatically advise them when to buy gold and when to sell off gold in accordance with the US economic variables.

 

[bvbfan]

Re: Gold Price in 2006.

the yanks keep buying gold as a deficit devalues the price of the US dollar and institutions have set formulas that automatically advise them when to buy gold and when to sell off gold in accordance with the US economic variables.

Really?

Much of the physical gold buying is going into jewellery and into investment demand from Asia and the Middle East. The US only has buying from hedge funds who are probably just trading the paper, not actually taking delivery of physical gold.

US gold stockpiles are most likely 0. Fort Know maybe say they have the largest reserves in the world but with no audit, how do you know?

Gold has surprized me in the last 2 months with its parabolic run to $540 USD, off course the pullback was needed. It may continue on to make it a 6th year of gains, but I think 2006 will be flat for gold shares before a major move up in 2007 to $600

The Asian demand is the only factor I can't grasp, well the fact they are buying so aggressively.
The first 6 months, it'll head down before rallying from July to the end of 2006 as it has done the past 3 years. Whether it'll end up for the year, I wouldn't want to stay. If it closes around $490 this year, then I think its possible

 

[wayneL]

Re: Gold Price in 2006

Fundamentals? What?

I'll just take the signals off the chart. I'm long!

Charts and discussion here(File to big to upload)

And here is my entry

 

[TheAnalyst]

Re: Gold Price in 2006.

Really?

Much of the physical gold buying is going into jewellery and into investment demand from Asia and the Middle East. The US only has buying from hedge funds who are probably just trading the paper, not actually taking delivery of physical gold.

US gold stockpiles are most likely 0. Fort Know maybe say they have the largest reserves in the world but with no audit, how do you know?

Gold has surprized me in the last 2 months with its parabolic run to $540 USD, off course the pullback was needed. It may continue on to make it a 6th year of gains, but I think 2006 will be flat for gold shares before a major move up in 2007 to $600

The Asian demand is the only factor I can't grasp, well the fact they are buying so aggressively.
The first 6 months, it'll head down before rallying from July to the end of 2006 as it has done the past 3 years. Whether it'll end up for the year, I wouldn't want to stay. If it closes around $490 this year, then I think its possible

American institutions are buying big....its how they hedge their risk in regards t US economics.

They have set formulas that take into at least 5 variables (delta, gamma, theta, vega and rho all based upon the assumption of constant volatility of the Black-Scholes bionomial tree) then the final one is VaR and C-VaR and all the trading is automated by a computer program that continually has the many different changes of the variables over the entire world markets, it also takes into account the current demand from gold for human purposes but they are using gold buying and selling it to hedge risk.

I REALLY dont deny that its being used to make jewllery as well but all these set formulas are used for every type of option, warrant, futures contract and any type of derivative and the underlying asset of every kind is taken into account. Humans only oversee that the computerised trading systems by every financial institution in the world does not falter.

 

[RichKid]

Re: GOLD Where is it heading?

COT for 27Dec05, if that's a bottom for the Commercials (Red line) then a short term retracement on the cards? Maybe a descending triangle finding support around 490?? A quiet time this time of year so the market should wake up next month.

 

[phoenixrising]

Re: GOLD Where is it heading?

Hiya Rich,

Thanks for posting COT, I wish I knew how to interpret it.

Are you having success understanding it?

Any COT experts out there (maybe Wayne if we ask nicely)

Nice to know where gold is going from here. Hanging around $516 or so over New Year break.

Cheers

 

[wayneL]

Re: GOLD Where is it heading?

Hiya Rich,

Thanks for posting COT, I wish I knew how to interpret it.

Are you having success understanding it?

Any COT experts out there (maybe Wayne if we ask nicely)

Nice to know where gold is going from here. Hanging around $516 or so over New Year break.

Cheers

A long way from being an expert pheonix

But, I am told that the great bulk of commercial hedging is done OTC (Over the counter) rather than through the futures markets.

So we don't know the true commercial position.

I have no way of verifying if this is true, just regurgitating what I was told.

Also the latest extreme short position of commercial traders in the COT report didn't result in a turn of market. So maybe its true.

Futures markets tend to be very technical so fib levels and suchlike are probably as good a guide as any, in the short term at least.

I'm thinking a short might be my next trade based on what I'm seeing right now (swing trade) but this opinion could change rapidly depending what happens tomorrow.

Long term, a lot of smart folks are accumilating as much as they can....physical holdings. As usual, this could either mean further upward pressure on price, or, the contrarians would contend that sentiment is way to bullish and that this points to a top being in.

For mine, I'll take any technical excuse to be long. But I'm not seeing that right at the moment.

IMO of course, and do your own research etc etc etc

Cheers

 

[RichKid]

Re: GOLD Where is it heading?

Hiya Rich,

Thanks for posting COT, I wish I knew how to interpret it.

Are you having success understanding it?

Any COT experts out there (maybe Wayne if we ask nicely)

Nice to know where gold is going from here. Hanging around $516 or so over New Year break.

Cheers

Hey Phoenix,
I'm not sure myself, just reading the lines like a normal chart and looking for patterns. The source of the chart (the upperman site) which I mentioned ealier has some explanations. I'd be more inclined to go with the gold price chart atm, looks like 520 is capping prices, maybe another decline to 490 (minor support)?

 

[smrt-guy]

Re: GOLD Where is it heading?

I'm desperately hoping for a correction back down to $490 so I can find another decent entry into stocks like OXR, NCM, GGN and a few small caps.

I don't expect to see it below $500 this month though

 

[RichKid]

Re: GOLD Where is it heading?

I'm desperately hoping for a correction back down to $490 so I can find another decent entry into stocks like OXR, NCM, GGN and a few small caps.

I don't expect to see it below $500 this month though

Might just settle on 500 if at all, nothing to do but watch now, no open interest to speak of either.

 

[wayneL]

Re: GOLD Where is it heading?

I'm desperately hoping for a correction back down to $490 so I can find another decent entry into stocks like OXR, NCM, GGN and a few small caps.

I don't expect to see it below $500 this month though

We shall see what we shall see. Some Elliott Wavers fully expect it below 500 this month. Maybe too many expect the retracement to 485ish, hence the market wants to take money from these people.

Me, I wouldn't have a clue!! I'm flat ATM.

 

[michael_selway]

Re: GOLD Where is it heading?

We shall see what we shall see. Some Elliott Wavers fully expect it below 500 this month. Maybe too many expect the retracement to 485ish, hence the market wants to take money from these people.

Me, I wouldn't have a clue!! I'm flat ATM.

I think its going to go to 600+ slowly now in a year or 2, but from then on, im not sure, probably start a down trend

This is just my prediction

 

[TheAnalyst]

Re: GOLD Where is it heading?

Gold is a tough one at the moment...it has risen with alarming magnitude and with the fed increasing US interest rates that strengthens the US dollar..i believe that there are a lot less riskier investments around at the moment that can give you your 20-50% without the the huge movement and risk like gold.

I think that probabilities of gold going up are good over the 1 to 2 year time period but i would look at some type of leverage so i could continue with other good opportunities in the market.

This is my strategy and i have been looking at some type of leveraged financial instrument such as those gold commodity call warants zauwma with an expiry date at decenber 2013, so time is on your side.

I would love someone to give me a summary on lihir gold, newcrest and any other gold stock that has real gold and is selling and something that the market hasnt already priced future growth into probally thats why i am more inclined towards the gold call warrant as it is reliant totally upon movements in the price of gold.

 

[clowboy]

Re: GOLD Where is it heading?

The analyst.

Do the warrants have time decay?

I dont really know that much about warrants so just asking.

Another direct gold investment is GOLD on asx but it has a very small time decay.

 

[TheAnalyst]

Re: GOLD Where is it heading?

The analyst.

Do the warrants have time decay?

I dont really know that much about warrants so just asking.

Another direct gold investment is GOLD on asx but it has a very small time decay.

Yes, they would have time decay but it would be very small as equity call and put warrants are just longer dated options, just give you a little or a lot more time.

The code i quoted was from the asx and thier is only one quoted and the asx is much more simpler that the sfe as the future broker require deposited money as insurance if trades go against you.

So if you are long on gold and u dont want to use a lot of capital and leverage you can just get the call warrant and sit there....but i cant give you advise and to be honest an entry point into gold at the moment is difficulrt as most will agree.

Look what happened about 2 yrs ago when it shot from the 300's into the 420 mark then it didnt rise until just lately.

 

[wayneL]

Re: GOLD Where is it heading?

Popped up to $526 on the feb contract in trading so far this year.

I think this puts the EW ABC correction scenario to <$500 in a spot of bother. Trading after holiday breaks can tend to be a bit emotive, so we'll see if this carries any significance once NY & Chicago opens.

S&P futs up 6 points before the bell also...like I say...emotive.

We're seeing lots of emotiveness so far this year huh?

Cheers

 

[clowboy]

Re: GOLD Where is it heading?

analyst


I meant GOLD as in the code GOLD which is a direct purchase of bullion stored in a london vault.

Not levereged though although you can margin loan against it at 50%.

Was really just for interest sake

 

[RichKid]

Re: GOLD Where is it heading?

My very confused attempts at applying EW to Gold, the only counts I'm confident of are Waves 1 & 2 in the monthly chart.

Weekly: If you're super bullish it really looks like this wave 3 is going on forever with no sign of a Wave 4 yet (unless you count that retracement to 489 as the end of Wave 4 and last month's high as the end of wave 3)....who knows?

Any other takers trying this EW stuff.....MarketWaves, still around for an update?

GP and other readers of Nick's book, I know some of you were trying out EW, like to have a go at Gold? Maybe Nick'll help out too???