Gold Price - Where is it heading?

[Morgan]

Uncle- hope this is not a silly question:

If we are assumming that gold price will strengthen due to devaluing of the $US dollar, how are you factoring in the strengthening of the $AUS against the $US (bearing in mind that gold price is set in $US).

 

[Uncle Festivus]

Uncle- hope this is not a silly question:

If we are assumming that gold price will strengthen due to devaluing of the $US dollar, how are you factoring in the strengthening of the $AUS against the $US (bearing in mind that gold price is set in $US).

Hi Morgan,
A good question actually. Short answer is you could hedge eg buy $AU/$USD. I'm no expert but obviously it basically relies on the US gold price appreciating faster than the $AU, which hasn't for a while now. But the odd thing is that the AUS market for some reason seems to follow the US gold price for day to day action. You can see on the chart how the currency has capped the gold price in $AU, yet the XDG index is still up overall.

Maybe the $AU is fully priced at these levels, who knows? There has been a few miners that have announced earnings downgrades due to the $AU appreciation so maybe if international investors start to lighten up on resource stocks they will start selling the $AU? I'm not sure if the experts can even agree on what the $AU will do next - parity maybe?
Interesting period ahead for sure.

 

[explod]

The previous peak in gold occurred back about 1980 at $900 US per oz. This was the end of that bull run in gold that began about 10 years earlier from a base of about US$35 oz.

The current bull run up for gold began from a double bottom formed between about 1999 and 2001 at about US$270 an ounce. A number of commentators have argued for some time that the world financial dynamics this time around indicate a much greater fall than the 80s, with some saying that some parts of the world, particularly the US, due to its massive public and private debt, will be hit harder than the 1929 into the 30s crash.

So if things are going to pan out this way, and it's looking more likely every day of late, then that jump in gold from $35 to $900, a ratio of about 25 to 1, would indicate that gold could at least run up to to US$6,750 an ounce. However if the US dollar becomes worthless as did some currencies during the great depression then a gold price in that region would be no big deal.

I am not an economist but can only follow the advice of others, who I think, know what they are talking about. However if things get that bad in the US I cannot help but also believe that we in Australia will not come out unscathed. So as insurance I am into physical bullion, some gold stocks, but ever ready to pull out for that fall. When it has happened big time in the past, some of the falls decimated portfolios.

In fact I see the current market a bit like Telstra 2, if you look back on the charts, you can see where the smart money got out, and many, including myself, got caught big time. A lesson well learned though.

Just my two Bob's worth on a Thursday. Would be good to hear from an economist from earlier times.

 

[BREND]

Uncle- hope this is not a silly question:

If we are assumming that gold price will strengthen due to devaluing of the $US dollar, how are you factoring in the strengthening of the $AUS against the $US (bearing in mind that gold price is set in $US).

You are rite! I have the same problem too as a Singaporean, earning my salary in SGD.

So I choose to buy Gold futures.

A small head and shoulders formation is formed, indicating that gold price is likely to move up higher. Place a working order to buy 1 lot of Comex Copper Aug07 at $672.

Gold chart:
http://basemetal-trading.blogspot.com/2007/07/bullish-on-gold.html

 

[CanOz]

So I choose to buy Gold futures.

A small head and shoulders formation is formed, indicating that gold price is likely to move up higher. Place a working order to buy 1 lot of Comex Copper Aug07 at $672.

Gold chart:
http://basemetal-trading.blogspot.com/2007/07/bullish-on-gold.html

What the?

 

[wayneL]

What the?

Copper is in a bubble...

 

[professor_frink]

Copper is in a bubble...

Gotta be a good short from here

I'd like to take the other side of your copper trade BREND.

 

[BREND]

Gotta be a good short from here

I'd like to take the other side of your copper trade BREND.

Ops! Typo error, I mean Comex Gold, not Copper.
I'll only buy if copper breaks $8000 effectively today.

Prof Frink, u trade futures or copper stocks? If you are trading futures, how long have u been trading? Just curious...

 

[professor_frink]

Ops! Typo error, I mean Comex Gold, not Copper.
I'll only buy if copper breaks $8000 effectively today.

Prof Frink, u trade futures or copper stocks? If you are trading futures, how long have u been trading? Just curious...

I don't mind a punt or two on futures. been trading futures for about a year.

 

[BREND]

I don't mind a punt or two on futures. been trading futures for about a year.

Mainly precious metals or any futures product that make money?

 

[professor_frink]

Mainly precious metals or any futures product that make money?

mainly daytrade the HSI, but have been getting stuck into crude at night recently.

back on topic, it doesn't look like you'll get your trade on gold filled tonight. You going to leave the order at that level or go chasing?

 

[Parag0n]

30 minutes on NYM... gold making a move.. up $5 so far chart looks nice.

 

[Bluesky]

Yeah, ive been watching this as well.
Last half hour really started moving upwards so things are looking very good. Only the start imo. Should start flying soon.

 

[BREND]

mainly daytrade the HSI, but have been getting stuck into crude at night recently.

back on topic, it doesn't look like you'll get your trade on gold filled tonight. You going to leave the order at that level or go chasing?

I had raised my limit price to 674, and it was filled.

 

[wayneL]

I had raised my limit price to 674, and it was filled.

Hindsite trade.

 

[>Apocalypto<]

I have a order in at 697 on spot gold. I dont think much of this rally. have been watching this market for quite a while now have seen it rally and fail on a number off times at 690 -700 so lets see if this is different.

 

[Sean K]

I have a order in at 697 on spot gold. I dont think much of this rally. have been watching this market for quite a while now have seen it rally and fail on a number off times at 690 -700 so lets see if this is different.

Yep, I agree. I haven't got too many hopes up, and I'll be relatively quick to take profits on my recent gold stock buys on margin. Maving said that, breaking 695 ish and I'll change my mind and probably put Joe's house on gold.

 

[bean]

Yep, I agree. I haven't got too many hopes up, and I'll be relatively quick to take profits on my recent gold stock buys on margin. Maving said that, breaking 695 ish and I'll change my mind and probably put Joe's house on gold.

At the moment that appears to be the action the Aussie gold stocks are taking...buyers are not coming in yet in strength...Are they waiting to see if Gold takes out US695...US gold Indexes have moved up over 10% in last week or so...However the interesting thing with the advance in Gold this time is both the Gold Price and US Gold indexes moved from the low together...So both are confirming the advance at the moment.

 

[>Apocalypto<]

At the moment that appears to be the action the Aussie gold stocks are taking...buyers are not coming in yet in strength...Are they waiting to see if Gold takes out US695...US gold Indexes have moved up over 10% in last week or so...However the interesting thing with the advance in Gold this time is both the Gold Price and US Gold indexes moved from the low together...So both are confirming the advance at the moment.

well sino gold is going up in leaps and bounds so that's not exactly right.

SGX 623 +19 +3.2%

S&P/ASX ALL ORDINARIES GOLD (SUB INDUSTRY) XGD 5,138 44.5 +0.9%

 

[explod]

well sino gold is going up in leaps and bounds so that's not exactly right.

SGX 623 +19 +3.2%

S&P/ASX ALL ORDINARIES GOLD (SUB INDUSTRY) XGD 5,138 44.5 +0.9%

Sino Gold is a standout at the moment as it is coming into production, and the ore is of good grade and the mine being in China is not dollar effected as in Auz.

Our market usually takes longer to catch on. One of the indicators of gold moves that I follow is the HUI Index, which in the last few days has broken resistance and if this continues is poised to pass it's all time high set back in may last year when Gold peaked at a 20 odd year high.

On that basis I see the current move as taking out the US$725 gold price in the nearer term. A dollar break below USDX 80.00 will do it. It hit a new low of 80.23 on Wednesday and sits currently at 80.48. Any further rise in oil, almost at a new high, will fuel both respectively