Gold Price - Where is it heading?
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If inflation is high and a problem, why the above chart?
Multi-currency commodity pricing with net gold settlement at the Central Bank level means that the US deficit release valve is no longer oil and commodities v. the USD, but rather, gold v. oil, other commodities, and the USD:
Everyone is so focused on waiting for oil and commodities to spike that they have missed the Gold/Oil Ratio (GoR) rising by 6x since 2008 and 110% since 2022…often because “I don’t want to buy gold because everyone knows gold isn’t used for anything”…
Higher oil prices and higher food prices cause the economy to crash and social unrest. Oil and food cannot be allowed to rise too far too fast. Hence oil remains tightly controlled in a range, $70-$90 +/-. Lower POO keeps costs of foodstuffs lower (fertliser etc).
The pressure release valve is gold. As inflation moves higher, which it will, gold will move much higher, absorbing the inflation from everywhere.
With the Saudi's accepting oil sales in multiple currencies and using gold as the neutral reserve asset, this trend of Gold/Oil will continue, pushing gold ever higher.
jog on
duc
Sean K
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Gareth Soloway, who is promoted as a guru TA but gets a lot wrong, puts a projection on gold of about 8500 if we're in a bull market similar to the 70s and naughties. 
Gold discussion from 19.50.
Gold discussion from 19.50.
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In the chart below I have tried to remove the cherrypicking bias that indexing can lead to by using the longest period that Tradingview allows for POG in AUD &USD.
The trends are obvious and explained briefly.
I ran it to see the extent that gold stocks that report mostly in USD (eg NEM) terms might appear to be performing differently if they were instead reporting in AUD terms (eg RMS), in light of recent strong upward price movements. By and large over the past 2 years POG in AUD:USD terms is unchanged, so my view is that for now at least the outcome for goldies more exposed to AUD costs versus USD costs won't be much different. On the other hand, with a shorter term perspective, intra-month variations can be significant.
The trends are obvious and explained briefly.
I ran it to see the extent that gold stocks that report mostly in USD (eg NEM) terms might appear to be performing differently if they were instead reporting in AUD terms (eg RMS), in light of recent strong upward price movements. By and large over the past 2 years POG in AUD:USD terms is unchanged, so my view is that for now at least the outcome for goldies more exposed to AUD costs versus USD costs won't be much different. On the other hand, with a shorter term perspective, intra-month variations can be significant.
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Following on....
Over the past few months the AUD v's USD price differences for POG were over 3 percentage points in favour of the AUD on 5 August, and had reversed to a 3 percentage point difference in favour of the USD today:
Over the past few months the AUD v's USD price differences for POG were over 3 percentage points in favour of the AUD on 5 August, and had reversed to a 3 percentage point difference in favour of the USD today:
Garpal Gumnut
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Gareth Soloway, who is promoted as a guru TA but gets a lot wrong, puts a projection on gold of about 8500 if we're in a bull market similar to the 70s and naughties.
View attachment 184931
Gold discussion from 19.50.
I had been trading PMGOLD up until high $32’s but now it’s all hold. So $120 + will please everyone if I cark it at the top.
gg
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@rederob thanks for highlighting this for everyone. In terms of how this will affect the trader or investor, it's a whole different chart because it's the difference in the exchange rates between the time you enter the market and the time that you exit. I have to deal with this all the time because I trade the US markets. The value in your analysis comes from highlighting to traders to be aware of the big picture position at the time they are trading.
Garpal Gumnut
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Good points @rederob and @DaveTrade , although as a part time trader/investor in both the US and Aussie markets I don't have the time nor the discipline to time my investments or transfers/conversions of capital in my US account. I just leave it in the hands of the gods. Also the US markets have been so volatile I even don't much pay attention to 12 mo.+ holds for the purpose of minimising CGT. Just me. I prefer to just concentrate on the market.
Perhaps if the $AUD became too valuable v the $USD I'd need to be more careful. So 3% difference on say a 20% gain doesn't rock my boat. Any thoughts?
gg
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For my situation I just take a position in the exchange rate when Aus$ in going up. All my trades are in the US market.
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jog on
duc
Sean K
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I look at that run up from '76 and try to put myself in a punters shoes back then, waiting for a pullback to top up, or enter the trend. Might not have ever got in.
There's a few obvious support levels not too far to the down side at the moment, if there was a pause and decent consolidation.
Sdajii
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That run is a pretty interesting example, although some shenanigans were being played so it's difficult to apply it to other scenarios like we're seeing now.
Generally, looking at a chart like we see in gold over the last year or so, I'd be expecting a pullback, but the fundamentals seem so strong, I'm not even confident of seeing $2600 again, and we might have a reasonably sustained rally up to around $3,000. After that, who knows? But with the USA in such decline, gold seems very likely to be in much higher demand, and with inflation going bananas, we could be at the start of another run along the lines of the one in the mid to late 70s.
@Garpal Gumnut
You once documented some stuff about gold in India within this thread somewhere ...
Was reading this article:
Key takeaways:
Nice
Kind regards
rcw1
You once documented some stuff about gold in India within this thread somewhere ...
Was reading this article:
India gold demand buoyed by import tax cut before wedding season
Bloomberg News | September 26, 2024 | 8:51 am Markets Asia GoldKey takeaways:
- Indian gold demand looks set for a strong few months as a cut to the import tax and what’s likely to be a buoyant festival and wedding season drive purchases in the world’s second-biggest consumer of the precious metal;
- Government lowered the customs levy to 6% from 15%;
- Imports more than tripled to 140 tons in August from the previous month, according to the World Gold Council;
- The positive trend is likely to continue as a bountiful monsoon this year has brightened crop prospects, potentially boosting disposable incomes of farmers — a major consuming group.
Nice
Kind regards
rcw1
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What i see as important in that info, is that effectively India is increasing its gold reserves behind the scene.
Unless the Indians gov has decided to be generous to newlyweds
.
Sean K
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What i see as important in that info, is that effectively India is increasing its gold reserves behind the scene.
Unless the Indians gov has decided to be generous to newlyweds
It seems like everyone is increasing gold reserves. I wonder why?
yes indeed so @qldfrog ... increased demand goes hand and hand with accumulative elements positively effecting PoG ...What i see as important in that info, is that effectively India is increasing its gold reserves behind the scene.
Unless the Indians gov has decided to be generous to newlyweds
India moved 100 metric tonnes of gold from UK to its domestic vaults, in the biggest gold movement since 1991, with the countries overall gold holding increased 27.46 metric tonnes in FY 24 and currently stands at 822 metric tonnes a per official data.
India moves 100 metric tonnes of gold from U.K. to domestic vaults
India moves 100 metric tonnes of gold from U.K. to domestic vaults, increasing local holdings to over 408 metric tonnes.
Golden Rule
Change in G20 Central Bank Gold Reserves
India outpaces the rest of the G20 in gold purchases
In the last four months alone, India has added over twenty-four metric tons to its reserves—more than what the country had purchased in all of 2023.
www.atlanticcouncil.org
Only gratuity on the cards is government officials getting married ... ha ha ha ha
Make sure you come back from overseas fit and well @qldfrog
Kind regards
rcw1
Attachments
Hi Sean K
“Anyone who understands gold’s historic role will grasp the importance of the argument behind extra bank leverage. Direct ownership of bullion by a bank is superior to holding the fiat money issued by a central bank. It should increase confidence in any bank and the system as a whole. Given relative values, bank purchases of bullion will drive the value of gold as Tier 1 capital up relative to other qualifying assets, increasing its desirability for regulatory purposes further without a gold-owning bank doing anything.” — Alasdair Macleod, resourceinvestor.com
Moreover:
Protecting against sanctions became important when Russia invaded Ukraine. Russia had about half of its $640-billion of forex reserves frozen by the US and its allies.
Buying gold and other currencies as a way of diversifying from the US dollar and US Treasuries.
Have a very nice Sunday.
Kind regards
rcw1
Garpal Gumnut
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Thanks @rcw1 .
From my reading and as you noted in the post yesterday Indian retail will increase through to Feb 2025 due to lowered taxation, festival and marriage season and the enlarging middle class savings.
The Sensex as noted is on the up and up and the Indian population are Gold hoarders as jewellery from way back. All good for the POG.
gg
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