Gold Price - Where is it heading?

[bean]

As we ponder I notice gold and silver being pushed down and the US dollar index up. Time and again week after week this occurs between markets when there is little active trading. Again it is a clear indication of how strong the gold price really is and how easily the general investment community is being fooled.

We will see how strong POG is...
If this is the real deal you will be surprised at the movement over the next few days of the US Gold Indexes and POG
A breakdown however will be just as severe.
as the gold indexes will fall below support.
Also a breakdown will be showing the direction of the general market.

 

[explod]

We will see how strong POG is...
If this is the real deal you will be surprised at the movement over the next few days of the US Gold Indexes and POG
A breakdown however will be just as severe.
as the gold indexes will fall below support.
Also a breakdown will be showing the direction of the general market.

I have no doubt that gold will hold up in the face of the off market attempts by the Central Banks. In fact I inferred that.

What I would like to know is the rationale/reasoning behind your above statements. I am not trying to be hard but to help each other in learning we need to know the WHY and HOW

cheers explod

 

[bean]

I have no doubt that gold will hold up in the face of the off market attempts by the Central Banks. In fact I inferred that.

What I would like to know is the rationale/reasoning behind your above statements. I am not trying to be hard but to help each other in learning we need to know the WHY and HOW

cheers explod

That SKI system I posted links to I quite like and take notice.

Years ago when making programs for the market I did not have enough daily day for the US market. so while working out technical analysis one of the things you look at is moving averages which are behind the 8 ball in moves so I started looking at random numbers so I could with those predict the market movements I then added the technical analysis to those and I developed it for a bear market out. As I said the other day I went 100% back in monday morning because I had an oversold signal developed and it was showing oversold and it was not showing another signal I have, that I would not have purchased as it would have overridden that one.
I mention part of my system used random numbers before but it was rubbished by most/all
If you look at the DOW
The DOW 14000 next day it was 13851... I already had a signal my readings dropped from plus 133 to minus 7 next day the markets went up and the reading got worse.
The DOW @ 13851 was less than day 5 and day 6 prior 13907 and 13862
But there was also other things I use were negative as well.
A quick example at the moment some moving averages the markets are below them but some of the random have turned positive.
The Dow is currently 13469 day 5 and 6 prior 13358 and 13265
But I have lots of other things negative...but a lot can chamge in 1 day or they get worse.
NOTE... I use other random numbers as well and different ones have different values depending on its order of importance.

I do the same thing with my gold index system I still use moving average but have random numbers. However different to the markets. I know in advance what numbers are needed to stay above.
Also with random numbers can't do a chart (different time frames)

Do I like the DOW at the moment? I do know that it is one day or two away from a rally and gold indexes are the same (YES BOTH still appear to be MOVING TOGETHER) I also know that a breakdown would more than likely bring a crash.

And if the Gold indexes crash the POG will go down as well

And as he stated (the site I sent you to) does it last 3 weeks or 1 year year plus for gold if he gets a signal.

For all that to happen easing by the FED?? a rate cut??
Is the US$ about to ..........................

Now I have confused you again????

 

[Magdoran]

That SKI system I posted links to I quite like and take notice.

Years ago when making programs for the market I did not have enough daily day for the US market. so while working out technical analysis one of the things you look at is moving averages which are behind the 8 ball in moves so I started looking at random numbers so I could with those predict the market movements I then added the technical analysis to those and I developed it for a bear market out. As I said the other day I went 100% back in monday morning because I had an oversold signal developed and it was showing oversold and it was not showing another signal I have, that I would not have purchased as it would have overridden that one.
I mention part of my system used random numbers before but it was rubbished by most/all
If you look at the DOW
The DOW 14000 next day it was 13851... I already had a signal my readings dropped from plus 133 to minus 7 next day the markets went up and the reading got worse.
The DOW @ 13851 was less than day 5 and day 6 prior 13907 and 13862
But there was also other things I use were negative as well.
A quick example at the moment some moving averages the markets are below them but some of the random have turned positive.
The Dow is currently 13469 day 5 and 6 prior 13358 and 13265
But I have lots of other things negative...but a lot can chamge in 1 day or they get worse.
NOTE... I use other random numbers as well and different ones have different values depending on its order of importance.

I do the same thing with my gold index system I still use moving average but have random numbers. However different to the markets. I know in advance what numbers are needed to stay above.
Also with random numbers can't do a chart (different time frames)

Do I like the DOW at the moment? I do know that it is one day or two away from a rally and gold indexes are the same (YES BOTH still appear to be MOVING TOGETHER) I also know that a breakdown would more than likely bring a crash.

And if the Gold indexes crash the POG will go down as well

And as he stated (the site I sent you to) does it last 3 weeks or 1 year year plus for gold if he gets a signal.

For all that to happen easing by the FED?? a rate cut??
Is the US$ about to ..........................

Now I have confused you again????

It is as clear as a thickshake!


I propose we create a “Rowan Atkinson” award for the most erudite poster on this thread.

Further, I nominate bean for the award for his fine efforts in his latest post that would even put Sir Humphrey Applebee to shame.

The clarity and eloquence is outstanding!

All in favour???

 

[explod]

No confusion at all, you have been good enough to put forward your thesis and I we now see where you are coming from.

If the fed were to ease rates the falling dollar will begin to fall much faster and that will most certainly give gold a solid lift up. Not sure that they will though because those that they would want to help by this move have lost their credit rating by now anyway. Will be interesting to see what pans out

 

[ducati916]

It is as clear as a thickshake!


I propose we create a “Rowan Atkinson” award for the most erudite poster on this thread.

Further, I nominate bean for the award for his fine efforts in his latest post that would even put Sir Humphrey Applebee to shame.

The clarity and eloquence is outstanding!

All in favour???

Magdoran;

I cannot support your nomination. Sir Humphrey, as an esteemed member of that fine institution, the Civil Service, had an astute knowledge of the system and what was required.

The same cannot be ascribed to the current analysis of gold from the nominee.

jog on
d998

 

[Sean K]

This youtube of Marc Faber is from March, but relevant today.

Faber

 

[explod]

I am going to give a newsletter a plug. OOOOOOOOOooooohhhhhhhhhh you all say, well dont, this is for the gold bugs, I have been a subscriber for about four years but apart from that have no association with them.

Have been down the track with Rivkin Report, Fat Profits etc., etc.

However the financial landscape panning out now has been asserted by this economist for years and he has been spot on. When I first subscribed I was very wet behind the ears, not saying I know much now but believe me I knew nothing, except I was becoming suspiscious of a rout and sought some answers

worth checking "The Privateer" capt@the-privateer.com

I do not subscibe to the full issue, only that part on the gold price and technical analysis re gold. A big cost saving, but for those of a political bent the full one is excellent also

 

[Magdoran]

Magdoran;

I cannot support your nomination. Sir Humphrey, as an esteemed member of that fine institution, the Civil Service, had an astute knowledge of the system and what was required.

The same cannot be ascribed to the current analysis of gold from the nominee.

jog on
d998

Hahahahahaha… Never let it be said Duc that anyone can get anything past you. I think you missed your calling in the British Civil service. You’d have made a great Sir Arnold Robinson!


Mag

 

[Nicks]

Ageo - "...Could you imagine if gold hit $800+ per ounce? People wouldnt buy because cost of living is rising and people cant afford to buy luxury goods."

Ageo this may be relevant in Australia, but the real consumer demand for jewellery is in India and China (half the worlds population) where the middle class is rising at quite a large rate. Truth be told I dont remember where I heard this but it makes sense, that this rising middle class is enjoying their increase in affluence and buying more and more jewellerey as a sign of their increasing affluence. If anyone can assist by posting info or data on this id' be grateful.

Secondly, as you should well know being in the jewellery business Ageo, that the markup on Gold jewellery is so high compared to the price of the raw gold, that an increase to US $1000 an ounce would only have a slight increase on the final retail price of gold jewellery.

 

[explod]

For other takes on the gold situation this small slice of a thread from Kitko is worth checking:


"A Star Rises!"

By David Vaughn
Aug 6 2007 12:44PM

www.goldletterdv.com


Take a look below at gold’s Friday price action. Gold is so much like a spring. Every time it finds itself being pushed down it jumps right up again. What you are looking at below is the evidence of a true bull market in action.

If you are in a big hurry for gold to ascend the present ceiling price of 700 just hold on and wait time out. It continues to occur to me that there are basically two divided camps among the gold market. There are those who never invest a penny but bitch and moan about the direction of the gold market.

Then there is another class who choose not to complain but instead quietly purchase quality gold and silver mining companies and make money. This game is about making money and there is a great deal being made even as we speak. The gold price is not crashing and, instead, is doing quite well.

Dave,

"While the carnage continues on Wall Street under the radar screens of most they're flocking to buy gold." "I could go on and on with reasons to stock up on the metal during these typically weak summer months. In order to get a better price you buy on weakness and only on down days. You only have to look at the action in gold today, 08/01/07 to know that gold is being accumulated at lower levels. GOT GOLD?"

EP

And what about that perfect storm soon to come barreling around the corner?

Dale Doelling from Trends In Commodities warns 'The perfect storm is about to come raining down on us, and the precious metals will be the place to be in the coming year…' 'So ‘hold on to your gold, silver, platinum, palladium and copper –these are the markets that will pay huge rewards'

I like listening to what the professionals have to say because that is how I keep my bearings and stay on course.

Kenneth Rogoff, professor of economics at Harvard says 'For at least the next 50 to 75 years, prices for many natural resources are headed up.' 'If you don't already have a substantial share of your equity portfolio in energy resources, precious metals and base metals, do some switching into them now.'

I know you have heard the following information below before but I think it is a good idea to hear it again and again.

Leading investment banks including Deutsche Bank, Barclays Capital, Scotia Mocatta, Standard Bank PLC, Merrill Lynch and Goldman Sachs are all forecasting higher gold prices.

And the warning below is already coming true today as we speak and converse.

Robert McTeer, former president of the Federal Reserve Bank of Dallas warns '...There will be a crisis that will result in rapidly rising interest rates and a rapidly depreciating dollar that will be very disruptive.'

Presently we are witnessing an alarming deterioration in the US Dollar that has just begun in earnest in the past year or so. In all of history when any country has reached the level of debt the US has reached there has always been a currency collapse. The paper house of cards built out of the US dollar is beginning to come tumbling down.

Foreigners & professionals recognize this inescapable fact, but not the average man on the street. The story behind gold is the plunging US dollar. What we are presently witnessing is the slow break down of the US financial order.

David:

"Of course the price should be dramatically higher, but you have to expect this pressure to keep the prices from rising so fast from those that have an agenda to show stability."

Chuck G.

During the last major gold bull market between 1970 to 1980 it was not unusual to see gold and silver mining stocks often climb from as low as a dime to over a 100 dollars a share.

What star do I make reference to rising? A golden star of course. Slowly as the wheels of time turn gold is becoming more and more a natural and necessary part of an investor’s portfolio. My only complaint for gold is that I personally believe the price climbed too quickly after surmounting 500 in late 2005.

I suppose I could beat my head against a wall and there would still be these non investors who complain about the direction gold is headed in. My primary concern, though, is the direction of quality gold and silver stocks that will do well regardless of the price of gold.

And here is really where the real rub is. Too many investors have bought low quality gold and silver shares that are going no where and just sitting in stationary limbo. And everyone knows that a rising tide lifts all boats in the harbor. But if I were you I would trade those worthless shares now for the quality winners.

Don’t pick your gold stocks via a dart thrown against the wall. There are excellent companies out there worth owning and you need to do an analysis to see if the shares you are holding are really worth hanging on to. If you are complaining about the gold price you probably own the wrong gold and silver shares. And how goes the housing market fiasco?

"U.S. trouble extends to global markets" "The worsening U.S. credit crunch is beginning to cast an ominous shadow. Markets from London to Shanghai dipped Wednesday amid worries that problems that began with subprime mortgages — loans to borrowers with less-than-stellar credit — in the U.S. housing market are infecting other assets." "This will increasingly become a global phenomenon. … We're now seeing contagion to other financial markets…" “The U.S. credit crunch, which began with defaulting subprime mortgages before hitting securities linked to those loans, could spread further: Foreigners holding mortgage-backed securities could suffer major losses in the ongoing market downdraft." "Anecdotal evidence suggests that overseas investors and hedge funds have significant exposure to the riskier" types of these investments, said an International Monetary Fund report in April." "We really are just at the beginning of this," says Desmond Lachman of the American Enterprise Institute." "Either country could be rocked if those investors are forced into a fire sale to cover their losses at home."

What is sad is that we have not even begun to see the carnage in the housing industry yet. It will probably begin to really peak next summer in 2008.

Hi David,

“The "dead cat bounce" in the housing industry is over…" "We are currently in another "dead cat bounce" in the USD, which will unwind rather quickly." "I also predict the USD dropping below 80 shortly…" "All the above conditions are extremely PM BULLISH!!”

Anthony S.

Gold Letter, Inc. reviews gold, silver, uranium and other resource stocks under valued and poised to rise in this time of increased demand for all resources. Natural resources and related contrarian stocks will only escalate in value as the world continues to experience unprecedented population growth. Gold Letter’s 10 best performing stocks are up over 2,000% and GL’s top 55 performing stocks are up over 500%. Close to 90% of all Gold Letter's recommendations since inception in January, 2003 are up over 250%. GL charts are computer generated and updated every hour while markets are open.

Click here to order Gold Letter

"The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable."

Send me an email!

David Vaughn
Gold Letter, Inc.
David4054@charter.net

8-6-2007

 

[ducati916]

Jewellery demand is price sensitive. As price rises, demand falls, as price falls, demand rises.

The driver behind the price of gold is *investment* demand. Back on page 12 odd of this thread I identified ETF's as one [if not the major] driver of gold price appreciation.

Investors have been leaving gold, ETF selling of the physical, to balance their NAV's has been a major factor in the stagnating price. The Carry Trade, global liquidity, asset price inflation, were the drivers of the rising price of gold. As these [if these] factors are removed, the price of gold will fall back to lower [inflation adjusted] value figures circa $300-$400oz

Check out the data;

 

[Ageo]

Secondly, as you should well know being in the jewellery business Ageo, that the markup on Gold jewellery is so high compared to the price of the raw gold, that an increase to US $1000 an ounce would only have a slight increase on the final retail price of gold jewellery.

hehe im jumping back and forward from this thread and the other.

Ok to answer your question lets go through the process of when i buy gold (giving away the tricks and secrets)

We buy the spot price for raw gold that day so thats ok. Then we send it to be worked on and for quality workmanship in Italy it costs a bit (anything from 0.50Euro to 8 Euro of labour per gram in weight per item). Then We need to ship it over here, so you need shipping costs, insurance and a few other things. Once it gets here you need to pay 15% (10% gst, 5% duty) before they release the goods from customs. Now we mark up our little margin to sell to the retail shop and then finally the retail shop will make their mark up.

So in turn if gold increased to say $900 p/o that would mean an almost 30% increase in price. What your forgetting is even thow the retail stores mark up the prices say anywhere from 100% - 400% (when they get it from us) they need to do that in order to cover their expenses (rent, fixures, fittings etc...) example 1 of our customers at westfields miranda pays $150,000 p/a just in rent. Thats over $10,000p/m just to cover the rent! now with 15 or so jewellery shops in their that means the competition is even harder, couple this with gold prices increasing and then you finally realise people start to question buying luxury goods. And let me assure you this is happening even in India and China (i know ive been there and seen it) The only advantage those countries have is cheap cheap labour.

Im just telling you what im seeing but i hope your right and price goes up as i have 10kgs+ worth of gold waiting to benefit in a rise in gold price.

 

[explod]

Quote:
"Investors have been leaving gold, ETF selling of the physical, to balance their NAV's has been a major factor in the stagnating price. The Carry Trade, global liquidity, asset price inflation, were the drivers of the rising price of gold. As these [if these] factors are removed, the price of gold will fall back to lower [inflation adjusted] value figures circa $300-$400oz".... end Quote

Dont' get the rationale here. In fact in the last month the gold price has slipped down due to liquidation in the carry trade and to meet margin calls. In the face of that gold has shown considerable resilliance and as more of the investment community realise this, gold will in fact go in the opposite direction as against money (the promise), gold has intrinsic value.

 

[ducati916]

explod

It's very simple, the investment value is the price adjusted for inflation.
Anything in excess of that is the speculative component.

With the unprecedented credit expansion, the price of gold appreciated via unbridled speculation.

One major contributor to that was the creation of at least 2 Gold ETF's.
They hold the physical [adjusting via the Futures market] their holdings.
These were sold to [amongst others] institutions that can not hold Futures.
The rising price attracted trend following speculators.
As speculators sell [or buy] gold ETF's, so the NAV is adjusted.

Gold will rise or fall based on speculation, as the inflationary value is circa $3000z-$400oz thus there will be little fundamental support till that price level.

If you are looking at gold as an investment, viz. long term hold as a hedge against fiat inflation, you should look to buy at lower than current prices, if you are speculating, better check your charts.

jog on
d998

 

[doctorj]

Gold will rise or fall based on speculation, as the inflationary value is circa $3000z-$400oz thus there will be little fundamental support till that price level.

I'm guessing you meant $300oz, rather than $3000z How do you arrive at these figures duc?

 

[ducati916]

I'm guessing you meant $300oz, rather than $3000z How do you arrive at these figures duc?

Simply take the long term inflation rate, I used 3.5%, the starting price of Gold when it was still de facto *money* and calculate over the time period.

Gold @ $20.67oz in 1930 @ 3.5% inflation = $292.24 [as an example]
Add your own figures for inflation if you don't agree with 3.5%

So actually my figures were a bit generous, they should be $200oz-$300oz for investment value, but, I was going on memory, always a mistake.

jog on
d998

 

[Sean K]

Simply take the long term inflation rate, I used 3.5%, the starting price of Gold when it was still de facto *money* and calculate over the time period.

But you have to assume that there is no supply/demand effect on POG to agree with this. I would have assumed demand has increased over the past few years and will continue to in Chindia, while supply in dropping. Yes, I know there's tons of it in central banks but it's regulated, and while USD falls and becomes less valuable, won't gold ,and/or Euro/pounds, be purchased as a proxy increasing demand further.

 

[ducati916]

But you have to assume that there is no supply/demand effect on POG to agree with this. I would have assumed demand has increased over the past few years and will continue to in Chindia, while supply in dropping. Yes, I know there's tons of it in central banks but it's regulated, and while USD falls and becomes less valuable, won't gold ,and/or Euro/pounds, be purchased as a proxy increasing demand further.

No not really as the most important supply/demand curve to be mindful of is the *investment* supply/demand curve.

*Investment* includes in this definition *speculation*.
Periodically due to wars, oil shocks, etc, speculators pile into gold/silver etc and drive the price above [or below] its inflationary investment value.

We are in such a period now, with all assets, housing, stocks, commodities, currencies, artwork, etc.

As the credit cycle tightens, which it currently is, the danger becomes not inflation, or hyperinflation, but.......DEFLATION....

That again is the great danger from the unbridaled credit expansion [debt]
The earnings simply do not exist to service the current level of debt.

Gold, is not immune to deflation, in fact, it is as vulnerable as any other asset, and that is why predictions of $3000oz are just nonsense.

Hyperinflation is not currently the problem in the developed world [Zimbabwe, yes] thus, the inflation rate, while certainly higher than advertised, is nowhere near high enough to drive gold to $3000oz, nor $1000oz

The cycle I suspect has peaked now anyway. Therefore, gold, is in all probability on the way down, with volatility certainly, but, $730oz looks to be this cycles high point.

Remember, the late 1970's early 1980's had far higher *official* inflation than we have had this cycle.

This cycle has been about credit expansion, which is not monetary inflation in the same way.

jog on
d998

 

[bean]

After laying out his compelling case for a deflationary depression, Prechter explains why gold and silver will not serve as safe havens for the bloodbath he envisions. In the next few paragraphs, we will clearly and concisely explain why Prechter's argument is flawed and why gold and silver should indeed be big winners in any upcoming deflation.


The article
http://www.321gold.com/editorials/texashedge/texashedge010405.html

I also remember Pretcher and other gold bears saying when gold moved from US$250 it would not get to US 300 and they have saidall the way up to its current value