Gold Price - Where is it heading?

[Uncle Festivus]

If you want trade effectively then you have to learn to think in probabilities.

It might pay to start looking at the market a little bit more objectively, both froma technical and fundemental perspective

Ok, so let's do that, but then trade on probabilities??? You are starting to sound like Bean now

 

[wavepicker]

Ok, so let's do that, but then trade on probabilities??? You are starting to sound like Bean now

Yes UNCLE it’s all about probabilities, May I ask you when you take a trade, what mechanism do you use to measure the market such that the cards are stacked in your favor as best as you can asses??. How do you know when high is too high and how low is too low in the market?? I have partly shown in other threads how I go about this, rightly or wrongly in your eyes.

Please show us how you go about this, I and others would be most interested in your logic both technical and fundamental. Can you provide, dates, can you provide, price levels and patterns in your analysis to back up your fundamental argument or do you just trade the obvious?? What are your entry, exit, and contingency, and how do you set them??

Re Bean, can you please elaborate???

 

[bean]

Ok, so let's do that, but then trade on probabilities??? You are starting to sound like Bean now

I was going to sit back and see how gold traded the next couple of days before posting.
Because I do see a few possiblities for the US Gold Indicies
I thought it would continue in a very very tight range till next week.
Support 140 & 335 for the hui and xau
However I now think that they are going to make a move tonight and tomorrow night.
The direction????
I think down but not 100% sure (only about 60%)
The POG will follow

 

[Uncle Festivus]

Yes UNCLE it’s all about probabilities, May I ask you when you take a trade, what mechanism do you use to measure the market such that the cards are stacked in your favor as best as you can asses??. How do you know when high is too high and how low is too low in the market?? I have partly shown in other threads how I go about this, rightly or wrongly in your eyes.

Please show us how you go about this, I and others would be most interested in your logic both technical and fundamental. Can you provide, dates, can you provide, price levels and patterns in your analysis to back up your fundamental argument or do you just trade the obvious?? What are your entry, exit, and contingency, and how do you set them??

Re Bean, can you please elaborate???

Just have a look at this market, it has been pummeled into the ground for the last 7 years, what are the chances it’s going to collapse from here given it has already come down 33%??

This is the crux of the present dicussion, not my methods. I originally merley asked if you had made your observation by way of technical analysis, yet it appeared that part of your answer had the word 'chance' in it. I thought it was a bit unusual for you, that's all. I didn't in any way have any doubt as to what your general view is, as it is closely aligned to mine anyway. Let's not get bogged down in semantics?

 

[wavepicker]

Uncle, the quote that your are referring to that is the “crux of the argument” is how I trade. It’s called buying low and selling higher. It’s based on Cyclical Statistical Analysis.

Now I ask you a question that is not related to the crux of the argument, but based on the quote from an earlier post

I assume this is from a TA perspective, but I can't see any fundamental reason for a bounce in the $US on the horizon

Does there have to be a fundamental reason why a market does what it does? Every evening in the news we hear of people trying to justify what the market did. Cannot it be that the fundamentals lag the market?

 

[Nicks]

Ok, so let's do that, but then trade on probabilities??? You are starting to sound like Bean now

Personally, I enjoy having Bean on this forum. Not that I understand what he is saying half the time but it makes things interesting especially when people rib him up about what on earth he is going on about, and then he comes back with some more bean logic. Keep posting bean.

 

[Uncle Festivus]

Cannot it be that the fundamentals lag the market?

I'm not sure, but for me it would be like the tail wagging the dog? As it applies to the gold price are you looking at a chart and identifying an established (or your own) ta principle then looking for a fundamental reason for the price to fulfill the ta principle? For example, I assume the price point for gold to technically breach a significant level would be around $700 or so based on simple ta? How would you see it, ie what gold price (or trend or tech indicator) is significant enough to you to begin buying, based on ta? Having arrived at this price, what then would be the factors to get the price to this level, if ta's are waiting for this price point? I would assume that some sort of fundamental 'event' or events had taken place before such price point. What do you think, the chicken before the egg?

 

[Gar]

Personally, I enjoy having Bean on this forum. Not that I understand what he is saying half the time but it makes things interesting especially when people rib him up about what on earth he is going on about, and then he comes back with some more bean logic. Keep posting bean.

as do I, I dont think his words should taken as gospel but I do think his posts are interesting and not entirely without merit

 

[wavepicker]

I'm not sure, but for me it would be like the tail wagging the dog? As it applies to the gold price are you looking at a chart and identifying an established (or your own) ta principle then looking for a fundamental reason for the price to fulfill the ta principle? For example, I assume the price point for gold to technically breach a significant level would be around $700 or so based on simple ta? How would you see it, ie what gold price (or trend or tech indicator) is significant enough to you to begin buying, based on ta? Having arrived at this price, what then would be the factors to get the price to this level, if ta's are waiting for this price point? I would assume that some sort of fundamental 'event' or events had taken place before such price point. What do you think, the chicken before the egg?

Uncle, this conversation has gone far enough. Fundies and techies have been debating for hundreds of years and will continue do so. I look at the market completely differently to you and you to me.

Personally I rarely bother with fundementals(except long term ones) as IMO the forces that propel the market are internal, dynamic, and feed upon themselves. I consider TA and sentiment much more important than FA when it comes to my trading(and my trading decisions are rarely based on the obvious fundementals at the time), but that is me.

To answer your question re TA on Gold, I consider Pattern first , Time Cycles second, followed by Sentiment. Price level is of secondary importance.

However if you would like to know more then refer to posts #446,454,559 on this thread. There I have in part given examples of my method and how I traded Gold last year(have made significantly more progress since then). In these examples you will see how the peak of Gold was identified to the week. At the time I was looking for Gold to be in either a bearish move or the very least a sideways market for 1-2 years based on long term time cycles. A chart was even posted of the most likely path Gold would take in those years and so far it has not been way off the mark, but I am not sure it will track this for the remainder of the time of it's sideways progression. What where fundementals saying back then?? Not much I gather except after the fact as is the case most of the time.

Cheers

 

[Nick Radge]

Another factor to look at is the correlation of the US$ to the Democrats and Republicans when in power. You will note, with extraordinary precision, that the US$ has fallen under Republicans (in fact was at these exact same levels under Reagan and Bush Snr) and risen with Democrats.

The world is bearish US$. There is a high chance that the Democrats will romp home next year. We're sitting at a multi decade support level.

Another point to ponder. If its so damn obvious that the US$ will fall, why hasn't it? Could it be possible, seeing it's so obvious to all, that all that bad news is actually priced in already? The market prices in the future expectations and will change when those expectations change.

Just take a look at RIO at its absolute high. What happened? They announced their takeover of Alcan. All analysts upgraded their valuations to $120. Those that new that the Alcan deal was in the air had already bought. They had priced it in already. The suckers were the one's that acted on the news. Buy the rumour, sell the fact.

I must concur 100% with Wavepicker on the plight of the US$

 

[>Apocalypto<]

Another factor to look at is the correlation of the US$ to the Democrats and Republicans when in power. You will note, with extraordinary precision, that the US$ has fallen under Republicans (in fact was at these exact same levels under Reagan and Bush Snr) and risen with Democrats.

The world is bearish US$. There is a high chance that the Democrats will romp home next year. We're sitting at a multi decade support level.

Another point to ponder. If its so damn obvious that the US$ will fall, why hasn't it? Could it be possible, seeing it's so obvious to all, that all that bad news is actually priced in already? The market prices in the future expectations and will change when those expectations change.

Just take a look at RIO at its absolute high. What happened? They announced their takeover of Alcan. All analysts upgraded their valuations to $120. Those that new that the Alcan deal was in the air had already bought. They had priced it in already. The suckers were the one's that acted on the news. Buy the rumour, sell the fact.

I must concur 100% with Wavepicker on the plight of the US$

Excellent post and excellent thoughts, thanks for sharing that Nick.

 

[bean]

Just an article I was reading may be of interest re POG and US$
"Don't Focus on the US Dollar"
http://www.321gold.com/editorials/sobolev/sobolev081407.html

And I also found a longer term chart for Gold
Posted by Aden sisters

 

[Uncle Festivus]

I must concur 100% with Wavepicker on the plight of the US$

Just to be clear, that would be that the $US & the dollar index will rally for some time but then continue to fall past these historic lows/support levels? Or is this the bottom?

 

[Magdoran]

I'm not sure, but for me it would be like the tail wagging the dog? As it applies to the gold price are you looking at a chart and identifying an established (or your own) ta principle then looking for a fundamental reason for the price to fulfill the ta principle? For example, I assume the price point for gold to technically breach a significant level would be around $700 or so based on simple ta? How would you see it, ie what gold price (or trend or tech indicator) is significant enough to you to begin buying, based on ta? Having arrived at this price, what then would be the factors to get the price to this level, if ta's are waiting for this price point? I would assume that some sort of fundamental 'event' or events had taken place before such price point. What do you think, the chicken before the egg?

Uncle Festivus,


Reading your comments to wavepicker reveals to me that your grasp of what wavepicker and I are doing in terms of our technical analysis approach is severely limited. Not surprisingly I’m going to support wavepicker’s comments in this post.

I don’t think you fully understand where wavepicker and I are coming from at all, and if you haven’t been following the various polemics in this area, then you are returning to some very old arguments that have been done to death on this site.

UF, please take the time to wade through our posts (I know there are a few), but at least do us the justice of both understanding the principles we have presented which are I believe consistent, or where modified through learning have been covered in some depth (for a public forum). If you are a serious player, at least examine the various calls in detail, and get your head around the concept of forecasting in terms of estimating probabilities we have ventured.

You need to understand Mark Douglas’ concept of the “probabilistic” trading mindset, concepts such as “Anything can happen”, “Every moment in the market is unique”, and “There is a random distribution between wins and losses for any given set of variables that define an edge”.

What we are saying is that ANY kind of analysis will fail from time to time. We are dealing with uncertainty in financial markets with imperfect knowledge, and also the perspective that analysts no mater how gifted are imperfect too. This is why wavepicker and I talk in terms of chances/probabilities. From our perspective there is no such thing as a 100% guarantee, only probabilities - until someone proves otherwise, and I make a blanket challenge to that effect. Do you disagree with this principle/assertion UF at the core, or were you just finding this concept difficult to comprehend?

Here is the core reasoning behind the various caveats on any of our analysis: Using even the most sophisticated form of technical or fundamental analysis is no guarantee of the future. I hold that there is no 100% guaranteed crystal ball/Holy Grail – no one has a monopoly on what will happen in the future – UF, I challenge you to prove me wrong.

Hence we see it as our duty to talk in terms of possibility and include caveats based on our best estimation at the time, standing at the brink of price action as it unfolds feeling forwards (to borrow from Bronowski).

A key premise in our thinking is that there is a discernable order to financial markets dating right back to the earliest recorded history, and that this order stems from a range of observable tendencies that effects all aspects of our existence (consider the accumulated scientific knowledge at ALL levels over the past 3000 years). The corollary being that (economic/psychological) patterns tend to repeat themselves, and that given a sufficient understanding of these patterns, that effective projections/forecasts can be made into the future in terms of time, price, or both time and price.

The cornerstone of our analysis is based on observations of well established market cycles and patterns that TEND to yield consistent results (often to an extent that can yield quite high positive expectancy – but in specific conditions). Wavepicker has in part a focus on wave structure in markets as ventured by Prechter for example.

However, we fully recognise that there are always exceptions to any rule, and that many of these exceptions can reveal a broader pattern that if studied carefully enough can also be accommodated. Hence the more effectively you study, the more effectively you can build a body of valuable observations and techniques which can significantly augment a trading edge.

While we can be highly confident of some of the calls we make in advance because we have spent years of concerted and directed effort to try to build a rigorous and effective capacity to make market forecasts, there has to be provision for error. Surely you can see this simple and glaringly obvious point? We can and do make errors.

Respectfully, some of the calls wavepicker has made, and the calls I have made have been highly accurate (others just plain wrong), but overall, I would have thought that our combined track record was reasonably compelling - read through the posts and make your own assessment if you are prepared to take the time and make the concerted professional effort to meet us at an equivalent level.

Let me make it clear though that while wavepicker and I share in common a core pure charting foundation for our analysis (much based on McLaren), and while I do use Elliott Wave principles factored into my analysis while this is his strong suit, of course we do have our differences in our estimations occasionally, and this is usually over timing. So I’m saying even though we work together and compare notes, we don’t always have to agree absolutely, but we do generally concur on the broader issues, it is in the minutia that our interpretations can diverge from time to time.

My key point to you UF is that you need to understand that in discussions like the one on this forum that we are venturing an individual estimation of what we are seeing in the market from a technical perspective in detail based on the evidence that is available.

I suspect that you may be assuming the type of technical analysis that we do is similar to the basic “run of the mill” garden variety “moving average cross over” orthodox styles. I don’t think you comprehend the vast difference there is between the various technical analysis styles or their effectiveness, and cannot distinguish the stark differences in quality and effectiveness.

Once you have taken the time to read through the combined posts wavepicker and I have made, rather than taking issue without understanding the whole body of knowledge and the reasoning behind it, at least look at this work, understand it, then if you like, why not start a new thread to raise any issues you wish to address there if you have anything original to add? So please, can we try not to reinvent the wheel on this thread?


Regards


Magdoran

 

[Uncle Festivus]

Mags,
I get the drift ok. As I have said, I agree with the general thrust of the reasoning and direction. I'm sure there's a Far Side cartoon in there somewhere about querying a technical analyst .
UF

 

[Magdoran]

Mags,
I get the drift ok. As I have said, I agree with the general thrust of the reasoning and direction. I'm sure there's a Far Side cartoon in there somewhere about querying a technical analyst .
UF

UF,

Now you’re starting to sound a lot like bean too, aren’t you?

I don’t know if there’s a far side cartoon about repetition or slow learning, but I think you’ve become the “Jeannie Little” of this thread!

Mag

 

[Uncle Festivus]

UF,

Now you’re starting to sound a lot like bean too, aren’t you?

I don’t know if there’s a far side cartoon about repetition or slow learning, but I think you’ve become the “Jeannie Little” of this thread!

Mag

What are the chances of that happening?

 

[Magdoran]

What are the chances of that happening?

A very high probability, in fact, it’s almost a certainty! Hahahaha!

 

[Uncle Festivus]

A very high probability, in fact, it’s almost a certainty! Hahahaha!

For the benefit of the rest of us Jeanie Littles/slow learners, what will the $US, the US dollar index & the gold price do in the next few months?

 

[numbercruncher]

For the benefit of the rest of us Jeanie Littles/slow learners, what will the $US, the US dollar index & the gold price do in the next few months?

*Gets out crystal ball*


Gold in AUD ^^ up !