Gold Price - Where is it heading?

[>Apocalypto<]

A bounce tonight, if not run for the hills.
The Gold price will follow the US Gold Indicies

Could I get my low in POG very soon.

US$ a bit more of a rise till interest rate cut (which may be soon.

There will be no interest rate cut in US Bean CPI data rose, that will leave the us economy open to all kinds of problems.

Due to the inflation data rise Sub Prime is on its own to a degree.

 

[Nicks]

Well 1/2 right???
The US Gold indicies have drop 8% last two day
POG less than US$ 2

Bean in the post that this above quote responds to, you said that you were about 60% sure.
Now you are saying, regarding that post, that you were 1/2 right (ie 50%).

So you were 60% sure and then 1/2 right. Therefore your analysis was really only 30% trustworthy.

Your mathematical logic always amuses me.

 

[Uncle Festivus]

A bit of a mini bull market happening here in the Aus gold price, thanks to the tanking Aussie dollar. Not sure if it will last though? Quite a few gold stocks going cheap today.

WASHINGTON (MarketWatch) -- Faced with tightening credit markets, Wall Street is clamoring for the Federal Reserve to cut interest rates, but so far there is no indication that the central bank will oblige.

But many economists are starting to pencil in a rate cut at the Fed's October 31 meeting. They say it will be clear by then that the economy - and not only foolish investors - would benefit.

Financial markets are betting that Fed chairman Ben Bernanke and his committee will cut rates, and soon. Fed funds futures are pricing in a 100% chance of a cut in September, with a small chance of a cut coming before the meeting. The market expects the fed funds rate, now at 5.25%, to sink to 4.75% by year end.

 

[bean]

Bean in the post that this above quote responds to, you said that you were about 60% sure.
Now you are saying, regarding that post, that you were 1/2 right (ie 50%).

So you were 60% sure and then 1/2 right. Therefore your analysis was really only 30% trustworthy.

Your mathematical logic always amuses me.

To confuse you even more I was and am still am 100% sure the Gold Indices have a lot further to fall and POG will follow suit
(When I made that statement I was 100% sure but if I was wrong won't I have had the (well everyone at me)
Even though today saw so many bargains in the gold stocks I stayed in cash
I am 100% sure that all my original posts and ideas on POG and US Gold Indicies are going to come true very soon.

Option expiry week in the US this friday. (just for fun)
The US markets need a bounce tonight or a total CRASH is only days away.

SO a possibility of 500 - 600 point drop to night for starters (surely not)

And as I said the US will cut interest rates - explained in the post I did yesterday

 

[BlueDaze]

Bounce

The US markets need a bounce tonight or a total CRASH is only days away.

Almost all the key market bottom indicators that I follow are at incredibly over-sold extremes. For example:

But look here...

So I agree with bean that a bounce is due tonight.

 

[BlueDaze]

SPX Is In Wave C Of An Intermediate Term Downcycle

This is one EW blog I've been following closely.

http://tradethecycles.blogspot.com

Lastest post:

http://tradethecycles.blogspot.com/2007/08/spx-is-in-wave-c-of-intermediate-term_15.html

"SPX is in Wave C of an intermediate term downcycle. Thanks to a disappointing earnings outlook from reliable SPX/market lead indicator WMT yesterday SPX is now confirmed to be in Wave C of an intermediate term downcycle (http://stockcharts.com/charts/gallery.html?$spx), since it took out the Wave A cycle low (occurred on Monday 8-6) yesterday (chart 1 at http://www.joefrocks.com/GoldStockCharts.html shows the recent intermediate term cycle high at 1555.90), see http://stockcharts.com/charts/gallery.html?$spx

The reliable WMT Lead Indicator was very bearish during much of today's session, it was greater than -1.00% versus SPX at times, which correctly portended severe late session weakness, but, it turned very bullish late in the session, see http://finance.yahoo.com/q/ta?s=^HUI&t=1d&l=off&z=l&q=l&p=&a=,p12,fs,w14&c=wmt,^GSPC, and, closed at a very bullish +0.66% versus SPX (S & P 500) today, so, SPX may have bottomed late today or may do so early tomorrow.

SPX's technical indicators like RSI, stochastics, and Williams %R are in or near oversold territory, and, Williams %R closed at an extremely oversold -97.875, with -100 being the maximum oversold extreme, which reliably portends a significant bounce in SPX very soon.

The Fed added $7 Billion in credit today after adding a very modest $2 Billion on Monday, a massive $24 Billion into the system last Thursday, and, a humongous $38 Billion into the system last Friday, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE, to ward off a market crash and to provide confidence that one wouldn't occur."

Appreciate if wavepicker or other EW experts can help me understand what he means... Is it an intermediate term downcycle in the context of a cyclical bull market, or is it the beginning of a major bear market?

 

[BlueDaze]

Market Not Close to Capitulation Just Yet

August 14, 2007

Market Not Close to Capitulation Just Yet
by Henry To

http://www.safehaven.com/showarticle.cfm?id=8187&pv=1

In our weekend commentary two weeks ago ("An Update of our Technical Indicators"), I stated that I did not believe we are entering a new bear market, unless one or more of the following occurs:

1. The promise of significantly higher income and dividend taxes by whoever wins the next US Presidential election in 2008, along with a Congress willing to implement these higher taxation policies

2. A trade policy mistake by Congress in dealing with China, along with a significant response from China

3. If the Yen carry trade or Swiss carry trade unwinds in a violent way and ends, which we are not looking for at this time. In all likelihood, such an event will most probably collapse the Korean consumer as well as the major Eastern European economies (not including Russia)

I now want to add a fourth qualifier: If the current credit market woes spread to other asset-backed securities, such as those backed with auto loans, auto leases, and credit card debt, then we will most probably enter a new bear market. Subprime and near subprime mortgage debt aside, any deterioration in the just-mentioned asset-backed securities will have severe repercussions for the average U.S. consumer, including higher auto loan and credit card rates all across the board. At this point, the rise in spreads among junk bonds, emerging market bonds, mortgage securities, leveraged loan securities, and CMBS securities still have not spread into the auto loan and credit market markets - but if it does, then we will have to seriously rethink the possibility of a US recession in early 2008 (we will revisit this issue in a later commentary, if applicable).

For now, probability suggests that we're still in a cyclical bull market. However, it is naïve to think that the last few years of excesses - including excesses in the US housing market, the US buyout market, and the global hedge fund market - can be corrected in a mere three weeks (both the Dow Industrials and the Dow Transports made all-time highs as recently as July 19th). Make no mistake: This is also the first genuine financial crisis we have witnessed in the cyclical bull market that began in October 2002 - and thus unlike the unjustified "four-year low" and bird flu scares that we experienced during the summer last year, it is natural to expect more corrective action in the US and global equity stock markets over the next few weeks. To put this in perspective: The Hong Kong Hang Seng Index can decline another 7% to 8% from its Friday close and still be above its uptrend line that stretches back to October 2005.

Moreover, there are still indicators out there which still do not suggest "capitulation" - or at the very least, a short-term, a tradable bottom. Let us first take a look at the action of the Japanese Yen versus other popular "carry trade" currencies (these are the currencies that are popular with folks who borrow in Yen and choose to invest in other currencies, not including the New Zealand Dollar). As our past commentaries have implied, it is natural to first look at the Yen carry trade for signs of capitulation, given that: 1) Speculative forex positions are, no doubt, the most liquid positions that any hedge fund or bank can liquidate in a financial crisis, and thus, it makes sense to look at the action of the Yen as a leading indicator of market capitulation, 2) In terms of measuring the Yen carry trade on either the purchasing power parity basis or in terms of the amount of Yen borrowed by investors or sent out by Japanese investors, the Yen has been getting very overstretched, i.e. close to its Fall 1998 levels, 3) Japanese retail investors, who have been the "main culprits" behind the Yen carry trade over the last 12 months, have historically (and still are) lousy market-timers. Therefore, should the Yen dramatically increase, that would most likely mean that Japanese investors have capitulated and repatriated their money back home - signaling an imminent bottom in the global equity markets from a contrarian standpoint.

The chart below shows the Yen cross rate performance (vs. the Euro, the British Pound, the Australian Dollar, and the Canadian Dollar) from January 2, 2007 to the present:

As mentioned on the above chart, the most recent correction in the four popular Yen cross rates is still not severe enough as what we witnessed during the late February to mid March correction. More importantly, these cross rates have only corrected to levels last seen during early June - definitely nowhere close to "capitulation" levels and a far cry to what we witnessed in Fall 1998, when the Yen - at one point - rose over 10% in a space of 24 hours!

The lack of an oversold condition in the various Yen cross rates (i.e. Yen carry trade) can also be witnessed in the percentage deviation of the Euro-Yen cross rate from its 200-day moving average, as shown in the daily chart below (from February 1999 to the present):

As can be seen on the above chart - even with the latest correction in the Euro-Yen cross rate, it is still trading at 1.88% above its 200 DMA as of last Friday. As a minimum, this author would like to see this % deviation go back to the zero line (similar to what we achieved during the October 2005 and the early March 2007 bottoms) before we would think about initiating a long position in our DJIA Timing System.

Another speculation with plenty of liquidity is crude oil - a commodity that is used and prized all over the world - and one which we consume over 80 million barrels a day and has attracted a lot of long interest over the last few years. Since the latest liquidity/credit crunch began, oil has declined from a high of over $78 a barrel to $71.60 at the end of last week, as can be seen in the daily chart (showing the daily spot price of crude oil as well as its percentage deviation from its 200 DMA) below:

While the latest one-week correction of about $7 a barrel has been relatively steep, it actually isn't much of a correction in the grand scheme of things - especially when compared to the action of crude oil prices over the last 25 years. In the last global credit crunch (keep in mind, however, that this came after the Asian/Russian/LTCM crises), crude oil declined approximately 60% from peak to trough from December 1996 to December 1998. Notwithstanding fears of a active hurricane season, the WTI spot price of crude oil is still lingering at near all-time highs, and is still 13% above its 200 DMA. Before we can conclude that investors have capitulated, this author would like to see this percentage decline back to the zero line, or at the very least , a crude oil price of $68 (5% decline from current levels), or below.

 

[BlueDaze]

"The effective Fed funds rate was 4.54% Tuesday. Since Friday, the rate has been 4.68%, 4.81%, and 4.54% respectively. There is now virtually no doubt that the Fed will cut before this month is over." - Henry To

 

[BlueDaze]

Bullish for USD - Bad for Gold

Henry To

I am now very bullish on the US Dollar against the Euro, given the following:

1) Turns out that the buying of subprime and other below prime US securities of recent years has been done with borrowed US$ - that is, the US$ had hardly benefited from capital flows into the US. Given the unwinding right now, these folks will be forced to replay their dollar loans, thus closing out their short positions. Normally, these would have no effect on the US$, but keep in mind that they have lost money on the securities, so e.g. If those have lost 30% of their capital and sell, then they will still need to buy US$ equal to 100% of their original capital, while only coverting 70% of their capital back to Euros.

2) Lower-than-expected growth in Italy and Germany during the 2Q. Both the Irish and Spanish housing bubbles have also burst. The injection of US$130 billion by the ECB last Thursday was very telling - and signals that either 1) Euro Zone growth is based significantly on financial liquidity, 2) the financial sector of the Euro Zone made disproportionately large investments in both subprime and junk securities. This is exemplified by a 30% weighting of financials in the MSCI Europe as well as the fact that a couple of money market mutual funds in Europe has actually lost capital.

3) On a purchasing power parity basis, the Euro is still massively overvalued vs. the US$.

4) Any slowdown in the US will affect the Euro Zone disproportionately, as the Euro Zone's manufacturing sector is the manufacturing of last resort, so to speak, or in other words, the marginal producer. Keep in mind that the Euro Zone has been hugely dependent - just like Japan - on export growth in order to sustain their GDP growth in recent years. Consumer spending growth in its latest "growth spurt" as been negligible.

I have no opinion on either the Can$ or AU$ right now - but I believe energy and metal commodities will continue to do okay going forward, so I am neutral on these.

I still believe that most Asian currencies offer tremendous value - against both the US$ and the Euro.

 

[wavepicker]

Re: SPX Is In Wave C Of An Intermediate Term Downcycle

"SPX is in Wave C of an intermediate term downcycle.

Appreciate if wavepicker or other EW experts can help me understand what he means... Is it an intermediate term downcycle in the context of a cyclical bull market, or is it the beginning of a major bear market?

Hello Bluedaze,

I assume he means a correction of bullmarket.

 

[bean]

Off to bed wondering US gold Indicies HUI was down 3% and Nasdaq went green!!!!
I sure it will make sense in the morning

and POG only US$ 6 down

 

[bean]

To All those that said ?????? to me.

Well Gold is not doing a Zig or a Zag at the moment

May I get praise if I am right?????

 

[bean]

To those that may have read what I have said regaring correction in Gold at the moment the

HUI has correct 20% yes 20% in the last four days

Interest rate may be ready to be cut in the US at the first available opportunity by the FED.
The next meeting is September the 18th will it be before then and will I be 100% in stock before then.

A stockmarket crash

is now imminent

 

[BIG BWACULL]

Gold is turning GO FOR GOLD Aussie gold up $3 ATM

 

[Boyou]

Aaaah forgive my ignorance Big guy,but can you elaborate on that for me?

I am keeping an eye on Spot Gold on Kitco and it looks awful!

Is it the AUD/USD exchange rate you are referring to?

 

[BIG BWACULL]

Aaaah forgive my ignorance Big guy,but can you elaborate on that for me?

I am keeping an eye on Spot Gold on Kitco and it looks awful!

Is it the AUD/USD exchange rate you are referring to?

Sorry mate not to sure heres a link to what i'm lookin at
http://goldprice.com.au/

 

[bean]

They may have just moved up from there lows.
But for all those charts did I see one showing a 20% in US Gold Indexes.
Surely a simple cycle and timing and randon would not have picked it
The bargains will come

 

[Boyou]

Thanks,I see what you see now,except Aus Gold is in the red right now.

Ho Hum.Sure are interesting times

 

[Sean K]

To All those that said ?????? to me.

Well Gold is not doing a Zig or a Zag at the momentView attachment 12378

May I get praise if I am right?????

Priase for getting what right Bean?

You have continuously said that gold with go up, or gold will go down, or gold will go sideways. Which prediction are you saying you were right on?

Is gold linked to the US Indexes, or not?

If not, does POG go up, or does it go down, therefore taking gold companies with it?

Is it linked to the USD? Or not?

Or, is it the POO, interest rates and inflation figures?

Or, is a combination of a number of factors, which you have not concisely articulated yet?

 

[Sean K]

Ooooooo.

Understatement...