Gold Price - Where is it heading?

explod said:

but the gold pool by comparison is now a very small part of the financial pool.

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this is the key - and central banks have been selling down gold while the amount of USD has increased exponentially. *if* gold reverts to being seen as a currency once again then this is the ultimate counter cylical investment and the run/spike could significantly surprise. Unfortunately serious USD instability has potential other negative consequences that could overshadow a gold price run.

cuttlefish said:

this is the key - and central banks have been selling down gold while the amount of USD has increased exponentially. *if* gold reverts to being seen as a currency once again then this is the ultimate counter cylical investment and the run/spike could significantly surprise. Unfortunately serious USD instability has potential other negative consequences that could overshadow a gold price run.

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Thanks Cuttlefish. I would be pleased if you could elaborate on what you believe the negative consequences of US dollar instibility would be on gold

I don't see any negative consequences on gold (gold will benefit from currency instability). I see non-finance related potential consequences of severe USD instability because it will affect the US position in the world political landscape.

The following is from a weekly alert I recieve. The full alert with charts is well worth a read as it puts together a good idea of where we are headed this week in gold. go to <alert@goldmoney.com>


Founder's Commentary


Finally, $700 - What’s Next?

Gold finally reached $700. Once again gold achieved an important milestone. It took a lot longer to reach $700 than I was expecting, but that's OK. The extra time enabled us to accumulate more gold in the $600s than otherwise would have been the case if central banks weren't selling gold. The pace at which central banks sold gold in recent months rose significantly.

For example, some 67 tonnes were sold in July, which is nearly one-third of the weight of gold newly mined in that month. That high rate of dishoarding makes it appear that central banks were desperate to keep gold from climbing higher as the subprime woes continued to build. Why? Because the message given by a rising gold price is one that the central banks don't like. So they would rather try to kill the messenger than face the reality that the dollar is not worthy of being the world's reserve currency. But these central banks were doing us a favor, enabling us to get rid of dollars and other fiat currencies by buying gold at prices that would otherwise not be possible if central banks weren't dishoarding.

Government intervention inevitably fails. It doesn't change underlying economic fundamentals, and if anything, government intervention messes things up even more. It distorts the market process, giving false signals. People act on those signals, and end up making bad decisions, causing even more problems. Take the mortgage mess as an example. It is now generally accepted that the Federal Reserve under Alan Greenspan kept US dollar interest rates far too low for much too long in the early part of this decade. Money was too cheap, and people borrowed this cheap money building too many homes and condos that only made commercial sense when viewed in an artificially low interest rate environment. Those days are gone.

Today's reality is entirely different. Counterparty risk is becoming increasingly important, as explained in my August 12th alert, "The Search for a Safe Haven".

This search continues, and as a consequence, it answers the question I pose in the title above. What's next for gold? It's headed higher as more and more people come to understand that gold does not have counterparty risk. That it also remains undervalued is another important point that will identify gold not only as a safe haven, but a good valued one too.

CHARTWORKS - SEPTEMBER 7, 2007

Gold - Technical Update
Technical observations of RossClark@shaw.ca

Bob Hoye snippet
Institutional Advisors
Sep 10, 2007

http://www.321gold.com/editorials/hoye/hoye091007.html

Gold held well during the liquidity crisis of August and has now managed to produce a new high for the year. We look for an initial target of $725 followed by a primary objective of $775. The time window for a high is during the weeks of September 27th or October 5th.

Breakouts are always important; however a failure to hold $685 and the 20-day moving average on any pullbacks will be considered a failure.

Gold COT

The commitment of trader's data has been supportive of the bullion price since the end of June. The commercials are short less than 100,000 contracts while the speculators have less than 80,000 longs as of the most recent report. It should take an increase in their commitments in excess of 60k to produce enough vulnerability to generate the next high in gold prices.

Seasonal Tendencies favor a rally in stocks into September-October. In the past ten years the precious metal indices (XAU, HUI, TSX Gold) have rallied well from July through September-October. A closer analysis shows that the rally from August 17th should take 6 to 7 weeks, providing a time window for a high during the weeks of September 27th to October 5th.

Gold is holding 700 after another test if it tests it again then 700 is support.

there was a very good accumulation base to validate this new break out.

I am still on the lines letting the price sought its self out, waiting on a fresh push to confirm this move.

Good trading


See chart

I would say that currently Gold represents speculation of a US Fed. rate cut that Bernanke is widely believed to be bringing to the market.

Should the rate cut not materialize, then see if Gold can hold it's present level.

jog on
d998

ducati916 said:

I would say that currently Gold represents speculation of a US Fed. rate cut that Bernanke is widely believed to be bringing to the market.

Should the rate cut not materialize, then see if Gold can hold it's present level.

jog on
d998

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I agree. If it's not at least 50 points I think POG will take a shalacking.

kennas said:

I agree. If it's not at least 50 points I think POG will take a shalacking.

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The gold price has continued to rise in the last year or two in spite of a number of interest rate rises in the US for that period. Would be interested in some elaboration.

explod said:

The gold price has continued to rise in the last year or two in spite of a number of interest rate rises in the US for that period. Would be interested in some elaboration.

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POG hasen't risen in the last 15 months? May 06 high???

I anticipate a buy the rumour/see the fact event. It seemed clear to me that POG was appreciating due to the expectation of a significant rate cut and further USD weakness. If it even comes in as expected I think POG will come off. If Benster doesn't drop the rates at all then I'll be feeling some hurt.

kennas said:

I anticipate a buy the rumour/see the fact event. It seemed clear to me that POG was appreciating due to the expectation of a significant rate cut and further USD weakness. If it even comes in as expected I think POG will come off. If Benster doesn't drop the rates at all then I'll be feeling some hurt.

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If they drop rates it will help gold, if they dont', sub-prime will get worse, which will help gold, if rates go up, problem will worsen which will help gold. They are running out of (in fact they no longer have any) options

The price of Gold will keep going up and up, because more and more people are realising that the modern money and financial systems are a SCAM and the only real money on the Planet is still GOLD and SILVER...

explod said:

If they drop rates it will help gold, if they dont', sub-prime will get worse, which will help gold, if rates go up, problem will worsen which will help gold. They are running out of (in fact they no longer have any) options

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I agree, I'm just thinking short term pain. I think the break through $690 will be shortlived if the rates aren't changed.

kennas said:

POG hasen't risen in the last 15 months? May 06 high???

I anticipate a buy the rumour/see the fact event. It seemed clear to me that POG was appreciating due to the expectation of a significant rate cut and further USD weakness. If it even comes in as expected I think POG will come off. If Benster doesn't drop the rates at all then I'll be feeling some hurt.

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The POG is making 12 month high on comex. over last few night.
The cash price has risen the last three days straight.

Yes agree the POG may/will come off - if the rate is cut.
However
Think of the Markets they have already factored it in!!!
The cliff edge for them is near and it is not going to be pretty.

I am still looking for POG and gold Indicies to rise at least anothrer 1 if not 2 nights. Hopefully POG may get to about 720 - 725 ??

And the Gold Indicies if they do can fall in Unison with the general market.

PS I was reading about a 60 minute chart on the DOW has formed a diamond - indicating a break out of about 1200 points when it does break.
If only we new which direction???

bean said:

The POG is making 12 month high on comex. over last few night.
The cash price has risen the last three days straight.

Yes agree the POG may/will come off - if the rate is cut.
However
Think of the Markets they have already factored it in!!!
The cliff edge for them is near and it is not going to be pretty.

I am still looking for POG and gold Indicies to rise at least anothrer 1 if not 2 nights. Hopefully POG may get to about 720 - 725 ??

And the Gold Indicies if they do can fall in Unison with the general market.

PS I was reading about a 60 minute chart on the DOW has formed a diamond - indicating a break out of about 1200 points when it does break.
If only we new which direction???

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Bean, aren't you still calling at $540 POG before the big rise.

ducati916 said:

I would say that currently Gold represents speculation of a US Fed. rate cut that Bernanke is widely believed to be bringing to the market.

Should the rate cut not materialize, then see if Gold can hold it's present level.

jog on
d998

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That is a excellent point, It's been weighing on my mind when I view this latest break out.

If the fed does not cut rates then this will head south very fast, there will be a lot of hope buyers in gold right now banking on a rate cut, were it finds support is the true gauge of the market sentiment to the value of Gold.

good trading

some interesting points made here. May i ask for forecasts on POG at years end.
I think it has every chance of between $750 and $775.


Would be silly not to have at least a couple of goldies in your portfolio.

scuffler said:

some interesting points made here. May i ask for forecasts on POG at years end.
I think it has every chance of between $750 and $775.


Would be silly not to have at least a couple of goldies in your portfolio.

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Would be a total @rse pluck IMO, scuffer. Too much water under the bridge between now and then. I will be very happy if it holds above $700, but who knows what's going to crop up......

Possible buying recently as well in anticipation of another event to mark the 9/11 anniversary?

Cheers,
GP

scuffler said:

some interesting points made here. May i ask for forecasts on POG at years end.
I think it has every chance of between $750 and $775.


Would be silly not to have at least a couple of goldies in your portfolio.

Click to expand...

The movements in gold have been fairly stable for the last 12 months moving in a slight upwards swing channel of little more than US$40 and ounce to high low. In 2006 the swings were up to $150 and ounce. As the markets are becoming volatile and unsettled so too will gold, particuarly if we have a breaking close past US$715 an ounce. The swings could very soon return to that of 06 where we could see gold hit US$800 plus and indeed back to Bean's area of $640. Of course by making the highs, at a 26year level considerable general market attention will come into play.

Not a subscriber but I noted last week that Fat Profets predict gold to reach $1,000 later this year. Given the way the US dollar is heading and the general market uncertainty this may well prove to be close to the mark