Gold Price - Where is it heading?

wavepicker said:

Interesting charts Edwood. Is the Pesavento type analysis you are using??
I am mulling over Gold at present. There has been so much hype and bullishness surrounding this advance that I can't help feeling that it may not rocket as much as most expect, as such I am gonna sit this one out.
Cheers

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Hi Wavepicker - yes its an automated tool for calculating harmonic fibs. They don't always play out but its handy to have them flagged to at least be alert for moves.

Not 100% confident.. or any where near it.. but I am watching from the sidelines looking for a retrace...
Cheers
.........Kauri

Kauri said:

Not 100% confident.. or any where near it.. but I am watching from the sidelines looking for a retrace...
Cheers
.........Kauri

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Technical: retracement would need a break below support at US$695 to 700. Remains in the bullish uptrend channel

Fundamental: us dollor trading sideways to weaker, oil going up, large buying from Middle East, investor uncertainty continues. Iraqi troop withdrawal, in spite of the rhetoric. an indication of failure and will also hit the oil price.

The security of gold bullion is gaining momentum. I would expect some consolidation to lower till later next week. A bounce off US$695 would be healthy IMHO

I found a recent article in Barrons Sept 10th 2007 that outlines an explosion in gold price due to the unwinding of the "Gold Carry Trade".

Think readers of this thread may find it interesting.

It also predicts $800 gold by the end of the year.

http://online.barrons.com/article/SB118954417476624138.html

The year 2007 is the slowest production of gold since the year 1922.

Hopefully someone will read it again. Supply/Demand. It is quite simple really or am I missing the plot.

Should I post a chart?

robandcoll said:

The year 2007 is the slowest production of gold since the year 1922.

Hopefully someone will read it again. Supply/Demand. It is quite simple really or am I missing the plot.

Should I post a chart?

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Yes cos im struggling with the term "slowest" perhaps a chart will help.

While your at it, a chart showing production for the last 200 years
so posters mite see the production bubble of the last 60 years.

The following excerp is well worth a read and you can go to the full article from the link at the bottom. cheers explod

I am of the opinion that over the weeks and months ahead, the US establishment and various central banks will orchestrate a massive monetary and fiscal bail-out. Remember, we are in the third year of the US Presidential cycle and the people in power will do whatever they can in order to inflate asset-prices heading into the election. In fact, Mr. Bush's recent "aid program" to help low to middle-income homeowners is a good indication of what lies ahead. If my assessment is correct, another bout of widespread inflation (money-supply and credit growth) will come to the "rescue" as the central bankers open the monetary spigots and flood even more liquidity into the ailing monetary-system.

It is worth noting that after the technology bubble burst in March 2000, the Federal Reserve created massive inflation through its ultra-loose monetary policy. And this easily available credit found a home in real-estate all over the world. After being burnt in the stock-market, the investing public decided to direct their speculative juices towards bricks and mortar. As easy money flowed thanks to record-low interest-rates, home prices were bid up in the majority of countries. There was a total disregard for risk as the "real-estate never goes down" mantra replaced the "New Economy" nonsense. This party continued for a while until the "bubble-blowers" decided to remove the punch bowl by raising the cost of borrowing. As the tide of liquidity went out, numerous people were found swimming naked! The "Sub-prime Crisis" had arrived.

Now, given the fact that the masses have lost a lot of money in technology and real-estate, it is highly unlikely that the next bout of central bank sponsored inflation will benefit these sectors of the economy. In other words, the next bubble is not likely to form in these previously "hot" markets. In fact, this time around, I suspect the easy-monetary policy will create a gigantic bubble in precious metals and other natural resources. Already, it seems as though the market senses the next wave of inflation as the US Dollar is declining and gold has broken above US$700 per ounce. In the period ahead, I expect gold to appreciate significantly not only against the US Dollar but also against the other currencies which are being inflated at a ridiculous pace! Take a look at the annual money-supply growth rates around the world -

US
+12%

Euro zone
+13%

Britain
+14%

China
+20%

Russia
+51%

India
+23%

S. Africa
+22%

Brazil
+12%


Now, you don't have to be a NASA-scientist to figure out that as the quantity of money increases, each unit of money will continue to lose its value or purchasing power against assets whose supply cannot be increased at the same pace. This confiscation of purchasing power has bullish implications for precious metals.

Today, several highly-intelligent economists and analysts are anxiously waiting for "The Crash" which will wipe out the value of the Dow Jones by 50-60%, cut the value of gold by half, cause an economic depression and create a vicious bear-market in asset prices. In my humble opinion, these people are going to be disappointed because "The Crash" will be stealth and will take place via plummeting currencies rather than an outright collapse in nominal asset-prices. Those who are forecasting a significant decline in US asset prices need to look no further than Zimbabwe where stocks have been making record-highs, albeit in a collapsing currency! So, given a choice between an outright deflationary bust and an inflationary bail-out, I can assure you that every establishment will opt for the latter outcome. In fact, central banks will continue to print money until the world runs out of trees.

The truth is that most people do not understand inflation and feel wealthy as long as their asset-prices continue to rise (never mind the state of the currency). So, the inflation-pill is a lot easier to swallow than an economic depression. And this is exactly what we are going to witness.

The modern-day monetary system is far from ideal, however we all have to live within the system and try our best to protect our wealth from the ravages of inflation. As a money-manager with the capability to invest in global assets, I have invested our clients' capital in the world of tangibles. Recently, we have added to our positions in precious metals on the belief that we could witness an explosive run-up over the coming months. Furthermore, from a sentiment perspective (with the majority of investors fearful and bearish), the current conditions seem ideal for the next advance in the ongoing secular bull-market in precious metals.





Puru Saxena
www.purusaxena.com

robandcoll said:

The year 2007 is the slowest production of gold since the year 1922.

Hopefully someone will read it again. Supply/Demand. It is quite simple really or am I missing the plot.

Should I post a chart?

Click to expand...

Here's a chart I found of newly mined gold production, 1845-2004. It doesn't incorporate the past couple of years' production, which from memory has roughly plateaued. I can't really see any evidence of what you're saying. Also keep in mind that central bank dishoarding and leasing remains a big additional source of gold supply onto the open market , so big that in some past years, according to analyses by gold investor James Turk, it has equalled new supply from mining. But that's re-assuring - since historically governments have a great track record of selling most of their gold at the bottom of the market

Ha thanks Barrett.
And to think i got my information from Alan Kohler. Im still bullish gold regardless though.

Ha thanks Barrett.
And to think i got my information from Alan Kohler. Im still bullish gold regardless though.

The following is part of Ted Butlers commentry
I have highlighted what I think is important

Once again, the bullish COT set up was accurate in predicting the impressive recent $70 gold rally. Less impressive has been the rally in silver, which appears to being dragged upward by gold. If one were to analyze strictly on short-term price behavior, the price action in silver could not be considered constructive. Then again, short-term price behavior is not the way to properly analyze a market.

While gold has performed admirably price-wise, the COTs suggest it may now be time for caution. The gold COTs, for the week ended September 4, deteriorated by more than 25,000 contracts net, due to tech fund buying and dealer selling. More importantly, extrapolation from the cut-off date indicates significant further gold COT deterioration, perhaps by 30 to 40,000 contracts or more. The sharp rally in gold took us from a very bullish COT market structure to a bearish structure. Tops are much more difficult to call than bottoms, and we still may have a ways to go in price, but from a COT perspective, there are caution flags flying in gold.
In addition, there has been impressive buying in the GLD gold ETF, to the tune of around 1.5 million ounces. On top of that, the Australian gold miner Newcrest announced it had pre-purchased 2.3 million ounces of gold in the last week, to close out its gold hedge book.

All told, from just the COMEX, the GLD and Newcrest (allowing for overlap), some 10 million gold ounces or more were purchased recently (paper and metal), with a total value of near $7 billion. That’s a lot of money and a lot of gold. In some ways, considering these amounts, the price rally in gold is somewhat subdued. (I shudder when I think of the potential price impact on silver if a fraction of that money found its way to silver). Of course, this same amount of gold was sold, with most of those sales being of the short-sale variety.

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I follow all US markets (i use run analysis some cycles, tech analysis )
I analysed various patterns...with a run analysis on saturday. I thought I spotted something rare!!. I have since subsribed to a site to see if what I had spotted may have been correct. so I can't mention mention what it was and if it happens or what may happen. Some things of what I mentioned on my last few posts maybe show an insight of what may happen..False hope?

bean said:

so I can't mention mention what it was and if it happens or what may happen.

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That's quite an intriguing statement Bean! Why can't you comment on what may happen?

I agree with the Ted Butler comment. It is pretty dangerous to call a top based on the gold COT (eg Dec'05). Where it has shown itself useful is in calling a bottom, and we didn't see the commercials' commitments get down to the <50,000 level that would support calling Aug16th as the bottom.

Explod, the Saxena article you posted was spot on. I am very bullish on gold in the medium to long term, except imo the evidence supports waiting rather than buying with both hands at this point. Re your previous post:

explod said:

Yep, needs to hold above long term support at US$700 (which actually goes beack to 1980/81) with consilidation, and yes up like a rocket from there. But could be a further shake out yet as alluded to by Bean, but not that low however.

Fundamentally, US dollar is at an all time low and continuing to weaken. Interesting the press seem to be avoiding this event. Not lost on the gold bugs however.

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The round numbers are important in gold technicals but I can't see that the $700 level has acted as any particularly significant technical support or resistance over the years.

The US dollar is at an all time low against the Euro and this had a lot of media coverage late last week. But the US dollar index is not at an all time low -it remains within the support range of 78.5-80.5 above which it has held repeatedly since 1978. The dollar has formed a major bottom in this range six times since 1978, at fairly regular intervals (see attached chart).

Surely it will before long, but I have to ask, is now the right time for it to break through this 29-year support level? We now have an almost total consensus among analysts that the US dollar is going to plummet when the US Fed cuts rates.. and gold bulls are going wild.. despite that the commercial interests are betting heavily the other way, both in the US dollar and in gold.. and the dollar is at 29-year resistance. I am not convinced that the market is going to reward the consensus of speculators.

Attached is a 5-year chart of the commitment of traders in the US dollar - extreme values of the commercial interests are usually good indicators of a turning point in the market. The commercials are close to as long as they ever have been for the past 5 years.

The news of a US rate cut is already factored into the market - so any unexpected bullish news for the dollar will provide support. I expect this as the catalyst for a strong US dollar rally, starting this week. This is likely to bring the key buying opportunity in gold stocks that the other indicators are saying is still to come.

I won't be selling my long-term holdings of gold stocks. But in keeping with past bottoms during this bull market, I'll wait for the XAU:spot ratio to cross below 0.19 again before buying more.

Some potential catalysts to begin a US dollar rally:
- rate cut 0.25 on Tuesday when market expects 50/50 chance of 0.5
- credit worries - Goldman, Lehman, report next week. Insider buying has been absent from those companies, though heavy in other financials
- news of euro economy weakening or ECB hinting at a rate cut

Also, it looks like insider selling at gold miners is on the rise, with insiders at Barrick, Goldcorp, Iamgold and Murgor Resources having sold shares in the past week, according to Steven Kaplan at truecontrarian.com

cheers
Barrett
chart:upperman.com

Looks like gold is going nuts again prior to the US open.

Some of the blue chip goldies are looking technically fantastic, but sentiment is not yet with the small caps. Will be interesting to see what sort of action we get when the speccies start joining in.

FWIW, I'll put 50c on gold getting to between 750-775 on this run before coming back.

The Plunge Protection Team dyke boys will be working overtime putting fingers into the many leaks in the fiscal dyke holding back the US dollar sea. Smash down imminent?

This chart pattern is becoming a little bit too obvious. 2 steps forward 1 step back!

bean said:

I have since subsribed to a site to see if what I had spotted may have been correct. so I can't mention mention what it was and if it happens or what may happen. Some things of what I mentioned on my last few posts maybe show an insight of what may happen..False hope?

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Insight into what might happen? Is this the part about gold crashing at the end of last week bean? Going back to $540. No you've amended that. To? Or, is this the bit about gold either breaking up, or down, and that we will know when it happens? You crack me up bean.

kennas said:

Insight into what might happen? Is this the part about gold crashing at the end of last week bean? Going back to $540. No you've amended that. To? Or, is this the bit about gold either breaking up, or down, and that we will know when it happens? You crack me up bean.

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May be it was Beans dip about 4 hours ago at US$714. Back on its merry way now and is why I stay long cause out of Wall Street they said it was different this time, they have mechanisms in place and everyone saw them on 4 corners last night.

Quote:
Originally Posted by explod
Yep, needs to hold above long term support at US$700 (which actually goes beack to 1980/81) with consilidation, and yes up like a rocket from there. But could be a further shake out yet as alluded to by Bean, but not that low however. [end}

BARRET'S

question


The round numbers are important in gold technicals but I can't see that the $700 level has acted as any particularly significant technical support or resistance over the years. [end quote]


About February 80 the US$700 acted as support then several times in August the same year it became resistance, a head and shoulders to a period of support in November where it then fell away.

On closer inspection, (I was just looking at a rough round number and in retrospect should not have done that) I was a bit high. The area of support is more at $660 and I think others on the forum may have indicated that.

Should have looked closer and apologies for that.

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I mentioned these closing prices of the 11 th September as being resistance for the Gold Indicies
16.24 155.47 366.98

Today they are roughly
16.00 158.35 361.41

Almost one week ago and Gold has been above US700 all that time.
Gold's move up everyone is sure this is it.
I mentioned a 'false hope'

Currently the Indicies are not confirming POG

"I was looking for something (a pattern) in US markets today did not happen
But spotted something else that did"

bean said:

"I was looking for something (a pattern) in US markets today did not happen
But spotted something else that did"

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Volume on September PUTS on S&P