Gold Price - Where is it heading?

Bush Trader · 20 September 2007

bean said:
No they have probably added some more...However see silver shot up because the structure is still O/K in Silver...but if POG drops/hit silver will follow.
More often than not within a few days of when Butler seems to mention COT'S structures being bearish the POG is hit.

The US markets are probabley oversold...so the rally there may be short lived...and was a short covering rally where the bears were crushed.

With the POG the fundamentals are really bullish...
However
POG was this in May 06...the US gold Indicies still a bit of there highs st back then...But gold stocks here (Aust) and there(US) some are way from there highs set back then.

The US$ beaten down but may be due for a bounce?
US gold stocks are overbought (but can still go higher).

Any move down and it won't just be POG or Gold Indicies.

This may be of interest, in regards to your hypothesis on silver Mr Bean.

Cheers

BT

Gold and Silver Decoupling?
FN Arena News - September 19 2007

With one expert after the other tripping over each other to sing to the virtues of owning gold bullion, the future continues to look cloudy for gold’s little brother silver. Technical chartists at Barclays Capital are yet to be convinced that the recent upwardly movement for silver is nothing more than a correction in a long term southwards trend.
The chartists believe that silver’s 17% surge since the mid-August lows has done nothing so far to break the larger bearish trend. Charts show strong technical resistance lies between US$13-13.15/oz and until that barrier has been broken silver’s fortune look less bright than gold’s.

Gold bullion raced through trendline resistance at US$720/oz rather easily this week and the chartists note daily momentum oscillators are increasingly overstretched; it’s just that price action simply refuses to fall in line with such signals.
Barclays chartists report they are closely watching the US$730.50 highs of May 2006. They believe that at first this price point may open the door to a larger correction, which could take gold back towards technical support at US$703-700/oz. However, a break through US$730.50 opens approximately US$10 of topside for a run towards channel resistance at US$740/oz, the team reports.

A sustained break above US$695/oz, as we are likely witnessing right now, puts the next target for gold at US$730/oz, according to the Barclays team. Next target is at US$800/oz.

Nick Radge · 20 September 2007

buggalug said:
btw I just finished reading your book, it was excellent, hope you are planning on writing more in the future.

buggalug,
The stats I use are either mine from experience or those collected over the years.

I have no educational books coming out. I really don't think I have anything to offer that hasn't already been done. I do have a very different book coming out in late 2008 which is something that has never been seen in Australia before, but its not educational per se.

Nick

Sean K · 20 September 2007

1042 [Dow Jones] Spot gold slightly higher on N.Y. close, on course to take out 26-year high at $730/oz, then on course for $750, says Westpac's Robert Rennie. Market digesting aggressive, unanimous cut of discount and federal funds rate, Fed statement. "The signal from the Fed was for a cut of 25 basis points, so there's now suspicion there's something large behind this (50 basis point) move," says Rennie. Predicts more fallout from subprime mortgages to work through financial markets, USD to trend weaker, setting gold up for run higher. Spot gold trades at $722.50, up $1.80 vs N.Y. close. (EFB)

CanOz · 20 September 2007

kennas said:
1042 [Dow Jones] Spot gold slightly higher on N.Y. close, on course to take out 26-year high at $730/oz, then on course for $750, says Westpac's Robert Rennie. Market digesting aggressive, unanimous cut of discount and federal funds rate, Fed statement. "The signal from the Fed was for a cut of 25 basis points, so there's now suspicion there's something large behind this (50 basis point) move," says Rennie. Predicts more fallout from subprime mortgages to work through financial markets, USD to trend weaker, setting gold up for run higher. Spot gold trades at $722.50, up $1.80 vs N.Y. close. (EFB)

If its hit the news then it must be time for a retrace.

Cheers,

explod · 20 September 2007

CanOz said:
If its hit the news then it must be time for a retrace.

Cheers,

Nah, when the taxi driver tells you, get out fast.

Any semblances to fact may be pure coincidence. I am wrong most of the time, particularly when at home.

Whiskers · 20 September 2007

Gold had a look in $730 territory, but popped out again. I guess the test will come shortly when NY opens.

Could be another good day for resource stocks tomorrow. Hope so anyway. There's a hanging man over LGL and I didn't sell.

UPDATE 4-Gold hits 28-year high as dollar sinks, oil strong
Thu Sep 20, 2007 10:43 AM BST
Email This Article | Print This Article | RSS [-] Text [+] (recasts, adds quotes, changes prices, byline; pvs SINGAPORE)

By Atul Prakash

LONDON, Sept 20 (Reuters) - Spot gold surged to a 28-year high in European trade on Thursday, as the dollar sank to record lows against the euro and oil traded near all-time highs.

Gold <XAU=> rose as high as $730.25 an ounce, the highest since January 1980, when the metal jumped to a record high of $850. It was quoted at $728.10/728.90 by 0916 GMT, against $721.10/721.90 in New York late on Wednesday.

"The market was in two minds yesterday, jumping between $722 and $726, but the euro's push through $1.40 against the dollar gave the market fresh impetus to break up again," said Tom Kendall, metals strategist at Mitsubishi Corporation in London.

"The metal is likely to see some consolidation now until the U.S. markets open. We could see further gains then, but the higher we go, the more nerves will be jangling," he said.

The dollar sank to record lows against the euro, weighed down by a hefty U.S. interest rate cut earlier this week and expectations of more moves to come.

A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil hovered just below a record high level after U.S. crude inventories fell more than expected and as the threat of a storm gathering near Florida reignited supply concerns in the world's top consumer.

A European precious metals trader said weaker dollar, higher oil prices and still existing subprime fears attracted a lot of investors towards the gold market.

"I think we will see a highly volatile market, but the tendency is to move on the upside," he said.

Other precious metals also gained, with platinum <XPT=> rising to $1,311/1,315 an ounce from $1,301.70/1,308.70 in New York, silver <XAG=> gaining to $13.11/13.16 an ounce from $12.95/13.00 and palladium <XPD=> increasing to $333/337 from $330.25/334.25 an ounce.

© Reuters 2007. All Rights Reserved

Whiskers · 21 September 2007

Interesting article from mineweb.com. $1,000 within three years, maybe $3,400

Hey... where are all you gold buffs tonight? Just when I am looking for some insight for tomorrow.

$3400 Gold – pipe dream or possibility?
A prediction of $3400 dollar gold within three years should not be discarded as impossible, although hopefully unlikely.

Author: Lawrence Williams
Posted: Wednesday , 19 Sep 2007

LONDON -

A short article in today's Times newspaper in the UK recounts that Christopher Wood, chief strategist at big Hong Kong broker CLSA (whose largest shareholder is France's Credit Agricole, the world's 7th largest bank by asset value) feels that "market ructions and a collapse of the dollar could send gold prices to $3,400 an ounce or more in the next three years."

Is this just a euphoric statement by someone carried away as the gold price strengthens above the $700 mark, or worthy of serious consideration?

Somewhat frighteningly, perhaps the ‘serious consideration' scenario definitely wins out here. $3,400 an ounce is a little less than five times the current gold price level - and price gains of this magnitude have been seen in the base metals and uranium sector over the past three to four years.

Admittedly gold is a different animal from the industrial metals where prices have risen on unprecedented demand from countries like China, which had not been predicted and caught the mining sector short. But, Wood argues, as reported in The Times, the scenario could be that investors will soon realise that the subprime crisis is just a currently-visible part of a much wider financial breakdown. This would lead to dollar collapse, in part as a result of the financial marketplace burying its head in the sand and pretending that "bad credit is good credit."

Whether the Central Banks will sit back and let this happen is actually unlikely, but the argument is that if enough momentum is gathered the Central Banks will be unable to stop it.

This pattern does depend on a substantial dollar decline, which in turn would lead to a rapid rise in US inflation, almost certainly to be countered by increased interest rates, and subsequent recession. This is one of the reasons that all but the out and out gold bugs pray that this does not happen - but it isn't impossible. Ask any Zimbawean! Inflation there is running at around 7,000 percent a year and in Zimbawean dollar terms the gold price is hugely in advance of $3400!

Personally I hope, and believe, that the gold price won't rise to this extent within the next three years as other stores of value would depreciate in value dramatically. However I certainly wouldn't rule out $1,000 gold in that period. Plenty of far more experienced observers than myself would agree with this - not least Pierre Lassonde, former President of Newmont.

So_Cynical · 21 September 2007

Gold Price - Where is it heading?...734.48 USD and climbing.

How good is this....i got something right for once.

explod · 21 September 2007

So_Cynical said:
Gold Price - Where is it heading?...734.48 USD and climbing.

How good is this....i got something right for once.

Yep, not rocket science but the rocket seems to work ok

clowboy · 21 September 2007

I tell you what sux though, the GOLD price is going gangbusters but so id the AUD$ so at best my gold holdings are breaking even.

How can I buy AUD with AUD???????

wayneL · 21 September 2007

clowboy said:
I tell you what sux though, the GOLD price is going gangbusters but so id the AUD$ so at best my gold holdings are breaking even.

How can I buy AUD with AUD???????

This is the advantage of using leverage... even if you don't use the leverage.

Supposing Gold is $700 oz and AUD 0.80 and you have $87,500 AUD

You could buy 100oz of physical Gold.... or, you could by 1 x 100 oz Gold future and be completely unleveraged.

You margin would be $3,375 USD which is ~$4220 AUD. This is what you would need to lodge with your broker.

So your position is:
1 x 100 oz Gold Future @ $700
$3375 USD lodged with broker
$83280 AUD in cash

Let's suppose both AUD and Gold went up 10%. i.e. Gold to $770 and AUD to 88c.

If you bought 100oz of physical gold, you would be squits, no profit.

However, if you bought the future, your position would be.

1 x Gold future @ $770
$10,375 USD with the broker ($7,000 USD profit + initial margin)
$83280 AUD in cash

Now if you wind up the trade and convert your profit back to AUD:
$10,375 @ 88c = $11,790
add that to your cash and you have $95,069 AUD.

Slightly less than 10% profit, but a hell of a lot better than zip.

That is ex commission (an iniquitous $6 - $40 round trip depending on the broker) but bear in mind, commish on physical is 5 or 10% for the round trip.

Same principle with buying AUD/USD with AUD... leverage

EVEN IF YOU DON'T USE IT.

Cheers

Disclaimer: Opinion only, you can lose a substantial amount of money with futures. It is not like stocks where you can only lose 100%, with futures they can come for your house, your wife, your left testicle, your liver, wine cellar and your first-born boy child. Futures can give you diabetes, AIDS, and warts on your nose. Please seek the advise of a commissioned salesma... errr, financial adviser before using any financial product.

Sean K · 21 September 2007

wayneL said:
Disclaimer: Opinion only, you can lose a substantial amount of money with futures. It is not like stocks where you can only lose 100%, with futures they can come for your house, your wife, your left testicle, your liver, wine cellar and your first-born boy child. Futures can give you diabetes, AIDS, and warts on your nose. Please seek the advise of a commissioned salesma... errr, financial adviser before using any financial product.

LOL You make a great case for futures Wayne!

Edwood · 21 September 2007

he he I like it Wayne

probably no surprises but that bearish harmonic pattern is no longer in play after the o/night rise

Sean K · 21 September 2007

Whiskers said:
Interesting article from mineweb.com. $1,000 within three years, maybe $3,400

Hey... where are all you gold buffs tonight? Just when I am looking for some insight for tomorrow.

I do still remember April last year when gold went balistic, and everyone was shouting for $1000++ in the comes days. Well, 18 months later and we're back where we were. I'd like to see the break through $690 confirmed first. Only passed through a couple of days ago. Am I being too conservative?

chops_a_must · 21 September 2007

kennas said:
I do still remember April last year when gold went balistic, and everyone was shouting for $1000++ in the comes days. Well, 18 months later and we're back where we were. I'd like to see the break through $690 confirmed first. Only passed through a couple of days ago. Am I being too conservative?

Perhaps... although it does look really bullish.

The thing that is lacking this time, in my eyes is, the euphoria in the small cap and spec end of the equity market. Once that appears, it's probably time to begin getting out.

My punt is for it to get above 750 on this run. I might not sell at this level, but I sure as hell wont open new positions. And I don't want to put words in Nick's mouth, but from his stats and method, it looks like it could get to between 820-890 (roughly, not sure what his exact measurements are).

USD tanking, inflation being factored into bonds, oil up, the saudi's talking of getting out of USD... still no reason to halt right now. Will just be interesting to see what happens if we get another big run on the goldy small caps...

wayneL · 21 September 2007

chops_a_must said:
inflation being factored into bonds

This is a very pertinent point, long bonds are taking a hit, essentially the market doing (on the long end of the curve anyway) what ####ing Uncle Ben should be doing and raising rates. I don't know whether that is bullish for gold in the medium term or not, but it shows the FOMC pulled the wrong rein this week.

You'd certainly be nuts not to already have some long exposure to POG here.

Uncle Festivus · 21 September 2007

kennas said:
I do still remember April last year when gold went balistic, and everyone was shouting for $1000++ in the comes days. Well, 18 months later and we're back where we were. I'd like to see the break through $690 confirmed first. Only passed through a couple of days ago. Am I being too conservative?

It's called a 'wall of worry', when everyone is expecting it (POG) to do it's usual thing and get smashed down. The difference this time could be the lengthy consolidation period preceding this breakout, & that's what it is, and everything else lining up ie the perfect bullish case for gold, thanks largely to Ben Bullwinkle Bernanke eg 'hey Rocky watch me pull a recession out of my hat'.

I'm with chops with the concern about the lack of action in the junior end of the gold market, except I would view any break out here as a good confirmation that phase 2 of the gold bull has well & truly started.

Who knows, the golden horse might have already bolted and everybody will have to scramble to get a piece of the action?

Ageo · 21 September 2007

clowboy said:
I tell you what sux though, the GOLD price is going gangbusters but so id the AUD$ so at best my gold holdings are breaking even.

this is very true, atm buying pysical gold is actually cheaper since our dollar is going so strong. So its countering any increase in the price of gold....

clowboy · 21 September 2007

wayneL said:
This is the advantage of using leverage... even if you don't use the leverage.

Supposing Gold is $700 oz and AUD 0.80 and you have $87,500 AUD

You could buy 100oz of physical Gold.... or, you could by 1 x 100 oz Gold future and be completely unleveraged.

You margin would be $3,375 USD which is ~$4220 AUD. This is what you would need to lodge with your broker.

So your position is:
1 x 100 oz Gold Future @ $700
$3375 USD lodged with broker
$83280 AUD in cash

Let's suppose both AUD and Gold went up 10%. i.e. Gold to $770 and AUD to 88c.

If you bought 100oz of physical gold, you would be squits, no profit.

However, if you bought the future, your position would be.

1 x Gold future @ $770
$10,375 USD with the broker ($7,000 USD profit + initial margin)
$83280 AUD in cash

Now if you wind up the trade and convert your profit back to AUD:
$10,375 @ 88c = $11,790
add that to your cash and you have $95,069 AUD.

Slightly less than 10% profit, but a hell of a lot better than zip.

That is ex commission (an iniquitous $6 - $40 round trip depending on the broker) but bear in mind, commish on physical is 5 or 10% for the round trip.

Same principle with buying AUD/USD with AUD... leverage

EVEN IF YOU DON'T USE IT.

Cheers

Disclaimer: Opinion only, you can lose a substantial amount of money with futures. It is not like stocks where you can only lose 100%, with futures they can come for your house, your wife, your left testicle, your liver, wine cellar and your first-born boy child. Futures can give you diabetes, AIDS, and warts on your nose. Please seek the advise of a commissioned salesma... errr, financial adviser before using any financial product.

Thanx for the example wayneL I am aware of what you are saying in regards to buying AUD/USD and everytime I look at the AUD I kick myself. I was playing around with a fex FX demo accounts rather sucessfully but when I went to open one all the disclaimers etc put me off. Unfortunately I don't trust my internet connection etc etc enough that I can risk not being able to close out a position if I have to. At least with shares I can physically ring the broker if I need to.

What is the set up with futures? can you ring the broker if you need to?

>Apocalypto< · 21 September 2007

clowboy said:
Thanx for the example wayneL I am aware of what you are saying in regards to buying AUD/USD and everytime I look at the AUD I kick myself. I was playing around with a fex FX demo accounts rather sucessfully but when I went to open one all the disclaimers etc put me off. Unfortunately I don't trust my internet connection etc etc enough that I can risk not being able to close out a position if I have to. At least with shares I can physically ring the broker if I need to.

What is the set up with futures? can you ring the broker if you need to?

If u trade FX though a CFD provider like IG, you can call them 24 hpours a day during the trading week to close your FX trade. I am sure with the other fx and futures brokers u can do the same. I could call my futures broker Xpress trade 24 hours a day during the trading week to close open a trade or just for a chat! chats weren't very long mind u!

Gold Price - Where is it heading?

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