Where Is Gold Going In This Market

[flying]

an opinion:

Positioning in gold is very long and we remain cautious about

chasing the metal higher from current levels,

Tend to agree and am selling half my gold holdings to cash ready to reinvest later in the year .

I agree only with I will not chase higher at these levels.

But if it should drop to 9 or less I would probably be inclined to back up the truck one more time.

Even though my adjusted cost is down quite a bit from there.

As for selling I will have none of that

Also not to say I wont make a few other investments ....maybe this year.

But I do not need to sell PM's for that.

Edited June 9, 2009 by flying

[Naam]

Naam,

The correlation on that chart is almost 100%. Why is that? (I can see there should be some correlation in that if there are a lot of futures at some point someone has to sell physical to match etc but surely this is very small compared to total supply and demand.)

How can you get a comex chart through the internet or Bloomberg?

Being a gold futures trader must be very profitable.

i'm sure these charts are available on the internet Abrak but i have no idea how and where. Bloomie has of course anything one could ask for... for a fancy price!. for several years (2001-2004) i subscribed to a rather small but specific package and paid 2,800 dollars a month it's easier and cheaper for me to call my banker and ask for any Bloomie screen shot or background info such as bond descriptions which i normally receive within minutes.

[Abrak]

i'm sure these charts are available on the internet Abrak but i have no idea how and where. Bloomie has of course anything one could ask for... for a fancy price!. for several years (2001-2004) i subscribed to a rather small but specific package and paid 2,800 dollars a month it's easier and cheaper for me to call my banker and ask for any Bloomie screen shot or background info such as bond descriptions which i normally receive within minutes.

Well when I was a broker I was never allowed Bloomberg or Reuters, not because of the fee (so I was told), but because of some thing called a 'centrally allocated overhead' which was never really explained but was also used as the excuse why we couldnt employ a maid to make coffee and clean the toilets at Bt6k a month along with that elusive term 'headcount'. I recently downloaded the Bloomberg App for iphone for free and find it very useful. I did at least look up that chart on the Comex website before asking but it isnt obviously there. Nice chart though.

[badge]

i'm sure these charts are available on the internet Abrak but i have no idea how and where. Bloomie has of course anything one could ask for... for a fancy price!. for several years (2001-2004) i subscribed to a rather small but specific package and paid 2,800 dollars a month it's easier and cheaper for me to call my banker and ask for any Bloomie screen shot or background info such as bond descriptions which i normally receive within minutes.

Well when I was a broker I was never allowed Bloomberg or Reuters, not because of the fee (so I was told), but because of some thing called a 'centrally allocated overhead' which was never really explained but was also used as the excuse why we couldnt employ a maid to make coffee and clean the toilets at Bt6k a month along with that elusive term 'headcount'. I recently downloaded the Bloomberg App for iphone for free and find it very useful. I did at least look up that chart on the Comex website before asking but it isnt obviously there. Nice chart though.

You were a broker in BKK abrak? Im not surprised you didnt even have Bloomberg then!

You can get COT charts from lots of sites, in the past ive used this site http://freecotcharts.com/charts/AD.htm then choose your future at the bottom. As an aside I dont place much credence in COT stats, not for trading purposes.

Bloomberg anywhere is available on any pc and is about $2200 a month i think. They have an office in BKK if you want to trial it Its breadth of data is pretty amazing. If you trade alot, ask your broker to provide you with it for free

[Abrak]

You were a broker in BKK abrak? Im not surprised you didnt even have Bloomberg then!

You can get COT charts from lots of sites, in the past ive used this site http://freecotcharts.com/charts/AD.htm then choose your future at the bottom. As an aside I dont place much credence in COT stats, not for trading purposes.

Bloomberg anywhere is available on any pc and is about $2200 a month i think. They have an office in BKK if you want to trial it Its breadth of data is pretty amazing. If you trade alot, ask your broker to provide you with it for free

Well actually I was an analyst rather than a salesman so I like to think I 'invest' rather than 'trade' and I often hold for 5 years, never have more than 7 or 8 stocks, so noone is going to give me a Bloomberg. I almost exclusively invest in Thailand which was the market I analysed and where I am on the ground and can contact management. Even though it is in a bear market it is a darn sight easier than momentum investing elsewhere. I use an online proprietary trading system www.poems.in.th which is free for anyone who signs up even the occasional punter (I am told Seamicos is the best) - that has everything from P&Ls, balance sheets to charts to real time trading.

(By the way that is the analyst side of me talking, the broker side does trade and holds rubbish with no intrinsic value (say like gold) or for apparently absolutely no reason at all (like GBP)).

[badge]

You were a broker in BKK abrak? Im not surprised you didnt even have Bloomberg then!

You can get COT charts from lots of sites, in the past ive used this site http://freecotcharts.com/charts/AD.htm then choose your future at the bottom. As an aside I dont place much credence in COT stats, not for trading purposes.

Bloomberg anywhere is available on any pc and is about $2200 a month i think. They have an office in BKK if you want to trial it Its breadth of data is pretty amazing. If you trade alot, ask your broker to provide you with it for free

Well actually I was an analyst rather than a salesman so I like to think I 'invest' rather than 'trade' and I often hold for 5 years, never have more than 7 or 8 stocks, so noone is going to give me a Bloomberg. I almost exclusively invest in Thailand which was the market I analysed and where I am on the ground and can contact management. Even though it is in a bear market it is a darn sight easier than momentum investing elsewhere. I use an online proprietary trading system www.poems.in.th which is free for anyone who signs up even the occasional punter (I am told Seamicos is the best) - that has everything from P&Ls, balance sheets to charts to real time trading.

(By the way that is the analyst side of me talking, the broker side does trade and holds rubbish with no intrinsic value (say like gold) or for apparently absolutely no reason at all (like GBP)).

is POEMS a prop trading system? or just a glamourised spreadsheet? I too see no value in Gold; its merely a useless yellow metal in my eyes, which has no yield and is simply a gamble on capital gains, which I have no problem with, if I could understand why anyone would want it? so its use as a 'store of wealth' or currency is its only possible attribute. but why is this metal a store of wealth? because people say so? why not silver, which at least has industrial uses? or platinum? and for 'apparently no reason at all' your holding GBP... did you not buy them? i update my thoughts on $ majors on a thread here called 'global fin. markets'. im awaiting a breakout in gbpusd(break down in $Index) to buy GBP again, I may even short cable if its not forthcoming

[flying]

I too see no value in Gold; its merely a useless yellow metal in my eyes,

Yeah makes you wonder about those whacked out Chinese spending 80 billion on that useless yellow stuff

Edited June 11, 2009 by flying

[Naam]

I too see no value in Gold; its merely a useless yellow metal in my eyes,

Yeah makes you wonder about those whacked out Chinese spending 80 billion on that worthless yellow stuff

China is following a certain agenda. besides securing supply of iron ore, copper, coal, crude, soy and all kind of grains as well as you name what commodities, they are accumulating gold to buy all bakeries on this planet.

what good is it to have an ample supply of grains but no bakeries?

[flying]

China is following a certain agenda.

Seems Russia is also.....

Musical chairs of sorts

I have said many times that if nothing else these are interesting times.

[badge]

I too see no value in Gold; its merely a useless yellow metal in my eyes,

Yeah makes you wonder about those whacked out Chinese spending 80 billion on that useless yellow stuff

No it doesnt, Ive no interest in what the whacked out Chinese are buying. Their track record of late is awful; BX, C, MS, BARC... they dont care anyway, they're cash rich, they're essentially forced to buy everything, including useless yellow metals that are currently considered trendy They should stick to buying actual commods, or renting vast swathes of other countries and growing/prospecting their own

I should add I have no issue buying Gold as a trade, I just dont subscribe to bugs arguments.

[Naam]

gold is not a useless yellow metal Badge! if it was useless would tens of thousands of goldbugs rave about it since generations, preserve their wealth by buying it and love it dearly? can these tens of thousands (or perhaps millions) be wrong?

hold on! i am dismissing the counterargument that billions of flies love shit since generations dearly.

[wester]

After Uncle Ben's helicopters finish dropping (if ever), and the Americans find all their ideas are useless, then the POG will be on the moon. Time frame - 3-4 years. But - I would recommend Silver over Gold as the Silver / Gold ratio is way out of whack these days. And I recommend this as an investment only to make profit and save your a$$ when those around you are losing their heads. I am not a goldbugger.

[Abrak]

is POEMS a prop trading system?

Perhaps I am not absolutely sure what a prop trading system but I can say this. It is effectively the same as being in the trading room in front of a dealing screen. You see all the bid and offer spreads as well as the volumes and you deal real time without a seconds delay. You can queue your orders, see their status. See the history of your past orders. Account balances etc.

I too see no value in Gold; its merely a useless yellow metal in my eyes, which has no yield and is simply a gamble on capital gains, which I have no problem with, if I could understand why anyone would want it? so its use as a 'store of wealth' or currency is its only possible attribute. but why is this metal a store of wealth?

I bought it sort of a currency of last resort (just desperate)

why not silver, which at least has industrial uses?

I can think of one good reason to hold silver and one good reason not to. The main reason not to is because it has 'industrial use' and the economy is going down the toilet and if its not, there are better investments. The main reason to invest in silver is because it has 'investment demand' and relative to supply is much more highly geared than gold as well as lower priced versus historic value (hence better value to no intrinsic value investors).

or platinum? and for 'apparently no reason at all' your holding GBP... did you not buy them? i update my thoughts on $ majors on a thread here called 'global fin. markets'. im awaiting a breakout in gbpusd(break down in $Index) to buy GBP again, I may even short cable if its not forthcoming

If you had held dollars 3 months back you did have a reason then - sort of piling from one bunch of crap into another.

[lannarebirth]

I too see no value in Gold; its merely a useless yellow metal in my eyes,

Yeah makes you wonder about those whacked out Chinese spending 80 billion on that useless yellow stuff

I have only the observations of my lifetime to go on, but from where I sit, rich Chinese have always been sellers of gold to the poor people of the countries they inhabit. The poor people never seem to get richer, but the Gold sellers do. Not sure what to make of it.

[churchill]

So that why they are buying now - because they know they can sell it at a big profit in a few years .

[lannarebirth]

So that why they are buying now - because they know they can sell it at a big profit in a few years .

Frankly, I don't believe it when anyone tells me that anyone else is buying this , or selling that; and neither should you. It is certainly not in their own interests to disclose such information, and if sovereigns do anything (particularly China) it is that they act in their own interests.

[flying]

So that why they are buying now - because they know they can sell it at a big profit in a few years .

Frankly, I don't believe it when anyone tells me that anyone else is buying this , or selling that; and neither should you. It is certainly not in their own interests to disclose such information, and if sovereigns do anything (particularly China) it is that they act in their own interests.

That is basically the same way I think.

Yet the last time before they made a large purchase the news got out & everyone said the same. Yet the purchase went forward with little fanfare.

Now they have claimed to be buying yet again.No big deal ........

For them anyway.......? Seems they have a lot of currency to unload

Badge Said : They should stick to buying actual commods, or renting vast swathes of other countries and growing/prospecting their own

Actually they are

[Naam]

I too see no value in Gold; its merely a useless yellow metal in my eyes,

Yeah makes you wonder about those whacked out Chinese spending 80 billion on that useless yellow stuff

I have only the observations of my lifetime to go on, but from where I sit, rich Chinese have always been sellers of gold to the poor people of the countries they inhabit. The poor people never seem to get richer, but the Gold sellers do. Not sure what to make of it.

good one!

[badge]

Badge Said : They should stick to buying actual commods, or renting vast swathes of other countries and growing/prospecting their own

Actually they are

Thats right, and they should stick to it

[badge]

Im not at all convinced all the bugs inflation will appear. It didnt in Japan in the 90's. More importantly Gold has been correlated to 'risk appetite' of late, so in the kind of inflationary environment that bugs prophosize, there will be far better investments than gold.

[Abrak]

Im not at all convinced all the bugs inflation will appear. It didnt in Japan in the 90's. More importantly Gold has been correlated to 'risk appetite' of late, so in the kind of inflationary environment that bugs prophosize, there will be far better investments than gold.

It is clearly a combination of the two as well as a dollar hedge. If it was a pure risk play its price would have gone down over the last 3 months as risk has been repriced but as inflationary expectations have risen further it has actually moved up a bit.

When you say there are far better investments I guess you mean TIPs or something which would probably be more highly geared to inflationary expectations. I take the view that noone knows how things are going to turn out but there is inherent risk that things could turn out badly either on the deflationary or inflationary side. There is also a shortage of decent currencies to invest in.

I also thought there should be a reverse correlation between gold and real interest rates and that you can only get out of a debt crisis with negative real rates. Unfortunately while I was buying gold as an alternative to cash, I soon worked out that most gold bugs and I suppose even Central banks hold it as an alternative to 30 year USTs so their view of real rates would be totally

different to mine.

[flying]

Truck is idling & gear shift is in reverse.

This may be the signal to back the truck up one last time before the coil goes sproing....We will see

Wish VV would check in & make it official

Edited June 16, 2009 by flying

[badge]

Im not at all convinced all the bugs inflation will appear. It didnt in Japan in the 90's. More importantly Gold has been correlated to 'risk appetite' of late, so in the kind of inflationary environment that bugs prophosize, there will be far better investments than gold.

Huh. So equities sold off y'day, and so did Gold? Ahhh, I see the USD strengthened y'day too, so Gold was acting like a currency, not a safe-haven.

I wonder what it'll act like today?

[flying]

Im not at all convinced all the bugs inflation will appear. It didnt in Japan in the 90's. More importantly Gold has been correlated to 'risk appetite' of late, so in the kind of inflationary environment that bugs prophosize, there will be far better investments than gold.

Huh. So equities sold off y'day, and so did Gold? Ahhh, I see the USD strengthened y'day too, so Gold was acting like a currency, not a safe-haven.

I wonder what it'll act like today?

Are you really Harmonica with a new handle?

prophosize

Seems familiar

Edited June 16, 2009 by flying

[lannarebirth]

Gold stocks are just about catching up with last years prices when Gold was at it's previous highs / I think they still have a lot of catching up to do IF gold can establish itself over 1000 - I think Gold Stocks could double plus from here - so I think from this level one can gain a lot more by investing in gold stocks as opposed to physical gold .

You may well be right, but I bought $XAU puts instead. If I'm wrong Gold will probably see 1200 PDQ.

[makavelithedon]

Hi all,

If we could presume for the sake of my post that hyper inflation or near to it occurs in the medium term to the US economy can you tell me what difference you see in holding gold mining stocks or those in oil companies? At present I prefer the oil play because of the high dividend and its flight to tangible goods as with gold but am trying to gauge whether I need to make an adjustment to gold stocks.

I would appreciate comments from PCA ,Abrak and others if you have the time on this area if possible. Also which gold mining stocks to look up that have little or no US dollar exposure? I have looked at AUS company Newcrest but would welcome views.

Many thanks

Mak

[SoCal]

Unless you are predicting utter meltdown, which some advocate, in which case mine stocks would likely be worthless, why the aversion to USD exposure?

If the dollar tanks, then would think they outperform, whereas AUD is up so are the costs of the minning company.

Really depends so much on the specifics to the company.

[Abrak]

Hi all,

If we could presume for the sake of my post that hyper inflation or near to it occurs in the medium term to the US economy can you tell me what difference you see in holding gold mining stocks or those in oil companies? At present I prefer the oil play because of the high dividend and its flight to tangible goods as with gold but am trying to gauge whether I need to make an adjustment to gold stocks.

I would appreciate comments from PCA ,Abrak and others if you have the time on this area if possible. Also which gold mining stocks to look up that have little or no US dollar exposure? I have looked at AUS company Newcrest but would welcome views.

Well thanks for asking my opinion (I dont think anyone has before) and I am not sure anyones opinion is worth much with regard to commodity prices.

I have to say if you assume hyperinflation (which I understand to mean high inflation and low growth) then gold should perform better as a commodity than oil. Ultimately oil is very dependent on annual supply and demand, so the big shift in prices that we saw over the last two years must have led to some serious investment. In addition one has to assume that Iraq will come online at some point in the future (they have 10 times the reserves of the US and produce a third as much.) Anyway hyperinflation implies lower demand than expected even if past prices dont lead to excess supply. Demand for oil has been known to drop even when the world economy is growing.

Demand for gold actually goes up with inflation as it is seen as an inflation hedge. Total supply is fairly fixed at roughly 50 years annual supply so it looks a much better inflation hedge than oil. It is also a risk play. I think gold would perform well in real terms under either a hyperinflation or hyperdeflation scenario but would be a disaster on a recovery to low inflation growth (under which oil would do very well).

As far as stocks go which is what I actually do know something about, I have never looked at oil stocks so cant help. Gold stocks are theoretically a geared play on the price of gold. In my experience, this doesnt really hold true and I do have a problem with the concept. From performance what you see is that the gold price is inverse correlated to stocks as regards risk and over correlated as regards inflation. More importantly to me anyways is that I do not find a lot of value in gold stocks and often not much gearing in the fundamentals on the basis they sell forward. If a gold stock was on 6x based on US$1100 gold it would be interesting but the majors just dont seem to be and sell on 17x or so.

I am sure there are far better experts on these stocks than me. I just didnt really like the fact that Newmont's share price peaked 2 years ago and had fallen 30%, the gold price had gone up 30% and there still wasnt any obvious value to me.

BTW if you want to buy gold stocks then it is worth looking at some of the convertible in case your view on hyperinflation is wrong.

[Naam]

UBS Metals Daily - 17th June 2009

After hitting a high of $990/oz in early June, gold has fallen

over the past two weeks. Market based inflation expectations,

defined here as the five-year, five year forward TIPS spread,

peaked in late May about 2.45% and have declined to around

2.10% since then: as the accompanying chart shows, there

appears to be more than a casual relationship between these

two data series, especially since the start of the year. To the

extent that inflation expectations have increased due to the

talk of “green shoots of economic recovery”, any deterioration

in growth expectations may see gold follow inflation

expectations lower. But as we saw in the first quarter of this

year, gold gets bought when investors get scared – so talk of

a double-dip recession (or whatever letter of the alphabet or

character you wish to use to describe this scenario) might

bring back the safe haven buying that defined the gold market

earlier this year. In the short term, inflation expectations could

dip down to a few tenths of a percent and still be in the recent

range and this fits with our view that gold can correct further,

especially as jewellery demand remains very poor.

Roubini says oil, gold look overpriced

Oil and gold are overvalued at current prices, which do not reflecting their market fundamentals, economist Nouriel Roubini said at

the Reuters Investment Outlook Summit on Tuesday. Roubini, who is known for having predicted the financial crisis that rocked the

global economy in the past two years, painted an economic backdrop of deflationary risks and warned that if oil keeps climbing

toward the $100 level it would deal an "economic shock" similar to the one last seen in 2008. The recent rally in oil, which sent prices

to an eight-month high above $73 per barrel, was "too high too soon," Roubini told the Reuters Investment Outlook Summit in New

York. U.S. crude oil reached a record high near $150 per barrel in July 2008 based on overly bullish global demand expectations, but

prices have since more than halved with the global economic slowdown. Roubini, who is chairman of economics research firm RGE

Monitor, said the current price of gold looks overextended as deflation is likely to outweigh any risks of inflation in the near term. "For

the next two years, deflationary pressure is going to be dominant, and it is going to become a time bomb down the line if and when

we keep monetizing large deficits. It may be too soon to hedge with gold," he said. "Unless we have high inflation, or...other risks like

depression, gold looks toppy," he said. Gold could spike again whenever there is rising risk aversion, he said, though noting that

bullion prices had declined after the Lehman Brothers debacle in September last year. (Reuters)

We have been very surprised by the concerns of inflation expressed by investors as we, like Mr Roubini, are more concerned about

the prospects for a period of disinflation and low global growth. But clients appear to be looking through the short term period of

deflation risk and are worrying about the prospects for longer term inflation – and as gold is a small financial market, it has not taken

a lot of inflation fear to drive gold higher. Should inflation concerns become more consensual, then gold could move a lot higher.

Gold reserves fall 21 mln euros in June 12 week

Gold and gold receivables held by euro zone central banks fell by 21 million euros to 240.7 billion euros in the week ending June 12,

the European Central Bank said on Tuesday. Net foreign exchange reserves in the Eurosystem of central banks fell by 3.9 billion

euros to 233.1 billion euros, the ECB said in its regular weekly consolidated financial statement. Gold holdings fell because of sales

by a single euro zone central bank. The ECB said the move was consistent with the 2004 Central Bank Gold Agreement. The bank's

balance sheet totalled 1.727 trillion euros, down from 1.748 trillion last week.

[churchill]

I moved out of some of my gold holdings at the beginning of last week as I thought prices would dip before a rise later this year - So not sure that now is the right time to invest - however it is very difficult to call the gold price and if your are looking long term I think now is a good time to put some money into gold shares .

Should you invest in gold?

http://www.iii.co.uk/articles/articledispl...section=Markets