Where Is Gold Going In This Market

[Naam]

the number of anal-lusters who warn the gold bubble might burst increases every day.

Yes I noticed that heavily played today here in the US too.

I figure I have heard them say the same even as gold was knocking on $1000/oz's door

I do not think they are any smarter today

I think I will continue to use my own eyes & ears to determine when things that have caused gold to rise subside.

I will then sell faster than you can say jumping jack flash

that is easier said than done. you might have your truck fuelled up and ready to go. but before you go you have to do some wheelbarrowing and loading. that will take considerable time, especially carrying the heavy load up those steep basement stairs not to forget all that digging in your backyard.

don't forget that markets move sometimes very fast! better load the truck now and keep it ready on the driveway... not in your locked garage!

sorry i forgot... what was your address again?

[flying]

sorry i forgot... what was your address again?

666 Cyber Street

Cyberpass, Cyberville

66666

BTW: Wheelbarrow no longer needed since I swapped out of Silver

[Lost in LOS]

Silver is way down now and I will buy some tonight, it may take a while but silver will be going up, a lot,

Just IMHO but now is not the time to buy Silver

Let the GSR guide you

It is still under 45/1 too low to be buying silver

Last time I backed up the truck...literally was at 77/1

Brought 500 shares SLV that day at 36.95, now 41.7 +4.75 a share x 500 = $2,375 x 30 = 71,350 baht works for me for 11 days. [got lots more but that was the last buy] I think silver is going to go way up and will buy more if it drops again.. My gold profits just brought me a new BMW

the world is tanking and the idiots in charge don't know [or refuse to acknowledge] how to fix it. Gold and silver have to go up

[flying]

Glad to hear your doing well Lost in LOS

[churchill]

Silver is looking strong again ..

Interview with Ben Davies .. worth a listen

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/8/20_Ben_Davies.html

[churchill]

Yes, The Price of Gold Is High, But the West Still Overlooks Its True Value

http://seekingalpha.com/article/288544-yes-the-price-of-gold-is-high-but-the-west-still-overlooks-its-true-value?source=email_portfolio

[Naam]

Yes, The Price of Gold Is High, But the West Still Overlooks Its True Value

http://seekingalpha.com/article/288544-yes-the-price-of-gold-is-high-but-the-west-still-overlooks-its-true-value?source=email_portfolio

an optimistic but rather fair assessment of the situation although it contains some rubbish flaws such as:

-This is in marked contrast to the Middle Eastern and Asian world where owning gold as a store of wealth is the norm due to their experience of currency debasement.

-The emirate of Dubai’s launching of a 5 ounce bullion coin is another indication that demand from the Middle East is set to remain robust and may surprise to the upside.

[Naam]

food for thoughts:

Prepare for the Plunge

I don’t think I’ve ever seen one trade or investment get as much attention as gold is getting right now. Well obviously gold is talked about when we discuss inflation, fear, currency devaluation, and the other pressing issues of the day. It was only a couple days ago when an investor I manage money for contacted me and asked my opinion of putting about 20% of his portfolio into the hard metal, that I was forced to really think through the position and why or why not it would make sense in today’s environment. Gold has had a stellar three-year run, doubling from around the 800 level and rising, in both the inflationary market we saw from 2008-2011 when oil rose over 100 a barrel, as well as in the current fear-filled market. European debt fears have seemingly more than replaced inflationary concerns, as hard and soft commodities have in many cases dropped nearly 40-50%.

Now most people look at the price of gold and see it at the 1800 level, which is double where the commodity was just about 2 years ago, and see the metal as an asset that has outperformed most asset classes including, the stock market, in a volatile tape - and seemingly continues to go up in every possible scenario. Besides the fact that gold is offered on TV, in vending machines, and is called by many, including CNBC’s Cramer, the world's “new currency”, it is also talked about as something than can win in almost scenario - kind of like the teflon metal. If inflation occurs gold wins because it's an effective hedge on the diminishing purchasing power of hard currencies. If deflation occurs fear will escalate and people will anticipate further stimulus and the risk of devaluation of countries’ currencies, so gold wins again. Now to be sure, I think we all understood why gold was going up when oil tripled from 30 to 90 on its way to 115 on the WTI contract, and other hard and soft commodities soared as everyone including the Fed and White House seemed to be fine with what clearly was a weak dollar policy designed to enhance our exports and inflate asset prices. Currencies were being devalued and inflationary costs were rising, perhaps even soaring. Gold traditionally does very well in an inflationary environment, although not as well as many of the commodities like oil that more than tripled during that time, or oil stocks, which also tripled and paid hefty dividends during that time. But now that the inflation story has died we are to believe that gold is the place to be, not because it's a hedge on currency devaluation but rather as the "fear trade": it’s the new currency and thus a place to hide from the latest crisis: The European Debt crisis.

I don’t accept that gold can continue to outperform in a clearly deflationary environment or that it's really a new currency and here’s why. First, historically, gold and oil have been very highly correlated since oil is often seen as an effective measure of inflation and gold is used as a way to hedge such fear of rising prices and diminishing purchasing power of the world's most held currencies. Second, if people really thought that gold was the new currency and had such little confidence in the dollar, why is the 10-year treasury getting more capital than ever and trading at levels not seen since the 1930s? Third, why has gold not soared at the rate the equity markets have dropped or the vix has risen during this latest crisis? No, something is amiss here. Sure, in the short-term the heavily elevated levels of fear reflected in the yields in the 10 and 30 year treasury and the vix may cause traders to spike gold prices, but longer-term it simply is not rational to believe that gold prices can continue to rise in a deflationary environment when major currencies are not seeing diminished purchasing power. The reality is that when gold is not moving on mere speculation but is moving up as an inflationary hedge (as it has historically for the decades we have data on the metal's movement), the decision to buy gold is really a decision to short the currency you are buying gold in. If the world's reserve currency, which is the most held currency by most governments and companies around the world, is no longer depreciating and is in fact rising against most major currencies, it seems odd to think that it has been replaced by a metal that is an inflationary hedge in an environment where commodity prices are plummeting.

In essence, to me you aren’t just buying gold, you are selling your currency and locking in its current purchasing power. If inflation occurs gold historically rises proportionally to the rate of inflation but little to no more. If deflation occurs and the currency you are effectively selling to buy gold appreciates against commodities and other currencies, you generally do not come out ahead. Once the speculative hype and extreme levels of short-term fear subside, just keeping that currency rather than buying gold could produce greater gains as you can keep your dollar in safe assets earning real returns while gold cannot be put in bond and money markets. I think this is also why most who have gold for decades have gotten around 5% a year, less than half the average 30 year return of stocks, and about on par with the average 10 year return of stocks over the last decade. Also, you have to presumably sell gold and accept a currency when you sell it - presumably the same currency you bought gold in. Therefore, while it may appear that gold is increasing rapidly, theoretically, gold should just be appreciating under normal circumstances at the rate at which inflation or the purchasing power of the dollar (the currency all major commodities are priced in worldwide) is diminishing once, again, the speculative element comes out of the trade.

The evidence is strong and I suspect will soon be repeated that gold, over the long-term (once speculation and fear are at normal levels), offers historical returns of 4-6% a year, fairly subpar compared to most asset classes, especially stocks. Even in the 1980s when gold hit its all-time highs adjusted for inflation, stocks generally outperformed gold over almost any 10 year span. I don't expect that to change simply because we have extreme levels of fear best shown by the vix rising nearly 40% this week to levels not seen since last summer, when it promptly dropped nearly 50% over the next several months. The dollar today is clearly no longer diminishing in purchasing power and has even gone to parity with the commodity or often inflation-leading currencies of both Canada and Australia. While talk of further stimulus is rampant and the recent debt ceiling bill clearly showed fiscal stimulus is dead, Bernanke has been similarly unwilling to expand upon the bond purchases and reinvestment of assets from selling those purchases in QE2.

The U.S., like most first world and emerging market economies, has shifted from promoting fiscal and monetary stimulus to a period of less spending and more limited forms of quantitative easing. Now if gold were truly the world's “new currency”, rather than the dollar, it certainly seems to be moving pretty modestly given the level of fear reflected in the vix, treasury yields, and the recent movement in equity markets. The fact that Bank of New York Mellon (BK) recently announced a special surcharge for new 50 million plus deposits by individuals to avoid massive FDIC charges to insure such large amounts suggests that much of the capital fleeing risk on assets or risky currencies is also finding its home in the good old greenback rather than the world's new currency. The 10 year bond is trading at the lowest yield since 1937 and the 30 year yield is trading at levels not seen since the Lehman levels days - both moves suggesting strong and robust demand for dollar denominated assets continues. All this tells me one thing, the dollar is still the reserve currency of the world and gold, while interesting in times of extreme fear, is still just another way to diversify your portfolio during times of fear and when inflationary risks are rising. The Bank of New York Mellon is taking dollar depositors, not gold ones, and the 10 and 30 year treasuries are futures contracts that give people the right to be paid in dollars, not gold. Now fear may continue to stay at elevated levels for some time and may even rise in the short term from today's levels, but remember, at some point the vix will stop going up 40% in a day and Europe won’t constantly seem on the verge of implosion. When current fear levels in the market diminish and governments reestablish at least basic levels of confidence, growth will likely still be slow to anemic, and inflationary fears will likely remain similarly tepid as well. What will people do with a commodity like gold at all-time highs when they look at oil likely in the 70s and a market down nearly 30% from its highs? A good note here is that the last time the vix was at these levels it dropped by nearly 50% over the next couple months, albeit in part because of QE2.

Now, to be sure, no one knows when the top will be, but I’d think sooner rather than later people will look to sell gold and move into traditionally higher returning assets like stocks and other industrial commodities that are largely near their lows while gold is at near all-time highs. While that move may not come in a couple weeks, I would strongly bet that it will result in a far bigger move downward than many of the moves up we've seen in this metal over the last year. As many people are already beginning to believe, as I do, that stocks and other commodities are moderately to significantly undervalued while gold is significantly to extremely overvalued, the move could be swift and severe.

[Naam]

double posting

Edited August 21, 2011 by Naam

[flying]

The evidence is strong and I suspect will soon be repeated that gold, over the long-term (once speculation and fear are at normal levels), offers historical returns of 4-6% a year,

For me that has always been the guidepost. At this time I do not see fear at normal levels...quite the opposite.

As for speculation...I am not so sure most who have bought gold are speculating. If so why not go with equities?

Looking back at 2008 you could have bought many like F (ford) at $2 & rode it to $20 there were & probably are many

that provide a better speculation trade.

This opinion you quoted could be right on & at times the rise in metals does look like a blow off.

But I recall the same being said when it approached $1000/oz & then at $1200/oz most said oh too late now to get on

then $1500 etc etc.

I continue to not look at price but reasons that drove the increase. As far as I can tell they are still providing reasons for more increasing & strengthening.

If I see the slightest light at the end of the tunnel I will start liquidating at least my initial investment.

Which is now nearly only a third of the current value

[ExpatJ]

The evidence is strong and I suspect will soon be repeated that gold, over the long-term (once speculation and fear are at normal levels), offers historical returns of 4-6% a year,

For me that has always been the guidepost. At this time I do not see fear at normal levels...quite the opposite.

As for speculation...I am not so sure most who have bought gold are speculating. If so why not go with equities?

I agree the fear is still high and the increased likelihood of recession and further turmoil in Euro land dont make stocks any more attractive.

But i do think many speculators are in gold right now- i know i certainly am, i just bought in in November (gold bars ) last month (paper gold) and 2 weeks ago (paper gold) in a big way , and expect to sell by the end of the year once the Euro crisis is over or looks like being solved.

Edited August 22, 2011 by ExpatJ

[Naam]

PostNaam, Today, 05:52 , said:

The evidence is strong and I suspect will soon be repeated that gold, over the long-term (once speculation and fear are at normal levels), offers historical returns of 4-6% a year...

i didn't say that but copied and pasted. historically gold did not offer that kind of return ...no matter what fairy tales are spread by gold aficionados.

Edited August 22, 2011 by Naam

[Naam]

just received from one of my my banksters:

Dear Naam,

as we discussed and agreed last year Gold remains the ultimate diversification in the current market environment and indeed Gold as portfolio diversification is not even as widespread as one might think … Currently Gold trades at USD 1'875/oz, and I would like to highlight that our commodity analysts have raised their Gold forecast once again, this due to economic woes and growing sovereign debt concerns.

They are increasing their short-term trading range to USD 1'724-2'200/oz and indeed maintain their bullish view. Subsequently there are lifting their 12-mth forecast to USD 2'200/oz from USD 1'800/oz. The 3-mth forecast is also set at USD 2'200/oz.

Indirect support for Gold is coming from Swiss and Japanese authorities. Their unwillingness to see a further appreciation of their currencies is limiting the number of safe-haven investments.

Please see enclosed our updated report. Happy to organize a conference call with our Analyst If required.

Best regards,

B. Ankster

p.s. please don't forget to pass on this important message to your goldilocks friends Flying, Churchill and the one who is lost in Los.

[flying]

Best regards,

B. Ankster

p.s. please don't forget to pass on this important message to your goldilocks friends Flying, Churchill and the one who is lost in Los.[/i]

Please pass along my thanks to Mr Ankster

PS: I see Gold up another $35/oz in Asia/Euro markets

PSS: To buy one gold eagle oz coin tonight the price is $2006.49 as I type

Edited August 22, 2011 by flying

[churchill]

It looks like panic .... Where are the take downs ? We'll be at $2000 by the end of the month at this rate !

with prices going up this fast - there must be big sell off at some stage or perhaps not ..

I wonder if Venezuela asking for delivery is behind it .... ( along with everything else ! )

Silver also doing well .. looking towards $50 again .

The problem is I don't think anybody can see any solutions to the debt problems apart from more qe and with all the politicians on holiday ...........

Edited August 22, 2011 by churchill

[Naam]

Raising our forecasts

• Due to economic woes and growing sovereign debt concerns, we

are raising our gold forecasts once again.

• We are increasing our short-term trading range to USD

1,724-2,200/oz from USD 1,578-1,850/oz and maintaining our

bullish view.

• To underpin that the developed world is still far way from solving

the sovereign debt crisis, we are lifting our 12-month forecast to

USD 2,200/oz from USD 1,800/oz.

No blue skies ahead

Our decision to once again raise our gold forecast reflects our growing

concern that more turbulent times await. Global growth is at risk of slowing

sharply, with fears over a contraction in the developed world in the

short run. US high-frequency indicators for August have given investors little

hope to believe otherwise. While less economic growth does not mean a

higher gold price per se, already unsustainable debt dynamics in the US and

Europe would become even more unsustainable. At the upcoming symposium

at Jackson Hole on 26 August, Fed Chairman Ben Bernanke could

highlight further monetary policy stimulus. On the other side of the Atlantic,

the ECB is buying government bonds on a grand scale to prevent the debt

crisis of peripheral Europe from spreading. With the euro at risk, potential

rate cuts in the Eurozone and the Fed should stay put, real interest rates

will remain in negative territory and gold should stay in high demand.

Fewer safe-haven currencies

Indirect support for gold is coming from Swiss and Japanese authorities.

Their unwillingness to see a further appreciation of their currencies is limiting

the number of safe-haven investments. This channeling of safe-haven

money into gold could also receive support from investors looking to invest

in gold's relative outperformance versus CHF and JPY.

Recommendation

We view gold as an outright buy until it reaches our forecasts. We expect

good support levels around USD 1,724/oz.

signed: anal-luster

[cloudhopper]

Gold is getting tired . looking for sells, have 15 min , 30 min and 1hr sell confirmations. need that 4hr one. 1850 here we come

Now 1859 and still in the game from previous short...

Some of our resident experts would appear to have a different opinion. I'd rather hold the real thing and sleep nights myself...

[Naam]

[churchill]

The Neverending Story of a "Gold Bubble"

http://www.kitco.com/ind/Holmes/holmes_aug222011.html

and a short term outlook from Turd ....

So, What's Next?

http://www.tfmetalsreport.com/blog/2155/so-whats-next

Edited August 23, 2011 by churchill

[flying]

So, What's Next?

http://www.tfmetalsreport.com/blog/2155/so-whats-next

I agree & said so last week.

Options expire this week & that is where they make their usual stand via margin increases etc.

Matters not to holders of physical.

Just chases the renters out for awhile

Watch the premiums act accordingly

Edited August 23, 2011 by flying

[churchill]

Monthly Gold Chart with some Price Projection levels

http://traderdannorcini.blogspot.com/2011/08/monthly-gold-chart-with-some-price.html#comments

[cloudhopper]

Monthly Gold Chart with some Price Projection levels

http://traderdannorc...e.html#comments

I love how these chart guys use pages to say it could go either way. Then there's this -

"Should the market blow through these levels, then we will have to resort to other methods to anticipate some potential inflection points."

Good plan trader Dan! BTW don't ever let the streams cross dude...

[churchill]

Monthly Gold Chart with some Price Projection levels

http://traderdannorc...e.html#comments

I love how these chart guys use pages to say it could go either way. Then there's this -

"Should the market blow through these levels, then we will have to resort to other methods to anticipate some potential inflection points."

Good plan trader Dan! BTW don't ever let the streams cross dude...

Like clown Gartman sell one day buy the next ..

or wall st .. Gold Bubble Alert: Wells Fargo Warns Clients http://moneywatch.bnet.com/investing/blog/investment-insights/gold-bubble-alert-wells-fargo-warns-clients/2313/

and 2 days later .. Wells Fargo Gives Three Reasons Why Gold Is Not In A Bubble

Read more: http://www.businessinsider.com/wells-fargo-gives-three-reasons-why-gold-is-not-in-a-bubble-2011-8#ixzz1VpJw53SW

[churchill]

There you are -- a good buy signal !

Economist Dennis Gartman Said He’s Reducing His Gold Position ~ Bloomberg Wire (he warned would go parabolic on Monday)

[flying]

Vice Chairman Of Germany's CDU Party Demands Gold As Collateral From European Bailout Recipients

[GentlemanJim]

Naam

ref your post 4980

Excellent, than you so much for the time you took to post, Nice one!

[Naam]

it didn't take much time. i just copied and pasted.

[Naam]

There you are -- a good buy signal !

Economist Dennis Gartman Said He’s Reducing His Gold Position ~ Bloomberg Wire (he warned would go parabolic on Monday)

did he also mention at which position in a parabola his gold position is?

[flying]

Two possibilities....

One... this is the lead into option expiration week chaos previously mentioned

Two..The cycle types see today (23rd) as Gann's anniversary with the Dow

Signaling tomorrow as the start of a slingshot.

As always Will be interesting to watch

[farang000999]

PostNaam, Today, 05:52 , said:

The evidence is strong and I suspect will soon be repeated that gold, over the long-term (once speculation and fear are at normal levels), offers historical returns of 4-6% a year...

i didn't say that but copied and pasted. historically gold did not offer that kind of return ...no matter what fairy tales are spread by gold aficionados.

This is very disingenuous of you Naam. For very long portions of history paper money was on a gold standard. Do you think it is fair to compare stocks to gold when gold was the equivalent of cash? Why should we not start looking at Stocks vs Gold from the point where Nixon closed the gold window?

Let's see, in 1971 gold was $40/oz.... Now it is 1800/oz

And somehow stocks have outperformed?

Edited August 24, 2011 by farang000999