Gold Discussion

I want it to reach $1500. Then I get a BIG bonus And then I am out of here and be a full time trader for myself instead of working like a slave and giving all the profits to my overpaid bosses

any idea when gold will drop?

approx

If I knew that, I would get an even bigger bonus

This week we should see some kind of correction, but lots of support beneath so it might not be very deep.

Charts for Oct. 16th posted on my blog

It can't reach $1,500 this year but it may hit $1,350 in 6 month's time, according to an expert review on CNBC. Personally, I see great potential in $1,500 within that time frame without undue intervention by central banks around the world to control prices. I'll just be happy if the prices could increase $100 every month until it reaches $2,000 by the end of 2010!

Just 4 Considering !

crude oil 80$ a barrel !!!!! 1 year high!
any1 profiting there?

I posted my daily chart for Oct. 20th, 2009 on my blog

News reports show that pension funds will begin to purchase gold as financial insurance, which will lead to further price increases. Already the Teacher Retirement System of Texas has announced that they will be purchasers.

Good article:

Gold at $2,000 Becomes Inflation-Adjusted Bullseye for ‘80 High

Oct. 19 (Bloomberg) -- Gold’s rally to a record means prices are still 53 percent below the 1980 inflation-adjusted peak.

While gold rose 19 percent this year to $1,072 an ounce on Oct. 14, consumer prices almost tripled in the past three decades, eroding the metal’s value. Bullion hasn’t kept pace with the cost of bread, fuel or medical care. In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.

Record government debt and interest rates close to zero percent are pushing gold higher for a ninth straight year, and options show investors expect the rally to continue. When prices reached all-time highs, the contract with the most open interest was the December call to buy the metal at $1,200. The contract to purchase at $1,500 an ounce was the third biggest.

“Gold is not at any peak,” said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages $58.5 billion in mutual funds and brokerage accounts. “The world’s money supply has increased and gold hasn’t kept pace,” he said. “We’re now in a period where gold is catching up.”

The U.S. Dollar Index, which measures the currency against those of six major trading partners, fell on Oct. 15 to the lowest level in 14 months, and has dropped about 7 percent this year. President Barack Obama has increased the nation’s marketable debt 22 percent to $7.01 trillion to revive growth.

Preserving Value

Gold bulls say today’s record borrowing and low interest rates mean the government will have to accept faster inflation as the economy recovers. Investors buy bullion to preserve value during times of turmoil and economic stress.

Financial institutions worldwide have reported credit losses and writedowns of about $1.62 trillion since the start of 2007, when the credit crisis began. Group of 20 governments have pledged about $11.9 trillion to ease credit and revive economic growth, according to the International Monetary Fund.

“Gold is the hedge against currency devaluation,” John Brynjolfsson, of hedge fund Armored Wolf LLC, said in a Bloomberg Television interview from Aliso Viejo, California, on Oct. 7. He predicted bullion will top $2,000.

Banks have raised their gold estimates. On Oct. 9, JPMorgan Chase & Co. said the metal will average $1,006 an ounce next year, compared with an earlier projection of $950. Deutsche Bank AG forecast an average of $1,150, up 32 percent from its estimate in July. Barclays Capital said Oct. 12 that “prospects for a run at $1,500 should not be underestimated” next year.

Understated CPI

Gold would need to rise more than sixfold to top the 1980 record, using a more accurate inflation-adjustment, said John Williams, an economist and the editor of Berkeley, California- based Shadowstats.com. He said the government has understated the cost of living over the past two decades with adjustments in the way it measures the basket of goods and services monitored by the U.S. consumer price index, or CPI.

Gold futures for December delivery closed Oct. 16 at $1,051.50 an ounce on the New York Mercantile Exchange’s Comex division, gaining for a third straight week.

“If the methodologies of measuring inflation in 1980 had been kept intact, gold would have to hit $7,150 to be the equivalent of the 1980 record,” Williams said.

The cost of living in the U.S. rose 0.2 percent last month, the Labor Department said on Oct. 16. Compared with a year earlier, consumer prices fell 1.3 percent. The CPI will drop 0.5 percent this year, before rising 1.9 percent in 2010, reflected by the median estimates of 61 economists in a Bloomberg survey. Annual increases averaged 2.8 percent a year in the past decade.

Purchasing-Power Adjustment

In March 1980, inflation surged to a 14.8 percent annual rate, two months after gold capped a four-year rally. Adjusted for the decline in the dollar’s purchasing power since then, gold’s Oct. 14 record of $1,072 represents the equivalent of $409 in 1980 dollars, the Labor Department calculator shows.

Since January 1980, the average price of a pound of white bread has risen almost threefold, from about 50 cents to $1.38 in August, and medical care has surged more than fivefold, Labor Department figures show. Gasoline and electricity prices have more than doubled.

Today, the gap between gold’s spot price and its CPI- adjusted equivalent is the widest ever.

Gold hasn’t been as effective a hedge against inflation as oil since the 1980s, said Matt Zeman, of LaSalle Futures Group LLC in Chicago.

Oil Beats Gold

Crude passed its 1981 inflation-adjusted record two years ago. The cost of imported oil averaged $39 a barrel in February 1981, after Iran cut exports, according to the Energy Department. That’s $89 in 2007 dollars, the Labor Department calculator shows. Oil reached a record $147.27 on July 11, 2008, and closed at $78.53 on Oct. 16 in New York trading.

“If you bought gold in the 1980s, you’re still losing money today,” said Zeman, a metals trader. Gold prices in New York languished for two decades after declining from the 1980 record, dropping to a 20-year low of $253.20 on July 20, 1999.

While bulls say gold is cheap, the inflation-adjusted price is 15 percent above its 30-year average, Bloomberg data show.

The Federal Reserve may limit gains by raising interest rates before inflation balloons, analysts said. Fed Chairman Ben S. Bernanke said on Oct. 8 that policy makers will need to raise interest rates “at some point” to control inflation.

‘Prepared to Tighten’

“When the economic outlook has improved sufficiently, we will be prepared to tighten,” Bernanke said in remarks prepared for an Oct. 8 conference in Washington.

Fed moves to cool inflation and the government’s revenue needs will stop gold, according to Jon Nadler, a senior analyst for Montreal metals dealer and refiner Kitco Inc.

“These wild calls for several-thousand-dollar gold are typical of times when gold goes into uncharted territory,” Nadler said. “The Fed will pull the interest-rate trigger and the Obama administration will, in addition, pull the tax-hike trigger before we get into any serious inflation. Once the man on the street gets in, the gold rally is likely over.”

Gold held in exchange-traded funds climbed to records this month at Zuercher Kantonalbank and ETF Securities Ltd. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, are up 42 percent this year. Hedge funds and other large speculators hold their most-bullish position ever in gold futures. So-called net-long positions, or bets prices will rise, increased by 6 percent to 253,955 contracts in the week ended Oct. 13, according to the Commodity Futures Trading Commission.

Gold Producers

The Philadelphia Stock Exchange Gold & Silver Index jumped 43 percent this year, as Phoenix-based Freeport-McMoRan Copper & Gold Inc. tripled. Toronto-based Barrick Gold Corp., the world’s largest producer, fell 10 percent. Barrick said Sept. 8 it will record $5.6 billion in third-quarter costs to eliminate fixed- price contracts as the company bets gold’s value will climb.

At Jersey, Channel Islands-based GoldMoney.com, which held $759 million of gold and silver for investors as of Sept. 30, founder James Turk said bullion can climb eightfold based on the historical relationship between the metal and the Dow Jones Industrial Average. The Dow is up 10-fold since January 1980.

Gold and the Dow, which has gained 14 percent this year to 9,995.91, were at about the same level during the Great Depression and the early 1980s, he said. On Jan. 21, 1980, as gold futures surged to $873, the Dow slipped to 946.25.

“The dollar is constantly being debased and inflated,” Turk said. “By 2013, gold is going to be at $8,000 and the Dow will be at 8,000.”

Gold-Dollar Link

Deutsche Bank said early this month that the dollar will fall to $1.60 per euro next year, a drop of 7.3 percent from last week, because of “rising fiscal deficits and loose monetary policy.”

Gold has moved in the opposite direction of the dollar over most of the past decade. The metal’s correlation coefficient to the U.S. Dollar Index is minus 0.8539, Bloomberg data show. A correlation of minus 1 indicates two assets move inversely to each other, while a 1 would show they move in tandem. A reading of zero shows no correlation.

Philip Gotthelf, the president of Equidex Brokerage Group Inc. in Closter, New Jersey, says he expects gold to trade at $1,250 by year-end.

“Gold has been pushing higher because it’s no longer just a hedge against commodity inflation, it’s also a hedge against a change in world-monetary standards.”

I've expressed my point of view on the current gold situation in one of my blog posts (I won't link because it may be considered an ad), but, in my opinion, the bubble scenario is becoming more and more probable with the recent all-time high breaks.

The tries of the gold standard supporters to prove that the gold can substitute the paper money are rather childish. And China buying the bullion and driving the prices up is looking more and more like the hedge funds that were buying oil futures in 2007.

By the way, the full cost of gold extraction and producing in Russia is near $350-$400. And that's not the most effective country, economically speaking. In my opinion, we can see a gold near $600-$650 again, but, of course, it may reach $2,000 and even $3,000 on some speculative wave before that.

In my view, China buys gold is a story the bulls have created. These days anything with a China angle sells and that's what the bulls are exploiting.
China is as far from transparent as can be in this regard. In fact, if they were to shift their USD reserves into gold, they'd probably want to be opaque.

I posted my charts for the week ending Oct. 23rd on my blog

http://finance.yahoo.com/techticker/...ing,-But-I-Don
.

He forgot to mention the third reason for the gold too grow - the purely bullish speculative bubble-rally, when gold is bought just because everyone is buying. I believe that's what we are seeing now.

Finally some movement - daily charts for Oct. 26th posted on my blog

We R In 4th Wave !
Take care !

There’s anxiety that gold can maintain a price above the $1,000 level and the number of buyers out there right now is diminished according to metals traders. I think investors are worried about a rally in the dollar, especially after the strength shown by the dollar the last few days. Gold continues to fall, heading for the longest decline since August, which provides a nice re-entry point after having reached 1064.

Based on the ZAR, gold should be under $1,000 pretty soon. Or the ZAR should strengthen by about 4% to about 7.4

But will you trade it?

Would a break of the bear flag shown on the H3 chart be a good short entry?

How about a touch or break of the U/Z UTL?