gold stuck in a trading range

MoneyLA

despite the recent price surge, gold is simply stuck in a trading range. this is what Ive been telling my web site readers and tv viewers.

not until gold breaks out above 1,000 will there be a new bull market.

gold will continue to bunce around 800-950 which is really not enough profit potential to justify the risk or the taxes on possible gains... and the new higher premiums on gold coins further cuts into the profit potential.

I am still steering away from gold.

those of you who know me know that I sold my gold earlier this year at $945 an ounce, and I have no regrets.

but I would consideer buying gold again if there is a break out above 1,000 that HOLDS.

NumbersUsacom

You maybe correct.

I was viewing the niffty charts recently put up by FC yesterday complete with trend lines and it appears that
either a trading range is emerging or the next step down to 650-700 is comming. But thats just an observation based on two charts,
no other fundamentals or technicals, and including all of my biases.

roadrunner

I'm not sure I get the logic in bailing out at $945 and then buying back in at something well north of $1000 once it's apparent a new bull is here. What if gold rises from $990 to $1075 in one day? Are you back in then?

Assuming gold gets to $1039+ by March 2009, would your alternative investments from the sale of gold at $945 have made more than 10% for you in that year's time? Unless you've been short bank stocks or gold the past year, it would have been tough to find a 10% return out there. And I'm assuming that by not buying back in at $750 (which would have allotted you the chance to sell again at $920+....a 20% gain in weeks that could have accomplished the same thing as buying gold at $1050 and holding until $1250) that you have doubts about this bull market every regaining traction.

In short, I'm not clear on the logic or the goal. It's certainly not trading and doesn't appear to be any flight to safety. Frankly, at some point in this market a $200 rise in gold could occur in a single day and keep on going. And that's not the day I want to be waiting for a better buy in price. With the current state of the financial markets, such a move is more likely every day.

I believe it was cohodk that should get credit for those gold charts posted yesterday. At least the ones that I saw were cohodk's. He's been putting those up every so often for years now.

roadrunner

fc

<< <i>ay.

I believe it was cohodk that should get credit for those gold charts posted yesterday. At least the ones that I saw were cohodk's. He's been putting those up every so often for years now.

roadrunner >>



it was not I who posted those graphs. cohodk is a very good guess.

MoneyLA

roadrunner let me explain.

I think gold's rally died when it failed to hold above 1000. I sold on the way down, and got a price at about 945 on the way down.

I am happy with my sale, and with the long term profit I made.

what I am saying is that I can be wrong, and gold can make another move and enter another bull run.

by my technical analysis, gold would have to move back above 1000 and stay there for a while to justify a new bull run.

in other words, I am not married to my position that the bull run for gold is over, and I am willing to accept a new bull run in the future.

my indication for that new bull run is a move back above 1000 that shows some staying power.

if you trade stocks, metals, anything, you can accept this strategy.

to sum it up: I made a profit seeing gold move from about 300 to 945.

if gold heads north of 1000 again, I will be ready to move back into gold for another bull run.

NumbersUsacom

I stand pleasantly corrected. Cohodk does get the credit for posting the niffty charts.

Sounds like a plan MoneyLa, and I know a commodity may pull back to its previous top or even a little below it, before launching
its real upward move , but there are times that this does not occur and it launches right through that previous ceiling with no let up
until a sizeable move has occured. Gold is a good example of one that may launch with excessive mania buying because no one likes
being left behind. I believe RoadRunner is sounding a clear possibility that is nice to be aware of. Glad you made good profits on your
previous purchase, enjoyed your post.

MoneyLA

the risk you are talking about, in technical talk, is called "gapping up."

gapping up means gold would jump from, say 950 to 1050 in one day. while that can happen, the jump to 1050 if it holds would be the signal to invest in gold again.

the risk that gold can jump overnight from 950 to 1150 to 1250 is slim. and those of us who follow technical analysis know that "gaps" in charts get filled, meaning that if gold did gap higher, there would be a pullback to fill the gap or come back to the gap-up point.

history teaches us this. so there is no need to panic. and we keep to our plan.

the real risk now is that gold will not reach 1000 again for months or even years.

roadrunner

One thing missed in that analysis is the opportunity to sell off a portion of one's holdings when/if gold rises to say $1150 or $1250, and then buy back on those inevitable "gaps." Why toss away such a perfectly acceptable gift? The fact that gold is still at 1980 levels in comparison to everything else that is 2X to 5X higher in price still indicates an error in valuation that needs to be rectified. Now either those assets need to come down a lot (S&P, DOW, etc.) or gold needs to move up a lot. The Dow/gold ratio continues to move downward towards historical low single digit levels (currently at 12.5). We will see the first single digits very soon...maybe first quarter of 2009.

The current financial and metals markets are not acting like anything I've witnessed in 35 years. With the HUI/XAU at levels that indicate a level of gold at $500-600, while physical gold is at $830, something is not right. Now either the paper market is severely sold off via the manipulation route, or physical gold is soon to follow paper gold to new depths. Take your pick.

roadrunner

57loaded

tomorrow will be a BIG day for USD

MoneyLA

Roadrunner.... there is NOTHING wrong with your strategy to buy and hold gold... if you are patient.

But I remember gold peaking at $875 an ounce back in 1980 and then falling, and taking more than a quarter century to return to the $875 level.

My chartwork tells me that gold had a rally failure a few months ago when it failed to hold above $1,000 an ounce... and after several attempts to get back to 1,000 an ounce I sold at $945. Gold has still not returned to the $945 level that I sold at.

Im not convinced that gold will return to $945 anytime soon, let alone the 1,000 price level. Even during the worst of the financial crisis of the past two weeks, gold could not hold above $900 an ounce.

However I am willing to make this concession: should gold get back above 1,000 an ounce and hold there, it might trigger a new bull run, and I will be willing to try that new bull run again.

In the meantime, I have no money at risk in gold, and sold near the recent all time highs.

fishcooker

Geez, a 20% price window is plenty large enough.

ProofCollection

Gold is about to make a huge move up *OR* down, some time this week.

I want to believe it's going to be up, but there's a good chance that it will go down too. It's usually best to sit out of this situation or buy an options straddle. If there is going to be a gap up or a fast move up, there will be plenty of opportunity to get in on it. The next move up could start with a dip down to $792 or so.

MoneyLA

even with today's tumult, gold failed to break above 900. what message is that sending to the golden bulls??

jmski52

even with today's tumult, gold failed to break above 900. what message is that sending to the golden bulls??

hmmmmmm..............stock market, gold.............stock market, gold.............hmmmmmmm.............

I know what I think, and it's not about paper right now.

COINB0Y

Even when the $.VIX.X hit 58, GLD was not picking up the slack.

Short term, I think there is a down leg to go.

What is not good is that there are too many Bulls saying its off to the races soon.

COINB0Y

We need a nice double bottom at $72.70





Looks like a fall coming:

ProofCollection

<< <i>even with today's tumult, gold failed to break above 900. what message is that sending to the golden bulls?? >>



Expecting a $60 move in one day is a tall order, don't you think?

Today's action showed that it is not time for gold to take off yet. Silver is not confirming the bullishness. I think it might need to retest $792.

Fjord

<< <i>even with today's tumult, gold failed to break above 900. what message is that sending to the golden bulls?? >>



One possibility is that GLD and other investment vehicles are being sold by investors and entities that are facing margin calls. This often happens in panics - lots of assets, even solid ones with no trouble, get trashed because they're being sold to meet demands for cash that the crappy investments are sucking away.

Maybe they'd rather not be selling GLD and t-bills in this market, but if they're hit with a margin call, they have no choice.

This would also explain why (if true) that individually purchased and held units of gold and silver are scarcer and more expensive than the price of GLD or SLV would indicate. People who buy gold/silver and store it in their safe deposit box are not under the same pressures as those who are fully leveraged in the open market.

MoneyLA

the beauty of technical analysis is that fundamental reasons don't matter. only the price action matters.

you can come up with all sorts of reasons for gold not moving back above 800, and not moving back above 1,000.

but regardless of the reasons you come up with, the fact is gold is stuck in a trading range.

and the trading range says gold has little upside potential.

ProofCollection

What do you mean? It has all of the potential to re-test and surpass its recent highs at $1030. The next move up will take us over $1000.

Silver is confirming gold's overnight move, so I may have spoke too soon. Gold may be ready to go.

roadrunner

The Treasury has helped the Fed out by issuing additional debt exclusively for its use. This helps soak up the excess reserves created by the Fed’s numerous loan programmes, which has caused its balance-sheet to balloon to $1.2 trillion. But the Treasury has congressional limits on how much debt it may issue. In search of a permanent way round the problem, the Fed has asked Congress to let it pay interest on bank reserves. It could then expand its balance-sheet indefinitely without driving the fed funds rate to zero; a bank will not lend out excess reserves at 0.25% if it can earn 1.75% at the Fed. The new bill would raise the debt ceiling and permit the Fed to pay interest on reserves immediately."

We understand that a provision allowing the Fed to pay interest on bank reserves was included in the Troubled Asset Relief Programme (TARP) approved by Congress late last week. This means that the Fed can now inject unlimited amounts of new money into the financial system without having to worry about pushing the Fed Funds Rate below its target.

Above, Steve Saville helps explain the reason for the acceleration of the Fed paying interest to other banks in the bailout bill. Now it makes some sense. This is where gold will respond to the additional liquidity being pumped into the system. Other assets not being "money," will take months or years to see the inflation effects.

roadrunner

NumbersUsacom

Once this economy picks up steam again, the fed is going to have to deal with all this inflationary priming, but as usual they will let the liquidity train run
too far before they put the brakes on hard enough to curtail it properly. Realestate might be looking good this winter also.

fishcooker

the beauty of technical analysis is that fundamental reasons don't matter.

Oh, if only.... if only.

Baley

The new range appears to be 1150-1450?, and spends most of its time these days between 1250 and 1380?

Gold appears about fairly valued at about $1330, with platinum about $100 higher than gold and silver around $22?

Personally, I'm a buyer below $1150 and a seller above $1600, mostly sitting tight with gold in between,

it's not exciting anymore and the gold market struggles to dredge up news on the barbarous relic

derryb

I'm expecting an $1100 low before the next big leg up. And I expect silver to trend likewise, the only difference being a fatter leg.

jmski52

Upon re-reading part of this thread, I wondered what 57loaded was alluding to when he said this -

tomorrow will be a BIG day for USD

So I decided to check.

This thread was right during the credit crunch crisis, right after Lehman failed and the (initial) bailouts took place.

Oct. 6, 2008 CNN Market Report

And the next day as well.

Oct. 7, 2008 CNN Market Report

And the hits just kept on coming.

Oct. 8, 2008 CNN Market Report

Oct. 9, 2008 CNN Market Report

Oct. 10, 2008 CNN Market Report

This is what QE has always been about. The bailouts continue as QE.

And you worry about a little dip in gold prices? And you wonder why they don't "taper"?

Nothing is fixed. It's smart not to forget that.

derryb

current dip is most likely a result of upcoming FED meeting next week where it is expected some taper will be announced. If it is I expect it to be token, probably a $15B monthly reduction. Most of us know that if tapering does occur, conditions dictate it be temporary and will only provide an opportunity to eventually come back with more than the current $85B a month. I suspect the FED will soon be buying the half trillion owed to the government in student loans; the other half trillion owed to privates sources will be eventually causing a hit in the private sector. Metals, in the mean time, will suffer along with an eventual drag on equities. News will take over temporary metal price movement, but fundamentals will continue to drive their positive long term outlook.

While the expected announcement soon that Larry Summers will take over the FED should have a positive affect on metals, the market has been known to react in error - usually in the wrong direction only initially. Once the buzz wears off, the market normally regains its senses. Summers, like his predecesor will prove to be an enemy to the middle class and a close friend to stackers. A surprise announcement of Yellon for FED chair will require a different assessment. I believe the overlooked, dark horse to be Geither, and would not be surprised to see it happen - however, the market would be caught with its pants down and not know how to react. There has got to be a good reason for Giether's early departure from Treasury and I believe it was done in order to work on preparations for a new FED approach, possibly an expedited, yet orderly dollar devaluation. We will know soon enough and be under the influence of a new economy management approach before the end of the year. I suspect things are in one way or another going to be a bit different. Whatever develops, my long term outlook for metals remains as strong as ever. What it would take to change that long term outlook has yet to be, and will continue to not be delivered by those calling the shots. They are achieving exactly what they set out to achieve, the problem is it does not include you and I.