Short Term Gold and Silver Trade Discussion - December
ProofCollection
Posts: 6,247 ✭✭✭✭✭
I wanted to start this thread to bring together those of us who trade PM's on a short term basis: from a few days to a few weeks. No one is a PM bull or a PM hater here - we're just playing the short term trends. We don't care if you think gold is headed to $5000 in the next two years, we want to know where it will be in two days or two weeks.
Use technical (chart) analysis, news events, or whatever data to discuss when and where the next turn is going to be. Be sure to describe this to us - your projections are worthless unless we know how you're deriving your projections.
This thread is just to help traders collaborate and share viewpoints and interpretations since charts and news can be read in many different ways. That being said, I DO NOT advise anyone to use the information provided here for their investment decisions. This is for fun only.
I'll start a new thread every month.
Use technical (chart) analysis, news events, or whatever data to discuss when and where the next turn is going to be. Be sure to describe this to us - your projections are worthless unless we know how you're deriving your projections.
This thread is just to help traders collaborate and share viewpoints and interpretations since charts and news can be read in many different ways. That being said, I DO NOT advise anyone to use the information provided here for their investment decisions. This is for fun only.
I'll start a new thread every month.
0
Comments
There is a chance that if gold doesn't emerge strongly from the $770's in the next day or so or sinks well into the $760's, we could be in for more downside.
Last time he came in , he brought in over 35 oz of gold, just before the last big drop. Luckily It was during business hours so I apologized, but sold it over the phone while he was sitting in front me. That was a close one as it dropped liked 80 bucks the next day ot so.
jim
with the way things are going economy wise i cannot see silver over
10 much at all and gold will stay between 700-800. there will be no
really shocking news to make things go either way, down or up.
stagnant might be the right term i am looking for. No way silver will
get past 11 or gold 865 in my opinion.
i plan to lay low, aquire silver as cheap as possible (close to spot)
and prepare to sell it in Jan on ebay for the usual profits. All the talk
of the economy and the stock market doing poorly will keep the frenzy
alive for a bit longer then I think for small time buyers.
so that is what i think will happen in Dec. Good buying opportunity
basically. Little chance for the metal to make a profit by itself. Maybe
long term it is there but I do not know and am not betting on it.
It's peculiar right now because metal has been in the media, it's at a relatively low price, govt's are herding up to the buy window, the great COMEX run on physical didn't occur so what happened...nothing it appears. I do know that folk are still buying small quantities but methinks the heavy hitters are already in position and are just waiting, jmho. The metal is stagnant sans a 5% up or down move on any given day. No rally, no falling, nothing. I guess that blows the "volitility" argument especially when dow stocks are up or down 500 or 600 on any given day...hey, you think metal is dicey, wanna buy some dow indexes?
Short term, I just don't see anything happening. Maybe when some new O policies come into effect things might shift but I just don't see much going on short term.
i tend to think precious.
there is a lot of "frustration" in all commodities markets right now, many unknowns about what the FED banks and Treasury will do and how far "bailouts" will go...local governments and States are even asking for handout or help...this should be very bullish for gold....should be
a somewhat exasperated (IMOO) Dan Norcini has a long comment on Sinclair's site about the recent happenings with gold.
as always am curious what Brian, Dave and Terry have for comments.....
good post topic....to stay on track with a thread ProofCollection
to cover my GLD SHORT. If I was not sooooooooooo greedy, I would
have covered weeks ago.
I thought for sure that Mumbai was going to cook me on Monday; it
did not. Sort of saved me, and boosted my confidence that lower
lows are on the way. If that DISASTER cannot move gold up, I don't
know what can.
My SLV SHORT is in fat city, but I would like to get out of that too.
..............
My PawnBrokerIndex says that cash is in SUPER short supply among
the average folks. The quality of pledged items is up, pledge volume
is down, and pledge redemptions are at a 30-year low.
This tells me:
Upscale folks are having to dump/pledge their stuff.
Poor folks have run out of stuff to pledge.
Most folks cannot afford to redeem their pledges.
...........
Two banks have rasied interest rates on me substantially, in the last two-weeks.
Nobody has cut me off, but there is NO cheap-money.
If I cannot borrow, I cannot lend.
If the credit-card companies pull $2-trillion off their "available credit" lines, I suspect
most folks will have more on their minds than buying PMs.
.............
When I finally cover my PM SHORTs, I will slowly start building a LONG position in
SLV; maybe GLD, too.
I keep averaging down on my MOO; very disappointing results.
..................
I am with the perma-bulls in the belief that saturating the field with paper dollars
is "fundamentally" good for PMs. But, many economists are in agreement that the
damage does not kick-in UNTIL the banks move the paper-money into the system
via loans. The banks ARE hoarding the cash.
banks will lend at a price...they just think that the near future will hold for higher interest rates??? does that make sense to you?
///////////////////////
The rates they suck from me are WAY higher than they were 6-months ago.
This year, both of my main lenders gave me several "credit cards" that are
designated for different purposes and have different rates and terms. In the
past - before 2008 - I simply wrote checks on a CL, and either covered them
as agreed or let them ride and paid the interest.
Now, it seems to me, they act like they are doing me a favor to do biznez. In
the past, they seemed to be eager to lend and get paid. They have not asked
for any additional docs or threatened to cut-back, but they certainly do not act
"happy" to see me.
The amount I can afford to pay for money is fairly fungible. But, shops I finance
and loan money to are not in that position. If they can no longer afford to use
my money, my need for money decreases; if they are priced out, they will fire
workers and maybe even go out of biznez. If I cannot earn that lost revenue
some other way, I could also lay off workers. I see NOTHING bullish for PMs
in the current on-the-ground reality.
...............
The banks no longer have a way to easily securitize the loans they make. There
are NO buyers of the paper at a reasonable discount. This has turned them into
hoarders of the money that they are being given by taxpayers; the purpose of
which "gifts" was to fund commerce and keep the balls up in the air.
It would have been better, as many knew beforehand, to give the banks NOTHING.
Massive failures would have created an opening for new guys to try their hand at
being responsible bankers. Or, the govt could have become the actual banker
instead of using a bunch of incompetent and corrupt middlemen.
The taxpayers don't much know it, but the money they are handing out is not
getting to the folks who can best use it......and, pay it back.
//////////////////////////////////////
If Mumbai did not do it, I have NO clue what will.
Most of the zillions on the sidelines are waiting to buy equities.
PMs may get their share, but no more than that.
......
We have seen a "two tier" price on PMs.
I suspect we will soon see a double tier on interest rates to borrowers.
ZERO FFR, 20%+++++ to borrowers.
As interest rates in the consumer market rise, the sidelined money will
go to work there. And, that same cash will be needed by biznez to pay
operating expenses.
Until/unless the bailout money leaks into the streets, there is really no
immediate upward pressure on PMs.
EVERYBODY needs/wants cash.
........
I suspect that patient folks will see some good PM buying ops in 2009/10.
Really no need to rush, unless one has NO PMs at all.
There are some gold funds and institutional investors in gold and PMs but they have always been there.
www.AlanBestBuys.com
www.VegasBestBuys.com
The next year or two is a great time to buy PM. Do like FC says, be patient and wait for a good price. There is plenty of time. Get silver now at $12-$13 an ounce or less and 5 years from now, I say there is no way you will be down. Short term, anything can happen. Yeah let silver fall to $4 an ounce so I can buy it at $8 an ounce. LOL. I doubt it, even if silver fell to $4, real world prices arent going to go below $10 or $11. To be honest, short term prices are so meaningless because they dont even reflect the real prices of PM'S today.
It's worth noting that yesterday and today the price of gold seems to have de-coupled from the S&P 500. Silver also saw some extra strength today that was not echoed by gold but is kind of following the trend of the S&P 500.
There is no way to pierce the veil of secrecy that the Fed has cast over the bailout money, but the implications are clear - they can do whatever they want, to whomever they want - for whatever reason. If the past is any predictor of the future, there is every reason to think that the government will continue to take from productive members of society in order to buy the votes of less productive members of society. This is now referred to as "economic justice". In other words, don't hope for any miracles here.
Bankers seem to have the final word at this time, but the forces of Economics have yet to weigh in. The Laws of Economics haven't changed, nor will they. The only question is when and who will notice that the emperor has no clothes, and who can make it to the exits fastest.
At that time, I want my assets in a form that has no counterparty risk, and is fungible and tangible. In the meantime, it's probably a real good move to pay close attention to insuring the basic necessities and family security.
On the other hand - you can't plan for every contingency, and you can't prevent every catastrophe. You still have to live life the way that gives you some satisfaction and enjoyment, and there may be deserving folks who need help. We'd all probably be a bit better off if we are still able to return to some of our basic roots & values.
Don't ask me how I got to here from the original OP. Meandering, I guess.
Added - Oh, I remember what else I wanted to say. It may be that gold and silver have more room to drop. It's my feeling however that if precious metals decline by another 10%, other assets will also decline by more than 10%.
Holding cash might seem to be the antidote, except for the danger that it will become worthless in a very short time. And I do think that that danger is real. So, you have to hold a fair amount of cash but you also have to be ready to spend it when it starts depreciating quickly.
If the economic system isn't destroyed completely, there will be a time to do stock research in order to identify companies that actually have a future with their revenue streams. That time's still a ways away, imo.
I knew it would happen.
Knowledge is the enemy of fear
I cant see PMs going higher until there is at least some sign that rates have bottomed.
Knowledge is the enemy of fear
<< <i>Also, as I have tried to state in the past, I believe there is a much more direct corrolation of gold with global interest rates than anything else. As global interest rates hit bottom in 2001 in response to the mini recession and 9-11, so did gold bottom. Global rates then rose until this past summer. The ECB, Australia, New Zealand and Brazil will stiil raising as late as July. And at that time I mentioned they then put the final nail in the their respective currencies coffin as that action would crush their economies. Now countries all around the world cannot cut rates fast enough.
I cant see PMs going higher until there is at least some sign that rates have bottomed. >>
That may be, but the purpose of this thread really is to discuss shorter term trends... the next few weeks. Regardless of market conditions or events, gold is still subject to sizeable moves ($20 or more) in either direction at any time. This thread is about trying to capture those smaller moves.
That said, there's a link in this other thread to an article that really discusses the current state of the economy and commodity prices. Bernake wasn't kidding when they said they supported a strong dollar, and that is what they've done. It's complicated, but it's explained in the thread linked Here.
According to Fekete and some others, gold is now in backwardation, a current positive factor for gold. But this has happened for brief periods before. If it doesn't last, then it's not a factor. But for now, people would rather take their gold home now, rather than hope for a score down the road or beat their heads against the wall fighting the FED and Treasury in the paper futures sweepstakes.
While TA and other factors might not readily support a move up in gold, just the amount of time gold has been surviving with constant NYMEX morning takedowns gives me confidence. Let's not forget that the open interest on the gold futures is essentially gone and at rock bottom levels not seen in years. There is really no enthusiasm in the paper markets. Does that mean there is no enthusiasm in the physical markets? Hardly. Yet with such little open interest, the PPT or any of its henchmen banks can easily sway this weak paper market. I'm not surprised that paper prices can't get traction.
Over 1 million ounces of gold is slated for delivery from the Comex this month. This is a huge increase over recent time periods. It comes down to whether that gold stays in the Comex or is moved out. In one case it is still subject to be played with while in the other case it's not. Things are not behaving the way they should be in the paper markets. On top of that the amount of physical gold sitting in the ETF's is near their all time high...while gold fell 30%. Gold is at record prices to most major currencies other than the USD. Too many things point to future gold strength. Gold has been building fractal energy for months. It's just a matter of what event blows the lid off. Note that even with the most recent jobs report showing 1/2 MILLION jobs lost, that wasn't enough to keep gold from falling. The PPT knew that data was coming out and headed it off at the pass. A year ago, a -150,000 jobs report would have sent gold up $25-$50 within a day or two.
In summary, it's getting to the point where one may have to toss out all the witchcraft being done on the dollar, economy, and commodities and look at reality. It boils down to honest money vs. fiat currency. The pog could flop $100 in a single day in either direction. But the chances of a $100 move down seem far, far less than a move up. I'm still confident we'll see a strong move back up to over $800 in Dec/Jan. Local shops can still not keep 1 0z gold bullion/coins in stock. Buyers are patiently waiting for stuff to show up.
The goal of getting to the election has been met. The last goal in GW's back pocket is to get to January 20th with all the wheels still intact on the USDollar and stock market. The PPT will be seeing frequent action to ensure that the wheels don't fall off until the new administration takes over.
roadrunner
Apparently not . . .
My Adolph A. Weinman signature
<< <i>I believe gold futures prices are still in contango so I wouldnt look for any major uptrends in the near term--months.
Apparently not . . . >>
Refuted
Knowledge is the enemy of fear
I hear you, but I dont view a sizeable move in gold being $20. $50 or more maybe, but not $20. After transactions costs and errors, $20 is not enough of a move to be profitable in trading.
Think of it as a $75 stock going to $77. Just not enough movement, this coming from someone who trades for a living.
Knowledge is the enemy of fear
Still, a $20 move on a futures contract is sizeable and worth trading. Buy a 100oz contract for ~$750 (~$5800 in margin), an increase of $20 gets you $2000, over 33% return on your margin. I'll take that any day.
<< <i>If you're talking physical gold trading, I agree. But futures and ETFs like DGP, it can be worth it. Maybe $20 was too small, but my point was still made.
Still, a $20 move on a futures contract is sizeable and worth trading. Buy a 100oz contract for ~$750 (~$5800 in margin), an increase of $20 gets you $2000, over 33% return on your margin. I'll take that any day. >>
Thats different. DGP and DZZ are 2x ETFs. So a $20 move is really a $40 move, which is closer to what I said you need to trade with some degree of success.
You are also assuming that every trade you make will be correct. Lets say your goal is to make $1000 per week or $200 per day. On Monday you make $200, on Tuesday you make $200, on Wednesday you lose $200. Now it is Thursday and you made only $200 for the week, so you have to double your expected return today and tomorrow to reach your goal. It aint that easy.
Knowledge is the enemy of fear
the real trick in trading is the numbers and being sure as you can be of the item your trading with
took my years to figure that out
Why would increasing joblessness drive up the price of gold? Or were you expecting all of those people who are now out of work to run out and use their food and rent money to buy gold?
Wouldn't the rising tide of unemployment indicate a continuation of deflationary pressure? And bear in mind, it takes time for the effect of new layoffs to filter through the economy.
CG
<< <i>Why would increasing joblessness drive up the price of gold? Or were you expecting all of those people who are now out of work to run out and use their food and rent money to buy gold?
Wouldn't the rising tide of unemployment indicate a continuation of deflationary pressure? And bear in mind, it takes time for the effect of new layoffs to filter through the economy. >>
What makes you think that small investors buying 1/2 or 1oz of gold here and there are going to be the driving force in the gold market? Why do you seem to ignore the billions of institutional dollars floating around the flow from one investment class to another on a weekly and monthly basis? People living paycheck-to-paycheck never would have been gold buyers even with a good paying job, so unemployment isn't going to affect demand from these people. People who have extra money in investments will move their money around as they see fit with the changes in the economy. If they are unemployed, their situation will probably not be so dire as they probably have a savings reserve. These people probably also have diversified invesmtents and the smart ones will elect to liquidate other investments before their PM holdings, if they have that luxury. Yes, some may have to sell some PMs, but plenty of others will be moving their money from bonds, mutual funds, etc. INTO PM's.
Eventually in these cycles, the big money WILL flow into gold and when it does, the price will move fast and far. Compared to other investments, it wouldn't take too much buying to really move the price of gold because there is so little of it to be had that just a few billion will consume most of the supply that's readily available for purchase.
It's not so much about the joblessness as it is the economic uncertainty that comes along with it and the factors that caused the joblessness.
Mexico's largest silver mine is now closed down due to a strike.
Story On Mexican Silver Pit
<< <i>I agree it's not easy, my point was just that a $20 move isn't as small and meaningless as described because there are vehicles out there to make a $20 move very profitable. >>
If some folks want to play that game more power to them. As you wrote, that $20 gain on full margin on futures, can mean a 33% gain on capital invested. The flip side is that if it moves $60 against, like it has on several one day moves in the past few months, it is a 100% loss and perhaps the entire account is wiped out. Those players trading in size on margin for $20 moves are unlikely to last more than a couple of months, and that is if they are exceptionally good and exceptionally lucky. Too many players mistake a run of good luck and winning trades for knowing what is going on and what will likely happen next. The luck will run out, and the vast majority of these type of players will be gone from the game in a short period of time with their entire accounts wiped out.
Again, readers who want to play that game, go right ahead, but understand the risks involved. One bad day, or perhaps even one bad hour can wipe out the entire account, if the risk isn't managed and the position sizes are too big for the capital backing it up. For would-be traders, learning money management in terms of right sizing positions and managing risk is at least as important as predicting up, down or sideways.
who has big money to do this? From the recent news, it appears no one has any big money left. Not the banks, not the investment houses, heck-- even the States are nearly broke. And I don't see Uncle Sam buying gold and silver either.
Now what about consumers? Heck, I don't see the rising tide of unemployed putting their scarce cash into PMs. And I don't see the general public doing it either, which is why gold and silver continue to slip.
What I do see here on these message boards is a lot of wishful thinking.
www.AlanBestBuys.com
www.VegasBestBuys.com
Just because the big funds lost half of their value doesn't mean there's no money left. Where's all the money coming from that has pushed T-Bill interest rates down to 0.1%? Or the dollar indext to ~87? It won't be long before that money will be pulled out of treasuries and put somewhere else. I'm not saying the next stop is going to be PMs, but it would only take a few billion dollars moving into PMs to make PM prices multiply. The total value of the stock, bonds, and derivatives market is still hundreds of TRILLIONS, and a great deal of that money can be moved around at will. And did you forget about the $7-8T in bailout money that banks and other institutions are sitting on? They might just chose to throw it into PMs too. There's A LOT of money out there, and you're foolish to think otherwise.
<< <i> Now what about consumers? Heck, I don't see the rising tide of unemployed putting their scarce cash into PMs. And I don't see the general public doing it either, which is why gold and silver continue to slip.
What I do see here on these message boards is a lot of wishful thinking. >>
There's indeed a lot of wishful thinking among PM holders. All the evidence shows that gold doesn't perform well in recessionary or deflationary environments. That's exactly what we're experiencing now. Eventually, I think it's almost a certainty that the gov't will over-prime the pump and thus create significant inflation. That's when gold should do really well. But that scenario may be several years away. I certainly don't see it happening in the coming weeks or months.
<< <i>Just because the big funds lost half of their value doesn't mean there's no money left. Where's all the money coming from that has pushed T-Bill interest rates down to 0.1%? >>
Umm, the Fed is buying all the short term Treasuries. They've priced institutional & non-competitive bid investors out. You actually think any investor with a brain would be paying virtualy par for T-Bills?
The Fed's idea is to force the major players into commercial paper, etc.
<< <i>There's indeed a lot of wishful thinking among PM holders. All the evidence shows that gold doesn't perform well in recessionary or deflationary environments. That's exactly what we're experiencing now. Eventually, I think it's almost a certainty that the gov't will over-prime the pump and thus create significant inflation. That's when gold should do really well. But that scenario may be several years away. I certainly don't see it happening in the coming weeks or months. >>
Actually, we are at the beginning of a depression. And even if we are not, we are in an economic period unlike any we have ever seen. When in history have you seen this much money created and dumped into the economy out of thin air? How can you vastly increase the supply of something (dollars) while at the same time increasing its value?
<< <i>
<< <i>There's indeed a lot of wishful thinking among PM holders. All the evidence shows that gold doesn't perform well in recessionary or deflationary environments. That's exactly what we're experiencing now. Eventually, I think it's almost a certainty that the gov't will over-prime the pump and thus create significant inflation. That's when gold should do really well. But that scenario may be several years away. I certainly don't see it happening in the coming weeks or months. >>
Actually, we are at the beginning of a depression. And even if we are not, we are in an economic period unlike any we have ever seen. When in history have you seen this much money created and dumped into the economy out of thin air? How can you vastly increase the supply of something (dollars) while at the same time increasing its value? >>
I think what is actually happening is that corporate(banking) debt is being transferred to the Govt (public). And since the money supply as we knew it was destroyed in the last year via failed investments, the newly created money is just replenishing your savings/checking acct. The money supply will only be increased when/if money is lent out. This is not happening and may not happen for a long time. In the past excessive inflation has always been met with deflation. This country may have just finished an amazing run of 80 years of inflation. Never has inflation gone unchecked for so long.
Many have posted that deflation always produces inflation, I would argue that inflation always produces deflation. And 80 years of inflation is gonna be one tough nut to swallow.
I would counter your question with this one, "When in history have you seen this much money destroyed?"
Knowledge is the enemy of fear
<< <i>I would counter your question with this one, "When in history have you seen this much money destroyed?" >>
Is the fed destroying dollars? They are the only ones that can create or destroy money. Please provide a source or more information. I have not heard this. All I have heard is that they are creating dollars.
<< <i>who has big money to do this? From the recent news, it appears no one has any big money left. Not the banks, not the investment houses, heck-- even the States are nearly broke. And I don't see Uncle Sam buying gold and silver either. >>
HSBC, for one: Article
They have $2.6B, and gold is currently 3% of the portfolio and they plan to buy more. Each percentage increase is $26M worth of gold.
This is just one example of one fund by one firm.
There is money out there.
<< <i>
<< <i>I would counter your question with this one, "When in history have you seen this much money destroyed?" >>
Is the fed destroying dollars? They are the only ones that can create or destroy money. Please provide a source or more information. I have not heard this. All I have heard is that they are creating dollars. >>
Over $80 Trillion of wealth has been destroyed worldwide over the past 14 months. And more is being destroyed everyday from real estate to the residual value of your leased vehicle. Money is also created when Barrick gold mines an ounce of gold or when Saudi Arabia pumps a barrel of oil.
Knowledge is the enemy of fear
In terms of a given monetary unit, inflation generally results in a "new" unit replacing thousands or more "old" units, which isn't really deflation. We're currently seeing a temporary decline in overall prices due to debt deleveraging, but the creation of massive new "bailout" and "stimulus" money will reverse that trend soon enough IMO.
My Adolph A. Weinman signature
<< <i>Over $80 Trillion of wealth has been destroyed worldwide over the past 14 months. And more is being destroyed everyday from real estate to the residual value of your leased vehicle. Money is also created when Barrick gold mines an ounce of gold or when Saudi Arabia pumps a barrel of oil. >>
No money is being destroyed when the price of real estate goes down (or created when it goes up). The people who sold at the peak still have the money they received from the sale - it did not go away or vanish. The people who bought at the peak now have an asset that is worth less than what they paid, but the money has simply transferred hands, not gone away. The dollars are still in the system.
No money is created or destroyed when we value something more or less. Again, the only entity that can create or destroy dollars is the fed, and right now they are creating them, not destroying them.
I guess if you grab enough straws you might have enough to prove your point.
so, give me TEN solid reasons to support higher prices for gold within the next six months (which fits this discussion of "short term"). ten straws might change my mind.
go ahead, ten please.
and I will give you ten reasons why gold will not move higher:
1. economy weakens
2. unemployment rising
3. lack of investable cash
4. gold and silver prices have been trending lower
5. lack of inflation
6. dollar holding value and even rising
7. oil prices falling
8. media has lost interest in gold
9. liquidation of gold to pay for other investment losses
10. economic uncertainty drives assets to cash, cash is king
thanks
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>
No money is being destroyed when the price of real estate goes down (or created when it goes up). The people who sold at the peak still have the money they received from the sale - it did not go away or vanish. The people who bought at the peak now have an asset that is worth less than what they paid, but the money has simply transferred hands, not gone away. The dollars are still in the system.
No money is created or destroyed when we value something more or less. Again, the only entity that can create or destroy dollars is the fed, and right now they are creating them, not destroying them. >>
No, most money is not created by the Fed. It's created by banks as credit. Do you see banks creating a lot of new credit these days?
1. economy weakens
Vague. And this affects the price of gold how exactly? Although the economy is weakening, I would argue that the feds' actions as result of the weakening economy are bullish for gold.
2. unemployment rising
Again, where is the correlation to gold prices? I know people like to argue that the unemployed don't buy gold, but this completely ignores the institutional and investor buying. Only a few percent of the US population actually owns gold for investment purposes, so this argument really holds little water.
3. lack of investable cash
By who? HSBC bank just made an announcement that one of their billion dollar funds is going to increase their gold holdings. This is just one fund at one bank. Large banks, firms, and countries have billions and maybe trillions available to move into gold any time they wish. China, for one, has announced their desire to multiply their gold holdings. Additionally, there are A LOT of investment dollars on the sidelines, waiting to jump into an investment.
4. gold and silver prices have been trending lower
Just because the roullette wheel has come up red many times in a row does not mean the next spin will be red. A sharp reversal can begin any day.
5. lack of inflation
Where do you shop? Do you shop at the same store the government shops at when they report inflation numbers? I have seen price increases in almost everything with the exception of real estate, cars, and commodities. The government has pumped TRILLIONS into the economy, it just takes 8-18 months for the effects of this to be seen.
6. dollar holding value and even rising
I would argue that this is a bullish argument for gold. The dollar has been on a tear lately and is overbought and due for a correction. This is almost a duplicate argument of #4 due to the strong inverse correlation of the USD vs. gold.
7. oil prices falling
Oil prices are oversold at ~$45 and due for a correction
8. media has lost interest in gold
So this means gold isn't going to go up? The media is usually last to the bandwagon. Once the media is reporting something, the wise start looking for an opportunity to bail.
9. liquidation of gold to pay for other investment losses
This is one of the few arguments that make sense, although it should be expanded to include liquidation of all dollar-based assets, which has bolstered the US dollar. The question is, how long will this go on? Because when this ends, that is when gold will really shine.
10. economic uncertainty drives assets to cash, cash is king
Economic uncertainty also drives money into gold.
So here's my list:
1. Gold is in backwardation
2. Shortage of PM's reported by all major mints.
3. Consistently rising premiums for Pre-1933 US gold (still higher vs. beginning of year despite lower gold)
4. USD overbought.
5. Oil Oversold.
6. Large investment funds announcing gold purchases
7. Large countries (i.e., China) announcing plans to purchase gold
8. M2 (the broadest measure of money supply still published by the Fed) is growing at a 13-wk annualized rate of 14.1%
9. The imminent recovery rally of the stock market will positively affect gold (should get technical confirmation of the rally this week)
10. Over 5% of outstanding Dec futures contracts demanding physical delivery this month, as compared to typical 0.5 to 1%. Track the COMEX inventory deletion: http://meltdown2011.wordpress.com/category/silver-gold/vaporize-comex-countdown/
11. Major mines closing or cutting back on production due to low prices.
<< <i>No, most money is not created by the Fed. It's created by banks as credit. Do you see banks creating a lot of new credit these days? >>
The money lent out by the banks is created by the fed.
The banks are now loaded with cash that can and will eventually be lent out.
1. economy weakens
2. unemployment rising
3. lack of investable cash
4. gold and silver prices have been trending lower
5. lack of inflation
6. dollar holding value and even rising
7. oil prices falling
8. media has lost interest in gold
9. liquidation of gold to pay for other investment losses
10. economic uncertainty drives assets to cash, cash is king
thanks .."
////////////////////////
The ONLY thing I see to refute the above is the same "fundamental" - and failed - dogma that I preached in the 1970s:
"Paper-money continues to be printed in record amounts."
........................
.........................
............................
CASH is KING; even if it is "junk."
I have NEVER seen so many middle-class+ folks needing CASH.
The credit-card gangsters say they a pulling $2-trillion out of the
"avaliable credit" line-items of their customers' statements in 2009.
Banks are NOT distributing the bailout money that they extorted
from taxpayers, with the help of the MOST corrupt bureaucrats in the
history of the world. (ALL of the money went to "bailout" the crooks
that screxed the pooch in the first place; they have no intention
of lending it to ANYBODY.)
NOT "bullish" for PMs.
By Alf Field
As this is going to be the last of these Updates, it is appropriate to review the reasons for writing this series of articles on Elliott Wave and the gold price. This will involve revealing a lot of personal detail and also unveiling an extremely high forecast for future gold prices.
The first article titled “Elliott Wave and the Gold Price” was published on 25 August, 2003. This article can be reviewed at the following site:
http://www.freebuck.com/articles/afield/030825afield.htm
In August 2003 the gold price was in the region of $350 and there were a number of conflicting views about the future direction of the gold price. Robert Prechter, for example, was predicting a move to below $253 and possibly below $200. For a number of reasons I was of the opinion that gold was in the very early stages of a major bull market. My views were thus the opposite of Prechter’s and I eventually plucked up the courage to say so.
I count Robert Prechter as a friend, so my purpose was not to disparage his views. I was more interested in setting up some parameters or guidelines that would help determine the likely outcome if the gold price exceeded those levels. I concluded that if the gold price dropped below $309, the odds would favor Prechter’s view. If it pushed above $382, then my bullish view would probably be favored.
This was more than just an academic exercise because in 2002 I had made a major change to our family investments, moving some 40% of the capital into gold and silver bullion plus a selection of gold and silver mining shares. If Prechter’s view prevailed, our family finances would have taken a serious drubbing.
Another reason for publishing the Updates was to illustrate a major advantage of the EWP, which is the ability to prepare a template forecast (or “road map”) of how the market is likely to unfold in both the long and short term, including the possible terminal prices. The original article produced a template based on the rhythms that had been observed in the early stages of the bull market, based naturally on the assumption that my bullish views would prevail.
The early stages of the bull market revealed corrections of 4%, 8% and 16% at increasing orders of wave magnitude. Those numbers were used in the original template published in that 2003 article, a template that forecast that the first major move upwards could reach $630 after which a correction of the order of 25% to 33% would probably follow. In fact, if the sequence had been extended logically, the larger correction should be double 16%, or 32%, but this was shaved to 25-33%.
I thought that the $630 forecast was conservative and that this number would probably have to be adjusted upwards later once the minor waves unfolded. In 2003, with gold in the mid $300’s, a forecast of $630 was both courageous and extremely daring. There was no purpose served in taking the exercise beyond that point until after the $630 target had been achieved.
In addition, the 2003 article concluded that if $382 was surpassed, then the gold price would move rapidly to $424 without a serious correction. That did indeed happen, with gold reaching $425 before the anticipated correction occurred. That success encouraged me to write an article updating the original forecast. I did not anticipate that the consequence of that first update would be the production of this Update 23 some five years later.
There was a further undisclosed reason for writing these articles and that was to eventually highlight the massive potential of the gold bull market. I was reluctant to reveal what I really believed in 2003 as it was so bullish that it would have invited the arrival of the guys with straight jackets and padded cells.
As this will be the last of these Updates, I will reveal my previously unpublished “back of the envelope” calculations in 2003. They were as follows.
Major ONE up from $256 to approximately $750 (a Fibonacci 3 times the $255 low);
Major TWO down from $750 to $500 (a serious decline of 33%);
Major THREE up from $500 to $2,500 (a Fibonacci 5 times the $500 low);
Major FOUR down from $2,500 to $2,000 (another serious decline);
Major FIVE up from $2,000 to $6,000 (also a 3 fold increase, same as ONE)
A case can be made for an 8 fold increase in Major FIVE, which would continue the Fibonacci sequence 3, 5, 8. You can do the maths if you like, but the fact is you can pick your own number for the gain in Major FIVE. Three times the low of $2,000 was actually the conservative expectation, producing a bull market peak target of $6,000.
I would not have invested 40% of the family capital into gold, silver and the corresponding mining shares based solely on my bullish EWP expectations. The following is a quote extracted from “Elliott Wave and the Gold Price” written in 2003 and referenced above:
“I am not a gung ho advocate of the EWP. I discovered not only its strengths but also its weaknesses. I prefer to have fundamentals, technicals and the EWP all in place (if possible) before committing myself to an investment.”
As mentioned in this quotation, I prefer to have fundamental and technical analyses in line with the EWP before committing to a position. Obviously I was satisfied with the fundamental and technical out look for gold when I made the dramatic change in our investment portfolio in 2002.
The technical analysis included the following:
The 21 year bear market in precious metals had ended with the multi-decade down trend line being broken on the upside.
The precious metal markets were oversold with sentiment and emotional indicators sporting extreme negative readings with bullish connotations.
In the 1970’s bull market, gold increased from a low of $35 to a peak of $850, a massive 24.3 times the low price. If the current bull market was to be of the same order, then one could project an ultimate peak of over $6,221 ($256 x 24.3). This matched the $6,000 target determined under the EWP.
The fundamental analysis was the real clincher. I had become convinced that the world, and especially the USA, was heading for a major financial crisis that would be so powerful that it would overwhelm all other factors. It would become the single most important criteria impacting on investment decisions. Privately I referred to this as the “Big Kahuna” crisis.
I anticipated that the Big Kahuna would give rise to the risk of a systemic meltdown, which would result in the authorities “throwing money at problems”, bailing out all the banks and large corporations that got into trouble. This would lead to the destruction of the currency. I wrote about this in more detail in “Seven D’s of the developing Disaster” in April, 2005, an article that can be found at:
http://www.freebuck.com/articles/afield/050428afield.htm
You are spot on, re; the 2 trillion pulled away from credit card holders. Chase is pulling back credit, they involuntarily cancelled two of mine, and advised
they had also done the same for 1.3 million other customers. Not for bad credit reviews but because of an unspecified policy decision. (?)
My credit score is in the good + range of 780 and this doesn't matter to them. They are taking liquidity out of the market place, period.
Oil Rises First Time in Seven Days as OPEC Signals Output Cut