GOLD

[azazel]

That's an enthusiastic post. Do you have a link for the Irish bank comment, I can only see reports of 18-21% of GDP for a single bank? ...and yes they are taking the piss!

 

 

Sorry, I got slightly over excited after some early afternoon wine, having listened to Jermey Vine BBC Radio2 at work....A strong coffee and I'm OK now.....

 

He said at 1:22, after the song, that bailing out the biggest bank will cost as much as Ireland takes in tax for the whole year.

I might be stupid, but Im not deaf!! Eh, woot did he say????? Please tell me I'm wrong....

 

http://www.bbc.co.uk/iplayer/console/b00tw...Vine_30_09_2010

[warpig]

I just had a quick listen and he did say that, but I can't find anything to back it up. Are you sure you only had 1 glass... ? 

 

Sorry, I got slightly over excited after some early afternoon wine, having listened to Jermey Vine BBC Radio2 at work....A strong coffee and I'm OK now.....

 

He said at 1:22, after the song, that bailing out the biggest bank will cost as much as Ireland takes in tax for the whole year.

I might be stupid, but Im not deaf!! Eh, woot did he say????? Please tell me I'm wrong....

 

http://www.bbc.co.uk/iplayer/console/b00tw...Vine_30_09_2010

[azazel]

I just had a quick listen and he did say that, but I can't find anything to back it up. Are you sure you only had 1 glass... ? 

 

It woz a pint glass..... Its nothing compared to the excesses of the banks.... Lets face it what is the odd trillion or quadrillion these days eh?? Golds in a bubble though!!

[warpig]

 Good man!

 

It woz a pint glass..... Its nothing compared to the excesses of the banks.... Lets face it what is the odd trillion or quadrillion these days eh?? Golds in a bubble though!!

[romans holiday]

 

 

Things are looking very interesting at this particular juncture. Will gold go parabolic and threaten to come within Sinclair's target of 1650 by January 14, or will it consolidate back to 1250 or so? Who knows... as far as the short term goes, it can go in either direction.

 

What seems more certain is that the medium/ long term uptrend will remain in place. I for one will be relaxed wherever the price goes within that channel.

 

All boats look to be rising lately thanks to Bernanke's effect on inflation expectations... it remains foggy how effective this will remain. But even if a tide of money was sucked back into the dollar at some point, on perhaps a renewal of the Eurpean crisis, I doubt gold will be moved much. Gold is looking increasingly solid as an alternative currency.

 

CNBC reporters are now scratching their heads about why both gold and stocks are up in tandem. It wasn’t too long ago that they were scratching their heads as to why both the dollar and gold strengthened in tandem. Isn’t gold supposed to be move contrary to stocks… or to the dollar??

 

What they’re missing is that this "see-saw" market is now defined by uncertainty and hence volatility, which first sends this asset or currency up, then that asset or currency up at the expense of the previous asset class [hyper-active money movement in financial markets alongside stagnating velocity in the real economy].

 

Yet, the price of gold continues in an upward trend despite the see-sawing in other asset classes. This is not because it moves contrary to some other asset or currency, but because of volatility per se. A volatile market is an uncertain one. Markets hate uncertainty hence money will continue to go to gold.

 

 

Link to previous thread:

http://www.greenenergyinvestors.com/index....st&p=185812

[sid]

Marc Faber see a correction of 20% to 30%

 

also warns about holding physical in US/ Switzerland (could apply to europe, as warned by cgnao)

 

 

 

“Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble"

 

Dr. Marc Faber, CLSA Investors Forum 2010 in Hong Kong

 

Faber advised investors to build exposure to bullion via monthly purchases and avoid sinking too large a share of their total wealth into the metal, as violent pullbacks can be expected. “We can have one day a correction of 20 to 30%,” Faber said.

 

He noted the 1970s bull market in gold saw prices plunge 50 percent, from 195 USD to 105 USD an ounce, before then rising to more than 800 USD an ounce.

 

Dr. Faber also cautioned physical gold holding in the United States and Switzerland were subject to the possibility — considered remote by mainstream observers — of forced sales to the government. Precious metals investments held in the Hong Kong or Singapore banks were safer, as these jurisdictions, influenced by China, were likely to resist US political pressure on individual investors.

 

Source: CBS MarketWatch

 

http://marcfaberblog.blogspot.com/2010/09/...n-of-20-to.html

 

 

[duckwomanloulou]

Marc Faber see a correction of 20% to 30%

 

also warns about holding physical in US/ Switzerland (could apply to europe, as warned by cgnao)

 

 

Hasn't 'force majeure' already been activated by the banks in Switzerland? - I read it somewhere (probably here) that Switzerland is already considered unsafe and vast amounts were being removed from the vaults to Hong Kong (Far East holders).

[Pixel8r]

More on the longterm gold channel. Why would anyone try to trade this?

 

 

 

[romans holiday]

The logarithmic chart is better for the long term. Averaging 20% odd year on year:

 

 

[Pixel8r]

The logarithmic chart is better for the long term. Averaging 20% odd year on year:

Even the log chart shows the steepening price increases, which is to be expected as we move towards the final mania stage.

 

The rate of increase over the last year in GBP is currently 32.73% on gold and 34.41% on silver.

 

 

 

[Perishabull]

Even the log chart shows the steepening price increases, which is to be expected as we move towards the final mania stage.

 

The rate of increase over the last year in GBP is currently 32.73% on gold and 34.41% on silver.

 

 

I think back to your chart Pixel8r's lines and so far it has followed the script - very well done - can you post it again? Do you expect a pull back at $1350?

 

[Pixel8r]

I think back to your chart Pixel8r's lines and so far it has followed the script - very well done - can you post it again? Do you expect a pull back at $1350?

Here is a recent one, I am expecting that the resistance lines will break at some point when we get to the final mania stage so who knows if it will follow the same pattern this time.

 

 

[seekingclarity]

Here is a recent one, I am expecting that the resistance lines will break at some point when we get to the final mania stage so who knows if it will follow the same pattern this time.

 

 

 

 

 

Thru 1320 resistance......

[romans holiday]

As they say "a rising tide lifts all boats". The Aussie dollar has strengthened even more than gold against the dollar in the last month. This should mean the price of gold in Aussie dollars is not rising.

 

When the risk trade comes off next, it wouldn't be surprising to see gold retrace 50 odd dollars. Of course it may first gain another 100 or so here on a spike.... and further weakening in the dollar.

 

 

 

 

 

Sure enough, looking at gold as priced in Aussie dollars, it's been tracking sideways for the last month.

 

 

[Steve Netwriter]

 

Explanation:

 

A Quick Summary of my Learning & Progress Along the 2008 Gold Prediction

http://www.neuralnetwriter.cylo42.com/node/3605

 

[Steve Netwriter]

Article updated with a few extra charts, including this one:

 

 

[Errol]

Looking for the inevitable correction now. Perhaps from $1400 back to $1100-1200.

 

Either way, I'll continue to add on weakness.

[Pixel8r]

Looking for the inevitable correction now. Perhaps from $1400 back to $1100-1200.

 

Either way, I'll continue to add on weakness.

I am not so sure we will revisit $1100-$1200, I would start adding on the redline currently around $1260.

 

 

 

[Crashman begins]

 

CID out of Britannia's ..

[romans holiday]

How to square the circle? Gold pushing new highs signals inflation right? But why is so much money going into bonds pushing the yields so low... which signals deflation right?

 

http://www.economist.com/blogs/buttonwood/.../bl/currencywar

BRAZIL'S finance minister, Guido Mantega, talked of a currency war earlier this week as countries compete to devalue, and boost their export competitiveness. This is a theme that I have been raising in recent posts and it could potentially have a big impact on asset markets.

 

What can countries do to drive down their exchange rates? They can intervene, like Japan, but such actions often fail to work; intervention is most likely to succeed when there is international co-operation and that is unlikely, given that other countries would have to let their currencies rise.

 

Another approach is to cut interest rates, but developed world rates are already close to zero. That leaves quantitative easing, which may be reaching a competitive stage. If everyone is printing money, that would explain the repeated strength of gold, which hit $1,313 on Wednesday.

 

But if inflation is the fear, why are bond yields so low (10-year rates in America, Britain and Germany are all below 3%). Why are inflation expectations (as backed out from the gap between conventional and index-linked yields) just 2% over the next 20 years in the US?

 

One answer could be that Treasury bond yields are being held down artificially by either: the prospect of further QE (ie buying by the Fed) or by the purchases of Asian central banks, which are buying bonds for currency managment purposes and are indifferent to returns?

 

The problem with the first suggestion is that it requires QE to be simultaneously driving gold up and long-dated bond yields down. I can imagine that short-dated bond yields would be dragged lower by a Fed money-creating policy but it surely ought to make long-dated investors more nervous. And the problem with the second option is that Asian central banks tend to focus on the short-dated end of the curve; the long-dated portion ought to be most market-sensitive.

 

Meanwhile, the equity market seems to be reacting to all this talk of currency wars with equanimity. It seems that good economic news, like today's Chicago survey, is good news for share prices while investors take bad economic news as a sign the Fed will be forced into more QE and that will also be good for equities.

 

Forget squares and circles, and think triangles instead.

 

Exter's reverse liquidity triangle explains why the yields of US bonds go lower [the prices higher] even as the price of gold goes higher. It's all about a drive towards liquidity as money works its way down from the assets at the top to the strongest [perceived] forms of liquidity at the bottom:

 

 

[Steve Netwriter]

Gold pushing new highs signals inflation right?

 

No, it signals loss of faith in the currencies.

 

Gold is not an inflation hedge. If it was, you would have seen gold rise from 1980.

 

 

[romans holiday]

No, it signals loss of faith in the currencies.

 

Gold is not an inflation hedge. If it was, you would have seen gold rise from 1980.

Yes, I was posing the perceived contradiction, by market participants, between gold going up on "inflation expectation" and bonds yields going to all time lows.

 

I'll see your "It signals loss of faith in the currencies" with "it signals the erosion of confidence in currencies". Investors, along with CBs, are diversifying into gold.

[seekingclarity]

How to square the circle? Gold pushing new highs signals inflation right? But why is so much money going into bonds pushing the yields so low... which signals deflation right?

 

http://www.economist.com/blogs/buttonwood/.../bl/currencywar

 

 

Forget squares and circles, and think triangles instead.

 

Exter's reverse liquidity triangle explains why the yields of US bonds go lower [the prices higher] even as the price of gold goes higher. It's all about a drive towards liquidity as money works its way down from the assets at the top to the strongest [perceived] forms of liquidity at the bottom:

 

 

 

 

The Exter Pyramid has been around for a while now - is it pre-71?....could it be that the strong USD cash component is now flawed because of the US situation with gold...?

[The Mad Hatter]

Hmmm. This latest missive from Moneyweek makes me a lot more concerned that a bubble could happen in gold.

 

I feel like one of those children trapped in the back of a car, going "are we nearly there yet?".

 

RB would be all over this sort of e-mail like a rash.

 

TMH

 

October 4th, 2010

Buy high, buy higher and buy higher still

 

BY BENGT SAELENSMINDE

 

“Let me just get this straight. You’re going to wait until the price goes up high enough, and then you’re going to buy!”

 

Mike knows me well. We’ve been mates since we were knee-high to a grasshopper. He knows the quivering lip and sickly look on my face if I feel I’m overpaying.

 

So the strategy I explained to him on Friday night not only goes against common sense, but against my character.

 

And the trade I was explaining ditches the ‘buy low sell high’ mantra and replaces it with ‘buy high, buy higher and buy higher still’. Mike was perplexed.

 

But if you’ve been following my gold strategy, you’ll have an idea we’re I’m going with this. You’ll know that we’re nearing a critical stage in the plan. If you haven’t got in yet, I don’t think it’s too late. I reckon there’s mileage in this gold play...

 

Time to place the next bet

 

In mid June, gold was trading at $1,230 and I outlined my strategy of how to play gold’s long-term bull market (click here for the full details).

 

And if you missed it, don’t worry. If like me you believe we’re still in the throws of a long-term bull market in gold, you can buy at today’s price and follow the same strategy.

 

But if you’re already in and you’ve been waiting patiently for the next stage, then it looks like we’re pretty close now. After a relatively quiet summer, gold has finally broken through the key $1,300 level and has been testing $1,320.

 

The strategy is to open a new position each time gold moves up $100. So it’s time to get ready to open your next position when she hits $1,330…

 

Why wait until it’s more expensive?

 

As Mike points out, it seems ridiculous to wait for something to get dear and then buy. Would you do that with anything else? But there’s method in this madness. And the point is, the original position has now gained equity (or profit… call it what you like).

 

If you’re playing this with a spread-bet, you can now use the equity from the opening trade to finance your next trade.

 

If you opened with a £10 a point bet, at $1,230, you’ll be sitting on a £1,000 paper profit if and when the price reaches $1,330 (that’s £10 multiplied by the 100 point increase in the gold price).

 

For ease, I’ve simplified the figures, but bear in mind you’ll have to absorb costs of rolling the bet over, putting in place a guaranteed stop loss and the implied interest rate (on your leveraged position). These costs tend to be pretty small, but it’s worth checking them out with the spread-betting firm first.

 

Now when the price hits $1,330 you’ll place the next up-bet at £10 per point.

 

And if this trade does well, then we’ll continue to build, the next stage being $1,430. It’s a pyramid and with spread betting, it’s based on leverage. If this sounds dangerous, it’s because it can be. Be under no illusion, you can lose more than your whole stake.

 

But done carefully, you can build a large position without ever having to top up your spread betting account. Of course, we need the bull to keep on running…

 

A pyramid has to be constructed perfectly

 

We’re ten years into the great gold bull market. And right now everything is shaping up nicely to keep this bull steaming ahead…

 

But as Mike pointed out, if gold is cheap and it’s in a bull market “why don’t you just load up now?… why keep waiting as it gets dearer and dearer?”

 

It’s a good question.

 

The problem is that you can’t short cut the construction of a pyramid.

 

First we have to build the base layer. And that takes time. It’s been three months since I outlined the strategy and only now are we getting ready to start construction on the second layer. But it’s vital to have that base layer of equity.

 

Why?… Because no market moves up (or down) in a straight line. That’s why we need some equity to keep us in the black when the inevitable pullbacks come.

 

Shortcutting the strategy and going straight into a big position will leave your pyramid unstable. What happens when the price slides fifty dollars? Do you have enough equity in the position so that you don’t get closed out?

 

It won’t help you that gold continues it’s upward march if you’ve been ‘shaken out’ of your position.

 

I prefer to take the tortoise approach. I’ll use leverage to get out-sized returns and not undue risk.

 

Good investing,

 

Bengt Saelensminde

For The Right Side

 

P.S. This is definitely not a strategy for widows and orphans. What I’m talking about here is high risk, high reward. You can win big time, but you risk your stake, so please don’t put down more than you can afford to lose.

 

[drbubb]

When anything is "so obviously a buy" - it may be time to sell.

 

Do be careful, and take a look at the seasonal factors, suggesting a high around this week