romans holiday

Was my recent call of the Gold low near $1550 clear enough for you ?

Sure, but a recent call. If I'm not mistaken this thread is primarily about the long term of gold... and gold as an investment, and the point I was making was in reference to the longer term calling of gold.

Trading gold in the short/ intermediate term [i prefer to do it with the more volatile silver] will of course identify good buying points for both traders and investors.

I wonder whether you have been 'converted' recently to the long term trend of 20% annual appreciation. A trend that has been identified here for a good few years now.

I call the Silver high near $50, and the Gold high near $1900,

and bought the end of 2011 dip, and the current dip.

 

Without wanting to sound big-headed, are you aware of anyone who has called it better?

If so, I want to know who, so I can start paying more attention to them

(I am always happy to learn from other's techniques)

 

You called the tops but not the run ups to those tops... gold from the 1000 level onwards [perhaps this was part of your discipline as a trader, that is, look for the spikes and corrections]. If I remember correctly you were often expecting gold to pull back when instead it slowly kept on rising. Others [not the bugs of course] called the tops also as they were obvious frothy spikes outside the annual rate of appreciation. For myself, wearing my investor's hat, I called a top/ spike in gold when it broke out of the trend. Wearing my trader's hat with silver, I missed the spike... though I hope to make amends for that in my current trading.

Interesting to see gold rise recently and the gold/ silver ratio also rise. Still think we could see the ratio above 60, which would be expected if gold at certain times is perveived more as a safe haven.

My guess is:

 

Silver is not going up before the Greek election (17 June).

 

.....

Wouldn't be surprised to see silver complete a bottoming process over the next few months... even down to say 25 from where it would then slowly climb back to the 40s over a good year or so. Then perhaps a spike on 'inflation expectation' in 2014.

The gold/ silver ratio - still relatively low - is also perhaps signals a bit more deleveraging.

This looks near bottom to me... third time down, and slow grind down this time.... now for the slow grind up:

Wouldn't be surprised to see one more down-leg in the metals. This should see a spike in the ratio upwards of 60. Could be a good time to swap gold for silver.

...one of my favourite parts of the world. But as this is the gold thread - shouldn't you have been further to the north-west?

 

(or much further south - but presumably that is where you started...)

South Island is the place to go for fossicking. Managed to find half an ounce over a three week period last summer with a sluice box and pan. Hard work though.... easier to just invest in it.

Just come from the apple season in Hawkes Bay [below the east cape] where I was the 'QC' on a picking gang [not Queen's Counsel but Quality Control]. Two months of work has raised enough pocket money for four months of leisure. Next port of call... the far north as is bit warmer up there.

 

GLD (shown as candle sticks) is NOT behaving what I would expect last night on 17 May 2012 (Thursday) when SPY (shown as the brownish orange line) continues to decline after the incidence of JPMorgan’s saga and the Greece’s ongoing crisis in managing its economy. I expected that GLD would have continued to decline when SPY continued to drop last night!

 

If we look back in mid-September 2008 on the trend chart below when Lehman Brothers was dissolved, GLD continued to decline with that of SPY. We all expect these trends to be normal when we expect the large market players were struggling to save their funds/investments by using their hedged GOLD starting from mid-September to late October 2008.

 

Nevertheless, SPY trended in an opposite direction to the trend of GLD (called “opposite-direction trending”) starting from mid-February 2009 to mid-August 2009 approximately. This opposite trending between SPY and GLD puzzles me, which is similar to what I am observing since last night on 17 May 2012.

Traders/ investors always look for repeating patterns. More often than not they are just not there. The trend in 2012 is turning out not to be neither like 2006 or 2008 but more like... itself, which is somwhere between 2006 and 2008.

In 2008 there was a munch more violemt period of deleveraging than the deleveraging we are seeing now. This could be the reason why gold has [will] 'decouple' earlier than 2008 from the the deleveraging as seen in other investments such as SPY. Being a form of liquidity besides a [leveraged] investment the gold market gets caught in cross currents which should see the price hold up relatively well compared to other investments simply caught in a tide of deleveraging.

Talking of tides, been on a week long trip around the east cape of NZ:

Surely silver will follow a similar route? I was hoping not to have to go in and out of gold/silver too much.

Yes, but more volatile. Hence the opportunity to trade that metal [for dollars]... as a hedge against your long in gold.

Does anyone have any proof of massive short positions on Gold currently operating which are driving the price lower?

Previously when any country within the EMU has found itself unable to pay high levels of interest on servicing their debt, Gold has gone up massively in price. Was that purely on the expectation of a bail-out of the country threatened

 

Is it going to play out differently this time, does Greece leaving the EMU without any more bail-out mean deflation, less money supply and consequently a continuation of the Gold price downwards?

In the short term, things can get choppy and disorientating... due to all the cross currents. First gold spikes up then it consolidates... then it sells off. You get your bearings more with the long term. Gold and the dollar should both appreciate as the best forms of liquidity... though gold more.

Gold not to peak until 2025? In which case I'm stuffed!

 

http://profitimes.com/free-articles/20-years-from-now-gold-12000-silver-1000/

Sounds about right. A long remonetization of the metal at 20% a year. A counter-balance of sorts to the 20/ 30 year inflation of house prices.

Why stuffed? If you want an 'earlier return', why not trade the volatility of silver?

Posted when silver was at $36.4

 

 

 

I'm not talked about this view much, since it doesn't sit too easily in my mind and it's not that easy to reconcile with my position that Gold remains in a bull market (although arguably that may be about to be tested).

 

However, we have seen numerous examples over the last year of just how easy it is for silver to get cut down. Compared to other metals priced by ounce it is very cheap and there are regularly large amounts of silver derivatives traded (futures, options, ETFs etc), although the market is much smaller than gold.

 

So yes it is a relatively cheap relative of gold and that makes it attractive and the silver market is relatively small, however although the size of the silver market is an attractive reason to believe that investing in silver longer term could be a sound investment the paradox here may be that this makes it silver's biggest weakness, it's easily manipulated. This may prevent the very substantial potential gains of the type you often hear trumpeted by those who don't have a deep knowledge of markets (and certainly I'm no expert). It's plain to see what has happened to the silver price when large numbers of sell orders hit the market, it has been summarily crushed on several occasions, whereas with gold although it has also taken a hit, the underlying strength is clear from the longer term charts.

 

Pull up a silver chart and it looks like a Samurai warrior has been using it for target practice;

 

Or silver is just more volatile... both to the upside and the downside. And then in the long term aggregate it should just reflect the appreciation of gold; 20% year on year.

The long term charts show the correlation so far. These charts only cover 3 yeras. What would be more interesting is a long termer term chart [say from 2000] overlapping both silver and gold on the logarithmic. The annual 20% appreciation of both would then be more clearly seen.... with also the more massive volatility in silver, which is why I think it makes sense to trade silver as a hedge against long gold.... can be charted here [can not print for some reason]: http://goldprice.org/live-gold-price.html

A moving average somewhere between the 50 and 200 week would be telling.

Hi do you still have positions in AGQ?

Yes, very heavy in AGQ. Was lucky enough to buy at 40 on the dip, and then bought again at around 50.. on the current decline. Don't mind to much if it bumps around a bit here as think silver should bounce back nicely. Will look to off-load most of it on the next silver spike. Could be a wait of a year or two.... consolidation, slow build up, then spike.

Based on the SLV : GLD ratio the trajectory is down, so whilst they're both going down, silver is going down faster than gold. Since the silver top in April 2011 Gold has outperformed Silver.

Every cloud has a silver lining. The ratio was due to bounce back. Silver remained surprisingly resilient against gold for quite some time, and if it goes still lower will swap my meagre holding of gold to silver.... that would be me pretty much 'all in' silver.

Yes certainly, and gold did perform very well indeed, but perhaps that "time frame" of speculative capital gains has left the building as per buy and hold. After all hoarding prevents opportunity for others.

Don't know about hoarding. See it more as a form of saving... postponing consumption until a more opportune time.

Yes just the doldrums of a downward trend...Gold futures for June delivery fell 2.1 per cent to settle at $US1604.50 on the Comex, the biggest decline for a most-active contract since April 4. Earlier, the price touched $US1595.50, the lowest since Jan. 4.

 

I can see why investors are now looking at income producing assets. This buy and hold business does not look very attractive.

Wasn't long ago that investors were salivating over the prospect of 1650 gold. If you're talking about buy and hold then a decent sized time frame needs to be kept in mind. 20% gains year on year are nothing to be sniffed at.

Gold falls below long term trend line support

 

May 8, 2012 at 14:37 GMT

 

The next support comes in at $1585.50 area where the bottom channel support line is found.

 

http://www.forexlive.com/blog/2012/05/08/gold-falls-below-long-term-trend-line-support/

Is that a linear chart?

Gold/ silver holding up pretty well even as the commodity currencies such as the Kiwi dollar come off.

Its really been taking a hammering the last few months.

Nah, just in the doldrums after a spike up. Nothing unexpected.

How do you think the Euro is likely to do? Since the start of 2011 Silver has been becoming more closely correlated to the Euro;

The correlation is no doubt due to them both moving contrary to the dollar. The 'risk on' trade will see both strengthen. But there are other factors that should see silver strengthen more in the aggregate, and then retain that strength. the Euro may just remain volatile and then weaken in the aggregate against the dollar [as the dollar strengthens due to deflation] and doubly weaken against silver. Taking gold as a more steady less volatile measure, the Euro/ Gold chart shows the price increases in sudden steps compared to the more steady rise of Dollar/ Gold. Wouldn't be surprised to see a repeat of this at some point where precious metal prices suddenly increase in the more peripheral currencies. Aussie/ Gold [silver] is also a good example of this.

Volatile silver looking like it's found its base here. A floor of 30 for silver and 1650 for gold for a bit will serve as a solid platform for the next leg up later in the year....though I think that leg up will be long and prolonged like the previous one after the previous collapse. Next spike to 100 odd? 2014?

A good base [and case] continuing to be built for gold.

RH

 

I don't know how to post charts, but went to Yahoo Finance and got a two year chart comparing AGQ with SLV

 

The result was using AGQ had no advantage over SLV at all !!

 

You maybe increasing your risk over the two odd years time frame, without getting ANY benefit.

 

Hope this link works........

 

http://finance.yahoo...n&z=l&q=l&c=SLV

 

******Also posted in your trading volatility thread******

Thanks for posting that. Yes, this is a high risk trade. The kind of trade I'm looking for is to sell in the short/ medium term. On the chart you've posted that would be similiar to the first half of the chart where it spikes to 400%. The important thing about the trade is to sell on the spike... and to have bought on the dip. Just sitting for a fixed term would be a bit senseless.

The post above yours also thinks about hedging the Medium term of this instrument by using half of the AGQ position to sell and buy within the shorter term on smaller interim spikes/ dips. A hedge within a hedge so to speak.

http://www.marketwatch.com/story/no-qe3-gold-silver-bonds-get-creamed-2012-04-03?link=MW_latest_news

 

Long US stock market and US dollar and short Gold!

The time to short gold was 1900 six months ago not now.

I think it's fair to say that the fundamentals on gold are thoroughly confused. Why not then bracket the fundamentals and let the longer term trend on the chart speak for itself. Gold is nicely consolidated/ ing here. The corrections of '06 and '08 lasted near a year. It's only been six months or so into this correction. If this correction is like the others, we've probably seen the bottom of it.

(Isn't that what Dominic is moving towards in his writings:

"...Note to self, a warning: I have come to, I suppose, love gold - or at least the idea of it, and the glorious, free society it offers at the end of the rainbow.

But I shouldn't. It's just an investment. So be warned and take note: should we ever see that exponential final euphoric bull market phase, then come back and read this, sober up and sell."

 

Maybe: Sell some. As I am suggesting. Could be better

No, my posts are directly contradicting what Dominic was saying, that gold is an 'investment'. Obviously you read other people's posts, but I do wonder if you consider the ideas put forward.

Repeat: Gold is a form of liquidity not an investment.

OK, you might disagree with that, but then that would be progress of sorts. At least then you'd show a grasp of the ideas and issues at stake.