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Gold Comments : for 1st Half-2007

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$800 is nothing... Jim Turk thinks it is going to 10x that.

 

GOLD chart ... update

chartot0.gif

 

“Gold is going to $8000 an ounce and silver $400! And it’s going there quicker than you think!” so says James Turk in the latest edition of Commodity Watch Radio. James Turk.

 

The programme also features interviews with "Dr Bubb", as he outlines five rules of investing ; and the CEOs of three mining companies Gold Resource Corporation, Wits Gold and Kazakh Gold.

http://www.minesite.com/webcasts/commodity_watch_radio.html .

 

UPDATED - with cycles

aaimage2po6.gif

 

= = =

 

IF THERE is anything to these bullish forecasts,

This early Jan.2007 slide may be setting us up for a GREAT BUYING opportunity. Let's discuss it.

 

The Old Nov-Dec Gold thread : http://www.greenenergyinvestors.com/index.php?showtopic=1091

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The next two years will be absolutely giant for gold. You will make money you never dreamed of making. This is what betting parlance calls the lock – the-can’t-lose bet. The two biggest recipients will be gold and silver shares and numismatic coins, following by silver numismatics, and gold and silver bullion and bullion coins. Share multiples will go ballistic - $850 and $25 will be broken in 2007 and we may well see $1,700 and $100.

 

http://news.goldseek.com/InternationalFore.../1167850347.php

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Statements like these make the whole article look rather ridiculous:

 

The recovery in real estate from 2001 through 2005 didn’t happen by chance. It wasn’t part of a recovery cycle. It was planned and executed by the Federal Reserve. [...]We see as an excellent possibility that George W. Bush will be assassinated by the Illuminati [...] It is inconceivable Brown is in line for Tony Blair’s job as P.M.

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GOLD:

THIS AREA, right near $600 is my target.

It could go further, but I am buying calls on gold shares here, because there may well be support at $600.

 

I am pretty close to fully invested, without any gearing (other than my SPX puts)

 

SPX:

May still break convincingly below that trendline, and close lower, before the day is out

 

TLT:

Strangely, has fallen sharply from the better opening

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TIME TO START SHIFTING...?

 

Out of precious metals into energy?

Maybe.

See charts and comments: WTI-to-Oil Cross market intelligence

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Statements like these make the whole article look rather ridiculous:

 

He also advises keeping guns at home, just in case ...

 

Nevertheless, he seems to make money and his subscribers do too.

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"Is this interpretation correct?", Frizzers asked (on advfn), as he posted this chart:

xx-may i post here-xx

(it is possible- but i think you want to look at volumes also)

 

GLD chart ... update

bighr5.gif

....that big volume on the fall, does not support the interpretation

that the C-wave is done yet

 

 

GDX, gold shares ... update

bigwq4.gif

...GDX doesnt look much better, but at least yesterday's candle was white.

 

i reckon GLD and GDX will go up and fill the gap down,

and may then retest the lows.

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A couple of writers who use EW seem to be suggesting $550 as a possible target for jan, before rising from that point. Interesting that Puplava reckons that there will be a deflation scare in the first 1/2 of the year which would hammer commodities and gold.

 

Does anyone out there ho uses EW concur that there is "C" correction on going or close at hand and that 550-570 is a reasonable number?

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An E-wave chart from a private bank

aa01iy4.gif

 

very similar to my own count,

but i reckon it needs to retest the recent low,

and maybe go a touch under $600.

 

so we may not be there just yet.

 

as you may know, i think oil looks attractive relative gold,

so i am looking for coal and oil service stock opportunities just now.

 

= =

Their Comment:

The sharp sell off by Comex Gold over the past three trading sessions provides the potential for a more bullish scenario than previously considered. The rally from the 4th October 2006 low shows a completed five pattern which has now been followed by a 3 wave correction (ABC). It has possibly completed wave c of wave 2 now that it is in the typical 50% to 62% retracement zone ($598.93 to $609.75).

 

In this event wave 3 should take the Gold price to a minimum of $753.87 if not higher. There is a barrier to overcome at 697 which is where wave 3 is equal to wave 1 and is the 78.6% retracement from the May 2006 high to the October 2006 low. Only two consecutive daily lower closes below 583.52 would negate this potentially bullish scenario!

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Found this article written today, on LewRockwell.com - a bit of useful history for any novice investors here:

 

The Federal War on Gold by Jacob G Hornberger.

 

An excellent account of the rise of paper money in the US, starting with Abraham Lincoln's legal tender law in 1862, whereby loans that, in the past were required to be paid back in gold/silver coin, could now be repaid in promissory notes. The apparent reason for this was to inflate away the war debt accumulated during the American Civil War.

 

It also includes a good explanation of Roosevelt's Executive Order 6102 of 1933 which prohibited the “hoarding” of gold by U.S. citizens. Americans were required to turn their gold holdings over to the federal government at the prevailing price of $20.67 per ounce. The legality of this was taken to the supreme court and in an act of breathtaking cynicism:

 

The gold-clause cases did reach the Supreme Court. Unfortunately, a majority of the Court declared the nullification of the gold clauses in private contracts to be a constitutional exercise of the president’s power. While it declared the nullification of gold clauses in government notes to be unconstitutional, the Court also held, in a twisted form of logic, that the holders of government debt had suffered no damage because gold was then illegal to own anyway.
ie: payment of debts to private individuals could not be covered by payment in gold, but the governments could force it's debts to be paid in gold.

 

The author's bottom line is:

 

Is there a possibility, however, that federal officials could confiscate gold again and make it illegal to own it? You bet your bottom gold dollar there is. For one thing, the Trading with the Enemy Act is still on the books and is still being used as the basis for presidential decrees. For another, ever since the Roosevelt administration, federal officials, assisted by the Federal Reserve, have never desisted from issuing ever-growing quantities of paper money, an inflationary process that has ravaged people’s savings. Finally, federal officials hate gold because its rising price in the face of inflation provides a public and an easily readable market message to the citizenry that government officials are destroying the currency.

 

Can't say I know enough about this to say whether this is paranoia or realism - any comments?

 

TLM

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I missed posting this here...

 

I'm bullish and close to fully invested in gold shares (and some other resource plays.)

A jump thru $640 or so will get us out the triangle area, and into a possible sharp move upwards to $700 & higher.

 

That sharp upwards move may have started on friday- but friday moves can be suspicious.

 

But this move in gold to $700, $800 or whatever, which may last some months,

is something to sell into- not in a hurry, not immediately, but once the market gets excited, and the

papers are full of bullish headlines about gold (like they were last May.)

 

if oil lags gold, and oil shares get cheaper in relation to oil, then:

I will probably be looking to redeploy capital from a screaming-upwards gold share market into a

quieter oil market- but we shall see

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I missed posting this here...

 

I'm bullish and close to fully invested in gold shares (and some other resource plays.)

A jump thru $640 or so will get us out the triangle area, and into a possible sharp move upwards to $700 & higher.

 

That sharp upwards move may have started on friday- but friday moves can be suspicious.

 

But this move in gold to $700, $800 or whatever, which may last some months,

is something to sell into- not in a hurry, not immediately, but once the market gets excited, and the

papers are full of bullish headlines about gold (like they were last May.)

 

if oil lags gold, and oil shares get cheaper in relation to oil, then:

I will probably be looking to redeploy capital from a screaming-upwards gold share market into a

quieter oil market- but we shall see

 

Gold looking very strong and we have moved through $640. Now at $645

 

Ciould this be the start of the next leg up

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Gold_19-1-07.gif

 

Updated Elliott wave interpretation - which is very bullish:

 

Price Patterns - The price pattern being played out by Gold since the May 06 highs is that of a symmetrical triangle, which usually breaks in favour of the preceding trend which in this case is higher.

 

Conclusion - Gold is looking very bullish as it is about to break out of the symmetrical triangle pattern, with other supporting analysis suggesting this to be imminent. The up trend is likely to carry gold beyond the previous high set in May 06, upwards and onwards towards to 847 and eventually to over 900, targeting 920 this year !

 

Buy Trigger - The two key buy triggers for Gold are 636 and 658. With gold at 636, it is on the verge of confirming a break of the first trigger. The best position would be a rolling spot contract. Or longer term investors can hold gold directly at bullionvault.com

 

Target - A break above 658 would target 847.

 

source: http://www.marketoracle.co.uk/Article243.html

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Hopefully this is of longer term interest to gold nutters.

 

http://www.kitcocasey.com/displayArticle.php?id=1183

 

The Daily Resource 1/24/07:

 

By Doug Hornig

January 24, 2007

 

 

'From a Monday press release put out by metals dealer Blanchard and Co.: “After months of inquiries and a hotly debated, in-depth position paper by its economic research unit, Blanchard and Company has learned that the International Monetary Fund has adopted a landmark accounting change to the way Central Banks account for their gold loans, giving this sector of the commodities market more transparency than it has ever had, the precious metals market leader announced today.

 

“ ‘This is a huge step forward for the precious metals market and a major victory for the gold market investor,’ said Blanchard Chairman and CEO Donald W. Doyle, Jr. ‘Not since the Washington Agreement on gold in 1999 and the legalization of gold ownership for Chinese citizens in 2004 has there been such an important event in the advancement of the gold market.’

--

--

GATA’s Bill Murphy, writing on LemetropoléCafe.com, was quick to react: “Without a doubt, should the central banks reveal the amount of gold they have loaned out, this will rock the gold market like nothing else in its history. IMO the price could double in a very short period of time, as market participants begin to understand THE GOLD IS GONE. Now, we wait and see if this comes to pass.”

 

##########

then a coupe ofpdfs rom IMF discussing this during 2006

 

Title: Issues Paper (RESTEG) #11, Treatment of Gold Swaps and Gold Deposits (Loans), Prepared by Hidetoshi Takeda, April 2006 - Reserve Assets Technical Expert Group (RESTEG)

undefined

 

 

III. POSSIBLE TREATMENTS

13. The new Manual should include a clearer description of the treatments of gold swaps

and gold deposits/loans by introducing relevant text already available in the Guidelines.

14. Regarding the statistical treatment of gold swaps, its treatment should be consistent

with that of other reverse transactions, as presented in paragraph 7 above. Thus, swapped

gold should be excluded from both reserve assets and IIP (demonetization). This is a logical

consequence, and overstating of reserve assets can be avoided. On the other hand, this results

in a decrease in the financial assets of the monetary authorities.15. Regarding the statistical treatment of gold deposits/loans, keeping the status quo is

suggested. That is, if the deposited/loaned gold is available upon demand to the monetary

authorities, it can be included in reserve assets as monetary gold (paragraph 99 of the

Guidelines). However, if the gold is not available upon demand, it should be removed from

reserve assets, and also from IIP (demonetization).

 

Then

http://www.imf.org/external/np/sta/bop/pdf/resout11.pdf

 

IMF COMMITTEE ON BALANCE OF PAYMENTS STATISTICS

RESERVE ASSETS TECHNICAL EXPERT GROUP (RESTEG)

___________________________________________________________________________

OUTCOME PAPER (RESTEG) # 11

TREATMENT OF GOLD SWAPS AND GOLD DEPOSITS (LOANS)

Prepared by Hidetoshi Takeda, IMF Statistics Department

July 2006

The views expressed in this paper are those of the author(s) only, and the presence of it, or of

links to it, on the IMF website does not imply that the IMF, its Executive Board, or its

management endorses or shares the views expressed in the papers.

2

RESERVE ASSETS TECHNICAL EXPERT GROUP (RESTEG)

OUTCOME PAPER (RESTEG) #11

(1) Topic: Treatment of Gold Swaps and Gold Deposits

(2) Issues: See RESTEG Issues Paper #11

(3) Outcome of the Discussions:

(i) RESTEG agreed to include a clearer description of the treatment of gold swaps

and gold deposits/loans drawing as appropriate on the relevant text in the Guidelines.

(ii) RESTEG considered that the statistical treatment of gold swaps and gold

deposits needed to be addressed from the viewpoint of whether allocated or unallocated gold

was involved.

(iii) For instance, one member noted that treatment of gold deposits set out in

paragraphs 98 and 99 of the Guidelines needed to be reviewed, as treatments differ

depending on whether unallocated gold and allocated gold is involved.

(iv) RESTEG agreed that the statistical treatment of gold deposits/loans of allocated

gold should be status quo. That is, if the deposited/loaned gold is available upon demand to

the monetary authorities, it can be included in reserve assets as monetary gold (paragraph 99

of the Guidelines). However, if the gold is not available upon demand, it should be removed

from reserve assets, and also from IIP (demonetization).

(v) The meeting was informed that gold swaps primarily involve unallocated gold.

(4) Rejected Alternatives:

None.

(5) Actions:

It was agreed that the secretariat would investigate further. The work would include

appropriate bilateral discussions to discover practices on gold swaps and deposits/loans

among central banks, especially those via unallocated gold, and prepare proposals on their

statistical treatments for RESTEG discussion through correspondence prior to IMF

Committee on Balance of Payments Statistics (BOPCOM) meeting.

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thnx for that.

 

a big step, perhaps.

let's see what the market impact is

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looks like money is pouring into gold from all currencies,

as gold breaks out above $650

 

let's see if some of these laggards juniors (including some tax plays) will start to move

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someone has suggested Avocet... chart

 

the Weekly chart looks excellent!

 

Cud be a good buy here

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This might be the beginning of another run in gold. What especially interests me is that the oil price has fallen but the gold price has gone up just the same.

 

Any ideas on this?

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