Jump to content
drbubb

Gold Comments : for 1st Half-2007

Recommended Posts

I couldn't help but chuckle when I saw that. However I have still managed to make a loss on Gold, despite reading most threads here I just don't know where to put my money....

 

OK im not taking for blame/credit for this one.. it looks like the BOJ may be doubling IR's. Hopefully there will be a thread on this when i return form work :lol:

 

EDITED:

 

Just announced! BOJ IR +0.25% ... 0.25% -> 0.5%

Share this post


Link to post
Share on other sites

Go buy >

 

Hidefield Gold

Terrane Metals

Trade Winds Venture

La Mancha Resources

New Island Res

Golden China Resources Corporation (needs EST)

 

Otherwise, my gold shares are doing OK, silver a bit sleepy.

Looking to invest a little more perhaps in silver - and need to do a little more homework.

Share this post


Link to post
Share on other sites

Is the Fed finally losing its Credibility?

Peter Schiff ... Feb 23, 2007

 

With Wednesday's data release that showed that the increase in "core" CPI in January was higher than expected, the price of gold soared by over $20 per ounce to just shy of $680 per ounce, a new nine-month high. As this is the reaction that most market watchers would have expected, it is not surprising that these movements failed to inspire much interest. After all, gold is an inflation hedge, so any sign that inflation is worsening should be positive for gold prices. However, what is surprising is that this is one of the few recent occasions when the gold market has actually behaved logically in this regard. Could it be that some whiff of sanity has arrived on Wall Street?

 

Over the last few years, the price of gold has typically declined following larger than expected jumps in "core" consumer prices. These counter intuitive movements have been explained by the market's anticipation that the Fed would react to higher inflation with additional rate hikes. Since higher interest rates are typically bearish for gold, the metal has dipped on signs of elevated inflation. However, Wednesday's $20 surge indicates that something meaningful may have changed.

 

My guess is that the market is calling the Fed's bluff. Gold investors may have finally concluded that when it comes to fighting inflation, the Fed is all bark and no bite.

 

...more: http://www.321gold.com/editorials/schiff/schiff022307.html

Share this post


Link to post
Share on other sites

I am dubious about the rise in gold being related to perceived higher inflation or increased tension with Iran. Neither issue has moved gold prices significantly before.

 

Could it be related to the meltdown in the subprime lending index? Perhaps investors are anticipating the problems spreading into other areas?

 

It'll be an interesting week next week!

Share this post


Link to post
Share on other sites

ONE LINER opinion from a Dublin-based fund manager...

 

Overall Industry Message was prices higher for longer

Unsurprisingly, the main theme driving this view on the demand side was Chinese urbanisation, which was seen as offsetting any slowdown in the US in 2007. On the other side of the equation, supply is still seen by industry as constrained and being vulnerable to either delay or disruption and being unable to swiftly respond to a growth surprise.

 

 

Euphoric Investor base

Even if the “everything for the best in the best of all possible worlds scenario” as presented by the industry is correct, the sheer weight of investor interest in once unfashionable and cyclical companies seems to me to urge a high degree of selectivity given the run up in most of the companies share prices

 

 

The areas that look best placed over the near to mid term seem to me to be platinum, gold, fertilizers and iron ore. While the industry remains bullish, I would be more nervous about copper and to a lesser extent, steel and nickel.

 

Of the companies that presented, the ones that looked particularly interesting include Lonmin, Anglogold, CVRD, Evraz and fertilizer companies generally

 

 

Owen Dwyer

Pioneer Investment Management Ltd

Share this post


Link to post
Share on other sites

Here are two conflicting views, take your pick

 

Pro Base metals: Don Coxe

 

http://events.ipresentations.net/Webcasts/...s2007/Lobby.php

 

Another veiw:

 

Frank Venoroso

 

http://howestreet.com/fbn/index.php/mediaplayer?video_id=192

 

I think Venoroso makes a better argument, although I am looking at a junior nickel company.

Share this post


Link to post
Share on other sites

Is nothing safe?

 

"Gold futures closed lower Tuesday for the first time in three sessions on concerns that China's demand for commodities may weaken, and price losses worsened in electronic trading after U.S. stocks logged their biggest one-day loss in more than five years.

 

The plunge sent many metals-mining shares to their lowest levels in a month."

 

http://www.marketwatch.com/news/story/gold...dist=TNMostRead

Share this post


Link to post
Share on other sites
"Gold futures closed lower Tuesday for the first time in three sessions on concerns that China's demand for commodities may weaken, and price losses worsened in electronic trading after U.S. stocks logged their biggest one-day loss in more than five years.

 

Cum Hoc, Ergo Propter Hoc - "With this, therefore because of this"

 

A common logical fallacy committed daily by the financial press :)

Share this post


Link to post
Share on other sites

James Turk: $720 Gold in Two Months

 

"All you worried goldbugs out there, repeat after me: Corrections happen. Every bull market has lots of 5%-10% squiggles that look like the end of the world to those who don’t understand, and like entry points to those who do.

 

GoldMoney’s James Turk devotes a page of his latest FreeMarket Gold & Money Report to the proposition that the secular bull market in precious metals (and the secular decline in the dollar) is alive and well. Here’s some of what James had to say:

Both gold and silver were hit hard this past week. It’s the same story we have seen many times before. As gold climbed in price, we witnessed in recent weeks the huge build-up of open interest on the Comex. The gold cartel, which is a group of bullion banks acting under the direction of the US government, was selling whatever paper promises (i.e., futures contracts, which are simply paper representations of gold but not gold itself) it felt were needed to try slowing and then capping gold’s advance."

..

chart

5163350_Turkgoldmarch07.jpg

...

 

Even though I have been and remain bullish, in the last letter I advised not to “go out and bet the ranch” because the “gold cartel has been out in force, trying to cap the gold price.” In other words, I do not recommend using leverage if you choose to trade gold (i.e., trying to profit from its price fluctuations, in contrast to the long-term wealth accumulation strategy of buying gold month-in and month-out). Leverage is dangerous, as we saw over the past four days. No doubt there were a lot of margin calls issued, with the consequence that there was much forced selling. But the capping by the gold cartel and the subsequent rush for liquidity does not diminish gold’s long-term prospects, a fact no doubt understood by the long-term accumulators of physical metal who now find gold significantly cheaper than it was just a short week ago.

 

Gold did not reach my $720 target by the end of February. But I expect that we will see that price soon enough, probably within the next two months.

 

...more: http://www.dollarcollapse.com/iNP/view.asp?ID=49

Share this post


Link to post
Share on other sites
I'm surprised you are. Any explanation? Perhaps we can continue this on the gold thread. To me, a violent devaluation of the US$ is just a matter of time. The sub-prime woes are only the beginning of the unraveling of the credit bubble. If (when?) the US is hit by a recession later this year, I think there is not a shadow of a doubt that Bernanke will get into his helicopter and drop interest rates. This will light a rocket under the POG.

 

Very briefly and without charts (so it will probably make my explanation of something v simple hard to follow) the reasons are basically as follows:

 

Firstly, the correction from the spring 2006 high does not appear big enough to correct the massive rise from the late 90s. I think the 2006 high was a pretty important affair and one that warrants a correction of the whole upswing to that date. Looking at an admittedly poor chart of spot gold, it appears to have had a big wave down from the 2006 high which only lasted about 2 months and then an abc upwave since then. So it should be time now for the next down wave to at least parity or more likely below the $550odd lows of last year.

 

Secondly, and forgetting EWs, markets often seem to make so called abcd corrective moves - i.e one wave down followed by a correction back up (but not to new highs) and then another wave down...giving an abcd shape if you letter each major turn point. Sometimes you get a second bite at the cherry, i.e the market starts to fall again in wave c-d, but then rises again to about the starting point - which is what we saw with gold. It started to fall last summer from the $675 region, but this proved to be a false breakout and it subsequently rose again back to that area a week or so ago to set up a so called gift trade (or second bit at the cherry). So if this theory holds we should get the last leg down now which can be of various lengths which i wont go into here, but should at least aim for parity with last year's low.

 

Thirdly, stocks rarely, it seems to me, just fall hard in one straight leg down (like they did last week) and then carry on rising as before to new highs. More usually, they will correct in at least three simple legs or waves or whatever you want to call them. i.e, a leg down followed by a correction and then another leg down - as they did last May/June in fact. So, at the least i expect we will see another leg down in stocks shortly. Gold often seems to follow stocks - see the charts from last May/June of gold and stocks. So this would suggest we might see another leg down in gold.

 

Fourthly, the economy seems to be slowing pretty fast right now (esp US) and i think there is potential for inflation to subside pretty quickly, even if just temporarily. This should help bring gold down. Even if Bernanke drops interest rates, that is no guarantee that money supply and prices will rise, the relationships are far more complicated than that. Plus, dont forget, despite the talk on this site, inflation to my mind doesnt seem to be about to take off. Bonds seem quite relaxed about the whole spectre of inflation....not what we saw in the 70s (a period that a lot of people seem to think we are mirroring now).

 

Fifthly, yes we could well see a violent depreciation of the dollar, but i think not just yet. If gold corrected as quickly as it did last May/June, then it could get to the $550 area or lower in just a few short months and then we could still get a dollar depreciation this year.

 

Finally, at the highs of late Feb this year, investor sentiment was at the highest levels since the May 06 top and that is near record levels of bullishness. Not a set up for further string rises. I do accept though, as i mentioned a few days ago, that some market timers have turned bearish gold a bit quicker than i would have liked.

 

In summary, not suggesting anyone should turn bearish gold on the basis of what i have said, but rather just trying to explain why i am bearish gold right now.

Share this post


Link to post
Share on other sites

Gold seems to have held up pretty well today despite a sell-off on the main indices and a Yen rally against the dollar.

 

I certainly wouldn't rule out another leg down but the potential for a big sell-off is limited. There has been an enormous amount of cash flow out of the Rydex Precious Metal fund (something like 18% of total assets in four days during last week's sell-off). The Hulbert gold timer signal went extremely bearish on gold (the average gold timing news letter had 0% exposure to gold by the end of last week).

 

Looks like complete capitulation on the part of gold bulls and such overwhelming bearish sentiment on gold must be extremely bullish in the medium term.

Share this post


Link to post
Share on other sites

GOLD forecast ====

 

I think we are in a "C" wave:

00aja0.gif

 

If so, it should end somewhere between $600 and $635.

My best guess is $620.

Share this post


Link to post
Share on other sites

I picked this up in today's SCMP:

 

"US treasury data show that 81 per cent of net foreign inflows were in so-called agaency debt sold by Fannie Mae and Freddie Mac and US corporate bonds, which include asset-backed securities and mortgage-backed securities. These securities are packed in collateralised debt obligations" (CDO's)

 

the article goes on:

 

"Those staggering flows could slow... Lehman Brothers estimate that the total market for sub-prime-related CDO's has lost US$18 billion to $23 billion of its value owing to the recent widening (of spreads) for sub-prime and CDO's."

 

Note:

America's current account deficit was US$857 billion last year- 6.5% of GNP-

The US needs $3-4 billion per day to fund this deficit.

And this has largely been met by foreign purchased of US debt - most CDO debt, it turns out

 

If these flows stop:

What happens to the Dollar?/ Whence goes Gold?

Share this post


Link to post
Share on other sites
If these flows stop:

What happens to the Dollar?/ Whence goes Gold?

 

Something I'm interested in is whether it's inevitable that the US will have no choice but to continue to create paper.

It makes my head hurt thinking about it!

Share this post


Link to post
Share on other sites

On gold, Tom O'Brian is firmly bullish. A caller queried whether we may go back to 640, and he thinks not; "it's topside from here". In my own view, we need to go through 670 with convinction.

Share this post


Link to post
Share on other sites

Gold Fields of South Africa May Get Buyout Offer From Pastorini-Led Group (Bloomberg) --

U.S. financier Edward Pastorini may lead a bid for Gold Fields Ltd., the world's fourth-largest gold producer, to tap the rising price of bullion.

 

and this...

 

Apollo snaps up Xstrata aluminium arm US private equity group agrees $1.15bn deal (FT.com$)

 

= =

 

interesting to see this buyout mania spreading to mining

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×