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Gold Comments : for 1st Half-2007

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Is there still an expected sell off into the second quarter?

 

I'm in a position to start constructing my portfolio and my first planned move was intended to be the PMs end, starting with physical gold. Timing thwarted me, as I had to watch $640 come and go.

 

So, here I am sitting on the sidelines waiting for an entry point, wondering whether gold is still the best first move at this time.

 

Do I just bite the bullet and get in? Do I take cyclesman's warning that gold is making a nine year top? Do I skip to the second phase of my portfolio and buy a blue chip energy stock? (or heed the warning that the equities market overall is due a correction?)

 

Do I just reinforce the hole in my pocket with asbestos and watch and wait?

 

Bu*ger!

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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.

 

Edward Pastorini = Top Insider Award

 

It's hoax apparently (although I am wondering why GFI is up over $20 again in overnight trading).

 

hoax

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Is there still an expected sell off into the second quarter?

 

I'm in a position to start constructing my portfolio and my first planned move was intended to be the PMs end, starting with physical gold. Timing thwarted me, as I had to watch $640 come and go.

 

So, here I am sitting on the sidelines waiting for an entry point, wondering whether gold is still the best first move at this time.

 

Do I just bite the bullet and get in? Do I take cyclesman's warning that gold is making a nine year top? Do I skip to the second phase of my portfolio and buy a blue chip energy stock? (or heed the warning that the equities market overall is due a correction?)

 

Do I just reinforce the hole in my pocket with asbestos and watch and wait?

 

Bu*ger!

 

Rydex precious metal funds cash inflows are still at multi-year lows despite the run-up. So traders are disbelieving or discounting it. This has to be pretty bullish for the intermediate term.

 

I'm long but not fully invested yet.

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"Ultimate forecast" of the Legendary Harry Schultz :

 

+ Gold to move over $700 within weeks, maybe just days

+ Gold should move over old high of $850 later this year,

and then "come to rest" near $825

+ Late in 2007, or early 2008, he sees gold going thru $1,000

 

+ Once the public gets in, he sees $1,400... and then a government panic,

with a new "Bretton Woods" type agreement, and we may see gold as

part of the monetary system

 

+ The Gold bull market still has many years to go.

 

+ He thinks most people should be willing to "trade gold, not buy and hold",

because of the huge "violent corrections" which may come along the way

 

From Gold Seek: http://news.goldseek.com/GoldSeek/1176739200.php

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Is there still an expected sell off into the second quarter?

 

I'm in a position to start constructing my portfolio and my first planned move was intended to be the PMs end, starting with physical gold. Timing thwarted me, as I had to watch $640 come and go.

 

So, here I am sitting on the sidelines waiting for an entry point, wondering whether gold is still the best first move at this time.

 

I still expect the gold shares to selloff with the general market- starting any day now- but not for long (a few weeks, maybe)

 

If ou feel stressed being out, You could nibble on some cheap juniors,

and maybe buy some calls on seniors, so at least you have a position

 

But Risk is very high

I certainly wouldnt be jumping in with two feet

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I still expect the gold shares to selloff with the general market- starting any day now- but not for long (a few weeks, maybe)

 

I'm ready to move, as soon as it looks like the right time. I'm going for physical bullion, at this stage, rather than stocks. This is the very, very beginning of my life as an investor, so I'm doing the solid end first. I'm very small beer.

 

Historic days, though, for me. I'm crossing the line from debtor to investor. My first open position, and all that. No doubt in years to come I'll be all dewey eyed at the memory (assuming I don't get toasted, of course).

 

If ou feel stressed being out, You could nibble on some cheap juniors,

and maybe buy some calls on seniors, so at least you have a position

 

I'll watch and admire you on that one, Bubb. I'm a long way from being ready to use options. I like the sound of Ruffers gold fund, though, which could be a very good way for an individual like me to be involved in gold stocks. Like you said, if I can't get you to manage my money...

 

 

Edited to add: I bet there are more than a few who would like to see you name names in the category of 'cheap juniors.'

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Have ECB Sales held down the Gold price?

This commentator think so:

 

SUBJECT: snippet from the cafe Posted By: PLAYER13

Post Time: 4/26/2007 09:06

 

The ecb have sold 76 tonnes in the last 5 weeks...they averaged i think about 5 tonnes a month before this time frame...the last time they sold 5p tonnbes was last may when it dropped substantially...we went up 30 bucks this time..

I just read the latest piece on gold/silver from one of the popular technical analysts on the internet. His analysis basically says we're at a critical juncture for gold and he painted a fairly bleak short-term picture in regards to the COT numbers.

 

I sent the article and charts over to our friend Dan Norcini for his comments. I've deleted the analyst's name so as not to make this personal, but I thought your readers might benefit from Dan's response. Dan, of course, makes his living as a trader in Houston and contributes almost daily to Jim Sinclair's site as well. Here's Dan's take on this particular analyst's interpretation of the gold/silver charts and the latest COT numbers...

Derek

 

Derek-

I totally disagree with [this analyst's] conclusions. For one thing, his chart goes back only to 2006.

 

My work is posted every week at Jim's site where I do a thorough analysis of this, both in gross terms and percentage terms. Neither one shows anything near a peak. When it does I will make some minor comments about it since I do not believe in being a Trojan horse for the gold cartel like this clown does. He is symptomatic of everything that is wrong with the gold community – they spend their tim e looking for re asons for gold to collapse rather than to go up and yet all claim to be friends of gold. The gold cartel could not as k for a better set of friends. A pox on the entire worthless lot of them.

 

The one thing holding gold back right now is ECB gold sales – that is the ONLY reason it cannot breach $700. If the ECB continues dishoarding its gold at this rate, it will exhaust its allotment of sales under the W as hington agreement long before it is tim e for another year of sales. I actually view gold's ability to hold up under this barrage of official sector gold selling as quite remarkable. It shows how strong demand is right now. We might see some price setbacks as some longs get impatient, but any dip down in price is going to find eager buyers with the dollar threatening a collapse through major support.

 

We will need to see what the monetary authorities attempt to do on the currency front with the dollar and the euro since things are getting dicey for the dollar. The die is cas t, however, and the dollar is not going to survive at these levels for long – I actually am saddened to see this since it is my childrens' legacy that we are talking about here.

 

Gold is going upward through $700, then through $750 and will breach its all time high and frankly, people like [this analyst] will have only made themselves look like fools when all is said and done with their constant, never-ending, self-aggrandizing top picking.

 

Who the hell cares if gold sets back in price from time to time? Nothing ever goes straight up. You buy it on weakness and sell it on strength and play the game over and over again. You can tell those who actually trade for a living and understand markets and those who write newsletters and run after diplomas .

 

When I learn things such as China announcing that they are planning on using some of their $1.2 TRILLION in reserves to purchas e other assets including gold, why the hell do I need top pickers in gold??? Does [this analyst] have the leas t idea of how much money that is and the possible ramifications to the gold market? That kind of financial firepower will utterly and completely overwhelm the bullion banks. China is smart, however, and will use the morons in the West who are trying to knock the gold price down to buy all they want at lower prices.

 

The floor in gold just got set another notch higher. Use trendlines and oscillators and ignore everything else.

Dan

 

More on sentiment:

 

Could sentiment be any lower than it is right now? Assets in the Rydex precious metals fund (investor class which is the big fund) has declined every day since April 12th and is about as low as it's been in 2007, despite gold rising 5% since Jan 1. and the HUI index up 13% ytd. Was wondering if you could provide a Cafe sentiment update.

 

And is it any wonder sentiment sucks? In the 5+ years that I've been trading gold and silver futures, I've have never seen a capping campaign as aggressive as the one going on right now. I woke up at 5 a.m. Denver time to see June gold at 689.50 and rebounding from lower levels where I reloaded a few hours earlier before getting some sleep, and I also saw 100 contracts sitting on the offer at 690 (ecbot system). $700 has been capped since February and 695 has been capped since very aggressively since 4/16 (as proof look at the open interest expansion AND the ECB system sales).

 

I have to believe that China and India and the Arab countries accumulating physical gold are sitting back and loving life - laughing at western fiat-based central bankers. I would encourage everyone to sit tight on positions, because my instinct tells me that May could be very profitable for those who can stand the pain of stomach acid from the agitation of watching this horror and knowing the truth...

Dave in Denver

 

 

@: http://www.stockhouse.com/bullboards/viewm...p;navd=fwd&

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With yesterday's Drop on light volume:

big3wi1.gif

 

The slingshot may be loaded, and ready to act.

 

If the support near GDX-$39.3 holds for another day or two,

we could see a sharp rally, and even a breakout

 

Notice that OBV for GDX remains above the level it reached on that

late February high

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I'm watching gold closely now.

Many think we have seen the seasonal peak, and are set for a dull market or even a slide as the market heads towards the usual summer doldrums.

 

I am not so sure. This year, I think we have potentail for a slingshot-effect, with thsi recent pullback, enough to scare out many people, who will them be prepared to buy it, if/when it turns around and breaks out above $700. So far, the gold stocks are drifting lower on light volume. Frankly, i find this bullish.

 

...more later, i want to look at:

 

+ the HUI/gold ratio

+ COT reports

 

to see if they confirm my bullish attitude. Then maybe some individual stocks

 

(see postings to come)

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SLINGSHOT SET-UP - what is it?

 

Gold and the Gold shares (HUI) are trading near a high, but tehy been unable to breakout for some weeks. Result: too Many potential bulls are looking at the seasonal factors, and selling down. Others have decided to simply stay away, because they are worried that the gold-and-gold share market are rolling over. Consider what will happen if the seasonal charts don't work this time, and instead of falling, the the action surprises them, and HUI and Gold breakout to fresh highs. Then, suddenly, a load of money that had been in the gold market, but recently moved "to the sidelines" will come rushing back in, accelerating the push in price above the breakout area. We have seen this before at important breakout points.

 

Here's a prior move from a "slingshot"- this is Gold shares/ HUI, the Gold Bug's index:

00a1el2.gif

 

(GDX and HUI are virtually identical, but GDX is newer, and it is easier to get volume data)

 

Let's look at Gold (represented by physical metal/"38099901") during the same period:

00a2np9.gif

 

The upper edge of the triangle was broken quickly, but it took longer for gold to surge above the old high near $380. When it did, gold quickly soared past $400 and higher.

 

So how do Gold and Gold shares look now?

 

00avk0.gif

 

Gold looks healthy. Especially considering all the ECB selling that we have been reading about.

However, a solid breakout above $700/720 may need the leadership of Gold shares.

 

00a2bbz9.gif

 

What I want to see is HUI leadership developing from here.

Currently the Ratio of HUI-to-Gold is 0.5003 (ie: 337.07 / 673.80 )

 

If gold is to breakout soon, i would first expect the HUI-to-Gold ratio shoot up to above resistance

which is at 0.52. And with Gold at $690, that would require HUI of $359. If that happens,

then the Ratio chart would show a nice Bullish upward reversal.

 

aoex1ye8.png

 

But the above chart suggests that the jury is still in deliberations - with no judgment rendered yet.

If I am wrong about this possible immanent breakout, then we will know very soon.

A bad sign would be if the HUI broke below the uptrendline, which is now at about HUI-$320.

 

On the other hand, an upwards reversal in the Ratio to 0.52+ should foretend much higher gold prices.

 

Fasten those seatbelts.

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Someone asked me today:

"HOW ARE YOU PLAYING THIS, if you think that a golden slingshot rally may be at hand?"

 

Well, let me tell you, I am sitting with my core positions, but i have not bought any stocks or bullion yet, based upon the Golden Slingshot concept.

 

Why not? The down trend currently looks too powerful. YES, It has come to one of the points where it may show a quick reversal, but there is no sign of that upwards reversal yet. I want to see some clear evidence that a powerful reversal is happening before I jump back in. Then if the lows are retested, after that upside reversal, we may have an excellent entry point.

 

Let's see what the HUI chart shows: ... update

aoex4zq0.png

 

First of all, the recent high, at 369.69 is rather clearly signalled. No wonder Tom Obrien sold a big slug of his gold shares, that top has the classic "timing the trade" signature: The market went to a "new high" of 369.69, just above the previous high of 369.38, and then reversed downwards- which is bearish under Tom's system. It helps to look at the volume, which we can see on a GDX chart. That recent high was GDX-42.88* on April 16th, with 695k shares traded, which is no better than average volume.

 

The four most recent highs were: (ignore, if you have no interest in price/volume principles)

 

==date= =open , high , low- , close :... volume. : =HUI= , high , ratio

09.05.06 41.65, 42.17, 41.50, 42.10 :.. 669,700 :

09.06.06 41.84, 42.58, 41.56, 41.70 :.. 664,700 : 362.17 , 369.38 , 8.67

- -

12.01.06 41.85, 41.99, 41.22, 41.54 : 1,057,600

12.04.06 41.74, 42.12, 41.21, 42.09 :.. 837,800

12.05.06 42.10, 42.32, 41.24, 41.58 :.. 960,500 : 356.11 , 362.53 , 8.57

- -

02.23.07 42.40, 43.32, 41.76, 41.83 : 1,077,200 : 357.29 , 362.58 , 8.37

02.26.07 42.32, 42.49, 41.90, 42.35 :.. 589,100 : 361.82 , 362.26 , 8.53

- -

04.15.07 41.55, 42.60, 41.51, 42.35 :.. 854,800 : 364.47 , 364.83 , 8.56

04.16.07 42.52, 42.88, 42.44, 42.88 :.. 694,900 : 368.28 , 369.69 , 8.62

 

*(NOTE: the HUI to GDX ratio tends to be: 8.6-8.7/ averaging: 8.64. yesterday was: 337.07 / 39.30 : 8.58)

 

So you can see that the 4.16 high (GDX-42.88) exceeded two of the prior highs, but had less volume than the december high. The late Feb. high (GDX-43.32) was higher, and its volume was much greater (+52%). But that high was not confirmed by the HUI, so basically the mid-April high looks like a fresh high (in HUI, at least), with substantially lighter volume than the prior Dec. and Feb. highs. an inability to make a fresh high on higher volume, is a sign of weakness. And the quick reversal, just as that new high as put in, is another sign of weakness- So that makes a classic turn.

 

GDX has fallen to (and slightly through) the lower bollinger band. The support GDX is near, should be enough to stop the descent, if we are still in the midst of a bull upswing. But the market will need to reverse soon, to allow that. the problem with buying aggressively now is that this move is too fresh, and is running to far in front of the relevant Moving Averages (like the 5d, 8d and 13d.) Normally, the gap between spot prices and those MA's will narrow- showing that downside momentum is waning- before there is any sustainable upturn.

 

The SLO-slow stochastic has already fallen to a level where we should begin looking for a turn. But often there will be a fresh low, when the stochastic has turned up, suggesting an immanent reversal in the market. We need those signs first.

 

Let's see if we can get the bounce in the next day or two, to add confidence that a turn is at hand.

...

 

I will be looking for ideas to add to my BUY List. Suggestions are welcome.

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Nice!

a rise in HUI & GDX today. so far:

 

+HUI : 341.95 +4.88 / Change: +1.45%

+GDX: $40.25 +0.95 / Change: +2.42%

+GLD : $66.68 -0.01 / Change: -0.01%

+ratio: $341.95 / $666.90 =

- - -

Meantime, Gold's COT charts look rather bearish

 

aoex5bg4.png

 

source: www.freecotcharts.com/charts/GC.htm

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HUI:

 

I DONT THINK that David Morgan would think much of my slingshot idea.

 

he has looked at the same chart for the HUI, and worries about the topping action.

He says:

 

"Precious Metals Analysis

We want to use the above chart of the Gold Bugs Index

(HUI) to present our current intermediate thinking. Taking

a step back from this timeframe, the HUI bottomed in mid

May 2005 near 175 and made a very nice run, touching

400 almost exactly one year later, May 2006. As we write

this report, another year has gone by and we have been in

a very long consolidation period between 275 and the

375 area.

Longer-term readers know we have made reference to the

fact it usually takes a minimum of three attempts through

a resistance level for it to be pierced. As can be verified,

the 375 level has been tested four times and as of this report

it appears another top has formed. Note that the 275

level on the downside has been tested three times, yet we

do not rule out another test of this area."

 

there's more in his Morgan report, which is worth getting for his independent view

 

= =

 

IN FAVOR of my more bullish view, i think there are too many long term gold bulls, who believe the seasonal argument and have taken big money off the table in front of what they perceive as a May-July correction. If gold breaksout instead, there's alot of money that might come rushing back in at higher prices.

 

Wednesday, we saw:

GDX: $40.36 +$1.06 Open: 39.16 High: 40.40 Low: 39.11

Percent Change: +2.70% //

Volume: 829,700 (that's good volume- more than the recent high)

 

Ratio is now... HUI/Gold : $341.76 / $66.66 (672.60) :: 50.81%

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I'm liking the slingshot idea Bubb!

 

Though without the time to research miners, Im simply buying bullion.

So each drop is just another oppourtunity to stock up. As Jim P is fond of saying 'backing up the truck' ;)

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Slingshot gents, watch for it.

 

Up today maybe, then a pullback for a few days into next week,

If that comes on light volume, we may be off to the races.

 

There's even a possibility, we get the slingshot from here,

and the pullback after the breakout

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YES.

I am doing some buying on this dip, and hoping the sell volume stays light, & support holds.

I want to see the gold shares hold better than the general market, which looks weak today

 

Have exercised quite a few wts. too, as they are in-the-money and approaching expiry

 

= = =

 

THIS CHART

aoex3be5.png

 

...suggests that Gold stocks (GDX) may be set to start outperforming SPY/SPX again

 

*I am assuming the triangle will break on the upside

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Perhaps people are remembering the sudden snap on "5/11" last year and taking money off the table, in addition to the seasonal effect.

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Slingshot update = Not ideal, but still possible

 

((See GDX thread for volume -ABX's volume was light))

 

Yesterday's move down was within acceptable limits. what i did not like was the recent light volume on the way up, and yesterday's downward volume was more than i wanted to see.

 

The good news is the volume on this pullback did not accelerate, so the potential for a sharp "slingshot upwards" remains intact. But I dont want to see the slide go beyond early next week. If volume stays light, it could provide a great opportunity to buys some gold stocks

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If volume stays light, it could provide a great opportunity to buys some gold stocks

 

Any particular companies on your radar DB? I have a "buy" tabled at $4 for GSS. I like HMY as well and GFI seems to have given back nearly all of the speculative bid ramp-up and is starting to look attractive again.

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I have just opened an account with Bullionvault. Funds will not be in the account until mid-next week. Should I be looking to buy all in one go, or spread my purchases over the next 3-4 weeks?

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(as a contrarian, i take this as rather bullish-

those who have taken money out of gold shares, will want to

reinvest at some stage, perhaps soon rather than later):

 

Gold steady but sentiment dampened

Fri May 11, 2007 =

By Pratima Desai

 

LONDON, May 11 (Reuters) - Gold steadied on Friday ahead of key economic data from the United States, but analysts expect an early test of recent five-week lows as risk-averse investors trim their holdings.

 

Spot gold was up a touch at $667.20/667.70 an ounce at 1030 GMT from $667.00/667.50 late in New York on Thursday, when it sank to $664.00, the lowest since April 4, on a dollar rally and a sell-off in equity markets.

 

"It seems to have calmed down, people are waiting for U.S. data," a trader said. "(The data) could affect the thinking on U.S. interest rates, the dollar and gold. The market is ignoring higher oil prices."

 

U.S. producer prices and retail sales for April are due later on Friday.

 

A stronger U.S. currency makes dollar-denominated metals more expensive for investors in other currencies, while gold is often used as a hedge against oil-led inflation.

 

But analysts say stock market losses and a firmer dollar -- hovering near one-month highs against the euro -- point to a nervous mood among investors, who are likely to sell their holdings, including gold, much as they did earlier this year

 

...more: http://today.reuters.com/news/articleinves...US-UPDATE-5.XML

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Any particular companies on your radar DB? I have a "buy" tabled at $4 for GSS. I like HMY as well and GFI seems to have given back nearly all of the speculative bid ramp-up and is starting to look attractive again.

 

 

good question.

i have said elsewhere that I like some Junior Coal stocks, but that may not be what you want to hear.

 

I am nibbling on some small junior stocks, and may post some symbols here.

I will look at the south africans you mentions.

 

later:

GFI at as close to $15 as possible, could be a great buy

 

I london, i will look at central china goldfields , arianne resources, and a few others

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I have just opened an account with Bullionvault. Funds will not be in the account until mid-next week. Should I be looking to buy all in one go, or spread my purchases over the next 3-4 weeks?

 

i buy gold shares, not gold.

if i was in your position, i might do 1/4 or 1/3 at around $670, and then look to add next week,

if the volume stays light on dips, strong on rallies

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Thanks DB. I like the South Africans because the currency situation is favourable (i.e. outgoings in rands, profits in dollars) and the land they own often contains uranium. GFI has a large amount of "below works" gold in its two major mines - Kloof and Driefontein. The unfavourable (or more accurately potential for) political situation has kept the price down imo. However, I doubt SA will sabotage its gold mining industry.

 

If you like coal, I recall someone mentioning JRCC as a buy before but I haven't actually looked at the company myself.

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