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drbubb

Gold comments - for the first half of 2008

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If the market perception is that we are now done with the banking sector write offs and that with tighter regulations on lending there will be more stable growth in the market place, why should gold go back to it's newly found highs?

 

Here's an interesting article from last week... Analysts at Goldman don't think we are even close to being 'done with the banking sector write offs'. " http://news.yahoo.com/s/nm/20080325/bs_nm/...edit_goldman_dc " They estimate that losses will reach 1.2 trillion. "U.S. leveraged institutions have written off less than half of the losses associated with the bursting of the credit bubble," they said. "There is light at the end of the tunnel, but it is still rather dim."

 

My impression is that fund managers will not entirely switch their investments to equities quite yet. I don't believe that the overall market perception is that we are in the clear yet, meaning that lots of funds must believe gold is a bargain now. I see a short term run up to the mid 900's range so accordingly, I'll be taking a long position on HMY this week (whose graph is very attractive right now).

 

 

 

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True, but he's been much more bullish on Gold than many other E-wavers.

 

I keep getting tempted into applying EW to gold and it basically doesnt work very well I have decided. Now and again it works well and it is easy to get carried away. It is likewise difficult to apply EW to currencies for some reason.

 

For example, from an EW perspective i reckon we should see another big leg down in gold soon, to at least the $800 and maybe even the $700 area if not below (Silver looks to be in the same precarious position as gold). But given my recent experience of trying to apply EW to them i wouldnt put too much money on it. Likewise, i think copper should have either finished a big multi-year bull market or very nearly so. This one i feel slightly more confident in and have a very small short position open on, but again not as confident as i would be if i saw the same pattern in stocks. So, ideally all three metals should fall very hard very soon - but dont go putting money on it. Lets see what happens.

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I keep wondering whether anything else in this Gold market will surprise me - but the latest article on Minesite has just done so.

 

Folks, they have the scoop on why Gold recently spiked over 1000 dollars.

 

The reason was....

 

 

>> European Minerals had to go in the market to buy gold to honour its obligations. Whether that buying was the cause of gold spiking over US$1,000 is hard to say, but it’s probably a reasonable assumption.

 

 

..... oh dear.....

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I keep wondering whether anything else in this Gold market will surprise me - but the latest article on Minesite has just done so.

 

Folks, they have the scoop on why Gold recently spiked over 1000 dollars.

 

The reason was....

 

 

>> European Minerals had to go in the market to buy gold to honour its obligations. Whether that buying was the cause of gold spiking over US$1,000 is hard to say, but it’s probably a reasonable assumption.

 

 

..... oh dear.....

 

 

Obviously Minesite felt that Frizzers needed more competition in the Comedy Field.

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Gold's up about $9 today.

 

I still think a low at $850, or near to that represents the Ideal target for Gold

 

001sh2.png

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support /resistance suggests a test of the 840/850 area; the bbs are widneing suggesting a downwards slide is imminent to this level

http://stockcharts.com/c-sc/sc?s=$GOL...2442&r=7969

in £ terms we could see £400 in teh near future the 200d ma would be broken but that also ahppened in sprin 2006

http://stockcharts.com/c-sc/sc?s=$GOL...2416&r=5212

if £400 fails then £380 looks to be next!

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Posted On: Thursday, May 01, 2008, 12:32:00 PM EST

 

In The News Today

 

Author: Jim SInclair

 

Dear CIGAs,

 

Let’s cut to the chase:

 

1 The potential for the bottom of the gold price being today is 75%.

2 If it is not today, then the bottom for the price of gold is very close by.

3 The downside in gold will be in by the end of the first week of May or sooner.

4 On the 8th of May interest will increase in junior precious metals shares. This interest will first be in the most meritorious issues.

5 Probabilities support the price of gold going back above $1000, failing, and on the third try making a new high.

6 The price of gold is going to $1650.

7 The euro is going to a minimum of 2 to the dollar.

8 The USDX will trade at .5200

9 Precious metals shares will be the darlings of the market prior to 2011.

 

_________________________

 

So, it's the 8th May for the juniors, the most meritorious of course.

 

 

 

 

 

 

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I keep getting tempted into applying EW to gold and it basically doesnt work very well I have decided. Now and again it works well and it is easy to get carried away. It is likewise difficult to apply EW to currencies for some reason.

 

For example, from an EW perspective i reckon we should see another big leg down in gold soon, to at least the $800 and maybe even the $700 area if not below (Silver looks to be in the same precarious position as gold). But given my recent experience of trying to apply EW to them i wouldnt put too much money on it. Likewise, i think copper should have either finished a big multi-year bull market or very nearly so. This one i feel slightly more confident in and have a very small short position open on, but again not as confident as i would be if i saw the same pattern in stocks. So, ideally all three metals should fall very hard very soon - but dont go putting money on it. Lets see what happens.

 

Update of the applying EW to metals experiment: Gold was around the $930 area i think when i wrote this and a couple of days later hit the $950 area, before starting a leg down to a bit below $850. A $100 odd fall, which counts as big, but not as big as i expected. It is now $884, so a bit lower that when i wrote, but not a huge amount. So, we have a big ABC' pattern in place from the highs of a couple of months ago. Thus, the falls could be over and the next leg up could have started (and in fact we have just seen a rise of $20 in the last 45 mins or so). But, on balance i dont think so. I think the more bearish elliot wave count could be the right one and that gold should soon turn lower again in a big fast move. The same basically applies to silver.

 

I am still wary of trying to apply EW to strictly to gold etc, but i have made a little on the falls to earlier this week before getting out, and will try a small short again i think - just dipping the toe.

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Update of the applying EW to metals experiment: Gold was around the $930 area i think when i wrote this and a couple of days later hit the $950 area, before starting a leg down to a bit below $850. A $100 odd fall, which counts as big, but not as big as i expected. It is now $884, so a bit lower that when i wrote, but not a huge amount. So, we have a big ABC' pattern in place from the highs of a couple of months ago. Thus, the falls could be over and the next leg up could have started (and in fact we have just seen a rise of $20 in the last 45 mins or so). But, on balance i dont think so. I think the more bearish elliot wave count could be the right one and that gold should soon turn lower again in a big fast move. The same basically applies to silver.

 

I am still wary of trying to apply EW to strictly to gold etc, but i have made a little on the falls to earlier this week before getting out, and will try a small short again i think - just dipping the toe.

 

we will see.

I think and upmove to $950-1000 or higher may have started.

And if not, I see support at $850, and failing that, near $800

 

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we will see.

I think and upmove to $950-1000 or higher may have started.

And if not, I see support at $850, and failing that, near $800

 

Interesting takes DB and DD. Prior to Dec of last year I hadn't dabbled in gold or silver. In Dec Jan Feb I dabbled, and won big (for me). In March I lost big (for me) through sheer inexperience and excitedness. I have not lost hope. In the meantime I have been reading, listening and learning, building a long term base in physical and buying good value (to me) juniors. I am now waiting for the right "in" for my more speculative funds (futures). I am certainly trying to take on board EW concepts. I have read with interest Alf Fields stuff. He is calling a bottom at the 850 we just touched, with an outside chance of a much lower drop http://www.gold-eagle.com/editorials_08/field050108.html

 

I am watching certain triangle patterns at the moment and waiting to see a genuine breakout one way or the other before the end of May.

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Interesting article from Mineweb

 

$2300 POSSIBLE IN THE LONG RUN

Gold secular bull market is still intact and remonetisation has begun!

Austria’s Erste Bank predicts a ‘shiny outlook’ for gold in a very detailed Special Report.

 

Author: Lawrence Williams

Posted: Friday , 11 Jul 2008

 

Article extracts:--

 

In its conclusions, the report quotes a number of factors which support a continuing rise in the gold price with the supply/demand balance unlikely to improve in the medium term - the only potentially adverse scenarios in this case being a dramatic decrease in gold imports in India, which is considered unlikely, or a very fast increase in mine production - which again, on data available, also looks to be unlikely.

 

Factors seen as positive for gold include a continued fall in primary production, increased demand from Central Banks in the emerging markets and a long term increase in jewellery demand also from emerging markets as earnings and living standards increase. The gap between supply and demand is thus likely to widen progressively and can't in reality be closed by recycling and Central Bank sales.

 

On the politico-economic front, the Bank feels that the "massive loss of trust on the capital markets and the still smouldering dangers from inflation" means that the "crisis-proof" metal should remain in strong demand over the coming months, with gold and precious metals seen as the only asset class capable of retaining value in both inflationary and deflationary settings on a sustainable basis.

 

Mined production of gold seems unlikely to increase significantly as mining companies are finding it increasingly hard to maintain profitability despite the big price increases of the past few years. The increased revenues as a result seem to be being more than matched by corresponding increases in the costs of labour, energy, equipment and production costs. Furthermore with most easily mineable reserves of gold at or nearing exhaustion the cost of working less accessible and lower grade reserves is also having a substantial impact on supply potential. Mining costs of up to around $600 an ounce, and rising, also serve to underpin the potential gold price downside.

 

With seemingly massive support seen around the $850 level, the report suggests that the price will remain in the $850-$950 band during the summer months with the $1000 mark being clearly passed again later in the year. Passing $1200 is seen as the first target and in the long run the price is seen as passing the inflation-adjusted all-time high of $2,300.

 

As if to place emphasis on the remonetisation aspect of gold, Stoeferle concludes his report with the J.P. Morgan Satement to the U.S. Congress in 1913 - "Gold is money, and nothing else".

_____________________

 

Full Article

http://www.mineweb.com/mineweb/view/minewe...7&sn=Detail

.

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KEY LEVEL : GLD-$84.00 as Olympic Torch is lit!

 

Have a look at this chart: update

bigvf5.gif

 

GLD is right on the 252d.MA ! at GLD-$84.00

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KEY LEVEL : GLD-$84.00 as Olympic Torch is lit!

 

Have a look at this chart: update

bigvf5.gif

 

GLD is right on the 252d.MA ! at GLD-$84.00

 

Good article re: gold recent plummets

 

http://www.safehaven.com/article-10941.htm

 

In the week ending 25th July 2008, the decrease of €578 million in gold and gold receivables reflected the sale by two Eurosystem central banks which roughly equates to the sale of just over 30.0 tonnes of gold. In the week ending the 1st of August, there was a decrease of €26 million in gold and gold receivables reflecting the sale by one Eurosystem central bank and the purchase of gold coins by another Eurosystem central bank, which roughly equates to the sale of around 1.40 tonnes of gold [consistent with the Central Bank Gold Agreement that came into effect on 27th September 2004].

 

This was after many weeks where only between 1 and 2.5 tonnes of gold was sold under this agreement. In the past, Greece has been a buyer of coins for its reserves. We are pretty sure that Switzerland was responsible for around 1 to 2.5 tonnes of the previous weeks' sales, prior to the week of July 21st but the balance most likely [we cannot be certain of this as this information is not yet published] came from a signatory that has not announced ahead of time how much it will sell. However, the pattern of a sudden arrival of a seller who sells without regard to the impact on the gold price is very much in line with a pattern set last year by Spain, who sold primarily to fill some of the gap in its own budget deficit. After all economy Finance Minister Pedro Solbes said in May 2007 that the central bank would sell gold to buy bonds, but so far that has not happened. The Bank last held a sale for gold in July 2007, when it sold 24.88 tonnes [0.8 million troy ounces].

 

While we thought it may have been Spain selling, during the week of July 21st the Bank of Spain's gold reserves were unchanged at 281.62 tonnes [9.054 million troy ounces] according to data on the central bank's website. Maybe the information still needs to be added to the website, therefore we will wait for confirmation of who made this sale when it is published.

 

But whoever has been selling, have they stopped selling now? Last week we only saw net sales of 1.4 tonnes, which takes us back to the previous pattern thus leading us to believe that it was Switzerland that keeps selling and will continue to do so until it has completed its sales [the residue is now well below 50 tonnes more]. As to the seller of that 30 tonnes, it appears that their selling has now stopped.

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Putting a few things together.

 

Has the CB intervention and subsequent market reaction brought the US$JPY to a peak ?

 

USJPY_080813.gif

 

 

The NZ$ is continuing to fall against the JPY:

 

NZJPY_080813.gif

 

 

And looking at the degree of undershoot in gold and silver priced in Yen, compared with 2007:

 

GoldJPY_080813_weekly.gif

 

SilverJPY_0808013_weekly.gif

 

 

It looks like the general view is moving towards this being a bottom.

 

The most worrying thing of all

 

I am not worried but this fall at all

 

I quite enjoy them really. I find the rockets up rather dull compared :D :D :D

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Please forgive my ignorance, but can you explain the significance of this?

 

There are various technical methods people use. DrBubb uses the 252 day moving average of gold in US$. The buyers tend to jump in when the price gets down to that sort of level, so it tends to mark a bottom.

Remember a lot of the big money is driven by the wonderful black boxes. They have their buy and sell analysis methods, which according to Jim S makes it really easy for the cartel to knock them up and down as they want!

 

(I hope that's a fair reflection of DrBubbs view)

 

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It's worth remembering the sort of movements you can expect in gold:

 

Jim_Sinclair_Formula.jpg

 

Suppose this realistic prediction plays out.

Someone buying gold in 2008 at $1000 would have insurance, and by 2012, would have gold at $2200.

$2200/$1000 = 2.2 over 3 years. That's 30%/year. Quite good performance for an insurance product.

 

Unless there is a black swan event, in which case get taller paper :lol:

 

 

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It's worth remembering the sort of movements you can expect in gold:

 

Jim_Sinclair_Formula.jpg

 

Suppose this realistic prediction plays out.

Someone buying gold in 2008 at $1000 would have insurance, and by 2012, would have gold at $2200.

$2200/$1000 = 2.2 over 3 years. That's 30%/year. Quite good performance for an insurance product.

 

Unless there is a black swan event, in which case get taller paper :lol:

 

Like you Steve I quite enjoy the ups and downs of gold and silver, although it helps if you are not leveraged and have physical because you can't run to the shops and flog it as quickly as you can press a button on an ETF or Gold Money <_<

 

I have been progressing with my nocturnal research on gold and thought I might give my prediction on gold for the rest of the year based on the averages that I have found so far. I want to state that this prediction is a provisional one as I have just found some more data to play with tonight and the fact that the POG has historically fallen further later on in August but that said I think that the lowest low may be in ....

 

POG has risen on average by 8.4% from the lowest low in August to the last trading day in the year. Given that the lowest low I have seen this August as an open or close is $808.75 therefore the end of the year should be approximately $876, a bit lower than Sinclair’s prediction.

 

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