Jump to content
drbubb

Gold: the Bull's thread

Recommended Posts

The divergence between Gold and gold shares...

underscored the vulnerability of teh recent Gold rally

 

xaugcaq071406.gif

 

EWI's comment:

August Gold] pushed to an intraday high of $669 today, slightly past the top end of the $658.50-$665.60 resistance area in what is likely a “flight-to-quality” bid based on the current geo-political tensions. It is uncertain if prices are at their final countertrend rally peak right now, but there are some subtle signs of an impending reversal in bullion prices. One is the significant divergence that has developed between the XAU/Gold bullion ratio and gold bullion prices, as seen in the above chart.

 

Oftentimes, diverging behavior in this ratio will precede gold declines, which is what occurred in February-March 2006 (first divergence at left on chart) and April-May 2006, prior to gold’s May 12 peak ($739.20). The current divergence started on June 29 and is becoming acute. Another subtle clue that the rally is approaching an end is the inter-market divergence between gold and silver, the latter being the higher-beta metal. This non-confirmation is akin to the higher-beta NASDAQ failing to confirm a rally leg in the blue-chip Dow or S&P. It doesn’t guarantee a trend change, but when traders refuse to accept risk (by failing to push the riskier asset relative to the more “conservative”), it suggests more often than not that a reversal is nigh. Right now, filling the open chart gap at $616 (June 30) would be a strong indicating that wave 2 or B up was complete

 

 

...MORE on the "free week"

Share this post


Link to post
Share on other sites
Some German paper has reported that Iran has accepted the package of incetives. Oil dropped a dollar on the news. So much for fear premium. Gold is also reacting to the rising US dollar as a haven of "safety" in these troubled times. Good opportunity for Ben to cut rates.

 

If that is the case then the paper must have some real good sources because everywhere else seems to be reporting a negative response, although they all seem to be using a standard Reuters press release. Is there a link for this?

 

President Bush and Russian President Vladimir Putin, who differ on whether to impose UN sanctions on Iran, expressed concern on Monday that Tehran had not responded to an incentives offer, Reuters news agency reports.

 

The two leaders made a show of unity in a joint statement declaring their intention to try to limit the proliferation of nuclear weapons, including the cases of Iran and North Korea.

 

“We are especially concerned by the failure of the Iranian government to engage seriously on the proposals” made by the five permanent members of the UN Security Council and Germany, Bush and Putin said.

 

http://mosnews.com/news/2006/07/17/putinbushiran.shtml

Share this post


Link to post
Share on other sites
If that is the case then the paper must have some real good sources because everywhere else seems to be reporting a negative response, although they all seem to be using a standard Reuters press release. Is there a link for this?

 

President Bush and Russian President Vladimir Putin, who differ on whether to impose UN sanctions on Iran, expressed concern on Monday that Tehran had not responded to an incentives offer, Reuters news agency reports.

 

The two leaders made a show of unity in a joint statement declaring their intention to try to limit the proliferation of nuclear weapons, including the cases of Iran and North Korea.

 

“We are especially concerned by the failure of the Iranian government to engage seriously on the proposals” made by the five permanent members of the UN Security Council and Germany, Bush and Putin said.

 

http://mosnews.com/news/2006/07/17/putinbushiran.shtml

I heard that last night, seems that by this morning, the Iranians were saying something different.

 

Good US production figures are hinting at more rate increases. Can the consumer handle it?

Share this post


Link to post
Share on other sites

The real risk is that US Real Estate crumbles,

and brings dwon teh whole US economy.

 

Bernanke will be watching for that

Share this post


Link to post
Share on other sites
The real risk is that US Real Estate crumbles,

and brings dwon teh whole US economy.

 

Bernanke will be watching for that

 

DrB,

 

How are you feeling about that August dip?

 

With Palestine/Israel/lebanon/Syria?? kicking off do you reckon it will still dip in a month or so?

Share this post


Link to post
Share on other sites

Having looked at August figures for the last few years on Kitco, I can't really see a significant dip relative to other months.

 

Is there anything particular about August this year that makes people expect a low? Could the drop we have had since Monday be 'it', advanced slightly? Seems strange that it plunged just as things really kicked off in the Middle East.

Share this post


Link to post
Share on other sites

Great article, Vish - cheers.

 

Gold has been putting in a beautiful series of lower highs and lower lows since hitting $675 on Monday. Looks like we are bang on for the low in 2/3 weeks' time.

Share this post


Link to post
Share on other sites

Right Evil, this baby's going down. We're on wave C of an ABC from 728 high. Might be more than three weeks before we see the bottom though. This correction started in May. There'll be some tradeable rallies on the way though.

Share this post


Link to post
Share on other sites

AGREED.

I could easily see GLD (1/10 ounce) come down an touch the Red MA ($55?) by late August

 

Chart = that would be about $550 Gold

Share this post


Link to post
Share on other sites

I posted this at ADVFN, but it's relevant here:

 

 

The received wisdom with gold is that it is a safehaven in troubled times. When it rises, people explain it as: a reaction to Bernanke's statements, rate rises, Iran, Nigeria, war on terror, stocks rising, stocks falling and so on.

 

These last two weeks have seen in my view the worst, most negative geo-political factors since I began following the gold markets last December. With Iran on-going, North Korea firing missiles and full-scale war between Israel and Lebanon, we are seeing serious and threats to world stability (and thus trade). In fact, the Israel-Lebanon war is worse than a threat, it is actual.

 

If ever there was a time for gold to soar and stock markets to fall, it was now. Yet the opposite has happened.

 

Conspiracy theorists might say this is obvious manipulation. Yet we all know that most conspiracies are just hot air.

 

The bottom line is that markets at the moment, and gold in particular, do not seem to be as driven by geo-political news as many believe.

Share this post


Link to post
Share on other sites

Friz, I agree to an extent, but I would also add that the market is a forward discounting mechanism - it's not what's going on at present that determines price, it's what the market is pricing in for the future. Of course, the market isn't perfect, either in its forecasts, or to its "discount" on current price - if it was, then making money would be easy. :)

Share this post


Link to post
Share on other sites

This is supposed to be one of the seasonally weak times for gold. Just wondering if someone with perhaps a bit more TA expertise could look at this chart. Does anyone see gold dropping to it's 200dma anytime soon?

 

Here

 

Edit: Up at $64.26 now.

Share this post


Link to post
Share on other sites
Perhaps rather speculatively i have just shorted gold, am looking for the falls to continue shortly to below $550.

 

Purely on fundamentals I am wondering what is going to push it back to $550? Seasonal Weakness? I'm sure there will be some pullbacks, but to $550? It seems to have had good support recently above $600. The technical side may indicate this is possible, but there is enough bad news around that gold thrives on. As Vish says above, it might go either way.

Share this post


Link to post
Share on other sites

Dr Bubb,

 

I wonder if you can apply your TA to the following charts for gold and silver.

 

http://bigcharts.marketwatch.com/charts/bi...&mocktick=1

 

 

http://bigcharts.marketwatch.com/charts/bi...&mocktick=1

 

My observations are that over the past years every time the 21 and 55 dma have touched that has signalled a buy point. We are seeing that now. However, they are coming back together after crossing, which was not the case with the previous buy points. I don't know if the 21 crossing the 55 and coming back signifies anything.

 

Also the bolis are converging a little which can precede a break out.

Share this post


Link to post
Share on other sites

I AGREE.

Gold & Silver are holding better than I had expected at this stage/

 

Despite that, i am still raising cash where I can because, I still expect an August selloff- in gold shares, if not in the metal itself. It is beginning to look like the metal has a chance to hold above $600, and perhaps higher. If we get a slide in the general market, then Gold shares would likely slide too, even if AU & AG hold up.

 

So we still may see some late August bargains

 

Silver (SLV) ; is on the top of a range, and may peak here, just below $12

Share this post


Link to post
Share on other sites

Re: Purely on fundamentals I am wondering what is going to push it back to $550? Seasonal Weakness? I'm sure there will be some pullbacks, but to $550? It seems to have had good support recently above $600. The technical side may indicate this is possible, but there is enough bad news around that gold thrives on.

-------------

 

 

Yes fair point, but i think there is a good chance that we will get a big economic slowdown this autumn/winter which, if it occurred, would likely take the wind out of inflation's sails and perhaps rapidly. This could cause gold to fall.

 

Also, i know this is unfashionable, but i think there is a reasonable chance the dollar might want to strengthen over the remainder of this year - there is a chart gap around 1.13 against the euro which it might want to fill. Plus, the dollar has not even re-traced a normal amount against the euro after its falls of the last few years, suggesting a larger correction might still be on the cards. This could cause gold to tumble too and they often seem to go in opposite directions.

Share this post


Link to post
Share on other sites

People waiting for sub-$600 gold to re-enter could be very disappointed IMHO. The reality of stagflation is starting to sink in, and in this environment gold is pretty much the only thing to hold.

 

I'd be suprised if we aren't over $800 by the end of the year, but then if the central banks want to stop this I'm sure they will. How much "ammo" have they got left, and how much of it dare they use though?!

 

Gold stocks on the other hand could well get tossed around with the broader market, at least until gold itself is back on a more stable, sustained upward trend.

Share this post


Link to post
Share on other sites

Maybe a Fed rate rise nect week would hit Gold

 

Markets still make it a 50/50 bet, but I think the odds are closer to 90%.

Friday's employment data will change the odds for the market

Share this post


Link to post
Share on other sites

I had been looking at a fall in gold to back near lows of $550 but see it as unlikely now. However, I'd be very surprised if there wasn't at least a fall to near the $600 mark before the month end. However, I thought this about oil before and the fall never materialised.

Share this post


Link to post
Share on other sites

If the slide in the stockmarket really takes hold in the days to come,

you may be surprised how fast Gold and gold shares fall

 

No guarantee on this, but it remains a real possibility- not a longshot IMO

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

×