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Gold: the Bull's thread

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A lot of resistance around the 600 mark. Big blue sky bounce from here possible.bigff7.gif]Gold[/url]

 

Looking at the bigger picture:

big1afx3.gif]gold 3 year[/url]

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Interview:

Mike Swanson on getting started and why he trades Gold shares:

 

= =

 

The Goldcorp bid for Glamis (+30% premium) could help Gold shares today

 

GOLDCORP AND GLAMIS AGREE TO US$21.3 BILLION COMBINATION CREATING THE WORLD’S PREMIER GOLD MINING COMPANY

TORONTO, August 31, 2006 – Goldcorp Inc. (TSX: G, NYSE: GG) and Glamis Gold Ltd. (TSX: GLG, NYSE: GLG) announced today that they have agreed to combine in a US$21.3 billion transaction to create one of the world’s largest gold mining companies. The new company will continue under the name Goldcorp Inc.

 

Under the terms of the transaction, which is structured as a Plan of Arrangement, Glamis’ common shareholders will exchange each Glamis share for 1.69 common shares of Goldcorp, representing a value of US$51.49 per share based upon the closing price of Goldcorp on August 30, 2006. This represents a premium of 32.7% to the closing price of Glamis’ shares on the TSX on August 30, 2006 and 34.8% to the 20 day volume weighted average trading price of Glamis’ shares on the TSX.

 

The new Goldcorp will have the following attributes:

 

+ Best production growth profile among major gold companies;

+ Proven and probable reserves of approximately 41.1 million gold ounces;

+ Resource base of approximately 14.0 million gold ounces of measured and indicated resources plus inferred resources of approximately 30.9 million gold ounces;

+ Lowest cost senior producer;

+ Focused operations and growth projects in the Americas with approximately 11,000 employees;

+ Strong balance sheet and robust cash flow to finance growth; and

+ All gold reserves and production unhedged.

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I hope the MLG&G fund holds some Glamis stock on my behalf! I've got a fair chunk of my ISAs in that fund.

 

Certainly looks like a strong move up for the HUI today, despite US stocks trading flat. Perhaps confirmation that today's little breakout in the gold price is the real deal?

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Perhaps confirmation that today's little breakout in the gold price is the real deal?

 

Maybe, though this chart taken from www.prudentbear.com (Guest Commentary, by Gary Dorsch, Is the 'Commodity Super Cycle' Fizzling Out? August 22) suggests gold may have some catching up to do on the downside if the relationship between oil and gold continues (or i guess oil could quickly rise). Of course all relationships like this break down at some point....will that point be now?

 

http://public.fotki.com/nbarter/gei/bitmap1107.html

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SEPTEMBER RUN STARTING?

 

These are the Bloomberg Headlines today:

 

Gold Gains a Second Day in Asia on Indian Seasonal Demand; Silver Advances Gold rose for a second day in Asia on expectation of rising demand from countries such as India. Silver also gained.

 

Copper Futures in Shanghai Climb to Seven-Week High Amid Concern on Supply Copper futures in Shanghai rose to their highest in seven weeks amid concerns that stockpiles held in Chinese warehouses may not be able to meet demand.

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I have some money that I was planning to put into mining shares fund. Would I be best to put it in now, or wait and see if the shares decline in sympathy with the general market over the next few weeks?

 

I am thinking I should put it now as it will help hedge against my Dow short but any advice is appreciated.

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From Todays MoneyMorning www.moneyweek.com - Sept 26 could be an interesting day for gold B)

 

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

Gold rose yesterday, to near $630 an ounce, due to “expectations demand will increase as jewellers stock up ahead of seasonal buying in India and as investors return from summer vacations,” reported Bloomberg.

“Gold has gained every September since 2000 as jewellers buy the metal for the winter holidays, the Indian wedding season and as investors in Europe and the US return to work after the summer,” the newswire continued.

 

Apparently gold has only fallen nine times during the month of September since it began trading on exchanges in 1975. As Ambrose Evans-Pritchard puts it in The Telegraph: “Even when [gold]churned ever-down from a peak of $850 an ounce in 1980 to $255 in March 2001, it usually managed to eke out a meagre counter-rally each September.”

 

We happen to think that Mr Evans-Pritchard is a very good journalist. This may well be because we agree with him most of the time.

 

So will gold rally this September? And might that take it back towards the heights of $730 an ounce, from where it plunged in May?

 

As Evans-Pritchard points out, if you put your faith in charts (and UK investing legend Anthony Bolton does, so unless your portfolio returns are better than his, perhaps you shouldn’t just dismiss them out of hand), it just might. Gold may have taken a dive in May, but it “bounced straight off the crucial 200-day moving average watched by chartists and is now forming a base around $620 - technically undamaged.”

 

Meanwhile, the September 26 deadline for European central banks to sell this year’s 500 tonne quota of gold is approaching and so far only 340 tonnes has been sold. UBS precious metals strategist John Reade, says: “It will be a bullish signal if they fail to take up their quota.”

 

It may not be such a surprise then, to learn that UBS has also seen increased demand for December 2006 gold call options, at a strike price of over $1,000. If the price doesn’t reach $1,000 by the strike date, the options are worthless to whoever holds them at that point.

 

But are these buyers being too optimistic? With the US economy slowing down, and threatening to drag the rest of the world with it, won’t the boom in metals prices end, dragging the gold price down with it?

 

Evans-Pritchard points out that gold hasn’t always been a good hedge during hard times, falling during the French Revolution and the First World War. “But then it was the world’s currency. Now it is the counter-currency, waiting in the wings to challenge an ever more deformed and fragile dollar system.”

 

Despite this belief, he can’t bring himself to imagine that the dollar will actually collapse. “It ought to fall, perhaps, to correct the world’s vast imbalances, but there is no credible currency for it to fall against…the Japanese and Eurozone governments will not let it happen…they will counter the US devaluation with devaluation of their own, setting off a fresh cycle of negative real interest rates.”

 

He may or may not be correct on this point. Certainly, the idea that the world’s central bankers will happily compete with each other to see who can slash interest rates the fastest is entirely in keeping with what they’ve done in the past.

 

But in any case, it doesn’t matter. Under either scenario - a dollar collapse, or an interest rate race to the bottom - gold wins. Both situations would cripple belief in the global fiat monetary system and send gold soaring.

 

As he points out, “Is that what gold is sniffing as a few very rich men and women buy their call options at $2,500 an ounce?”

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

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I do not feel strongly enough about gold one way or the other right now and so am out, but there seems to be such a consensus for gold to rise that i cannot help but wonder whther we are about to see some big falls.

 

Even my daily paper mentioned the September effect a couple of days ago. So, just as the bearish sentiment in stocks should have been more of a warning of further rises over the last few weeks, maybe the same is true in reverse for gold now?

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Looks like this is the real deal.

 

HUI/XAU breaking out.... Gold right up against $640 which has been resitance during previous rallies.

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"Meanwhile, the September 26 deadline for European central banks to sell this year’s 500 tonne quota of gold is approaching and so far only 340 tonnes has been sold. UBS precious metals strategist John Reade, says: “It will be a bullish signal if they fail to take up their quota.”

 

So, they have an agreement to sell 500 tonnes each year, I assume until it's all gone? Where does this come from? Could it be bearish if they can't sell it all?

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I shorted gold earlier today at 634 as from a short term EW perspective it looked like it wanted to fall. A nice 4 bucks gain already....will move SL down now to lock it in.

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I am loving this. Have already locked in $14 of fall so far. When the price pattern is set up like it was earlier you have a low risk bet which this time paid off very nicely.

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WARNING:

Possible Bull Trap on Gold : chart

The chart will look bad, if it breaks $600 soon

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Should bounce from here, if it doesn't and it breaks through 600 with momentum there is still the 200 and 252 dmas around 585 and 570 to prop it up, but gold could be in a bit of trouble..

 

Can anyone tell me the significance of this triangular wedge shape that is emerging?

 

 

big9kw3.gif]gld2[/url]

 

 

 

 

big8po6.gif]gld[/url]

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Should bounce from here, if it doesn't and it breaks through 600 with momentum there is still the 200 and 252 dmas around 585 and 570 to prop it up, but gold could be in a bit of trouble.....

 

The triangular or pennant fomation is a consolidation pattern the potential upside target is usually equivelent to the height of the first leg of the pattern which shoudl see gold well above $700 although we are currenlty testing support at the lower side of the patten.

 

Gold weakness temporary

 

GOLD PRICE ($) - SHORT-TERM VULNERABILITY

 

Trend: Short term down. Medium term sideways. Long term up.

 

Strategy: Sell short - but with caution.

 

The US dollar gold price has been consolidating over the past two months in a symmetrical triangle (lines 2 and 3). The price has now broken down below line 2 support to trigger a sell short signal.

 

The short-term stochastic oscillator (on top) is turning down again after a pullback, which confirms the price chart for more weakness.

 

Therefore, sell short gold bullion for more short-/medium-term downside.

 

The minimum target is US$569 (on its spot price). Interestingly, that will be at line 1 support and in the region of the 200-day moving average, which provides loose support.

Free news alerts: click here to subscribeThe longer-term targets here (after this correction) are $727 and then the $850 all-time high.

 

Place your initial stop-loss as a close above $630 (line 3).

 

Look to narrow a trailing stop as the price nears $570 (eg, to a break of the high of the prior two days) and start taking profits at $570.....

 

1537-0-0-0_386992.gif

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Gold is acting really strangely at the moment.

 

The expected end August low did not happen... could it be that it's late and is starting now?

 

I feel the price has dropped due to a ??stronger dollar?? cheaper oil and speculation of less asian demand.

How the hell did the dollar stengthen?

 

Current price $607. I am looking for an entry point to purchase more gold/silver.

 

Does anyone here believe it will drop below 600?

 

I am hoping to see around 580 and I will buy.

 

I'm also interested in September 26th if Central Banks do not sell their full quota this is bullish to me what do you guys think will happen?

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Gold is acting really strangely at the moment.

 

The expected end August low did not happen... could it be that it's late and is starting now?

 

I feel the price has dropped due to a ??stronger dollar?? cheaper oil and speculation of less asian demand.

How the hell did the dollar stengthen?

 

Current price $607. I am looking for an entry point to purchase more gold/silver.

 

Does anyone here believe it will drop below 600?

 

I am hoping to see around 580 and I will buy.

 

I'm also interested in September 26th if Central Banks do not sell their full quota this is bullish to me what do you guys think will happen?

 

Duane - The best advice is to assume nothing.

 

Gold has tried 3 times to rise above $607 and has failed each time. At teh moment, it doesn't look good for a rise above recent highs. There is likely to be continued strong resistance at $640, $670 and $720.

 

On the downside, gold just can't seem to get away. This is the fourth time it's resting on $607. There is a good chance it could go lower from here. If that happens, it's just a case of which support level will hold. No one can say for sure.

 

Whilst it stays between $607 and $640, it basically hasn't made a decision either way.

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Guest Guest
Duane - The best advice is to assume nothing.

 

Gold has tried 3 times to rise above $607 and has failed each time. At teh moment, it doesn't look good for a rise above recent highs. There is likely to be continued strong resistance at $640, $670 and $720.

 

On the downside, gold just can't seem to get away. This is the fourth time it's resting on $607. There is a good chance it could go lower from here. If that happens, it's just a case of which support level will hold. No one can say for sure.

 

Whilst it stays between $607 and $640, it basically hasn't made a decision either way.

 

What a week for gold. shot straight up to 640 back down to 607 in a matter of days.

 

If it is not anything else it's certainly an adrenalin rush.

 

I thought it was skyward bound when it broke out early week and nearly bought at $635.

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If you are buying physical then don't worry, 630/600 makes no difference. I had a bit of luck though I'm buying 20K worth at the moment but Perth Mint won't price it until Monday so I'll get a bit more. If it really got hammered, then I would load up on the shares. To be honest it is very niave to try to predict the price over a short time frame, nobody knows. and all I know is that the more I have the better I sleep at night ;-)

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