G0ldfinger's GOLD Thread: Longer Term Aspects

[G0ldfinger 0]

G0ldfinger's GOLD Thread: Longer Term Aspects

Facts, charts, and discussions on gold and related topics

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When I left the madhouse (www.housepricecrash.co.uk) and moved over to GEI, I started the GOLD thread(s) with the intention to have a better online home for my gold ramblings.

 

The thread(s) turned out to be quite a success, and the moderators decided to split them into monthly units.

 

While I do not see the usefulness of the monthly split (but never complained), I also don't like the spin the threads have recently got every month by subtitles etc. that seem to encourage to trade the metal.

 

The original thread was not at all intended to be a trading thread.

 

Obviously, I am only a guest here, tolerated by the proprietor DrBubb, and not even a moderator (and also don't have the time or aspiration to be one). So, it seems the best solution to have my "own" thread.

 

What does this mean?

 

I will collect my thoughts here, and everyone is invited to discuss them and everyone else's who is posting.

 

Yes, there will possibly be a spin on this thread - my spin. My philosophy is: don't trade. Instead, invest with a mid to long term horizon, because: You got to be in it to win it!

 

Still there is the question: one day, it will make sense to sell gold (or silver). When will this be? Well, there is a good start for a discussion. Many people on here know that I believe in cycles - especially when measured in real, non-hyperinflatable money: gold. So, let's observe and discuss these cycles.

 

Naturally, I will post my favourite charts on here as well. So let's start with these here. They show two beautiful cycles: the Dow Jones priced in gold, and UK houses priced in gold (plus targets, as I could imagine them).

 

 

By the way, I am not entirely against shorter term considerations or aspects of Technical Analysis in gold. They can be a useful tools to time gold purchases (and maybe, in several years time, gold sales). But in general, I am more interested in the Fundamental Analysis of gold and the long term implications of it.

 

= = = = =

LINKS:

Goldfinger's Long Term Gold charts :: http://www.greenenergyinvestors.com/index.php?showtopic=8853

[Pixel8r 0]

Good idea, here's my contribution. This graph shows the regular progression and encourages the buy and hold strategy which I also subscribe to.

 

 

 

[Errol 0]

I'm another long term holder. Agree with GF's position.

[FWIW 0]

Very good idea - I'm in!

 

To kick things off, here is chart and indicator that I am watching closely for my next physical buy:

 

 

I am waiting for the daily ADX to go above 35, before jumping in. This will be for Buy to Hold purchase! Some people will jump in now, and that is fine...but we swim with sharks!

 

This method is a continuation from my previous thread: http://www.greenenergyinvestors.com/index....st&p=130482

[seekingclarity 0]

Good one GM!

 

This is fresh of the press from Jim W .....pun intended, but very relevant given the broad scope of your thread title-

 

http://financialsense.com/fsu/editorials/w...2009/1008.html#

 

 

[Pixel8r 0]

Good one GM!

 

Sorry couldn't resist....

 

 

[DoctorSolar 0]

Good one GM!

 

This is fresh of the press from Jim W .....pun intended, but very relevant given the broad scope of your thread title-

 

http://financialsense.com/fsu/editorials/w...2009/1008.html#

Yep great stuff GF.

 

I love his target prices 1130, 1300, moon

[seekingclarity 0]

 

Of course that should be GF... humble apols.

 

Thanks Pixel. By the way hats off to your calls in recent months

 

[fitkid 0]

Excellent goldfinger AUTONOMY my kind of governance.I am also a physical personaly holding gold investor who at the momment is long gold,i will avidly peruse this thread for strategies and developments and contribute when and where i can.

[fitkid 0]

When We Have Gold We Are in Fear, When We Have None We Are in Danger - English Proverb

By Anna Coulling

 

 

My name is Anna Coullling and I am a full time currency and commodity trader, having been involved in trading and investing for over 15 years.

 

There are probably as many conspiracy theories about gold as there are about Elvis, Marilyn and the Moon Landings but this time the gold bugs may just be proved right. Since the price of gold shot past the magical $1000 mark last week there is no reason to suppose that the price will just keep on rising given the level of support from the rest of the financial market. The list is long and wide and encompasses a weak US Dollar, central bank buying and a seemingly insatiable demand from China which, when combined with a strong technical picture, is suggesting that spot gold prices are likely to hold onto the $1000 per ounce price point before moving higher.

 

For traders and investors not familiar with the gold chart or chart reading then I would suggest paying close attention to the state and fate of the US Dollar and China. One of the reasons given for this current bout of dollar weakness has been a move back into equities as investors rediscover their appetite for risk but this is not enough to explain the recent deterioration in sentiment towards the Dollar. In addition if the FED continues to highlight that US interest rates are not going to be raised quickly this too will keep the Dollar under pressure for some time.

 

Then, of course, there is China whose economic relationship with the US can best be described as a marriage in which one partner is a saver and the other a spendthrift. With China sitting on approximately $2 trillion dollars of foreign exchange reserves, half of which are denominated in US Dollars, even a modest weakening of the greenback will see China's wealth take a mighty hit. China has responded not only by indulging in a massive commodity spending spree, but also over the past 6 months has made a series of moves to try and protect itself against US Dollar devaluation. First, at a recent BRIC Summit in Russia Chinese leaders came out strongly in favour of a new reserve currency to replace the Dollar. Second China has been buying both gold bullion and mining assets in Latin America, even though it is itself the world's largest producer at 270 tonnes per annum.

 

Finally, in the most extraordinary turnaround the Chinese Government is actively encouraging its citizens to buy precious metals, such as gold and silver which until 2002 was banned. Every bank in China sells gold and silver bullion bars in 4 different sizes and Chinese mining companies are also encouraging their employees to convert some of their wages to gold on payday. Gold is traded in some form 24 hours a day and there are now persistent rumours that the export of silver has been banned which, if true, could mean that gold too would be next. There are also rumours that China is looking to ban the export of rare earth metals which are essential in the manufacture of hybrid cars and superconductors.

 

Finally, Alan Greenspan's comments that the recent "Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies" would be enough to keep the current rally in gold prices going for some time to come.

 

Anna Coulling is a full time currency and commodity trader and investor, who specifically helps new traders to understand the financial markets. All the information on her web sites is free. For further information and examples please click on the following link : http://www.spot-gold-price.org

 

Article Source: http://EzineArticles.com/?expert=Anna_Coulling

 

 

[G0ldfinger 0]

I've got no problem with people trading gold. I'd advise that nobody should do it unless they are really sure what they are doing though. Any trading of this sort should be done with money you can truly afford to lose and should not be leveraged.

I agree with this. I just didn't like that something that was intended as a longer term perspective discussion often is so dominated by trading questions, starting right from the title.

 

Then I think of those grannies who sit on the Krugerrands they bought 2001, and maybe they suddenly want to trade that next top in gold (that some see). And I just want to shout "NO!!!!!" at them.

 

The point is, they shouldn't even get tempted by corresponding thread titles etc.

[G0ldfinger 0]

Everyone, thanks for the support by the way!

[fitkid 0]

I agree with this. I just didn't like that something that was intended as a longer term perspective discussion often is so dominated by trading questions, starting right from the title.

 

Then I think of those grannies who sit on the Krugerrands they bought 2001, and maybe they suddenly want to trade that next top in gold (that some see). And I just want to shout "NO!!!!!" at them.

 

The point is, they shouldn't even get tempted by corresponding thread titles etc.

 

Goldfinger dont you agree whith me as well.ALL TRADERS SELL TO ME AT 50% OFF SPOT MANDATORY

[fitkid 0]

HOW ABOUT THIS FOR GOOD ADVICE

 

If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold.

Robert Ringer

[G0ldfinger 0]

To all the double-top announcers:

 

(1) Is a blow-off double top. Note that the second top is lower.

 

(2) Is the breach of a (ridiculous) psychological barrier, maybe combined with some suppression efforts by a certain Cartel.

 

http://img218.imageshack.us/img218/8545/goldusdlog081009.png

[G0ldfinger 0]

Goldfinger dont you agree whith me as well.ALL TRADERS SELL TO ME AT 50% OFF SPOT MANDATORY

That'd be very generous of them!

[G0ldfinger 0]

Silver looks still subdued here. (The red dots are the last 5 trading days.)

 

http://gold.approximity.com/gold-silver_watch.html

[FWIW 0]

To all the double-top announcers:

 

(1) Is a blow-off double top. Note that the second top is lower.

 

(2) Is the breach of a (ridiculous) psychological barrier, maybe combined with some suppression efforts by a certain Cartel.

 

http://img218.imageshack.us/img218/8545/goldusdlog081009.png

 

I think the problem is that the human mind cannot easily comprehend exponential functions. For example 5% per year interest on £1000 would mean you double your money in 14 years.

 

The doc explains it here:

 

From:

 

However, with gold we have it in reverse. First the majority of the population can't beleive that money can be created out of nothing. Second we have massive printing and money creation. Now when gold goes vertical in usd, people will say it will come back down. What they misunderstand is the price of gold is not going up (an oz of gold is still an oz of gold), it is the value of paper that is going down and what other people are prepared to pay you for it.

 

 

[G0ldfinger 0]

Now we're getting into some real TA here. I just thought it might be interesting.

 

http://goldismoney.info/forums/showpost.ph...postcount=30363

 

And here the close-ups (1979/80 and 2008/09):

 

 

They could not be any more different.

[FWIW 0]

Now we're getting into some real TA here. I just thought it might be interesting.

 

http://goldismoney.info/forums/showpost.ph...postcount=30363

 

And here the close-ups (1979/80 and 2008/09):

 

 

They could not be any more different.

 

I don't think it was a true double top pattern, more of a cup and double handle.

 

 

From: http://seekingalpha.com/article/165435-com...ndle-volatility

 

 

[G0ldfinger 0]

I don't think it was a true double top pattern, more of a cup and double handle.

...

I agree 100%. But I read "double top" in some places - even on GEI.

[Dispassion 0]

I think the problem is that the human mind cannot easily comprehend exponential functions. For example 5% per year interest on £1000 would mean you double your money in 14 years.

 

The doc explains it here:

 

F-QA2rkpBSY&NR

 

However, with gold we have it in reverse. First the majority of the population can't beleive that money can be created out of nothing. Second we have massive printing and money creation. Now when gold goes vertical in usd, people will say it will come back down. What they misunderstand is the price of gold is not going up (an oz of gold is still an oz of gold), it is the value of paper that is going down and what other people are prepared to pay you for it.

 

I'm worried about the notion that some of those who are trying to time markets, don't understand everything in this video already. This is taught in GCSE maths (for those educated in the UK), isn't it?

 

If you're timing or thinking of timing markets, then it's important to note that this level of maths is second nature to the people who manage the vast majority of money on the markets. Anyone who gets involved in the competition that is market timing, should at least have an idea of who they're competing against!

 

I really don't want to sound elitist, but I think the most important thing any investor can learn is under what conditions it is better to let someone else invest for them - in most cases this can be automated with very little cost by following a balanced portfolio. Yes, this would mean we'd only have about 10% of our wealth in gold, but that would be because we'd be aknowledging that the average wealth 'knows more than us'.

 

Ok.. interlude over. Carry on GF.

[G0ldfinger 0]

The Dow Jones is now in the perfect position for staying put while gold moves up and up. (5 most recent trading days in red)

 

On the other hand, I somehow expect it to turn soon. This could make the "handle" to the left thicker - exactly as it happened decades ago.

 

http://gold.approximity.com/gold-silver_watch.html

[FWIW 0]

I'm worried about the notion that some of those who are trying to time markets, don't understand everything in this video already. This is taught in GCSE maths (for those educated in the UK), isn't it?

 

If you're timing or thinking of timing markets, then it's important to note that this level of maths is second nature to the people who manage the vast majority of money on the markets. Anyone who gets involved in the competition that is market timing, should at least have an idea of who they're competing against!

 

I really don't want to sound elitist, but I think the most important thing any investor can learn is under what conditions it is better to let someone else invest for them - in most cases this would be a balanced portfolio.

 

OMG! Yes you do sound a bit mother superior!

 

Yes, let someone else do the thinking for you!!! That's worked out wonderfully for these guys:

Quote:

Most actively managed funds don't beat the market in the long run

For example, he followed all 355 equity funds existing in 1970 over the period from 1970 to 2005. Of these, 223 did not survive to 2005. Only 24 of the remaining 132 beat the market by at least 1% per year. Just nine of those 24 beat the market by at least 2% per year and two beat it by 3% or more.

 

From:

http://www.moneyweek.com/investment-advice...self-94108.aspx

 

You don't work in Financial Services by any chance do you?

 

 

[Dispassion 0]

OMG! Yes you do sound a bit mother superior!

 

Yes, let someone else do the thinking for you!!! That's worked out wonderfully for these guys:

Quote:

Most actively managed funds don't beat the market in the long run

For example, he followed all 355 equity funds existing in 1970 over the period from 1970 to 2005. Of these, 223 did not survive to 2005. Only 24 of the remaining 132 beat the market by at least 1% per year. Just nine of those 24 beat the market by at least 2% per year and two beat it by 3% or more.

 

From:

http://www.moneyweek.com/investment-advice...self-94108.aspx

 

You don't work in Financial Services by any chance do you?

 

That's is my point.

 

The average actively managed fund underperfoms the average balanced portfolio, for one simple reason: actively managed funds are competing against each other to time markets - a zero sum game and the cost of timing markets is greater than not doing it at all, due to both transaction and management costs.

 

When we time markets we are actively managing our own funds.

 

[No, I don't work in finance]