Gold Price - Where is it heading?

wavepicker · 22 May 2006

Re: GOLD Where is it heading?

MARKETWAVES said:
I totally disagree with this guy Hamilton .............

His work is over written also ....Less is sometimes best .

You cant write long episodes -
and expect to keep most peoples interest !
His main problem is he is paying attention to Lagging indicators

He makes refrence to the 200day moving averages -
well guess what? ...... Thats a lagging indicator ....

You cannot watch the westrern oscillators and expect to do well .

again simply because they are all lagging indicators

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

THE NAME OF THE B GAME IS TO FIND A SOUND BASE BEFORE THEY BREAK OUT- If a market breaks out its too late .

How many times must I bring this simple message to the table ?

Gold has no base built into right now ....
Long Term or Short term... It's the simple truth ....

Very True marketwavez,
they are lagging indicators. But they can also be used as leading indicators as well(bullmarket knows what I am talking about) with some imagination. This will also lead to subjectivess as does with using Elliott.

The problem with most folks using MA's today is that they do not really know what the MA is a represention of. An MA is a simple cutoff filter. The line you see in the MA is the sum of all the cycles(cyclicalities) above the period you have selected or the cutoff. Now if you subtract the MA from the price you end up with the opposite, You end up with the sum of the cycles that the filter threw away in the first instance or under the cuttoff you have selected. This is the inverse of the original MA. Simply checking the phase relationship of these 2 lines will give much information. Centering an MA first before using it is the key

There are other low lag filters such as WMA (digital filter which is what I use) and adaptive MA's

go to MESA Software, John Ehlers has some very interesting papers there on MA's, so has Dennis Meyers at his website

Cheers

tech/a · 22 May 2006

Re: GOLD Where is it heading?

Wait a minute here Wave picker

Am I reading what you said in the above post right ?
You bought Gold in 2001 and held it to April of 2006 ..

LET'S PUT THIS IN ITS PROPER PERSPECTIVE .................

.................................................. .................................................. .....
Well , I think every Gold trader in here should be listening to you very closely and checking out the Elliott Waves .
After that - Throw out all the News .& Turn off the T.V. - This is no laughing matter .

You have just cashed in one of the best bull runs in the history of Gold , since what happend in the 1970's ......

Hmm my suspicion grows,you seem to work as a tag team.
Given some complements on your charting all of a sudden this has un leashed a spate of posts with copious amounts of "Look at me look at me"

The analysis is great why cant it be presented without the chest beating??

ducati916 · 22 May 2006

Re: GOLD Where is it heading?

rederob

ducati
Physical demand for gold, and money "liquidity" are not alike.
You wrote this, " I have to take issue with the demand for gold............75%- 80% of gold demand is from retail, and retail is most definitely not buying, they are actually net sellers from the preliminary data ."

The paper trading of gold instruments is irrelevant to physical demand.

Which I am not referring to.
*Retail* are the peasants going out to buy their gold bangle etc.
The preliminary data shows that they are *net sellers* viz. converting their little stash of gold into cash.

So let's take some of your other points.
I asked about recent or future "world class" gold mines.
You gave examples that do not cut mustard: World class means the company would be a gold mining major player, not a minnow. You should try to back up your examples with actual or proposed annual gold output.

Boka Huidong; multi-million oz deposit.
PetaQuilla; 7 separate high grade *mineral* deposits
Golden Peaks; new deposits within an area that has provided large output.

You reply to my claim that increasing demand in the "measured" sectors is nonsense.
No proof of course, but that's your typical response.
Go and find annual (physical) demand over the past 3 years for jewellery fabrication, industrial use and/or investment purposes and then post your reply.

You need to learn to read.
My reply of nonsense was to your ill-informed and incorrect assertion that the Gold ETF accounts for 5% of physical demand. Your memory also seems to need checking, as I have already posted the factual figures in a previous post.

Contrary to your assertion, I include figures, facts, and evidence. Your posts by comparison are simply opinion devoid of any figures that provide any evidence of your assertion. From pg12;

Gold’s meteoric rise is largely due to the popularity of an ETF, StreetTracks Gold Trust "GLD". Launched 15 months ago, by the beginning of this month it has attracted assets of more than $6 billion.

Since shares in the trust represent ownership of one-tenth ounce of physical gold, the trust is sitting on 343 metric tons of the stuff, more than the Bank of England -- indeed, more than all but 16 of the world’s central banks.

The ETF has more assets than the next five largest gold mutual funds combined, and is the world's largest trove of gold in private hands. It dominates its marketplace more completely than any comparable investment portfolio. Among technology funds, for example, no single fund is bigger than even two of its biggest rivals.

It has consumed a big chunk of global demand -- 13% or 14% of annual mine supply,” Singlehandedly the ETF shouldered aside typical factors affecting the gold market and became the big driver of gold’s price. Traditionally, jewelry demand and hedge-fund speculation were the culprits.

On mine supply you ask for figures. If you do not know what the figures are, then you should not be posting replies on this topic.

I would like some evidence to support your assertion.
At the moment your lips are flapping, there's lots of noise, very little evidence.

On future figures for possible gold prices I am foist on my own pettard.
I took information in your later posts which used $720 as the upside range.

$720, $769, who cares, $49 either way is not a big deal between friends.

Moving forward, regarding the speculative component;
You can calculate a 50% premium within commodities that have a futures contract associated with them, gold, of course being one of them.
The implication being that the $140 billion of speculative money is driving the froth. If that money moves elsewhere, the so called *fundamentals* will evaporate in exactly the same way as the *dot.com* bubble, where there was additionally only speculative excess, and no fundamental demand to support the high valuations.

Many of the funds speculating in the commodities markets are trying to take their profits with a *backwardation* strategy. This month, they lost 6.4% in a contango situation, how long will they wish to hang on? Who knows, but that's speculation for you.

You need to raise your game, I'm starting to get bored with nothing but opinion, I like to see analysis.
I'm more than happy to see analysis that contradicts or refutes my own, as I may learn something, but currently this is just not the case.

jog on
d998

rederob · 22 May 2006

Re: GOLD Where is it heading?

ducati
You re-entered this topic based on "demand".
You talk about liquidity.
The physical demand figures are vailable if you want to find them.
I suggest you do before being so knowledgeable.

wavepicker · 22 May 2006

Re: GOLD Where is it heading?

tech/a said:
Hmm my suspicion grows,you seem to work as a tag team.
Given some complements on your charting all of a sudden this has un leashed a spate of posts with copious amounts of "Look at me look at me"

The analysis is great why cant it be presented without the chest beating??

Tech/a,

There is a difference. I have nothing to sell, ie course or subscriptions etc, and have no intentions to do so. I am just like you, I am here to learn, and post anything that may help others from my experiences both good and bad.

That is why I have been reluctant to post charts on this site in the past, and probably will be in the future. Time is precious, because there is not a lot of it availble to me. That's why I have chosen in the past to just focus on my account, and forget the forums.

rederob · 22 May 2006

Re: GOLD Where is it heading?

ducati
Your presentation of data on physical demand is lacking here, but you opened the door, so you should have had the numbers to support your case.
The World Gold Council is the industry body that is the recognised source of supply and demand data for gold.
In relation to my question about what world class mines were opened or are to be opened you have named some companies/mines that, were their full resource base to be mined tomorrow, would possibly add a few percent to total annual supply: In the greater scheme of gold mines, none are likely to be on the radar of serious gold bulls.
Your information on the gold ETF is spot on, but mine supply (2355tonnes in 2005) is only one part of the total equation (3860tonnes in 2005).
Last year the Streetracks ETF accounted for 203tonnes of demand, which removed slightly more than 5% of gold from suppliers; and your claim is that this is nonsense - perhaps by being a fraction of a percentage point out it is nonsense!
ducati, as you don't seem to be able to come to grips with the fact that physical demand year on year over recent years is greater than supply, it might be best you put your talents to use elsewhere.

ducati916 · 22 May 2006

Re: GOLD Where is it heading?

rederob

Marvellous stuff..........amazing what a kick up the **** can achieve.
I shall peruse your numbers and come back to you in due course.

jog on
d998

ducati916 · 23 May 2006

Re: GOLD Where is it heading?

rederob

Gold mine production = 2,518 tonnes
Recycled gold = 800 tonnes
Central Banks = 552 tonnes
Total = 3870 tonnes

Total end use consumption = 3754.3 tonnes

Therefore we have a surplus of 115.7 tonnes

However the interesting figures are of course;
Reduction in Total end use consumption of 15%....demand is falling.
Jewellery has fallen by 15% (this being the biggest net end user)
Investment uses of gold has fallen by 25%
ETF demand has fallen by 30%

All in all demand looks soft, and anaemic within the investment community specifically.
We therefore have the classic supply/demand dynamic, falling demand in the face of higher prices.......just as gold producers start to ramp up their investment to increase production........classic bust.

To protect their investment, I would expect to see some producers re-instate hedges, increasing the selling pressure, with a stall in price, or falling prices just watch the speculative money bail out...........thats when you'll see the collapse in price.

So what you'll possibly see in the next few months is ever increasing volatility, as speculation runs riot, the volatility will scare out any marginal traders as margin calls will either bust them out, or send them running for the hills, leaving just the big boys, who with the absence of the greater fool theory will start to move to pastures new. This increasingly will force producers who have not hedged, to hedge, or risk new production at a net loss, this will be the final nail in the coffin.

Regarding India & China driving demand......I don't think so. As previously stated, the individuals who buy jewellery either cannot afford it at current prices, so you lose their demand, or they are net sellers.

A feature of Indian demand is its extreme sensitivity to price volatility – this is the country where that factor is of most importance in affecting gold demand.

Over half of demand comes from rural or rural town areas. Demand here is largely traditional. It is affected by incomes and thus the quality of the monsoon is important. In these areas gold is also important as a means of saving – a gold chain or bangle which can be worn on the person is considered a relatively safe way of storing wealth.

The same will hold for China. As for Central Banks being buyers at these prices, nonsense, they will be sellers, they can always replace their stocks at lower prices.

As with any speculative medium, when price rises faster than growth in profit, the result is always a return to fair value and below. Demand has fallen by 15%..........price is still +70%............look out below.

jog on
d998

Sean K · 23 May 2006

Re: GOLD Where is it heading?

0200 GMT [Dow Jones] Gold expected to consolidate in $625-$675 band
underpinned by global tensions, high energy prices, volatility in global markets, especially currencies, says Rothschild Australia. Most analysts saying
buying on dips remains name of game, but as UBS says: "we are not convinced we have found one yet."(JAD)

rederob · 23 May 2006

Re: GOLD Where is it heading?

ducati
You seem to have a lot of trouble getting published numbers to match your assertions here.
As I said previously, Central Bank sales have given rise to gold supply surpluses: Their amount of gold is finite so can only "tighten" the fundamentals as time goes by.
Demand has increased by 600tonnes in the 2 years to 2005 so Iwould be reluctant to call it anaemic.
Jewellery demand has increased annually as shown in the table below: By the way, jewellery demand is often counter-intuitive in that the higher its price, the more it is wanted. As India has a middle class population the size of America's, gold jewellery demand in that nation will increase into the foreseeable future.
Little of your interpretation stacks up with the last 3 years data on physical supply and demand.

ducati916 · 23 May 2006

Re: GOLD Where is it heading?

rederob

ducati
You seem to have a lot of trouble getting published numbers to match your assertions here.

Nonsense, the figures come from your own data;
Jewellery consumption, from Q4 2004 to Q4 2005 has fallen 15%
All the other figures also come from your own data.

As I said previously, Central Bank sales have given rise to gold supply surpluses: Their amount of gold is finite so can only "tighten" the fundamentals as time goes by.

Again only part of the story. The supply from the jewellrey segment has gone as high as 1150 tonnes as people sell it off. Therefore there is plenty of overhead supply completely independent of the Central Banks.
Of course as Investment demand dries up, the supply/demand dynamic alters further in favour of supply. From history, the Hunt brothers tried to corner the silver market, supply came out of the woodwork, and they got handed their lunch.

Demand has increased by 600tonnes in the 2 years to 2005 so Iwould be reluctant to call it anaemic.

Investment demand has atrophied by 25%......that's anaemic in my book.
As speculative money is withdrawn, so the demand will further decrease.

As good as its word, the Bank of Japan has been taking huge amounts of liquidity out of the global capital markets. In an effort to re-inflate the Japanese economy and end the years of deflation that had kept the country mired in a no-growth swamp, the Bank of Japan had pumped billions into the country's banking system. Now that the economy is finally growing again and now that prices aren't sinking any longer, the Bank of Japan has given two cheers to the return of inflation and has started to remove some of that cash from the financial markets.

In the last two months, the bank has taken almost 16 trillion yen, or about $140 billion, in cash deposits out of the country's banks. The country's money supply has fallen by almost 10%. The Bank of Japan isn't finished pumping out the liquidity that it had pumped in. That should take a few more months. And when it is finished, the Bank of Japan is expected to start raising short-term interest rates.

Thus the hot money that was flowing into all types of asset classes, gold being one of them, will see the loss of that buying pressure & momentum. You will have profit taking, some buying support in anticipation of a trend continuation, sucking in the fools, and then price collapse, repeat until it again hits the long term trend of 2.5% price appreciation at circa $350 - $450

Gold at these levels becomes pure speculation, and is governed inexorably by the laws of speculation.

Jewellery demand has increased annually as shown in the table below: By the way, jewellery demand is often counter-intuitive in that the higher its price, the more it is wanted. As India has a middle class population the size of America's, gold jewellery demand in that nation will increase into the foreseeable future.

Absolute nonsense.
Demand as measured by $demand, which is simply due to the astronomically high price, but demand for the physical has shrunk by 15%
Further the previous quote regarding India originates from your highly touted World Gold.

Little of your interpretation stacks up with the last 3 years data on physical supply and demand.

3yrs ago the price wasn't at $700
At that price, the demand trend changes quite significantly, and none of it particularly indicates higher prices. Commodities are highly price sensitive. A trend by definition is a prediction, and must be either right or wrong 50/50.

jog on
d998

rederob · 23 May 2006

Re: GOLD Where is it heading?

ducati
I will leave my posts and tabled data for others to interpret.
You continue to obfuscate as you wish.
I won't indulge in selective, deceptive and misinterpretative practices to make my points.

ducati916 · 24 May 2006

Re: GOLD Where is it heading?

rederob

ducati
I will leave my posts and tabled data for others to interpret.
You continue to obfuscate as you wish.
I won't indulge in selective, deceptive and misinterpretative practices to make my points.

Sob, sob.
You're hurting my feelings now. All after sending me a mocking PM requesting an update to my original analysis, you are now jumping ship. Abandoning all the charties to negotiate the volatility without the razor insights into the fundamentals of gold.

With regards to the *numbers* they are taken from the information you so kindly provided on the data pertaining to gold supply/demand on pg24 of this thread

I would have thought the numbers were clear enough. After not *liking* my numbers, now you don't even *like* your own numbers.

jog on
d998

rederob · 24 May 2006

Re: GOLD Where is it heading?

ducati
The numbers are not my numbers - they are there for anyone that goes to the Wold Gold Council site.
You continue to blur money with physical - there is a link but the two data sets need to be interpreted separately.
A key driver of gold's price into the future will be mine supply falling significantly short of physical demand.
How many commodities are there in such short supply and of such value that banks have to release supplies to the market, and individuals are willing to sell their jewellery (so it can be melted down) for cash.
Yes ducati, I did PM you and ask you to revise your gold forecasts.
I have little doubt that by October this year we will have $800 gold.
I also know that the next major retrace is likely to be more severe than the present one.
I remain a conservative gold bull at this stage, but I also like to keep my position intelligible and simple.

ducati916 · 24 May 2006

Re: GOLD Where is it heading?

rederob

ducati
The numbers are not my numbers - they are there for anyone that goes to the Wold Gold Council site.

Just so, and those are the numbers that I am working from, and they show into 2005 Q4, a rather large decline in demand across the board, well save industrial useage.

You continue to blur money with physical - there is a link but the two data sets need to be interpreted separately.

Nonsense.
If you cannot differentiate the references from my posts, then there is no hope.

A key driver of gold's price into the future will be mine supply falling significantly short of physical demand.

And this is where we disagree.
Investment in the production of the physical is ramping up due to the high spot & futures price, but, demand is falling away, thus you have a classic over supply situation in the making.

How many commodities are there in such short supply and of such value that banks have to release supplies to the market, and individuals are willing to sell their jewellery (so it can be melted down) for cash.

Gold is classically SPECULATIVE which is what I have maintained all along. With speculation comes all the classic boom...bust scenario's. You have the classic, buy low, sell high........the Banks see it, the peasants see it, yet you are determined to buy high, in anticipation of a greater fool buying even higher...............so be it.

Yes ducati, I did PM you and ask you to revise your gold forecasts.
I have little doubt that by October this year we will have $800 gold.
I also know that the next major retrace is likely to be more severe than the present one.

Well we may, or we may not.
That's speculation.
What we don't have however is any fundamental reason for gold to be $800oz

I remain a conservative gold bull at this stage, but I also like to keep my position intelligible and simple.

And you're confused as to whether I am a bull on gold, or a bear?
In that case I suggest you seek professional help.

jog on
d998

rederob · 24 May 2006

Re: GOLD Where is it heading?

ducati
I don't have a concern about you being a bull or a bear - it is not relevant to my analysis.
What is important is using the information to make a correct or wise decision.
Your reply is again typically of no value to anyone looking at the trend in supply and demand of physical gold.
If you are right then gold will not be $800 this year, posssibly at all.
I see no point in further discussing the data tabled a few posts earlier as it speaks for itself, and I believe the average reader will have no difficulty working out what has happened, and what will continue to happen if the trends continue.

LPA · 24 May 2006

Re: GOLD Where is it heading?

I'm going to add my here from a completely non financial viewpoint.

As an anthropologist I am constantly amazed by the importance that is placed on jewelry and gold products throughout almost every culture on the planet. India in particular has a very long standing relationship with gold that transcends financial matters and enters almost into the realm of religion (and in many cases enters this realm directly). With a growing middle class in India, a rapidly growing one at that, the consumption of gold jewelry can only grow UNLESS the Indian culture changes substantially....obviously this is not going to happen in the next couple of decades; if ever.

Now what does this mean...well, since India at the moment accounts for about a quarter of the gold consumption in the world, AND India's population is growing MUCH FASTER than China. India will within our lifetimes be the most populated country in the world, and they also happen to be the most gold hungry country in the world. There is your FUNDAMENTAL REASON for gold prices steadily climbing I believe over at least the next 10 years - and quite possibly continuing to climb for far longer than that. $800 an ounce is nothing to somebody who's culture dictates they must have these things to gain social standing in a culture where social standing means more than almost anything. Added to this, gold in India is OFTEN BOUGHT BY WEIGHT, therefore the typical jewelers mark up does not take place and therefore spot prices can go higher than you expect before people are priced out of the market......and as for being priced out of the market, if something is that important culturally the price will not be a concern - and in fact THE HIGHER THE PRICE GOES THE MORE CULTURALLY DESIRABLE IT WILL BECOME.

I'm serious, wait until this years Indian wedding season at the end of the year (but in particular in about 2 or 3 years) to see what happens....then read this post again :

p.s. Rederob, I agree with your analysis....hehe, thought I should add some fuel to that fire

Sean K · 24 May 2006

Re: GOLD Where is it heading?

1254 [Dow Jones]TECHNICAL ANALYSIS: Gold (last $666.10/oz) hit $636.5 low 2 days ago, near $632.33 50% retracement of $534.15-$730.50 advance, and formed bullish hammer candlestick pattern. Currently, daily chart slightly bullish biased with stochastic staging positive crossover near oversold level; MACD still in bearish mode but negative MACD histogram bars contracting, pointing to waning downside momentum; may test resistance at $674.80 (May 16 low), breach of which exposes further upside towards resistance at $698.00 (marked by downtrend line from $730.50 peak) and $717.00 (May 17 high) thereafter. Any close below $636.5 will abort current bullish biased outlook, suggest recent downtrend has resumed. (LST)

Sean K · 24 May 2006

Re: GOLD Where is it heading?

0413 GMT [Dow Jones] ABN Amro Morgans stays bullish gold despite metal falling off 26-year high of $730/oz in recent weeks to $665 now, in line with commodity-wide correction; as part of across-board metal price upgrades, expects gold to average $670 this year, $750 next, with successful assault on $800 perhaps in early 2007, before cycle turns over. Bullishness based on possible rebuild of some central bank holdings plus geopolitical, inflation tensions, mine supply constraints.(JAD)

coyotte · 24 May 2006

Re: GOLD Where is it heading?

I obviously have been interpreting the the driver/ co-driver of POG wrongly

was always under the impression that it was Liquidity --- (Pecieved or Actual)
and/or Confidence in the underlying currency

eg: in times of world conflict POG rises (relative to the nations involved currencies)because it is pecieved those nations will need extra cash.

@ times of actual increase in liquidty, POG along with hard assets (real estate, art etc) also rise

the co/driver takes over when confidence in a nations currency either gains or falters -- if the $au was to = $us 2.00 then POG in Oz terms would meaningless.

Since all the Gold mined even before the Pharoses, is still around in some form can't see how supply could be a driver --- read a couple of years ago that the total Mkt cap of G/miners was less than McDonalds --- if gold was in short supply one would presume that CBs would simply buy the lot out, with loose change !

Gold Price - Where is it heading?

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