Inflation, deflation, gold and currencies

[RDRUNR]

Technical analysis

On technical analysis alone I calculated gold is heading for around $680. Timing is not clear. I calculate on current data that gold could eventually reach around $500 before a bull market sets in. Of course this needs to be reviewed on a regular basis.

[richard5za]

I am fascinated at the number of traders reports I am seeing that say that there is strong physical demand from the Far East in the upper $ 1700's. By physical demand it means that the gold is being physically shipped from the West to the East. One London trader made the comment that no one in their right mind would short gold whilst this strong physical demand exists. It sounds like an Eastern flight into safe havens.

The Fed did what was expected yesterday announcing that they would buy Treasuries in the 6 to 30 year range to bring down interest rates a bit more. I was surprised at the words they used to describe the US economy: "Significant downside risk" This should be good for gold but it probably had already been factored in by the market.

The current short term down trend for gold continues; for instance the MACD was minus 11 at the New York close yesterday, but (in terms of technical analysis) it would seem that a support level is forming in the upper $ 1700's. Theres no enough data yet to be confident on this point. I still have an intermediate target count on my charts at $ 2080. Comex option expiration for gold and silver next week on 27 September - there's usually volatility around the expiration date; so lets see if anything dramatic happens.

Gold seems to be a moving target and the final outcome will probably take most people by surprise: In 2008 I was forecasting gold from around $ 800 to $ 1150 and a longer term target to $ 1600 at which stage one sold up out of gold, waiting for the Bubble to burst. So I am interested both in the continued upward predictions of my own charts and in the growing number of technical analysts who are saying that you can't talk about a gold bubble at $ 2000 per ounze; that gold would need to be much higher before a bubble would be present.

[richard5za]

Strong dollar

The feature of today is the strong dollar; both Euro and British Pound down over 1.5% thus far today

I find this safe haven flight into the dollar interesting - my own longer term view of the dollar is that it will steadily lose value

[RDRUNR]

Looks like I'm right on target for gold prices dropping to $500 - 650oz. Gold is CRASHING down today, -$71oz following yesterday's crash and the day before's low of last weeks low.

[richard5za]

On technical analysis alone I calculated gold is heading for around $680. Timing is not clear. I calculate on current data that gold could eventually reach around $500 before a bull market sets in. Of course this needs to be reviewed on a regular basis.

Dear RDRUNR, I didn't know that you were a fellow chartist, a technical analyst. Welcome my brother! But I do think that our vierws are so different that we have all the right ingredients for a wager; a bet on who is going to be right. Don't you think?

Gold has been wacked so hard in the last couple of days that surely you can't lose? How much would you like to put on the bet? Say $ 1000 (USD of course) that over the next couple of years my prediction is more accurate than yours? Termination point of the bet is 31 Decemeber 2013 when we make the evaluation?

Best wishes, Richard

[Higgenbotham]

How much would you like to put on the bet? Say $ 1000 (USD of course) that over the next couple of years my prediction is more accurate than yours? Termination point of the bet is 31 Decemeber 2013 when we make the evaluation?

Best wishes, Richard

Why not sell $1000 worth of December 2013 puts and collect your premium now?

[richard5za]

We seem to be in a very interesting position as regards the financial markets in general, metals in particular. I suspect what we have been witnessing this last week is at least partially a forced sell off and not just a voluntary liquidation into safe havens, the dollar in particular.

Gold closed in New York yesterday at $ 1657 and so looking at the market in a longer term context and in chartist terms, so far we have had a fairly typical Fibonacci retracement, and the longer term trend lines are intact. I am long in gold with a small position, and at present I am neither a buyer nor seller; just watch to see what happens.

Silver is very interesting. I took a very small long term position in silver because of the massive decline in stocks in the Comex warehouse, stocks more than 75% down over the last two years, and upon the assumption that supply would at some stage become a real problem and the price would spike up, and during the correction and I would take some very nice profits. The price of silver has just been wacked down 25% in a week. Where do the necessary silver stocks come from to wack the price 25%? Or is this short selling on a grand scale with some carefully planned strategy in mind? Time will tell I suppose.

[richard5za]

Nice bounce for gold on 3 October presumably safe haven flight back again after the liquidation?
But note that the short term downtrend is not yet broken, albeit that the chart is looking much more encouraging. So take care.

gold3Oct2011.jpg (108.25 KiB) Viewed 4049 times

[richard5za]

Clive Roffey is calling a buy on Platinum; the following chart by Clive Roffey and commentary is self explanatory. This might be signifying a buy into metals in general. The current gold down trend, now for the last 30 trading days looks like it may well be turning, but in my opinion a new low to the $ 1540 support level is a possibility. I susppect the highest probability however are now for rising gold, silver and platinum prices. I want to see the gold down trend broken before buying more gold.

Platinum 5Oct2011.jpg (66.48 KiB) Viewed 4029 times

[thomasglee]

OK, I'm not the financial guru many of you here are, but what I heard Cramer say on CNBC this morning just seemed ASININE!

He stated that because Brent Crude is not dropping, that's proof we are not headed into a recession and that stocks are WAY underpriced.

I know he's smart enough to know that oil prices (especially brent crude) have stayed high because of commodity traders speculating and profiting from running long on oil.

What am I missing here?