ecoface

Good to see you here, Ecoface.

 

You certainly could be right, and I think there is probably a 50% or so probability (of lower lows) in my thinking.

But I do note that a large number seem to share this view, so a surprise is likely perhaps

Oh well; GS seems to call the exact same today.

http://blogs.marketwatch.com/thetell/2013/09/13/gold-under-1000-an-ounce-dont-rule-it-out-says-goldman-sachs/

I haven't posted for a year or so, but thought I would throw this in.

We're in for a re-test of lows, and down to c.1000-1050 USD, to flush out all but the strongest of bulls, before the final explosion.

I think this latest aggressive correction of 6 months or so, is far too short. If I have learnt anything from this crisis over the last 5 years, it is that change happens over a much slower and longer timeframe.
Behavourially, there are too just too many pundits, talking heads, and "experts", expecting a rally up to 1425-1550, and very few expecting another fall. Expect a rough ride. I'll come back in 3-4 months to see how this fairs.

It wasn't something published in Moneyweek, just something he came across elsewhere.

Thanks anyway.

It was screwtape files.

Excellent blog : I've been tracking it ever since.

I went heavily short on BDEV yesterday.

(as well as Ftse)

Has anyone contemplated the concept that the recent peak was the equivalent of the mid 1970s peak of 800 after which there was an 18 month correction, before the final 4.5 year explosion?

If there is massive deleveraging and deflation in 2012 and 2013 which looks a real possibility, then gold will really have to prove itself.

For those of a view that history often repeats itself, gold in late 1974 was at 800 (inflation adj) and dropped to around 380. A similar repeat pattern now would result in gold dropping from 1925 to 950.

It took 2 years for the rapid rise from 350 to 800, then 2 years to go back to 380.

This current cycle from late 2009 (at late 900s) to Autumn 2011 (also 2 years), could forseeably be mirrored by the same drop over the same duration, so a mid cycle bottom in Autumn 2013.

Such a correction would flush out almost all investors. It would also mirror the classic bear trap stage of the Awareness Phase of the anatomy of a bubble. (see the graphic yourself as can't pin it).

How many of you are placed to handle a fall for 18-24 months down to $950, as that is one pattern that is reasonably feasible.

This kind of thinking doesn't threaten the long term bull position. It kind of makes sense if one views that this depression will take another 4-5 years post 2013. By 2018 we could see gold at over $4300 (i.e. using inflation adjusted figures the POG went from 800 to 1800 = 2.25x).

If there is one thing I have learnt from the last 3-4 years of crisis, it is that the change occurs very much more slowly than previous recessions. The gold bugs are very impatient, and the powers that be, far more resilient to radical change. The hyper-inflation arising from the QEs should only feed in, once we have had the second and more devastating dip of this depression.

So, what do you good folk reckon of the mid 70s mid cycle argument?

(I do recognise that this era is worse than the 70s, but place that to one side.)

This is the biggest news for the POG for years.

http://www.zerohedge.com/news/gold-rehypotecation-unwind-begins-hsbc-sues-mf-global-over-disputed-ownership-physical-gold

Gold has broken the downtrend : Gold chart-46period-MA

WAY Too early yet.

Still below 20 dma, and looks like end of Sept to me - need 2-3 days of this; sorry.

Hate is a strong word, but I come close when it comes to Mervyn King for what he and his crooks are doing to sterling at the moment. Their QE2 jawboning is utterly criminal. This gold correction is not presenting much of an opportunity for Brits.

For Brits it still looks okay; just shot through 50 dma at 1080.

Next stop down 144 or 200?

Don't be too downhearted yet

Can anyone add their own view as to how this volatility in the lease rate will affect POG please?

Gold Lease Rate

Many thanks

Blimey - gold just fell off the edge of a cliff and dropped $50!

Who, or what is creating this?

(Someone called a double top)

Well I certainly agree with you that we are due a proper correction but I don't think it will reach the 200 DMA, over the past three years the 150EMA has been the far better indicator. Indeed over the past six months it has barely managed to go below the 50 day EMA. I could be wrong certainly but I would be buying at the 50 EMA.

Double top in GBP.

Bull trap in gold coming in my opinion, sucking people back in thinking we will go up to 1900 again. H&S forming right now. Prepare for deep medium term correction back to 200+ dma in long term bull trend. There are strong signs in US that in the short term there will not be QE3 (yet). This will surely kill POG for a while.

(ouch - already got a bashing from bugs).

I don't think it would have any effect after maybe a small correction. The graph below shows the response of gold to real rates since 1970, which you can see is positive till rates are 3% over the inflation rate. So really for gold to start turning negative we would need rates to be around 8% currently, which is miles away from the current rates.

 

I was pondering the idea that the only way the authorities can instill confidence in their own monetary systems and currencies, is to allow interest rates to increase, albeit marginally. A very minor increase will surely induce a short to medium correction in POG.

Just a quickie...

How would POG respond to an increase in interest rates (however unlikely)?

Thx

Well, FWIW, I'm planning for a sharp fall in the POG very soon, back to around £890 or the 200 dma (for GBP).

Since Dec 08 lows, we have seen 5 up legs, each lasting about 4-5+ months after the 20 dma crosses the 50 dma.

The last leg up, or crossover, was in March. Therefore IMO the recent high of c.£1000 was a top and we will see a healthy pullback to test the main primary bull trend.

We may see one final push up to £1110-1115, but then the correction.

Anyone else care to comment on the duration of the uplegs, and my forecast for a retest of the trend lows?

Thx.

Bubb,

 

Beautiful head and shoulders pattern playing out on Barratt BDEV.

 

I can't post my chart, but check it out. Left shoulder late Feb.

Well, that seems to have been ruled out - the bull is strong on BDEV.

Look for double top next.

Any ideas why POG has fallen nearly 2% today?

Who is selling?

Bubb,

Beautiful head and shoulders pattern playing out on Barratt BDEV.

I can't post my chart, but check it out. Left shoulder late Feb.

Does anyone know the last high in gold £909 sticks in my mind but I'm not sure.

About £915 in December - why? You looking for a double top per chance?

 

Definite two tier market. Most places that are normally bought with a mortgage are sticking and dropping.

 

I think the two tier market poses real problems for the bears.

It would be interesting to see people's views on when or how they think the cash rich (top tier) market will roll over, or catch up with the bottom and middle tiers.

I don't see interest rates rising having that much of an effect on the top, until they rise over 2% which could be years away. I actually see the top tier being driven my inflationary fears too - those of memories of the 70s will understand how the flight to real assets like property defends against inflation (I still struggle to see the logic, but the cash rich generation think inflation is good for housing).

I think it is not really worth having debate about the middle and bottom end of the market - they are continuing to slide.

May be the roll over of the top tier will signal the real panic, if and when it happens. Until then the media won't give a monkeys.

FWIW - I think the top tier market will freeze if and when stocks crash. The confidence from the buyers at that end of the market will be wiped out.

This happened to some extent in 2008 when EMs were in free-fall. Once QE and thus stocks rallied the top end market returned, having had interim support through the bank bonuses and weak £.

I know a few agents that work for the big boys like Knight Frank, Savills, and Strutt and Parker and there is no doubt in my mind, of the close link to the health of the city, and the top end of the market. The wealth spreads out of London like ripples on a pond. It is obvious, but we need reminding of this.

If the activity we have seen in the last 2 weeks in equities is the start of a medium term correction then this could signal the top of this 12-18 month rally in the housing market's top tier (regardless of interest rates staying where they are).

People don't often align equity market cycles with housing cycles, but I think we can be more clever to segment the housing market and then draw comparisons.

So what? If someone in Detroit has paid off their house and it is now worth nothing - so what? They still have a house and don't have to pay rent to anyone.

 

If your argument is that if you had waited all this time you could now buy a house in Detroit for nothing - well, who'd have known? You could probably buy a house for next to nothing after an earthquake but it's not something you'd bet on happening in the particular town you want to live in.

 

It's a risk you take in life. If there was major radiological accident at Aldermaston and it contaminated the local area - houses there would be worth nothing - but that's no more relevant than the fact Detroit has died. What you going to do if you want to live in Aldermaston - just wait until the day it happens?

If there was an incident at Aldermaston it would wipe out the south east of the UK.

Quite impressive really considering the impending SP bomb:

Housebuilder Barratt has slashed its losses and seen its revenues hold firm in the six months to December 31.

The company posted a £4.6m loss, compared to a loss of £178.4m in the same half of 2009. Its revenue was slightly up, at £877.6m compared to £872.4m.

Getting back on to the subject of UK house prices, do you remember in 2006-2007 how those of us in the know were closely monitoring the market in the US as an indicator of what was to come our way? It was around 6-12+ months ahead of us depending on where in the US and UK.

Well de-ja vue?

As of December, so almost three months ago, the housing double dip was getting increasingly worse. This was confirmed by the latest Case Shiller data, according to which the 10- and 20-City Composites posted annual rates of decline of 1.2% and 2.4%, respectively.

(From ZeroHedge)

Zero

And there is a new report which states that the crash in the US was (is?) worse than claimed!

Reuters House Report Fudge

I loaded up heavily at the end of last week.

I have 50% left to invest of the total that I want to in gold. , but want to see if Gold in GBP holds above the 233 dma at around £818. There seems to be some consolidation in the 820s to 830s going on.

I would worry if it gold drops through 810 as the next stop down is mid 750s.

(hence keeping back 50% etc.)

If you make a tonne, send me a small donation, and I will pass it on to some podcasters I listen to.

Like the excellent KMO: xx

 

Or listen to him, and do it directly.

KMO?

I didn't make much - haven't closed it yet anyway. Left it open as we are top of a downward channel which could hit 60s.

Then I'll pass you some.

Anyway, your tips on S&P need to improve first

Monday will be very interesting in SPs and Equity markets.

I wonder if, over the weekend, the institutions and "powers that be" co-operate to create a buying market, thus stop the dyke from bursting.

I think the will let if slip a little to 1270 or so then we are up to 1360.