bitbigt

I feared you might ask...

 

Other than gut instinct (which usually works quite well, actually), its

 

A. My future predictions (dangerous, but necessary to create and adapt with time/event) are that the 'recovery' is now in motion, and will continue for a year or so. Of course, its as unreal as the recovery that occured between 2003 and 2007, which was built upon ultra-low interest rates. This current recovery is built upon ultra-low interest rates plus QE. Next time around, they won't be any medicine strong enough to revive the patient!! There's also a very large amount of cash in the system (much directly from the QE) looking for a better home than savings accounts, and so we're creating mini-bubbles in stocks and commodities. So for the next year everyone will start to feel secure and rich(er) again, and gold will struggle. Layer in deflation for a year, and gold doesn't have a chance medium term. Finally, the PPT will keep suppressing golds price until they run out of capacity to do that (because they've spent all of germanys gold, etc). But after the next 12 months, the economic 5hit will really hit the fan, and gold will be the place to be.

 

B. The charts. As shown below, I can interpret the USD price of gold in two ways (and I know which one is prevalent at GEI). The red one is self explanatory. But lets consider the blue curve, which starts rising initially in 2005 as people were throwing their money into everything. But it them extrapolates what might have happened without the credit crunch panic - which itself involved two several month periods of extreme fear, causing gold to shoot up during those periods. But between those time intervals, gold fell right back down to the blue curve. And if we're now enterring a new delusional period of happiness and light for a year (see above), I can see gold dropping right back down to that blue line.

 

GoldsFuture

 

But I'll probably change my mind again after I've taken my medicine

...fluck me, did I just move the market ??

I too would be interested in "all the evidence" which led to this bold prediction.

 

EDIT: Personally I think gold will hold in the 900 - 1000 USD area with a breakout at the end of the year early next. Any weakness in the price of gold will be accompanied by strength in USD. Strength in USD means a weak GBP. So I very much doubt we will see prices go lower than 500 GBP. As rh says gold has been monitised and that puts the floor in at 900 USD.

 

Cheers and good luck.

Perhaps the words "all" and "evidence" were a bit strong. Hopefully my last post will clarify my thinking, based upon never taking the market for granted ...and I know you'll all give me loads of stick for it (just as you did when I sold in March), but what if I'm right :o :o

Am curious what evidence gave you the notion gold is going down below 500?

I feared you might ask...

Other than gut instinct (which usually works quite well, actually), its

A. My future predictions (dangerous, but necessary to create and adapt with time/event) are that the 'recovery' is now in motion, and will continue for a year or so. Of course, its as unreal as the recovery that occured between 2003 and 2007, which was built upon ultra-low interest rates. This current recovery is built upon ultra-low interest rates plus QE. Next time around, they won't be any medicine strong enough to revive the patient!! There's also a very large amount of cash in the system (much directly from the QE) looking for a better home than savings accounts, and so we're creating mini-bubbles in stocks and commodities. So for the next year everyone will start to feel secure and rich(er) again, and gold will struggle. Layer in deflation for a year, and gold doesn't have a chance medium term. Finally, the PPT will keep suppressing golds price until they run out of capacity to do that (because they've spent all of germanys gold, etc). But after the next 12 months, the economic 5hit will really hit the fan, and gold will be the place to be.

B. The charts. As shown below, I can interpret the USD price of gold in two ways (and I know which one is prevalent at GEI). The red one is self explanatory. But lets consider the blue curve, which starts rising initially in 2005 as people were throwing their money into everything. But it them extrapolates what might have happened without the credit crunch panic - which itself involved two several month periods of extreme fear, causing gold to shoot up during those periods. But between those time intervals, gold fell right back down to the blue curve. And if we're now enterring a new delusional period of happiness and light for a year (see above), I can see gold dropping right back down to that blue line.

GRAPHIC: GoldsFuture

But I'll probably change my mind again after I've taken my medicine

OK... these last few days I've had my finger trembling on the buy trigger, and it was more (good/bad??) luck than judgement that stopped me buying.

I hate buying or selling unless I feel rather certain, and that's the problem!

So I decided to get on top of things, and looked at all the evidence today.

I've boiled it all down to a bold prediction:

GOLD IS GOING DOWN TO BELOW GBP 500

So I'm not going to buy yet.

Now I can get on with my life, and if I'm wrong at least I will know I was confidently wrong :-)

Well, many of the "ignorant masses" have been frightened to death and are largely out of the markets now, hunkered down trying to re-save for their retirement. I think the market is being driven now by investors and banks, not such an ignorant lot in the sense that they consider themselves financially savvy. Yet, I would suggest they are still susceptible to the mass behaviour and the madness of crowds.

 

imo, the explanation why market players are buying both commodities and stocks in the midst of a deflation [and here we agree that there is a deflation] is because they are concerned about the potential effects of QE. This portrays both mass behaviour and mass thought; as good monetarists they have been taught to believe that inflation follows increased money supply as surely night follows day. Hence QE and the credible threat of continued QE herds investors into the markets, it is simply an inflation trade on the future, but this is a future that might not eventuate. When/if investors realise this and see the reality of deflation instead they will all head for the doors at the same time.

 

Once again, with the buyers of gold, the ignorant masses will not be the prime mover of the price, the big and informed players have already started moving in.. savvier investors, large institutions and central banks. I reckon we will see steady buying continue as the long term future of major currencies continues to look bleak.

 

Though there is no doubt a lot of people do not "get it", there is also a lot who do get it and that is why I suspect we might not be seeing bargain prices in gold anytime soon.

 

Edit: I was thinking also of the graph P8R has posted above.

So I think we largely agree, no?

The difference being our interpretaion of how many of what kind of investor are at play just now. But we do agree in the direction in which all this will ultimately develop (more and more 'getting it', eventually!)

But that table from P8R though prooves nothing - arbitrary selection of years, crude categorisation into deflation and inflation. One you use that kind of aproach to proove anything one wished to.

I do not understand why you think people who believe in deflation would buy stocks. When deflation bites next, it will kill the stock market.

Well - we have deflation, and we have a rising stock market!

I can theorise why this might be so, but it brings us nothing to do so. Basically, a lot of logical connections are missed by the masses.

For the vast majority, gold is the thing they buy when very scared (e.g., credit crunck panic, terrorist attack, war...) or when inflation is rampant (1970s). Those things are not apparent now, and those people will not be buying during deflation.

For a few informed individuals, the possible future inflationary impact of QE provides a reason to buy, and currently that is why the market is not collapsing - but that is not enough of a driver to make it shoot up. Too few people 'get it'.

...IMHO

Gold has been very stable the last few months, building a base. It is now quietly moving up to all time highs.

In the next couple of weeks we might well see it go through $1000 and stay there. I mean, who is going to sell? and there are plenty lined up to buy.

Next few months...

Who is going to buy: a few people who can see through the current and widely-reported price deflation and persistent stock market rally.

Who is going to sell: the many, many people who are believing we face deflation and who wish to cash out of gold to put their money in the rising stock markets

We must see through the majority's eyes, and not our own, if we wish to predict where gold is going.

So I still believe the price will idle along and/or slide slowly down some while yet. But I no longer think we're likely to get a rapid price fall.

I'm confused. I thought you sold to buy a house, selling at what you thought was the best time, and avoiding any short-term changes against you.

Steve - I did indeed sell to lock in 200k cash, for a house. Then reflected on the tax hit we'd get bringing it to UK, so instead decided to use half of it to pay off Swiss mortgages on BTLs there. Other half is then free to go back into gold, at the 'right price'. [for UK house purchase, we'll just deploy more of our UK savings, and take a mortgage ...which will be covered by increased income from Swiss BTLs]

Sub 500 pounds?? If there is a reversal in the markets, which also looks likely, the pound will once again tank. Pounds look expensive at the moment. Yen and dollars look cheap... why not buy them with your pounds if you are waiting for a dip?

bigtbigt is holding out for sub £500 GBP gold.

To be fair, I believe BigT was expecting a low in the GBP gold price in the next few years. Not the next week weeks.

My 'right price' prediction back in March was 30% below the GBP prices then (i.e., sub 500). And I expected that to occur within 6 months to 2 years. We're now 5 months down the line, and have seen a 20% drop. However, the USD gold chart has shown more resilience than I expected, and so I am now slightly less certain of there being a sub-GBP500 opportunity. Hence my inclination to start nibbling now or soon.

EDIT: Most irritatingly: I placed a buy request this a.m. in Switzerland to get in before the BoE announcement, but they didn't execute before their lunch break. So given the last hours price changes (reactionary overselling of pound) I have decided to delay buying a while longer.

So you now want back in?

BigT,bigT, what will you do if there is no dip in gold? I know you are up because of cable, but will you get back in atr $1050 or what?

Hi Guys - Sure I want back in, and have stated all along that I was waiting for a price drop (from GBP 660 where I sold) to repurchase. I thought we'd go lower than we have by now, and that makes me less certain that we'll see sub-500. I currently feel we may be at or about the bottom, and so I am perhaps going to start nibbling at these prices. But only nibbling, as I do also think its quite likely that we'll get closer to 500 before a real floor is established.

So if I nibble soon, it will only be with 20% of my cash. That will let me double up and more than double up again if/when the price drops further.

To your specific question Azazel, the total cash I hope/plan to reinvest is just the 100% profit I made upon selling - so even if I reinvested it with gold at GBP1,000,000 and it then fell to 0, I'd still not have lost anything.

However, like DrB, I am trying to smell autumn's bottom, and then I'll pounce on it - which, in other contexts, would probably get me arrested.

Heard something rather interesting on Bloomberg about 1 hour ago.

 

There are now only 3% BULLS ON THE US DOLLAR

 

That is a HISTORIC LOW, i believe they said.

This suggests an immediate rally, and maybe a sharp one.

It should take at least a few weeks to correct this extreme

 

A sharp rally in the Dollar, should be bearish for Gold, and may yield that price dip

in August that I have been awaiting.

"...that price dip in August that I have been awaiting"

You and me alike!

But - what if that dollar strengthenning happens because something causes a return of fear (terrorist incident, another banking failure...) and its consequential return to risk aversion. That would be good for PoG.

I thought I recognised that article... it's 2 weeks old.

And what, fundamentally, has changed in the last 2 weeks to invalidate this article???

So say the "winning team"...

While there is still a fair chance of gold making a run at its highs over the short-term, there is considered to be very little chance now of a breakout to new highs

http://www.clivemaund.com/article.php?art_id=68

I'm curious why you think this is the case?

When CC first hit, it took most investors by surprise (though some of us had been predicting for a long time!!!!). Hence the panick

Then things rather calmed down until the end of last year when the stock market crumbled (after-shock from the CC). Hence more panick

But the response from governments was to bail out everything of economic importance, and make it clear that they'll not let the system go under. So, future squeezes on bank capitalisations (e.g., due to under-performing prime mortgages, credit card defaults, business collapses) will be painful but they are now expected, and everyone knows the governments will step in. Hence, no major 3rd wave panick. ...just a grinding and painfully slow recovery [which will suppress UK inflation].

...IMHO!

EDIT: or just look at it this way... major legs down in stock markets (and peaks in VIX) came precisely before each recent run up in price of gold, but stock markets are now more reassured and VIX has fallen dramatically. Everyone now knows that economic armageddon has actually been avoided!

What's your rationale for being in oil bt? How does that square with your current deflation views? The price now is getting high... it might get to the high 70s but it is not being driven by demand but rather by investor speculation. Looks very vulnerable to another sell off soon, don't you think?

I don't think we'll have massive deflation, nor massive inflation in the UK for the next year or so (in terms of cost of living). Looking 2-4 years ahead, we will have a big inflation problem. But that's not the key consideration wrt oil

Oil's price depends upon what is happenning globally. And by next year much of the world will start firing on all cylinders again. So I can easily imagine USD 100 oil again over next 1-2 years. That will represent a 60% profit for me, at current exchange rates.

That increasing oil price will be the harbinger of the following high UK inflation - and that will be what causes gold to take off.

I would argue that gold has risen significantly over last few years only at times of major economic panick (autumn 2007 as credit crunch first hit, then early 2009 as the 2nd wave occured). The fear of a major economic collapse has now largely passed, and so gold will struggle to take off from here without either a 3rd wave major credit crunch panick (not gonna happen) or the actual occurance of inflation (2+ years away).

Finally, I agree that there is a lot of speculation in the current price of oil, but a lot of that is due to larger players seeing things as I explained them above. So oil will not fall dramaticaly from here. Instead, its best to make sure you're in oil now, and in gold a little while later.

no, it's in Euros at the moment. Not a nice feeling having cash in the bank right now at least it's in a French bank, so a better quality of worry ?

I dunno... since I don't fear high-inflation for a year or 3 yet, and since I am planning to buy a UK (GBP) house, then having my cash in Sterling is not such a bad thing as it puts me in a strong bargaining position. This cash, BTW, is in a very safe bank in Switzerland and in Northern Rock (where accounts are 100% guaranteed, regardless of amount)

am I to gather that you don't think the pound will become the euro then ?

No. Conservatives will get in, and they have no interest in joining the Euro. So I don't see this as an issue over the next several years.

But if you are implying parity in GBP:EUR exchange rate, I think that's certainly possible (or even likely) over next few years, as I expect the Euro to continue strengthenning in and of itself and as USD and GBP loose their attraction. Also, for a long time now, EUR and CHF have tracked each other closely, as both are seen as safe havens - but I think the Swissie will start to loose out to the EUR over next few years (...and yes, I have about 1 years living costs in EUR, because of these expectations)

I do fancy a shot at silver though as well, that chart that GF (I think) put up showing the historical price of silver makes it look very cheap.

I'm currently heavily in oil, and have some gold and plan to buy more. But really not sure about silver. It might be a really good idea, I just don't know. My oil purchase is designed to make money over next few months-years, as oil will start running out! My gold purchase is to preserve wealth over years to decades. Not sure why I'd buy silver - other than to try to make a packet in short time frame. But I don't know if I want the stress that its volatility brings.

Yes. It's like the paper currencies are little ducks in the bathtub all bobbing up and down relative to each other.

 

Meanwhile the plug has been pulled and they are all going down together but if you only look at the ducks and how they bob up and down you may not notice that.

 

Gold is the bathtub.

Lovely analogy - but gold is also a currency, and so also a duck!

So my advice, GOM, is to concentrate separately on only three ducks:

1. the duck your wealth is in (GBP in your and my case I believe) - which I feel will not sink substantially further as the conservatives will get in power and start some serious medicine

2. the duck your thinking of buying [and only bother with this at all if you think the first duck is about to sink, or you're confident this second duck is going to float significantly higher, as you'll loose on the exchange transaction] - in my view, EURO will keep strengthenning, as the Eastern European financial problem is way overstated, and the EURO will start to be used as a second reserve currency

3. the golden duck - which I'm watching very carefully, with an aim of buying, though not yet

In short, ignore all the other birds - they're just an expensive distraction (as every red blooded male knows)

I think it would be not exactly unexpected if gold (once more) would lead the chartists/TA-preachers ad absurdum. The only way of dealing with gold for me is from the fundamental side.

I share your conviction that gold will be a far higher price one day - because of fundamentals.

But fundamentals do not drive markets, sentiment does.

And how high will gold go, and what day will the peak be reached? ...and will we recognise that peak (and there will[\b] be an absolute peak) and sell our gold before the price falls again?

Since I can't answer those questions, and since that day might be many, many years away, I'd rather move around the various investment classes until gold looks primed for its next leap up. By my judgement we're not yet at that stage.

Of course, with your single-minded (and rather admirable) buy-and-hold approach you have zero risk of missing the take off, but equally you are certain to miss out on other opportunities in the meantime - and (with all respect) that could entail years of significantly profitable missed opportunities.

UPDATED - from the GS thread

 

Some weeks to go to the next important low in Gold ?

 

Static components: long term (ong) : short term (btb)

 

 

/see Charts :: OilnGold : http://www.buythebottom.com/cot_charts/gold.html

 

Target levels : targets: GCnp: -800, LSnp: +10,000 / see: chart

Yes ...I feel the floor upon which PoG is crawling is starting to crumble

I might be interested in offering to sale some coins or bars of gold and silver in the future. How do you think the best way of arranging the trade is?

 

I could show my ebay account as a reference and then accept a cleared cheque or bank transfer before posting, or cash on collection.

 

Id rather sell to a member here than sell to ATS or on ebay and let ebay and paypal take a huge slice! Like war pig Im not selling yet either but I might sell a kilo of silver or something.

I'd want to do the deal face-2-face, in a bank that held the gold and could transfer the funds as cash or equivalent (e.g. bankers cheque). I'm talking many kg here, not a few ounces

It might be worth offering up your gold for sale on here if you have decided to get out.

Now that's a seriously interesting idea!

Are we allowed to buy/sell gold between ourselves? I don't see why not. We could reduce costs/fees dramatically, and when the real gold is in Switzerland it brings added safety.

I'm not ready to buy in yet (expecting further downside in GBP PoG), but would be keen to discuss buying from some of you guys when I get to that point.

I can also point you to (help you with) cheap ways to buy and store in Switzerland.

thanks, i will be looking for some pre QE announcement action that day then

 

does lightning strike twice? i remember JP saying he expected a QE announcement either in June or the next fomc meet (aug/sept?)

Double-agent: I think the GBP-gold chart in your signature is showing USD-gold?

Big moves over the last couple of months gold down to £575 from £700

And £ up 30cents against the dollar - a 20% move!

 

I suspect that this cannot be sustained and a reversal is surely on the cards given that the UK is in even worse shape than the US. Got a large amount of cash (in pounds sterling) coming my way and thinking now is the time start moving that in to gold and perhaps some gold mining stocks. I know even the gold bulls in here have not been buying gold of late. Do any of you now think this could be the time to accumulate again especially if you are holding pounds?

I have the Sterling cash, but not buying back in ....yet

Swapping it is trading, and trading is dangerous.

I see it rather differently:

Trading is about placing bets, and deciding when to rebalance those bets according to what you think is optimal.

But if you have any funds in any investment (e.g., gold or silver) then you're also placing a bet, and if you don't ever change the investment allocations then (even if you don't realise it) you are deciding that your investment balance is optimal.

So I would argue that some trading is more sensible than assuming that the investment plan you made on day-1 is optimum for evermore.

I would, however, criticise anyone who over-traded (i.e., anyone who is fickle and too uncertain in their view of things, so they keep changing their mind at a rate that the trading costs and spreads kill them)

The above argument holds not only for ones balance between silver and gold holdings, but PM vs any other asset class as well, even cash at times!

[ps. I've had a similar debate with people (who keep everything in the bank) who question why I bother so much with investing my money in various ways. I try to explain that they are choosing to put all their eggs in one asset class (cash), which at times can fall significantly in value. Trouble is, they'd mostly be like lambs to the slaughter should they start to manage their own investment portfolio with no knowledge of the game!]

I got my head bitten off a few days ago on this thread for mentioning gold was overbought.

Not by me

There are a several of us long-term believers in gold who suspect there will be a significant correction before a far larger rise in price over coming many years

FWIW, I reckon we are in shortly in a for quite a large short term correction in gold as indicators are all showing overbought without underlying support.

 

I also reckon the dollar will bottom this next week and rally for the short term, and $ dominated commodities such as oil will correct and fall from around $70 which is a top.

 

...at least this is the general theme of how I will be investing for the next few months.

Looks like you might have nailed this precisely (next few days will tell)!

I'll watch your predictions very carefully in the future