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EXCERPT:

Gold has been flim-flamming around in a trading range for so long now - over 6-months from the September panic low - that we ought to be able to discern what kind of pattern is evolving. Well, we can, and there are 2 alternative explanations, both of which are bullish, and neither of which contradicts the other because they are complementary - because they are both valid interpretations of what is going on...

 

I hope he is right, I have been buying GLD calls and some Gold too.

 

But not everyone whom I rate in Gold forecasting is as bullish as I am. I met with my Hedge Fund manager friend B, and showed him this chart:

 

gldweekly.gif

 

He doesn't think that the fundamental set-up is anything like 2006. Instead, he sees a slowdown in China and other emerging markets. He thinks that this will show up as a continuing drift downwards in commodity prices, including Gold. And there may even be a sharper slide, like in 2008 in his view.

 

It is good to understand the points of view of those whom you disagree with.

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He doesn't think that the fundamental set-up is anything like 2006. Instead, he sees a slowdown in China and other emerging markets. He thinks that this will show up as a continuing drift downwards in commodity prices, including Gold. And there may even be a sharper slide, like in 2008 in his view.

 

It is good to understand the points of view of those whom you disagree with.

 

 

Question - Would you rather buy on fundamentals or chart and price action?

 

The problem is, you can never really be sure when buying strictly on the fundamentals. Too many unknown, unknowns.

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Market Nuggets: Morgan Stanley Still Looks For Gains In Gold, Silver In 2012, 2013

 

Morgan Stanley remains upbeat on gold and silver for this year and next. In a weekly commodities report, analysts note that gold hit a two-week high last week after a hint from Federal Reserve Chairman Ben Bernanke that unconventional monetary measures may still be undertaken, before the metal succumbed to a higher U.S. dollar and quarter-end selling. “This year and next, we still expect significant annual rises in gold and silver prices from strong investment demand,” Morgan Stanley says. Among commodities, Morgan Stanley says it remains bullish on the precious-metals complex and old-crop grains.

 

 

 

http://www.kitco.com/reports/KitcoNewsMarketNuggets20120402.html

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Question - Would you rather buy on fundamentals or chart and price action?

The problem is, you can never really be sure when buying strictly on the fundamentals. Too many unknown, unknowns.

I don't completely agree with him, or I would be selling down some of my Gold positions.

 

But I shall remain alert to mores signs of an emerging markets slowdown*

 

Another thing his colleague said to me was:

 

"Goldman has just come out recommending a puchase of Gold and Gold share,

and you know what that means..."

 

(A Bull call by MS - on its own - would be less a "kiss of death" than a Gold Bull call by GS.)

=== === ===

 

*in fact, here's an excerpt from a follow-up email,

suggesting the that bad times are continuing to roll:

 

Subject: A Few interesting facts!

 

Europe down 20bps - Italy and Spain down 1.5% on Bundesbank comments “not accepting bank bonds supported by Greece, Portugal, Ireland and troubled nations as collateral”

 

1. Futures sold off as Bundesbank rejected bank bonds backed by troubld nations

2. CHINA Mar Mfg PMI 53.1 (c 50.5) 12mo hi - HSBC Mfg 48.3 (c 49.6 pr). 4mo low

3. China: PMI # distorted by rebound in tobacco/metal - China closed til Thurs

4. JAPAN Q1 TANKAN large Mfg -4 vs. cons -1 (2nd quarter of contraction). Weak

5. EU Mar PMI Mfg inline - 47.7 (c 47.7) - France notable miss: 46.7 (c 47.6)

6. Italy PM Monti: decided not to ask for capital support fm EFSF

7. Some large EU banks to partially repay LTRO loans within next 12mo – FT

 

B.

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I don't completely agree with him, or I would be selling down some of my Gold positions.

 

But I shall remain alert to mores signs of an emerging markets slowdown

 

Another thing his colleague said to me was:

 

"Goldman has just come out recommending a puchase of Gold and Gold share,

and you know what that means..."

 

(A Bull call by MS - on its own - would be less a "kiss of death" than a Gold Bull call by GS.)

Well, things are really starting to slow down here, and mining seems to have plateaued.

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I don't completely agree with him, or I would be selling down some of my Gold positions.

 

But I shall remain alert to mores signs of an emerging markets slowdown*

 

Another thing his colleague said to me was:

 

"Goldman has just come out recommending a puchase of Gold and Gold share,

and you know what that means..."

 

(A Bull call by MS - on its own - would be less a "kiss of death" than a Gold Bull call by GS.)

=== === ===

 

*in fact, here's an excerpt from a follow-up email,

suggesting the that bad times are continuing to roll:

 

Subject: A Few interesting facts!

 

Europe down 20bps - Italy and Spain down 1.5% on Bundesbank comments “not accepting bank bonds supported by Greece, Portugal, Ireland and troubled nations as collateral”

 

1. Futures sold off as Bundesbank rejected bank bonds backed by troubld nations

2. CHINA Mar Mfg PMI 53.1 (c 50.5) 12mo hi - HSBC Mfg 48.3 (c 49.6 pr). 4mo low

3. China: PMI # distorted by rebound in tobacco/metal - China closed til Thurs

4. JAPAN Q1 TANKAN large Mfg -4 vs. cons -1 (2nd quarter of contraction). Weak

5. EU Mar PMI Mfg inline - 47.7 (c 47.7) - France notable miss: 46.7 (c 47.6)

6. Italy PM Monti: decided not to ask for capital support fm EFSF

7. Some large EU banks to partially repay LTRO loans within next 12mo – FT

 

B.

 

Yes. All that would suggest tightening liquidity?

 

Have you noticed VIX and Gold are becoming more positively correlated. All it may take is a pullback/correction in the main stock indices to kick start Gold.

 

As for GS and MS ramping, I have no idea what to make of this!

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Flying the Yellow flag now on DrB's diary:

GLD / Gold

gldid.gif

 

(Earlier today, I told my broker:

"If GLD breaks $162, we could have a sharp drop."

He called my after it happened.)

 

I don't like the move down today. Heavy volume too.

If you are not yet in Gold, you should wait.

If you are in, then this is a time for caution.

I may consider reducing my positions

 

Let's collect some comments Here or on the Gold thread.

This needs a very close look

 

BTW, I am happy that I am playing this potential upmove in Gold

with options. Most of my money remains safely on the sidelines.

So if last week's Gold low gets taken out, and it slides to the

Dec Low or lower, I will still have plenty of firepower.

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(I suppose this is a reflection of the sorts of comments you see on Lows.

But that on its own does not make me bullish):

 

The end of the gold bull is on the horizon

 

By Howard Gold

NEW YORK (MarketWatch) — The last decade has been a bonanza for investors smart or lucky enough to buy gold. From their April 2001 low of $256 an ounce, gold prices soared 640% to their September 2011 peak. While large U.S. stocks slogged through a lost decade, gold returned 21% a year.

 

Investor interest, long dormant since the age of the gold bugs in the late 1970s, was rekindled as the SPDR Gold Trust ETF / GLD offered a cheap, liquid way to own this most coveted of metals. Even high-profile hedge funds jumped aboard.

 

But lately gold’s winning streak appears to have stalled. As I write this, gold is sitting on its 200-day moving average and sells 14% below its all-time high of $1,895 an ounce.

 

This week, the Dow Jones Industrial Average and the Standard & Poor’s 500 index have hit post-crisis highs, but gold prices keep tumbling. At Wednesday’s close, it changed hands at $1,635.70 an ounce.

 

Gold’s supporters remain steadfastly bullish. But some brave contrarians say the decade of gold is ending not with a bang but with a whimper. They even challenge the conventional wisdom that gold is destined to rise as long as central bankers keep printing money. If all that additional liquidity doesn’t turn into high inflation, why own gold at all?

 

Mark Williams raised those questions in an op-ed in the Financial Times last fall. He’s a former bank examiner and risk analyst who teaches at Boston University and wrote a book, “Uncontrolled Risk,” about the fall of Lehman Brothers.

 

“The last bull market for gold ended in 1980, when prices fell by 60%,” he wrote. “The bubble is popping again. This time, gold could drop to $700 an ounce, more than $1,000 below its peak.”

 

His reasoning? Economies and banks are slowly recovering from the crash and financial crisis. The Greek debt deal averted a major meltdown in Europe. And despite central banks’ alleged “money printing,” we haven’t seen the inflation that has accompanied big runs by gold in the past.

 

“Gold is a hedge against inflation,” Williams told me in an interview. “You’ve seen a run-up over the last decade and there’s no inflation to speak of.”

 

Technically he’s right. From 2001 to 2011, the consumer price index rose on average 2.4% a year and never topped 4% growth, even in 2008 when oil and commodity prices soared briefly.

 

By contrast, the CPI rose by an average 7.9% annually during gold’s last great bull market from 1971-1980, and there were three years when inflation exceeded 10%.

 

Money isn’t really sloshing around

Ah, ask the gold bulls, but won’t all the money the central banks issued to save the banking system eventually cause inflation, if not hyperinflation?

 

The Federal Reserve increased its balance sheet by $2 trillion in its various rounds of quantitative easing, which involved buying Treasurys and other government securities. That’s led to a similar increase in the reserves banks hold, which is why economist James Hamilton of the University of California-San Diego wrote: ”The Fed is creating reserves as opposed to printing money.”

“If you back out those excess reserves, you’re looking at a monetary growth rate at 3%-4%,” said Prof. John Tatom of Indiana State University.

 

/source: http://www.marketwatch.com/story/the-end-of-the-gold-bull-is-on-the-horizon-2012-03-16?siteid=bigcharts&dist=bigcharts

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^^ From the same article:

And gold’s biggest fans are deeply attached to it. “Gold is one of those emotional asset classes,” Williams told me. “These folks are fanatics about gold. There’s a class of investors who are into gold because it’s a religion, a cult, a political statement.”
Very true.

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The time to short gold was 1900 six months ago not now.

 

I think it's fair to say that the fundamentals on gold are thoroughly confused. Why not then bracket the fundamentals and let the longer term trend on the chart speak for itself. Gold is nicely consolidated/ ing here. The corrections of '06 and '08 lasted near a year. It's only been six months or so into this correction. If this correction is like the others, we've probably seen the bottom of it.

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The time to short gold was 1900 six months ago not now.

 

I think it's fair to say that the fundamentals on gold are thoroughly confused. Why not then bracket the fundamentals and let the longer term trend on the chart speak for itself. Gold is nicely consolidated/ ing here. The corrections of '06 and '08 lasted near a year. It's only been six months or so into this correction. If this correction is like the others, we've probably seen the bottom of it.

A good move, which I missed, would have been to Buy GLD Apr-$160 puts, when GLD was at $164 just two days ago

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Well, I do not know if the bull run is over. But I will be hanging onto mu Gold a bit longer. Im still up on My holding with Bullion vault at the moment, Not for much longer if the price carries on going down. But Im willing to risk that at the moment. I May even add to my holding at some-point over the next few months. I would buy again now if I had the spare funds to do so.. Im willing to hold a bit longer to see what happens. I will give it time.

 

I do not have a get out price in mind. Do any of you? Are any of you looking to sell ay $2000, $3000,$5000, $20000 ?? I have to tell you the truth. Im never even given it any thought to what sort of price I would be looking for to sell. I may spend some time doing that now. Im Still worried long term about the world. Not just the money side of things but worried about many of the troubles that we face now and in the coming years.

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Well, I do not know if the bull run is over. But I will be hanging onto mu Gold a bit longer. Im still up on My holding with Bullion vault at the moment, Not for much longer if the price carries on going down. But Im willing to risk that at the moment. I May even add to my holding at some-point over the next few months. I would buy again now if I had the spare funds to do so.. Im willing to hold a bit longer to see what happens. I will give it time.

 

I do not have a get out price in mind. Do any of you? Are any of you looking to sell ay $2000, $3000,$5000, $20000 ?? I have to tell you the truth. Im never even given it any thought to what sort of price I would be looking for to sell. I may spend some time doing that now. Im Still worried long term about the world. Not just the money side of things but worried about many of the troubles that we face now and in the coming years.

 

I am happy to get out around about this level. Its going to take a couple of years though due to cgt so if it gets another wind I'll perhaps be able to take advantage of it. I dont need to get out at the top to feel happy with what has been a great investment. It did help getting in early though so never had to worry about making a loss. I always did think I might end up holding all the way past the top then having to sell on the way down but I see nothing wrong with this. Not that I'm saying the top is past because I have no idea. I'm just saying if.

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Ross Clark continues:

 

 

 

“It is key that investors understand these markets experienced similar volatility in the 1970s. For now, if we can hold solidly in this $1,625 area, gold should be explosive for the second half of the year. The mining shares, which have been lagging, should dramatically outperform the price of gold in this next bull leg.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/2_Gold_Bull_Market_Set_Up_for_a_Spectacular_Move.html

 

Bid/Ask 1620.80 - 1621.80

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My main reason for buying gold a few years ago was negative real interest rates. This argument still seems firmly intact, and it doesn't appear there will be a volcker-esque move to tackle this for quite some time.

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Well, I am not selling but I think it's time to repost this, which I never finished but it's prretty much all there. I made it as a "note to self":

 

 

 

A Gold Investors’ Treatise

 

Some day, you will feel it is time to sell your gold. Whilst that time appears to be far off at the moment, some time it will come, and you may be very tempted. It will not be easy to do; holding gold has been part of your life for possibly many years and it will probably feel very strange, an almost ‘naked’ feeling to be without the security blanket which has slavishly served and insured you and your family for the entire period you possessed it. I think it is important now to put in writing thoughts on

WHY you bought the gold.

WHAT you expect may happen in the future.

CRITERIA to be met before a sale, such as reserve currency money supply and IRs, gold/silver standard etc.

THE RISKS pertaining to other assets you may wish to purchase (e.g. tax!, non-portability etc.)

CONSIDER that the authorities will go after any visible savings and means-test items like council tax benefit, Jobseekers allowance etc.

 

ALSO to consider buying PUT options- cheap insurance without having to part with physical metal. Worst case; you write off the money you use to buy the puts. Leverage is ok for Puts!

 

I would like to say that making this document public NOW is important; we have a nuclear community focussed and alert. This may not be the case in the future, so it may be hard to garner ideas together – many minds work better than one!

 

It is my aim to provide a list of hurdles which you should honestly be able to clear in favour of selling any gold before you do it.

 

Use Shadowstats!

Guidotti-Greenspan rule

Short term (Bund?) IRs > M3 by at least X

 

Merrill:

the supply of money in all currency areas is increasing a lot faster than the supply gold. So the weak dollar is pushing gold prices higher in USD, and the increase in global money supply is driving gold prices up in every currency.

 

Broad money in a number of key currencies expanded 7 to 10 times faster than gold supply in 2008. This trend is poised continue over the next 18 months. If EM CBs come to the conclusion that gold at the current prices is better value and offers lower political risk than government bonds denominated in EUR or USD, reserve diversification into gold will continue. We estimate that any given increase physical gold demand of 100t ($3.6bn) could push prices up by $45/oz. With EM FX reserves at nearly $6trn, it will not take much to send gold prices higher.

 

the whole point of having a fiat currency is to be able to debase it when the economic conditions require it

 

 

The following is a most compelling reason to keep your wealth in gold.

Most global banks are still unsafe, warns S&P

Standard & Poor’s has given warning that nearly all of the world’s big banks lack sufficient capital to cover trading and investment exposure, risking further downgrades over the next 18 months unless they move swiftly to beef up their defences.

By Ambrose Evans-Pritchard

Published: 12:02AM GMT 24 Nov 2009

 

Every single bank in Japan, the US, Germany, Spain, and Italy included in S&P’s list of 45 global lenders fails the 8pc safety level under the agency’s risk-adjusted capital (RAC) ratio. Most fall woefully short.

 

The most vulnerable are Mizuho Financial (2.0), Citigroup (2.1), UBS (2.2), Sumitomo Mitsui (3.5), Mitsubishi (4.9), Allied Irish (5.0), DZ Deutsche Zentral (5.3), Danske Bank (5.4), BBVA (5.4), Bank of Ireland (6.2), Bank of America (5.8), Deutsche Bank (6.1), Caja de Ahorros Barcelona (6.2), and UniCredit (6.3).

 

While some banks may look healthy under normal Tier 1 and leverage targets, critics claim these measures can be highly misleading since they fail to discriminate between high-risk and low-risk uses of leverage. The system failed to pick up the danger signals before the financial crisis. The supposedly moderate leverage of US banks in 2007 proved to be a spectacularly useless indicator.

 

S&P has shifted to a tougher code. It is less tolerant of hybrid capital – a liability rather than an asset, and no defence in a crunch – and insists that banks must quadruple capital put aside to cover trading desks. Private equity exposure will be treated more harshly.

 

 

 

Interesting post: DON’T LET THIS BE YOU!

http://www.housepricecrash.co.uk/forum/index.php?showtopic=131218&view=findpost&p=2266004

AvidFan 7:33pm 26th Nov 2009; GOLD@ 1193 (GBP723.00) /Oz.

Genuinely pleased for all those that bought gold - including those that were so PI55ED off with the state of affairs a few years ago, it was all or nothing at $550 an ounce.

 

I was buying at between £275 and £330 and at one point owned a fair amount - I won't say how much. I was neither a gold bull or a bear, I was just scared. And at the time I became aware of the reasons for owning gold (early 2005), I wanted in but was too nervous to buy with my life's savings.

 

If I'd have held on to this point, I could have literally retired. As it is now, I'm sitting in sterling earning 5% and watching my entire life's work be destroyed by politicians and central bankers.

 

This really is just about the cherry on top of my miserable fuc*ing life.

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Thanks for reposting chris ct. Its a good reminder to me why its going to be important to continue to hold gold for many years. The physical stuff preferably. Even just to have it off the radar in my old age.

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