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Looking good for a higher-low being put in here.

However I won't get excited until Gold has cleared the previous high of $1435.

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At last!

Nice to see you in the Bullish mood, C.J.

 

I think we may now need (at least) a brief pullback, especially in Gold stocks

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So basically Turkey secretly sold some of its gold to Iran to reduce the current account deficit and make the economy look better ahead of an election: http://www.bloomberg.com/news/2014-06-25/turkey-sells-200-tons-of-secret-gold-to-iran.html

 

Gotta love politics as usual.

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And another one on the rehypothecation of Shanghai warehouse stocks. Assuming the numbers are correct that wold suggest that there is a significant shortage of gold (and probably other metals) at least some of which will need to be replaced: http://www.bloomberg.com/news/2014-06-26/china-finds-15b-of-loans-backed-by-falsified-gold-trades.html

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Can Gold backing work?

What will happen to the price, if you use it to back 5%, 10%, 20%, 50% or whatever, of currency in issuance?

 

on Jim Rickards ideas

. . .

2. Intrinsic value of gold is mining cost. The intrinsic value if far far smaller than the amount required to back fiat currencies present today.

Gold backed new currency is not therefore the solution. New ideas are needed. There is my naive two pence

- In my opinion the maximum amount of money that a country may issue must have value, not larger than the total value of the assets owned by the

government. These may include gold, but perhaps less liquid stuff could be included, like property. That sets an upper limit.

-The effect of money on the economy unfortunately is dependent also on money velocity, which is variable factor. If velocity goes to zero, theoretically huge amounts of

banknotes could be printed without hyperinflation (as we see today). The total amount could exceed the upper limit. !!

- So, the conclusion is that some clever self-regulating system is required that considers money velocity and allows growth of money supply at high rate required by economic growth.

I believe that some original ideas are needed and will eventually be implemented.

 

???
It depends on how much Gold you want/need.

 

If you demand more and more gold each year, the average Mining cost will rise.

 

Here's Gold production since 1900:

3.jpg

 

And, in recent years :

 

mine-supply-gold-2013.png

 

Even though the price rose dramatically since 2001, production has grown little.

Demand more gold production, and the costs will really soar.

WHY?
Because most of the high grade Gold has already been found and mined,

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http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=246058&sn=Detail

 

Summary: demand for physical gold in Asia has fallen and investors have been reducing holdings of funds which hold physcial gold (and Barclays is bearish).

 

I actually view this as an overall positive for gold - if the price has edged up slightly in spite of the weakened demand, what will happen when that demand comes back?

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Exactly

 

Demand has (finally) picked up in the West, replacing the buying from the East.

And most AMericans have stopped selling, having sold down to "long term comfort" levels

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C.J.

What's driving the expectation for higher Gold?

Can you say something about the drivers you use?

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okay

looks like you might have forecast today's drop (about -$16 right now)

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Zerohedge are sensationalising the drop yesterday

 

14thJulyLHF_zps6a137355.png

 

There were two large volume spikes in the August Gold futures contract, one of over 4800 after 7am, and another over 10,000 at 2pm

 

 

Zerohedge are painting this as significant however when it's the other way round do they write about it?

 

Here's August Gold futures on 5th June

5JuneLHF_zps27194b4c.png

 

A huge volume spike of over 10,000 contracts before the open sending the price shooting higher

 

'Upward' manipulation doesn't make such a good story though does it.

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Dr B in response to your question. We only use price nothing else. We view price as having the collective information of all parties bulls and bears. The collective knowledge of these participants is far greater than any single database. Prices are made at the margin.

We like Gold as we feel our forecasts are measuring the Worlds reserve currency against money itself. An ounce of Gold now is the same as an ounce of Gold in 1929.

 

15p6ckp.jpg

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Zerohedge are sensationalising the drop yesterday

 

 

 

There were two large volume spikes in the August Gold futures contract, one of over 4800 after 7am, and another over 10,000 at 2pm

 

 

Zerohedge are painting this as significant however when it's the other way round do they write about it?

 

Here's August Gold futures on 5th June

 

 

A huge volume spike of over 10,000 contracts before the open sending the price shooting higher

 

'Upward' manipulation doesn't make such a good story though does it.

 

But I think they DID write about the upward spikes; it was the eruption of the Quingdao port probe into missing collateral... ?

which they argued , along with Goldman as i recall, would be ultra-positive for gold.

http://www.zerohedge.com/news/2014-06-05/chinas-missing-commodity-scandal-spreads-banks-fear-fallout-rehypothecated-funding-d

 

 

Also there is usually some news around an upward spike.. like:

http://www.zerohedge.com/news/2014-06-05/ukraine-closes-8-border-crossings-reports-russian-troop-movement

 

 

Or, maybe it was -ve deposit rates at the ECB...

http://www.ecb.europa.eu/press/pr/date/2014/html/pr140605_3.en.html

which ZH did cover..

http://www.zerohedge.com/news/2014-06-05/have-questions-about-ecbs-unprecedented-negative-deposit-rate-call-guy

 

 

Anyway, it seems there is never any explanation for the sharp *downward* moves at odd times of the day or night.

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"Dr B in response to your question. We only use price nothing else. We view price as having the collective information of all parties..."

 

Okay.

So there must be cyclical and momentum factors built into your model.

 

In my over charting system, I regard certain moving averages as providing important support -

and THAT is also based on historical prices, over past time frames (of the moving averages)

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(for those who may not have seen today's Dr.B's Diary):

 

Have the Old Gold Bulls learned nothing ??

 

I hadn't listened to John Embry or Chris Walzek for some time, so I tuned in to last week's podcast

 

Jul.18 - John Embry & Professor Laurence J. Kotlikoff

MP3 : http://radio.goldseek.com/shows/2014/07.18.2014/GSR-07.18.14-cc.mp3

 

After listening to some scary warnings from Prof Lawrence Kotlikoff, they went to Embry's part of the interview.

 

It was a Gold bull fest, with each trying to outdo the other in talking about how high the Gold price might go.

 

JA: "Once it breaks the 2011 highs, a whole new group of investors will come in."

Will they? Why?

 

A very different conversation might have been about how Gold is cheap, because it is cheap in relation to some specific valuation metrics.

One I like is: The CRB Index. This is comprised of various commodity prices, and is most heavily weighted towards Oil.

 

Here's what that looks like : A Ratio of Gold-to-CRB:

 

GOLD-to-CRB-Jul14_zpsf51175f8.png

 

It reached a high over 6.00 in mid-2012, and then at the end of 2013, had fallen to just over 4.00 (is it 4.05?)

 

That's a big drop, of 33.4%, and is a good reason to say the Gold is cheap, relative to other CRB commodities.

 

The value of my Ratio, relative value approach, is that it allows you to have some historical perspective on valuations,

and you get away from the Embry/Walzek circus, of just trying to imagine higher and higher valuations that Gold might climb to.

Is that what caused the Gold Bulls to miss the important Top at $1920 in 2011 - or maybe 5.74 times CRB ?

 

It RATIO also showed that Gold was dangerously high in early June 2012, when it was over 6.00.

 

The Good news is that the Gold-to-CRB Ratio seems to have made a convincing looking TURN off the bottom of the channel

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GOLD-to-CRB-Jul14_zpsf51175f8.png

 

The Good news is that the Gold-to-CRB Ratio seems to have made a convincing looking TURN off the bottom of the channel

 

I agree that the KWN crowd are almost all permabulls and that is the reason I stopped listening to them.

 

Has that chart not reached a temporary peak? There would seem to be resistance at 4.4-ish and the bollinger-band is also constraining any further upside in the short term. I would therefore anticipate a drop from here. I did miss the peak at £1900 though and just held. I wish I had listened to your warning then but ... live and learn - at least I should be able to recognise the next big peak and act accordingly.

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Well, anything is possible, K.

 

But my view is that a Wave 2 correction just ended, and a nice Wave-3 up is now starting

 

I hope to do a new Video on it tomorrow

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Well, anything is possible, K.

 

But my view is that a Wave 2 correction just ended, and a nice Wave-3 up is now starting

 

I hope to do a new Video on it tomorrow

 

Thanks DrBubb, I did start reading a bit about Elliot Wave Theory a while ago but I never did spend enougth time wth it to get a grip on it.

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