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Jim Sinclair’s Commentary

 

The price of gold is preparing for a ballistic move upwards.

 

I count this geometric up-move in price to appear in weeks, not months.

 

Trading here borders on a serious case of self destructive tendency.

 

Have all shorters and traders uploaded this tune onto their iPods by now?

 

They'll need it. They're done.

 

 

http://gold.approximity.com/gold-silver_watch.html

 

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Seems to me the most likely outlook is gold moves sideways over the summer. I can't see it declining too much now that concern about the dollar has gone mainstream. Can't see it exploding upwards as long as the Dow and commodity rallies continue. I reckon the only thing that could take gold significantly lower... back into the 800s would be a massive sell off in everything with a deflation scare. I will be buying a little at the end of next month if the price is still at these levels... but keeping some serious powder in reserve [in US dollars] in case we see a correction and I wouldn't call that trading.

 

If I did not already have the larger part of my worth in gold/silver I would be seriously buying now. I reckon whether you buy or not depends largely on how much you already own.

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Seems to me the most likely outlook is gold moves sideways over the summer. I can't see it declining too much now that concern about the dollar has gone mainstream. Can't see it exploding upwards as long as the Dow and commodity rallies continue. I reckon the only thing that could take gold significantly lower... back into the 800s would be a massive sell off in everything with a deflation scare. I will be buying a little at the end of next month if the price is still at these levels... but keeping some serious powder in reserve [in US dollars] in case we see a correction and I wouldn't call that trading.

 

If I did not already have the larger part of my worth in gold/silver I would be seriously buying now. I reckon whether you buy or not depends largely on how much you already own.

I buy as soon as I have any spare cash and treat gold & silver as currencies that can't be increased at will. Why would you want to hold any currency that is being quantitively eased in reserve? The US will be having to buy a lot more of their own treasuries soon, as no one else wants them anymore.

 

 

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I buy as soon as I have any spare cash and treat gold & silver as currencies that can't be increased at will. Why would you want to hold any currency that is being quantitively eased in reserve? The US will be having to buy a lot more of their own treasuries soon, as no one else wants them anymore.

As a hedge for holding so much gold and silver already and to diversify my currencies. Though the outlook for the dollar looks pretty grim, we might see its swan song before its collapse. I am keeping some dollars in reserve in case we see another round of forced liquidation. Who knows, perhaps the Fed may be able to manipulate this if the dollar looks to be in danger of falling over; better to have crashing markets than a crashing currency.

 

Also, because I do not see the currency being destroyed, just devalued by half [with gold doubled in dollar terms], it makes sense to buy discriminately. As the reserve currency, the dollar is perfectly capable of spiking [as gold is of "correcting"] before finally becoming a second rate currency. I hold dollars strategically, looking for an opportune time to buy gold. If I can buy gold cheaply, then not only can I accumulate more than I would if I bought indiscriminately, but I can also not be too concerned about whether the price will correct. Call me a pragmatist. :)

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As a hedge against holding so much gold and silver and to diversify my currencies. Though the outlook for the dollar looks pretty grim, we might see its swan song before its collapse. I am keeping some dollars in reserve in case we see another round of forced liquidation. Who knows, perhaps the Fed may be able to manipulate this if the dollar looks to be in danger of falling over; better to have crashing markets than a crashing currency.

 

Also, because I do not see the currency being destroyed, just devalued by half [with gold doubled in dollar terms], it makes sense to buy discriminately. As the reserve currency, the dollar is perfectly capable of spiking [as gold is at "correcting"] before finally becoming a second rate currency. I hold dollars strategically, looking for an opportune time to buy gold. If I can buy gold cheaply, then not only can I accumulate more than I would if I bought indiscriminately, but I can also not be too concerned about whether the price will correct. Call me a pragmatist. :)

Optimist, USD halves in value every decade or so under the best of circumstances.

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The more I study this chart the more I learn.

 

Gold is not something to be gambled with. It is my long term investment and safety in an uncertain world.

 

szbkzr.jpg

 

What if, QE was really started in 2001 with all fiat 'hard' currencies? What if, the term Hard Currency was meant originally only for Precious Metals. What if, the only way the Yanks can win this corrupt game, is if everybody else loses?

 

 

 

 

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Optimist, USD halves in value every decade or so under the best of circumstances.

Don't most fiat currencies devalue near this much under near "normal" inflationary conditions?

 

The time line I have in mind for dollar/gold volatility is only a year or two... with the idea to get out of dollars when/if they spike on the back of de-leveraging round 2.. This is not gambling/trading but just being prudent. I recommend reading "The Art of War".

 

Investors are in a psychological war and Bernanke and company, master manipulators, will be using all manner of dirty tricks. Keep some powder dry.

 

PocketSunTzu.gif

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Gold May Be On Verge Of Historic Breakout

 

By Peter Brimelow, MarketWatch

 

Is this it for gold? After a good week, gold watchers of all stripes think it may be. Again.

 

After Friday’s 0.8% rise to $958.50 a troy ounce, Martin Pring, decidedly not a gold bug, set the tone in his Weekly InfoMovie Report: "Gold could be on the verge of a historical breakout. Watch that $990-$1,000 area like a hawk."

Pring has always laid very heavy emphasis on the predictive power of gold shares. His analysis: "The gold-share ETF, the GDX [Market Vectors Gold Miners ETF (GDX)], has just broken out from a major base. Since the shares often lead the metal, this is a bullish factor."

 

Dow Theory Letters’ Richard Russell has also been interested in GDX, saying this after Friday: "Ordinarily I would only add gold items on a correction. But gold seems on a roll now, so I added GDX."

 

Two developments are causing the excitement about gold. From a charting point of view, gold shares are generally agreed to have broken out, meaning that gold itself could well be about to do something very important. Australia’s The Privateer (whose free U.S.-dollar 5X3 Point-and-Figure chart looks very handsome after Friday) describes the situation:

"What is being traced … is a gigantic ‘reverse’ head-and-shoulders formation. The trading range between US$900 and US$1,000 was broken early in April. Over the month of April, a tighter range between US$870-US$910 was established. Now, gold has broken back above that range. The ‘right shoulder’ on the ‘reverse’ head-and-shoulders formation is getting wider. … There are two major resistance points. The first is at US$955 … where the chart is now. The second is, of course, at US$1,000, the level reached in March 2008 and again in February 2009."

 

Several other commentators see the same thing.

 

The second bullish gold development: general economic conditions.

 

As the Gartman Letter noted on Wednesday: "The dollar does look vulnerable. … Pushing government steadily leftward, the Obama Administration has set up the possibility of a U.S. dollar rout. … If this persists, commodity prices generally shall rise and rise materially, and gold shall too."

 

more...

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Gold May Be On Verge Of Historic Breakout

 

By Peter Brimelow, MarketWatch

 

Is this it for gold? After a good week, gold watchers of all stripes think it may be. Again.

 

After Friday’s 0.8% rise to $958.50 a troy ounce, Martin Pring, decidedly not a gold bug, set the tone in his Weekly InfoMovie Report: "Gold could be on the verge of a historical breakout. Watch that $990-$1,000 area like a hawk."

Pring has always laid very heavy emphasis on the predictive power of gold shares. His analysis: "The gold-share ETF, the GDX [Market Vectors Gold Miners ETF (GDX)], has just broken out from a major base. Since the shares often lead the metal, this is a bullish factor."

 

Dow Theory Letters’ Richard Russell has also been interested in GDX, saying this after Friday: "Ordinarily I would only add gold items on a correction. But gold seems on a roll now, so I added GDX."

 

Two developments are causing the excitement about gold. From a charting point of view, gold shares are generally agreed to have broken out, meaning that gold itself could well be about to do something very important. Australia’s The Privateer (whose free U.S.-dollar 5X3 Point-and-Figure chart looks very handsome after Friday) describes the situation:

"What is being traced … is a gigantic ‘reverse’ head-and-shoulders formation. The trading range between US$900 and US$1,000 was broken early in April. Over the month of April, a tighter range between US$870-US$910 was established. Now, gold has broken back above that range. The ‘right shoulder’ on the ‘reverse’ head-and-shoulders formation is getting wider. … There are two major resistance points. The first is at US$955 … where the chart is now. The second is, of course, at US$1,000, the level reached in March 2008 and again in February 2009."

 

Several other commentators see the same thing.

 

The second bullish gold development: general economic conditions.

 

As the Gartman Letter noted on Wednesday: "The dollar does look vulnerable. … Pushing government steadily leftward, the Obama Administration has set up the possibility of a U.S. dollar rout. … If this persists, commodity prices generally shall rise and rise materially, and gold shall too."

 

more...

I think the charts are clear - these last few weeks gold has not been increasing in value. It is flat or down against most currencies.

 

All that is happenning is that the USD has been depreciating. ...simply because concerns and panic over the economy are subsiding, and the repratriation (buying) of USD is reversing.

 

There is not a major awareness and worry about QE.

 

And all this is exactly what the US authorities want. This way they dilute away their national debt

 

 

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I think the charts are clear - these last few weeks gold has not been increasing in value. It is flat or down against most currencies.

 

All that is happenning is that the USD has been depreciating. ...simply because concerns and panic over the economy are subsiding, and the repratriation (buying) of USD is reversing.

 

There is not a major awareness and worry about QE.

 

And all this is exactly what the US authorities want. This way they dilute away their national debt

 

The major awareness you talk about is starting to be felt in the treasuries market. This from James turk;

 

Some say that T-note yields are climbing in spite of the fact that the Federal Reserve is buying Treasury paper, but they have grabbed the wrong end of the stick. T-note and T-bond yields are climbing precisely because the Federal Reserve is buying Treasury paper.

 

As buyers start to leave treasuries in droves and the equity bounce starts to falter the money has to go somewhere. For the head and shoulders to make sense we will need a lot of volume to pickup between $980 and $1000.

 

The next few weeks will be very interesting.

 

 

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I think the charts are clear - these last few weeks gold has not been increasing in value. It is flat or down against most currencies.

 

All that is happenning is that the USD has been depreciating. ...simply because concerns and panic over the economy are subsiding, and the repratriation (buying) of USD is reversing.

 

I'm beginning to think we may have seen an intermediate term top at close to £700 and gold will not make any substantial gains is GBP this year...

 

Time to start thinking about miners instead maybe? Or is there way to gain exposure to rising $gold using local currency?

 

 

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I know it's not trading but thought it might be of interest.

 

Milton Friedman on gold and the Great Depression video.

 

 

(There is a bit where he says you know where the depression started because that is where the gold flowed to. It struck me this is very similar to what we have seen with the flow of dollars back to the USA as the crisis developed - and caught many out like Schiff).

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As buyers start to leave treasuries in droves and the equity bounce starts to falter the money has to go somewhere. For the head and shoulders to make sense we will need a lot of volume to pickup between $980 and $1000.

Maybe! ...but I think its equally possible that people just over-bought gov bonds when fears about the economy were at their highest (at the same time that they were repatriating USD). Now the fear has decreased, the yield for gov debt is rising to a more reasonable level

 

Don't get me wrong - I think we will have high inflation down the line. But that´s years away, and people with a lot invested in gold may be looking for signs of that inflation too early

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Well, whatever happens to gold in dollars going into June it's not going to go up in sterling that's for sure - 20-day, 50-day and 100-day EMA's are now alligned in a bullish configuration:

 

http://finance.yahoo.com/echarts?s=gbpusd%...ource=undefined

Unless risk aversion returns. If/when the markets next sell off, gold may go down a little against the dollar but the pound may retrace ALL the gains made against the dollar and perhaps worse. In that scenario gold will be more expensive in pound terms.

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Unless risk aversion returns. If/when the markets next sell off, gold may go down a little against the dollar but the pound may retrace ALL the gains made against the dollar and perhaps worse. In that scenario gold will be more expensive in pound terms.

I think canadian dollars would be the safest currency to keep your spare powder in, thats where I would keep any.

 

 

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I think canadian dollars would be the safest currency to keep your spare powder in, thats where I would keep any.

If you want to keep funds in another currency long term Canadian dollars are good [being a kiwi, my plan is to eventually start buying the kiwi dollar but only when they are a lot cheaper]. For funds you plan to spend on gold or silver in the short term [when looking for a more favourable buying point] the US dollar is better. The US dollar should move in inverse to gold with the idea of buying weak dollars, and then in turn buy gold on weakness when dollars are strong. If you do not see the possibility of short term dollar strength/forced liquidation in the near future, it is best just to buy gold/silver outright with whatever currency.

 

I also had CAD$ at goldmoney but as a commodity currency it was just tracking gold/silver so just bought silver with them. Worked out well because even though silver was more expensive in US dollars due to dollar weakness the CAD$ price was pretty much unmoved.

 

I m still kind of averaging in now because at these levels gold/silver looks good to me. I reckon QE [psychology] has pretty much put a floor under gold prices for now. As for silver, well as we all know a little bit more speculative there, and as you say the G/S ratio looks a good way to play that.

 

The wildcard for me is another round of deleveraging/forced liquidation so besides averaging in a little I want to keep some decent powder dry in the reserve currency. If G/S ratio goes to 50 odd I will swap silver for gold. I wouldn't wait for the ratio to fall too low. If we see deleveraging round 2, the ratio could easily go back to 80 or 90 which would obviously be a good time to swap back again.

 

Wow! 63.3 now.

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