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drbubb

Gold: the Bull's thread

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Given the volatility we've seen this year, if it decides to fall, it'll reach $600, no problem. I'm 99% certain that we won't go lower than June's $542, though - I thought it then that we were unlikely ever to see that figure again, given how massively oversold it was. The 200dma has now moved up to about $575+, which has always provided absolutely rock-solid support for gold during this bull market.

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At the moment, my strategy is to trade in line with fundamentals and play gold and silver on the long side and stocks on the short side (at the same time). Occasionally (eg. due to oil price falls) gold goes down and stocks go up, but recently they mostly continue to move together, which will give allow me to take profits in which ever direction the market moves, then just wait for the rebound the other way. (The fundamentals give me the confidence to wait on the positions that are temporarily losing).

 

This is a change from my previous approach, which was a confused mix of short and long term positions, and stop losses which seemed to do nothing for me (so often they were hit by a few points, then the market rapidly reversed and would have put my position in profit a day or two later!)

 

It's working so far (I have just had my best trading week by a country mile) but need more time to see if I just got lucky for a few days. I feel it should continue to pay off at least while the markets remain in this directionless, trading mode. When they do start to trend decisively one way, it should follow the fundamentals so I should still come out on top. Haha, this trading game's easy on paper isn't it! Lets see what really happens... !

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i am beginning to think that this will be one of those "odd years" (2 of 10),

where we will not see much of an August selloff in gold.

 

Thus, I am starting to put cash reserves to work in attractive private placements ( i am doing two this week). I will also be looking for undervalued junior companies over the next 2-3 weeks

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i am beginning to think that this will be one of those "odd years" (2 of 10),

where we will not see much of an August selloff in gold.

 

Yeah, my short on gold is feeling less and less inspired. :o

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Month End Report – July 2006 : US Global Investors

 

Investment Performance:

 

The Balanced Natural Resources Fund gained 1.95% net of fees and expenses in July, underperforming the S&P 500 Energy Index and outperforming the Basic Materials Index, which posted returns of 4.96% and -3.49%, respectively. In addition, the Balanced Natural Resources fund underperformed the Goldman Sachs Natural Resource Index which posted a gain of 1.98%. This marks the thirteenth consecutive month of positive returns, without a single monthly loss.

 

 

SWOT:

 

Strengths

Nickel prices on the London metals exchange jumped the most in six weeks to $24,700 a metric ton after inventories fell to a 15 year low and workers at Inco’s Voisey’s Bay mine voted in favor of a strike.

Copper prices continue to be supported by the threat of a strike at the Escondida mine in Chile, the world’s largest copper mine.

Natural gas prices gained 34.5 percent last week to $8.21 per thousand cubic feet, following a bullish 7 billion cubic feet storage withdrawal, primarily due to warmer-than-normal temperatures. This marks the first ever withdrawal in the months of June or July.

The first half of 2006 marked a 20-year high in U.S. drilling activity, the American Petroleum Institute said.

The EIA in its Short-Term Energy Outlook expects crude oil prices to average $69 per barrel in 2006-2007 driven by continued limited spare capacity. Although higher prices have dampened demand growth, it is anticipated to remain strong at 1.6 million barrels per day in 2006 and 1.8 million barrels per day in 2007

 

Weaknesses

U.S economic growth slowed in the second quarter to 2.5 percent from 5.6 percent growth in the first quarter, according to the latest GDP estimate released by the government. Most economists had forecast 3 percent growth in the April to June quarter.

The housing market continues to slow as new home sales fell 3 percent in June to 1.13 million units down from 1.17 million units in May, which is bearish for Copper as a new home contains 400 pounds of the metal.

In its latest Export MetCoal Outlook, AME Mineral Economics indicates during the first four months of 2006, world pig iron production (excluding China) has decreased by 2.0 percent, year-over-year. (Pig iron is the primary input used in making steel.) This decrease in pig iron production has contributed to an approximate 11 percent decrease in import metallurgical coal by Brazil, North Asia, and the EU-15.

 

 

Opportunities

The U.S. economy would not necessarily go into recession with oil at $100 a barrel but consumers would feel the pain and the economy would slow further, Standard & Poor's said. "The good news today is that we feel even a $100 price would not result in a U.S. recession," said David Wyss, S&P's chief economist.

Metal Bulletin reports that 2006 Chinese iron ore imports may grow 20 percent year-over-year to roughly 330 million tonnes versus the 32.3 percent year-over-year rise in 2005, citing an advisor at China's Iron & Steel Association.

The International Energy Agency’s initial 2007 oil market forecast calls for global oil demand to accelerate to 1.9 percent growth from 1.4 percent in 2006.

 

Threats

Violence increased in Nigeria, Africa's largest oil exporter, where Royal Dutch Shell PLC lost almost half a million barrels a day of output after attacks early this year.

Africa's third-largest oil producer plans to announce a tax increase on companies including Anadarko Petroleum and Eni SpA, following Venezuela and Russia in demanding more money as oil prices jump.

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well woudn't you know it.

 

As soon as you start doubting a sell off, it comes!

??

I'm still reading gold (as of now) at $645. What sell off?

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??

I'm still reading gold (as of now) at $645. What sell off?

 

not huge, i know... but it may be the start of something.

 

EDIT: Falling faster now... down $20 from recent high

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YES, i agree

 

Funny that. start talking about no corection, and one arrives

I think gold is headed towards $600 or lower from this latest action

 

LATER:

After a second look, if HUI can hold today's low near HUI-334.5, then gold's bull move may still be intact

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I have had a nightmare recently with gold and copper. Been trying to short both for a couple of weeks and get taken out by spikes. Just looked and gold and copper now plunging - esp the latter - typical.

 

If this is the start of the falls i have been waiting for in copper for the last few weeks then much much lower prices should be around the corner.

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$626 and Kitco is sounding like an estate agent:

 

"Gold recovers as oil prices resume upward trend"

 

I noticed that!....very odd.

 

Finished today at $633.30 so where to on Monday up down or sideways?

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CYCLE : Not Done yet- But June Low may hold- says Cliff Doke

 

there’s the ever-present matter of the dominant 4-year (and 8-year) cycle bottom which is due to touch down around September 1. This downward pressure from the latest 4-year cycle could add to overhead resistance pressure for many gold and silver stocks in the next 3-4 weeks, so we’ll have to anticipate this and remain vigilant in the remaining weeks of August.

 

Yet despite the overhead pressure from the bottoming 4-year/8-year cycle, there are some good reasons to believe that the price lows made in June by most actively traded gold and silver equities was in fact the dominant intermediate-term "internal" low for the precious metal stocks as a whole. The infamous stock market technician Joseph Granville, in his book "A Strategy of Daily Stock Market Timing for Maximum Profit," distinguished between a market’s "internal" versus "external" low and he maintained that the internal low was visible based mainly on investor sentiment (psychology). Specifically, an internal low is a function of price plus capitulation at the bottom of a price decline when the greatest number of traders/investors have thrown in the towel and have given up on stocks, walking away from the market. We saw this happen following the June low in precious metals equities (with the bullish percentage on gold stocks falling from over 90% to under 60%) and since that time higher lows have been made in many individual gold and silver stocks.

 

Another potential positive in the current market is that the month of August begins season strength for the gold stocks in general. Since 1994, there has been only one year when August was a losing month for the XAU gold/silver index, namely August 1998. This of course was exceptional in that not only was the 4-year/8-year cycle bottoming hard, but a major deflationary trend in commodities and currencies was underway and was felt around the world’s major financial systems. Since this time inflationary pressures are much greater in commodities while deflationary pressure are virtually non-existent at this time, a similar experience for gold stocks isn’t expected. True, there can still be some downward pressure felt as a result of the bottoming 4-year/8-year cycle in the coming weeks but those lows made in June are likely to hold up in most gold stocks. Even if some are violated they aren’t likely to be substantially violated on the downside and the "internal" (psychological) low made in June will still stand.

 

...MORE: http://www.financialsense.com/editorials/d.../2006/0807.html

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Mmm. I'm just sitting on cash waiting for the *inevitable* low. I'm still depressed about missing the lows at 550 - a huge run up of expenses at work meant I couldn't really dive in then! Still, I first got into gold at $470 so it's not all bad.

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I followed an interesting link elsewhere a while back on the Fed seeming to be 'bombing' gold.

 

And another link on this site regarding confidence in currencies and interest rates, the dollar and all the rest.

 

I would be interested in comments on how large a part Fed-Gold may be playing regarding the $.

 

Is it possible to keep up to date on what central banks are doing with gold, or does one have to wait for these statistics to become somewhat historic?

 

 

 

####################

 

BTW I've been interested to date in sustainability, ecology and the environment (more than green investments) and have spent some time in the past in agriculture.

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I really can't believe that analysts get paid for doing what they do.

 

The current take on the US inflation figures for the future gold price is:

1) Inflation goes up - Then the Fed will raise rates again and therefore support the dollar so gold will go down.

2) Inflation goes down - gold will go down because it is an inflation hedge.

 

Why don't they just be honest and say "we don't have a clue, it's been going down so we are guessing that it will keep going down!". GAH! :rolleyes:

 

Sorry rant over.

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Gold seems to be moving up again. Strange given that the market is rallying based on tame inflation data. Surely this should be bad for gold's prospects?

 

Is it just general correlation with the market?

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Gold seems to be moving up again. Strange given that the market is rallying based on tame inflation data. Surely this should be bad for gold's prospects?

 

Is it just general correlation with the market?

 

Many suspect that the FEDs plan is to fiddle the CPI data keeping it down so as not to spark wage claims while printing billions of Dollars to increase the money supply. Berenke has already let slip that he is prepared to drop money from helecopters rather than allow deflation of te US economy and the FEDs decision not to stop publishing the M3 money supplydata is further evidence of their intentions.

 

Many investors may see last months low inflation data as confirmation that Helecopter Ben's plans are about to kick into action.

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Aargh!

 

So frustrating if this late August bottom doesn't appear!

 

I was really hoping for something nearer $600.

 

 

if you go to the safehaven.com website there are a few articles by Chris Laird, and he is making the point that gold maybe sniffing out some deflation at the moment because the rallies were so wek over the summer despite the geo events, I also think he said that the hedge funds could start shorting alot of markets after the summer based on the technicals, so gold could have some drops from here.

I am hoping to add big time to my physical holding depending on the price, so the lower it goes below 600 the more I'll buy, if it bounces around in sep then I will just start accumulating on a monthly basis.

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I've had a few conversations with a bullion dealer recently - I've asked some basic questions. A summary of what I've learned is below: may be of use, I hope, to folk here.

 

GOLD:

 

+ Recommended buying gold rather than silver+

 

+Buy coins rather than bullion bars/biscuits. They are easier to sell - bars are treated with suspicion, often buyers ask for certification: which is almost never provided in the first instance!!!! MAIN POINT HERE: The difference in the spread is not worth the hassle when selling.+

 

+Krugerrands are recommended – they are generally cheaper than other coin types & are the most widely held / recognisable (and therefore I’d suppose the most liquid)?+

 

+Post 1857 (from memory) Britannia’s are free from CCG as they are considered legal tender but they are slightly more expensive initially.+

 

+ He was bullish on gold (surprise, surprise some may say but for what it’s worth I thought he was being genuine).

 

+He had noted an increasing interest from the mainstream press over the last two years – he had recently been contacted by The Times.+

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+Buy coins rather than bullion bars/biscuits. They are easier to sell - bars are treated with suspicion, often buyers ask for certification: which is almost never provided in the first instance!!!! MAIN POINT HERE: The difference in the spread is not worth the hassle when selling.+

 

Good advice, I bought some 10oz bars a couple of years ago however in hindsight there is no advantage and if gold goes up by x10 I'll have to keep them for large transactions, any further purchases will be 1oz Krugs

 

Good to see gold is getting close to the 600

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Good advice, I bought some 10oz bars a couple of years ago however in hindsight there is no advantage and if gold goes up by x10 I'll have to keep them for large transactions, any further purchases will be 1oz Krugs

 

Good to see gold is getting close to the 600

 

I do indeed think this is good advice. I was thinking the advantage of the slightly lower initial cost when buying bars, but the arguement for buying 1oz coins is compelling. My holdings are mainly in 1oz bars - which I do not think is ideal - additional future additions will be made via the coin route.

 

A point with silver though - the dealer was more neutral with buying bars here. I think this is perhaps due to the lower value / oz factor. Therefore I'm buying 1Kg silver bars in the main. I plan to add a few bags of coins (which have just 50% silver content) in the future.

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