trader_dante
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It would be interesting to see what happens if the dollar turns downwards again...
TWI
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"Gold still stands out as one of the better quality trades in this space, particularly if you fear inflationary pressures that are appearing on the horizon, but while it remains in the camp of trades that the market remains fairly long, it is naturally going to strike some fear in the hearts of those tempted to step in front of it. Even if the CFTC data shows a chunky fall of 5moz, that still leaves the market 8moz net long, never mind the perhaps 4moz on Tocom (locked limit-down for 2 days with about 2 moz on the offer overnight) and collective 14moz in ETFs. CPI is the watched pot we are awaiting to boil at 13.30BST today with a 0.3% reading deemed another prompt for the markets to head further south"
shrenickshah
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gugaplex said:
Gold is a Safe Haven against major interest rate and currency risk...Currently at the moment gold is having a shake off its real trend..
The recent plunge in the price of gold has caused shell-shocked investors to second guess their previous outlook for the metal. However, in the midst of a roller coaster market it can be very easy to lose touch with the broader perspective. With that in mind, gold's prospects are as bright as ever, and the sharp fall likely created one of the best buying opportunities of the current bull market.
First and foremost, the recent decline was not a gold decline, it was not a metals' decline or even a commodities decline. It was an across-the-board pullback among asset classes, from commodities, to emerging markets, to the Dow Jones, regardless of their individual investment merits. The commonality was that the drops seemed to be proportionate to prior advances, and that the assets were widely held by leveraged speculators. (The lone exception seems to have been oil, where its surprising resilience likely indicates that a significant rally is about to begin.) To me, this was a liquidity event, with the decline in the price of gold having little to do with its underlying fundamentals.
For years, leveraged speculators performed their financial high wire acts secure in the knowledge that Greenspan and the boys at the Fed were manning the nets below. The protection became know as the "Greenspan Put." The fear now is that the "put" may have expired with Greenspan's term, and that Bernanke has neither the intent nor the credibility to write another one.
With his anti-inflation rhetoric seemingly taking any interest rate cuts or added liquidity off the table, leveraged speculators suddenly found themselves out on those wires with nothing but concrete below. In Wile E. Coyote fashion, a glimpse below caused reality to set in. As a result, many opted to climb down, requiring assets to be sold to pay down debts. The result was a reversal of momentum, causing additional selling, short-selling, stop-related selling, margin liquidations, and redemptions.
However, my guess is that the markets are misinterpreting the Fed's resolve or even its ability to fight inflation. Bernanke really wants to pause, but he is fearful of causing a run on the dollar by doing so. Therefore he must first lay the ground work for a pause by convincing the markets of his commitment not to. His strategy may work for a while, but once investors call his bluff, he will fold like a cheap suit.
With so many speculators stampeding for the exits at the same time, it is only natural that prices would collapse. However, once such selling pressure is exhausted, gold's fundamentals will re-assert themselves, likely resulting in a spectacular rise. Having been badly burned, speculators will likely stay clear of the market until gold forms another base above $700 per ounce.
The biggest trade yet to be unwound is the massive long position in the U.S. dollar. The fact that a broad-based pullback has already begun in other asset classes means the dollar could be next. Such an event would be extremely bullish for gold, meaning the recent decline in its price could ironically lay the foundation for its biggest advance.
One anecdotal indication that gold's recent rise may have been a bit too steep was that my traditionally anti-gold opponents in a "bull and bear" debate at last month's Las Vegas Money Show were both bullish on gold. Of course, they were bullish for the wrong reasons; claiming gold's rise was a result of the strengthening global economy pushing up jewelry demand. With these misguided bulls likely to have now been flushed out of the market, a more orderly rally can resume free from all that excess baggage.
Like I've said to the folks that were hyping gold at $720/oz with similar "fundamental" bullish reasons for gold to go higher:
The new trend for gold has started. Inflation will be muted for the foreseeable future (once energy prices drop). I believe oil is the next commodity to correct substantially. With oil correcting, gold will have a lot of pressure on it.
We may see a nice bounce over the next few weeks, but I truly recommend selling the majority of your gold holdings and only taking opportunistic short positions as the price falls.
Good Luck....
The new trend for gold has started. Inflation will be muted for the foreseeable future (once energy prices drop). I believe oil is the next commodity to correct substantially. With oil correcting, gold will have a lot of pressure on it.
We may see a nice bounce over the next few weeks, but I truly recommend selling the majority of your gold holdings and only taking opportunistic short positions as the price falls.
Good Luck....
TWI
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Read article over weekend pointing out that the recent decline was not really a gold decline, or just a metal market decline or isolated to being a commodities decline. It was an across-the-board pullback among all asset classes covering commodities to emerging markets to Dow Jones, regardless of individual investment merits.
The common theme was that the drops seemed to be proportionate to prior advances, and most importantly the assets were widely held by highly leveraged speculators.
I do not think the decline in the gold price has a lot to do with its fundamentals. I would also argue that the resillience of oil may well indicate it could rally from here rather than decline. Greenspan is now gone and with him the safety net that was an effective "put" for investors. Nobody is sure about Bernanke and he seems to be playing a bluff game. No doubt he would prefer to pause on rates but then worried about the dollar being trashed so needs to play a game of rhetoric which threatens more hikes than are intended.
I would expect the dollar to be a good candidate for a major collapse.
The common theme was that the drops seemed to be proportionate to prior advances, and most importantly the assets were widely held by highly leveraged speculators.
I do not think the decline in the gold price has a lot to do with its fundamentals. I would also argue that the resillience of oil may well indicate it could rally from here rather than decline. Greenspan is now gone and with him the safety net that was an effective "put" for investors. Nobody is sure about Bernanke and he seems to be playing a bluff game. No doubt he would prefer to pause on rates but then worried about the dollar being trashed so needs to play a game of rhetoric which threatens more hikes than are intended.
I would expect the dollar to be a good candidate for a major collapse.
I would be a lot more inclined to take the gold bearish view if the US dollar was being propped up by a much better fiscal picture. However, while the current account deficit is running at it's current level and while money inflow to cover that is now showing weakness I have to say the dollar view is bearish which for gold means bullish. Frankly I don''t think this ends any time soon. All the projections I have seen for the deficit have it carrying on at current levels for the next few years and there is no sign of a change in US govt policy to indicate they intend to radically change that picture. For me the US will have to keep the rate rises coming just to keep the deficit funded and maintain the dollar ,but I don't think anyone believes given the housing picture they have much latitude to go more than maybe another 1/2 to 1 %. The moment then they show hesitation I can see the dollar getting jumped on again and with that would go gold. Against that if the deficit or money inflows change character then so does the prognosis for gold.
By the way I've read all sorts of argument for why the deficit is ok and sustainable. Nonsense springs to mind and I'm in good company with that view.
By the way I've read all sorts of argument for why the deficit is ok and sustainable. Nonsense springs to mind and I'm in good company with that view.
LOL...are we talking about the war we are in ,or the war we might yet start 
If I wanted to be really negative forget war chests and talk about health and pension costs ,but we don't have to go there. Current deficits are big enough to be of concern in theirown right.
If I wanted to be really negative forget war chests and talk about health and pension costs ,but we don't have to go there. Current deficits are big enough to be of concern in theirown right.
trader_dante
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Looks like we've found a temporary bottom in the low $540's.
A nice series of higher highs and basic trend support at $575.
I'd like to see if it can convincingly take out $600 today.
A nice series of higher highs and basic trend support at $575.
I'd like to see if it can convincingly take out $600 today.
belgiumbrit
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600 ???
I'm still long on gold ... I'm looking at the charts and see upside potential - sure - everyone is waiting for the feds rate decision, but it's going to be 0.25 per cent which is already factored into the gold price, and i think that we'll see upside movement beyond 600 on Thursday or Friday ...... i can't see a price beyond 625 till summers end ........ but i've been wrong before - christ have i been wrong ! But - what do you guys think -are we stuck -range bound - or do you agree that a break out is on the cards by ends week ? Baptiste - any ideas ? Love to know- as we all suffer from self delusion at times-and its great to hear other views !
"May the bourse be with you ......."
I'm still long on gold ... I'm looking at the charts and see upside potential - sure - everyone is waiting for the feds rate decision, but it's going to be 0.25 per cent which is already factored into the gold price, and i think that we'll see upside movement beyond 600 on Thursday or Friday ...... i can't see a price beyond 625 till summers end ........ but i've been wrong before - christ have i been wrong ! But - what do you guys think -are we stuck -range bound - or do you agree that a break out is on the cards by ends week ? Baptiste - any ideas ? Love to know- as we all suffer from self delusion at times-and its great to hear other views !
"May the bourse be with you ......."
trader_dante
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Hi belgiumbrit - I'm also long gold at the moment...yesterday afternoon it looked like we had a breakout on the cards but it's worrying that it couldn't hold it and reversed course downwards again.
belgiumbrit said:
belgiumbrit
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Thanks Dante - yep - i was holing on my the seat of my pants - Its strong -very resilient right now - and the upward trend is still just about intact .........not so sure about 600 this week -sheeesh ! Still zabove resistance - maybe maybe maybe !
belgiumbrit
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By the way, are there any gold traders that would be interested in exchanging msn messenger details for chat ....... would be great to bounce ideas and strategy off other people prior to or during a days trading ! Its a solitary life eh ? Anyway - if you have msn messenger and are interested, please drop me a private message !
Cheers
Cheers
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