Gold - Is It All Over?

[Stainless Sam]

Well, gold has fallen off a cliff. Now close to $1550 and the $2000 predictions are a summer memory. No-one even mentions the $6k-£10k range that was being trumpeted. Goldman Sachs are positing $1200 before long.

I wasn't watching for it, but did have a sneaking suspicion 'cos Asheron hasn't been posting any of his twice a week gold ramping threads for a while. Even he can't make the recent carnage sound like a good time for idiots to buy the shiny stuff.

So what are your thoughts? Is it all over? Is anyone up to their chin in yellow metal or silver and getting that uncomfortable twitching feeling in the nether regions? What will it zoom up to once the Euro bomb explodes and financial armagheddon arrives?

[RichB]

Sounds unlikely, but you can never tell with the way things are these days.

[AteMoose]

who knows but perhaps its not all bad if GBP crashes?

what about bitcoins?

[evetsm]

Short term, Gold is manipulated , Volcker admitted as much.

Longer term , gold is always money just as it has been for 6000 years.

Gold is money, it is close to the perfect money because it almost perfectly tracks the real interest rate when left alone. Keynes studied 200 years of empirical data under a gold standard and Summers and Barskey corroborated it :

http://www.gold-eagle.com/editorials_01/howe082201.html

If you believe that infinite QE is good for fiat, and if you believe fiat money does not ALWAYS collapse in an hyperinflation,

then stay clear of gold.

[wish I could afford one]

...

So what are your thoughts? Is it all over? Is anyone up to their chin in yellow metal or silver and getting that uncomfortable twitching feeling in the nether regions? What will it zoom up to once the Euro bomb explodes and financial armagheddon arrives?

Sitting on 4% of total net worth in gold against a target allocation of 5%. Another small fall in the gold price or a rise in the value of some of my other asset classes or the passage of some time during which I will add savings to my portfolio and I'll be buying gold again.

The great thing about a non-emotional, mechanical investment strategy is you don't have to have "thoughts" or wonder if "it is all over".

[Errol]

Nope. Still expecting well in excess of $3500 an ounce and probably more like $5000+ an ounce. Sterling price has hardly budged anyway, which is annoying.

[Errol]

I wasn't watching for it, but did have a sneaking suspicion 'cos Asheron hasn't been posting any of his twice a week gold ramping threads for a while. Even he can't make the recent carnage sound like a good time for idiots to buy the shiny stuff.

This would suggest a bottom. Gold sentiment is at record lows.

[Take Me Back To London!]

This would suggest a bottom. Gold sentiment is at record lows.

We have had this before in 2006 and when we were down in the bunker with Hitler in 2008 whilst he got his margin call. Back then in 2008 gold went from $1011 to $730 and silver from $21 to $9. I love the negative sentiment. I get nervous when it gets too bullish.

Edited February 23, 2013 by Take Me Back To London!

[giantbat]

Well, gold has fallen off a cliff. Now close to $1550 and the $2000 predictions are a summer memory. No-one even mentions the $6k-£10k range that was being trumpeted. Goldman Sachs are positing $1200 before long.

I wasn't watching for it, but did have a sneaking suspicion 'cos Asheron hasn't been posting any of his twice a week gold ramping threads for a while. Even he can't make the recent carnage sound like a good time for idiots to buy the shiny stuff.

So what are your thoughts? Is it all over? Is anyone up to their chin in yellow metal or silver and getting that uncomfortable twitching feeling in the nether regions? What will it zoom up to once the Euro bomb explodes and financial armagheddon arrives?

Retail scared out again - time to go long.

[frederick]

THere is only one question, are the worlds Govts sensible or feckless? if the answer is feckless then gold by default is good. I cant price gold, Who can? But I know how well run a lot of western nations finances are.

[200p]

I don't think it's quite over. Gold is traditionally tied to oil - and I'm paying 138p/L at the pump, probably near all time highs.

[rollover]

Investors fret over gloomy gold indicator Gold has crashed into a death cross – an ultra bearish sign watched by market chartists. Gold's weakness comes as little surprise given that prospects for the global economy are looking up and inflation fears are dying away. Gold is seen as a traditional hedge for inflation.

A 'death cross' often heralds further sharp falls for the gold price. Link

[GinAndPlatonic]

Well, gold has fallen off a cliff. Now close to $1550 and the $2000 predictions are a summer memory. No-one even mentions the $6k-£10k range that was being trumpeted. Goldman Sachs are positing $1200 before long.

Even a numpty like me cannot understand when people say it`s fallen off a cliff, yet over the last ten years it does nothing but rise....and rise...and rise..some people are so very miopic..

[erat_forte]

Investors fret over gloomy gold indicator Gold has crashed into a death cross – an ultra bearish sign watched by market chartists. Gold's weakness comes as little surprise given that prospects for the global economy are looking up and inflation fears are dying away. Gold is seen as a traditional hedge for inflation.

A 'death cross' often heralds further sharp falls for the gold price. Link

Thanks - that's reassuring to know. Glad that things have been sorted out so well now after the troubles of the past few years!

[MrBlonde]

Gold in May 2012 went to $1563. The price in sterling was £981.

Compare that to today: $1581/£1042.

Gold is not over!!

[JimDiGritz]

This isn't a Gold collapse, this is a temporary USD rally.

With Eurozone fears escalating and the well signalled Aa1 rating drop for GBP the USD has enjoyed a new year bounce.

A gold collapse will occur if growth returns in all major markets and inflation falls sharply.

[wherebee]

All I can see from over here in Asia is governments and individuals buying gold - but insisting on the real stuff, none of that paper nonsense. I don't understand this market, but surely at some point a eastern buyer will demand enough real gold to uncovber any shenanigans?

[Sir Harold m]

I have been bearish gold since about sep 11 when we had the aftermath of the debt ceiling. I was just muting about going long again , surely recent events and price moves are a buy signal or does the op believe that if something falls on prove it becomes a less attractive buy ?

In which case brainless stainless should have gone long houses in 07

[Take Me Back To London!]

Investors fret over gloomy gold indicator Gold has crashed into a death cross – an ultra bearish sign watched by market chartists. Gold's weakness comes as little surprise given that prospects for the global economy are looking up and inflation fears are dying away. Gold is seen as a traditional hedge for inflation.

A 'death cross' often heralds further sharp falls for the gold price. Link

Ambrose Evan's views at the Telegraph.

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022953/golds-death-cross-is-a-buy-signal-for-china/

Gold’s Death Cross is a buy signal for China

By Ambrose Evans-PritchardEconomicsLast updated: February 21st, 2013

Gold price has dropped below $1,600 for first time in six months

It is a treacherous moment for gold bugs.

The first whiff of future tightening from the US Federal Reserve has sent bullion into a nose-dive, triggering a much-feared “Death’s Cross” sell signal on gold futures.

Gold has dropped by over $100 an ounce in ten days, touching $1556 this morning. The HUI index of gold mining stocks broke down weeks ago – as so often leading gold itself by a few weeks – and has already crashed to levels last seen in 2009.

Goldman Sachs has cut its long-term forecast to $1,200. Credit Suisse and UBS are bearish.

Citigroup says the great bull market of the last 12 years is over. The “long cycle” has peaked. Economic recovery has yanked away the key support. So long as there are no big “street riots” this year, investors will stop buying precious metals as Armaggedon insurance and rotate instead into stocks that generate income. Such at least is the argument.

This is more of less what the market would look like and feel like if the gold rally really were to fizzle out, leaving behind an army of small investors who joined the party late and face deepening losses for twenty years – as they did from 1981 to 1999.

If it were true that the Fed is preparing to unwind QE, I would agree – up to a point – that gold faces a nasty squall. But all we had from the minutes was a comment that an undisclosed number of FOMC voters fear inflation and financial bubbles and think the Fed should stand ready to cut back on bond purchases earlier than thought.

How many times before have we heard “exit talk” from Fed hawks? We know who they are. They make a lot of noise. They are routinely ignored. The policy is dictated by the Fed Board and by Ben Bernanke, and there is little sign yet that the board is about to turn.

All the indications point the other way. Bernanke is targeting 6.5pc unemployment, and probably targeting nominal GDP growth of 4pc to 5pc as well.

The US faces fiscal tightening equal to 2pc of GDP this year at best. It is hard to see what is going to offset this. There is a snowball’s chance in hell that economic expansion will be strong enough in 2013 to force Fed tightening.

As for Japan – still the world’s biggest creditor – it has imposed a new policy mandate on the BoJ that implies massive easing over the next year.

The world economy as a whole is still in the grip of a deflationary vice. The global savings rate is still rising to fresh records above 24pc each year.

There is still a glut of capital sloshing around (and ready to go into gold) and a dearth of consumption. The overhang of excess capacity in global manufacturing is still there.

China’s investment is still running at 50pc of GDP, and its consumption is just 36pc, the most distorted economy in modern history.

The international trading system is still out of kilter. Globalisation is still going haywire and that is the underlying cause of the global crisis.

We remain in a 1930s slump. Until this is overcome it is a fair bet that the Anglo-Saxon central banks and their OECD allies (basically everybody except Frankfurt) will stay uber-loose to mitigate the damage.

The world’s policy-making elites know this, which is why central banks bought more gold last year than at any time since 1964. Turkey bought 164 tonnes, Russia bought 75 tonnes. Brazil, Korea, the Philippines, Kazakhstan, Iraq, Mexico, Paraguay, and others all added to their gold reserves.

The Chinese don’t declare gold purchases, but it is an open secret that are buying on every dip, as they have to do merely to keep the proportion stable at 2pc of their $3.3 trillion reserves. Chinese managers at SAFE must be licking their chops at this week’s chatter about a Death’s Cross.

I might add that China would have to buy vast amounts of gold to raise the share to 10pc, a figure mooted by some officials in Beijing.

Until the EMU debt crisis China was still willing to invest most of its fresh reserves in euro debt to diversify away from the dollar. Three years of incompetent crisis management – and no real solution in sight even today – have punctured any illusion in Beijing that monetary union is a sound undertaking.

Jin Zhongxia, head of the central bank’s research institute, said in an OMFIF paper this week that: “the debt crisis in the euro area has demonstrated the structural weakness of this currency.” Indeed.

Yes, the Chinese like the dollar again, but they already have a lot of dollars. They don’t have much gold compared to their peers.

So hold your nerve. The reality is that we have been moving for several years to an informal Gold Standard in which gold takes its place once again as a central store of value – a currency of sorts – in the mix of sovereign reserves.

The reason is obvious. The West is crippled by debt, and so is Japan. Governments are likely to seek an easy way out in the end. The rising reserve powers of Asia know this perfectly well.

As for the Death’s Cross – when the 50-day moving average falls below the 200-day average – it has not actually happened. It occurs only if the 200-day line is declining. This is not yet the case. As you can see below, the line is rising very slightly. That makes it a “Dark Cross”.

Here is a table of what happened in the months after each Dark Cross on the S&P Composite for much of the last century (courtesy of Ron Griess at TheChartStore.com).

Technical patterns can be very powerful but this is not one of them. The Dark Cross trigger offered no meaningful signal on the S&P Composite. Why should gold be any different?

Trust your analytical judgement, not some Voodoo gobbledy gook.

Edited February 25, 2013 by Take Me Back To London!

[Quiet Guy]

Here's a contrarian call: http://www.marketora...ticle39176.html

"while it certainly takes a lot of courage to buy gold and silver and especially Precious Metals stocks here, especially if you have been beaten up in the recent past, according to everything we have reviewed here, that is precisely what you should be doing."

Is it all over? No idea but maybe summer will be nice for metals?

Just for the record, I'm just sitting and watching, not buying more because I'm already heavily invested by conventional standards.