Will Gold Ever Drop Below $500 Now .....

[Perfectionist]

Considering ..... Peak Oil, growing populations, third world countries like China, Brazil, India becoming economic powers, increasing natural disasters etc etc ..... ???

[Columbo]

Considering ..... Peak Oil, growing populations, third world countries like China, Brazil, India becoming economic powers, increasing natural disasters etc etc ..... ???

I don't think it is sane to try to use fundamentals to argue the case for gold in particular. It is manipulated too much.

[Frizzers]

Some analysis has forecast that it may go to 475 or even 415 during this intermediate bear run.

[hpbear]

Gold is currently in early stage 2 bull run.

This means that unless there is some central bank selling, it is unlikely to drop much below the 200 moving day average (200MDA).

On January 1 2006, the 200MDA stood at 460$. Thus with gold attaining 575$, the difference was excessive and a (seasonal) correction was expected.

The 200MDA is currently at 480$, increasing about 10$/month. This is the basic support price.

If in stage 1, gold must soon go back to 200MDA. It must do so within the next 2 months, in order to drop below 500$. However we are in stage 2 (where gold is decoupled from dollar). This means that the gap, may not close quickly. For this reason, I doubt gold will drop below 520$. Some further correction is expected according to the COT report but I believe there is uncertaintly on short term price movements.

Note that I am overinvested in gold (45%) (starting last September), so my opinion may be biased and my experience is limited.

For someone wishing to invest in gold, I think there are 2 options.

1) Wait until the gap is reduced further (perhaps in April or May).

2) Invest now but be prepared to be patient and withstand some initial loss, if correction continues.

[timmy_30]

Yes, also note that jewelry buyers seem to be coming into the market to stock up whenever the price hits around $535, that's what's nice about commodities that actually get used for something.

[urban_hymn]

that's what's nice about commodities that actually get used for something.

I thought that was the point about commodities. Can you name a useless one?

[Frizzers]

Nice post, hpbear. Good bit of level headed summary.

[debtfree]

I don't think it is sane to try to use fundamentals to argue the case for gold in particular. It is manipulated too much.

totally agree, the price has been forced down days before Uk/US troops withdraw from Palenstine Prison.... and then price shoots up ?

mmmmmmm for manipulation

[Perfectionist]

Do you have a link to the 200 MDA for Gold ?

[hpbear]

Do you have a link to the 200 MDA for Gold ?

Red line under gold's technical picture on this link

http://www.gold-eagle.com/editorials_05/grandich031406.html

For a more extended period of time see also blue line under gold's weekly on this link

http://www.gold-eagle.com/editorials_05/gnazzo030906.html

I am sure there are better charts elsewhere, you only need to look at regular contributions in www.kitco.com or www.gold-eagle.com and you will find plenty of information.

Stage 1- Price of gold increase with time (described by 200 MDA) is approximately linear

Stage 2- Price of gold can be fitted to a parabola ( investment demand starts to become important)

[Perfectionist]

Thanks dude !

[oracle]

Gold is currently in early stage 2 bull run.

This means that unless there is some central bank selling, it is unlikely to drop much below the 200 moving day average (200MDA).

On January 1 2006, the 200MDA stood at 460$. Thus with gold attaining 575$, the difference was excessive and a (seasonal) correction was expected.

The 200MDA is currently at 480$, increasing about 10$/month. This is the basic support price.

If in stage 1, gold must soon go back to 200MDA. It must do so within the next 2 months, in order to drop below 500$. However we are in stage 2 (where gold is decoupled from dollar). This means that the gap, may not close quickly. For this reason, I doubt gold will drop below 520$. Some further correction is expected according to the COT report but I believe there is uncertaintly on short term price movements.

Note that I am overinvested in gold (45%) (starting last September), so my opinion may be biased and my experience is limited.

For someone wishing to invest in gold, I think there are 2 options.

1) Wait until the gap is reduced further (perhaps in April or May).

2) Invest now but be prepared to be patient and withstand some initial loss, if correction continues.

good bit of analysis there......however I don't think there will be much more opportunity to get in cheaply.

I'd agree we are now end of phase 1/early phase 2.......and momentum will build if anything as inflationary pressures grow/geopolitics gets less stable....I'd be a buyer at anything below $530,especially if the exchange rate is favourable.