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Realistbear

Gold Nearing The $600 Break Down Point

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http://www.businessday.co.za/articles/mark...x?ID=BD4A214320

THE spot price of gold on Friday fell to a seven-week low of $606,10 a troy ounce on the strong US dollar and a weaker crude oil price, traders said.
In early trade, gold was quoted at $607,75/oz, down $6,15/oz lower than yesterday’s close.
"Gold is lower on the strong US dollar due to expectations of further interest rate hikes. Gold is also following the oil price," a Johannesburg bullion trader said.

GC6M.N GOLD JUN 06 5:46AM 606.90 $ 9.10 -1.48%

Gold up to its old tricks? Great short term ride but knowing when to sell is key.

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Now back up over $613. This price band is interesting as Gold has reached it's 200 day moving average. If it continues down, I'll be buying in.

Yesterday as a panicky day, with the Dollar getting stronger for some reason (now weakening) and the market 'reacting' to minor news items such as a terrorist boogieman getting capped as if it's going to make Iraq as safe as Trumpton.

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What do you mean by a "break down point"?

Billy Shears

Thats the point I have a nervous breakdown!

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What do you mean by a "break down point"?

Billy Shears

Psychological $600 point. If it goes lower, or breaks down, below $600 there could be a move to the exits.

With world IR moving up, noises of a deal from the ME and the "end of the world for the $" scenario retreating gold may look overvalued.

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$ going south again I'm afraid RB.

Could this be because panicky selling yesterday effectively created demand for dollars, which is reversing today as people pile into other investments, or buy back in on the lows? Could anyone with more than my rather nascent market knowledge confirm this?

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Guest Alright Jack

$ going south again I'm afraid RB.

Could this be because panicky selling yesterday effectively created demand for dollars, which is reversing today as people pile into other investments, or buy back in on the lows? Could anyone with more than my rather nascent market knowledge confirm this?

I always wonder, in the after math of a big sell-off, presumably no one is dumb enough to just hold cash. The money is going to go somewhere surely?

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$ going south again I'm afraid RB.

Could this be because panicky selling yesterday effectively created demand for dollars, which is reversing today as people pile into other investments, or buy back in on the lows? Could anyone with more than my rather nascent market knowledge confirm this?

I think this Forex article sums it up--simplistically, its a mess that will have to unwind. In messes the dollar usually fares better than the European currencies, especially CABLE:

http://www.fxstreet.com/nou/content/9795/c...acro&dia=962006

Investors wanted transparency, and now they have it, but they don’t like it. They wanted a chairman who would fight against inflation, but would not cause a recession. Although investors have an exalted view of what the central bank can accomplish, the fact is that the Fed’s power is severely limited, and they don’t have the tools to get the economy they desire.
Having engineered a stock market bubble, followed by a housing boom, they are out of options, and there are no more obvious bubbles to create*.
They can pursue policies leading to
inflation or recession
or a combination of both with little or no room in between. In the end Greenspan finally got it right—“history has not dealt kindly with the aftermath of protracted periods of low risk premiums”. You can’t get much clearer than that.

Its like I posted yesterday Ben has 2 choices:

A. Inflation

B. Recession

He will go for B. and a recession will hit Europe harder than it will the US.

*IMO the gold bubble has maxed out.

Dollar holding around 1.84 after a brief forray into the high 1.83's this morning.

1 U.K. £ =

1 1.8434

When the recession comes I think we will see the pound revert to its historical average of the past decade or so: 1.60's. If the HPC is worse than the 20-30% "soft landing" some expect sterling may find itself closer to parity with the dollar. :)

Edited by Realistbear

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Now back up over $613. This price band is interesting as Gold has reached it's 200 day moving average. If it continues down, I'll be buying in.

I make the 200 day MA around $544. The 100 day is $605. Although $600 is a natural support point I agree. What is also interesting is that if you draw a line across the previous bottoms (on a log scale) at $456, $541 and $549 you hit todays point exactly.

It is interesting that you say if continues down you would buy. I would say a decisive break down from here would be very bearish indeed. As with any share I tend to look for signs that it is firming or moving higher before I buy. I never catch the bottom and always miss the top, but I invariably get the meat in the middle.

As so it is with Gold - I bought on the decisive break upward last Nov at $479 and sold when it broke below the 50 day MA $629 this week.

I will watch it closely for an opportunity to get back in though.

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It is interesting that you say if continues down you would buy. I would say a decisive break down from here would be very bearish indeed.

Personally I'd say it would have to go below $550 to be a buy. I'm guessing that the Japanese sucking liquidity out of the market has more to do with the drop than interest rate rises or expectations of rises... most of the run-up from $500 has probably been speculators looking for a quick buck.

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I always wonder, in the after math of a big sell-off, presumably no one is dumb enough to just hold cash. The money is going to go somewhere surely?

You must be sitting on a mountain of cash then AJ :P

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Gold will likely fall to its 200 day moving average in the $530-$550 range before getting going again, if it does. There are so many variables that it is kind of hard to make a call on the future. I see the vast debt and the probability of peak oil (see other thread) creating a banking crisis that will lead to a gold rush eventually, but probably not for five to ten years. Don't be disappointed if gold does not exceed $700 for another couple of years.

Edited by malco

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If the stock market gaps down from 6,000 to 1,000 the cash has gone nowhere. All the people who didn't trade (ie. 99% of shareholders) have lost 5/6ths of their money. This is what happened in 1929 and is a common misconception amongst BBC-stylee journalists who think "money has gone from dot coms into gilts", etc.

apart for in the futures market which is effectivly a zero sum game. e.g for every buyer there is a seller.

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Guest Alright Jack

I bought a reasonable amount of Gold on Thursday and friday, just over $600.

I rarely buy gold, and normally stick to Gold shares- so this unusual move is a clear signal of where I think it is headed

That is unusual in your case. That is quite a buy signal to many on here i reckon. One question though remains;

At what temperature will you feel the heat, drop your paper and fill your boots before the bullion market locks up?

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Good explanation on Financial sense today about why the US will continue to inflate.

Worth Listening to :

FS 3rd hour Big Picture

Too much debt, both national and private, too many retirees - the US can't afford to pay for their liabilities so they will continue to inflate.

The same applies for the UK although not quite to the same extent.

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Guest

Good explanation on Financial sense today about why the US will continue to inflate.

Worth Listening to :

FS 3rd hour Big Picture

Too much debt, both national and private, too many retirees - the US can't afford to pay for their liabilities so they will continue to inflate.

The same applies for the UK although not quite to the same extent.

I listen to Financial Sense, but find it too flippin scary to be true.

Listening is kind of like watching Scooby-Doo from behind the sofa and several piles of cushions.

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Guest

When shares are crashing and gold is soaring,

Gold shares will be in a no man's land in between

Bubb - are you losing confidence in paper-based stuff now?

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I bought a reasonable amount of Gold on Thursday and friday, just over $600.

I rarely buy gold, and normally stick to Gold shares- so this unusual move is a clear signal of where I think it is headed

Where do you buy your gold (and stocks/options for that matter)?

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I listen to Financial Sense, but find it too flippin scary to be true.

Listening is kind of like watching Scooby-Doo from behind the sofa and several piles of cushions.

Well as they say: "Deal With Reality or Reality Will Deal With You"

I do think that some of their predictions are just soo gloomy to be true. But then you examine the counter-arguments (such as the peak oil denyers) and their arguments have more holes than Emmentaler cheese.

And then when you find all their initial predictions about gold rising come true then you think hmmm. They are gaining my respect with their financial know-how by delivering results perhaps I should listen some more.

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Yes, but I suppose they are contracts rather than things you "own". Because of their symmetry, they make no net wealth input or output to the economy as a whole, so maybe it isn't strictly part of the wealth being measured.

Most houses hedge the contracts with the underlying asset, so that's not strictly true. Also, it's not quite zero-sum as there are commissions!

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Psychological $600 point. If it goes lower, or breaks down, below $600 there could be a move to the exits.

With world IR moving up, noises of a deal from the ME and the "end of the world for the $" scenario retreating gold may look overvalued.

But everyone has said that gold is safe in times of turmoil? :blink:

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Psychological $600 point. If it goes lower, or breaks down, below $600 there could be a move to the exits.

With world IR moving up, noises of a deal from the ME and the "end of the world for the $" scenario retreating gold may look overvalued.

Psychological $550 point. If it goes lower, or breaks down, below $550 there could be a move to the exits.

Psychological $500 point. If it goes lower, or breaks down, below $500 there could be a move to the exits.

Psychological $400 point. If it goes lower, or breaks down, below $400 there could be a move to the exits.

Psychological $300 point. If it goes lower, or breaks down, below $300 there could be a move to the exits.

It seems to me that gold is a good investment for those with Itchy Bums.

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www.kitco.com The World Spot Price - Asia/Europe/NY markets

MARKET IS OPEN

(Will close in 10 hrs. 16 mins.)

Metals Date Time (EST) Bid Ask Change from NY Close

GOLD 06/12/2006 03:14 603.10 603.80 -5.10

-0.84%

3.10 off of the "break down" below 600 and a possible rush for the exits????

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