Friday, Dec 04, 2009

One for all the gold bug rampers

BBC News: Gold price slumps

Gold fell more than $76, or 6%, to $1,150 an ounce, down from a record high of $1,226.56 in early trading.
After figures showed the US jobless rate falling, the dollar gained 2% on the Japanese yen and 1.3% on the euro.
Gold has hit a number of record highs in recent weeks as the dollar weakened due to low interest rates in the US.

Posted by the number cruncher @ 10:01 PM (2004 views)
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1. crunchy said...

Small market whipsaws, nothing more. No economic miracles that I can see out there, but I bet it scared some. lol

Friday, December 4, 2009 10:16PM Report Comment

2. hpwatcher said...

This story is more for those who feel bitter about not buying gold, rather than the bugs.

But story this proves that it still isn't too late to buy ;-)

Friday, December 4, 2009 10:24PM Report Comment

3. alan said...

Its back to $1161, now.

Gold seems volatile. People are getting edgy.

Hardly surprising, the USA has been throwing billions at the financial system for a long while. Banks have been a popular item on the site. I won't try and copy the main themes.

Don't expect things to get better....the politicians are in the dark.

It's friday - c'mon Bruce

Friday, December 4, 2009 10:50PM Report Comment

4. tpbeta said...

Seems to me that this is carry trade stuff. As gold goes up, dollar goes down. Sometime in the next six months this will reverse, possibly spectacularly. I'm buying dollars for Xmas.

Friday, December 4, 2009 11:15PM Report Comment

5. quiet guy said...

Good post number cruncher. All I'm going to say, speaking as a metals enthusiast, is that I suspect that won't be the last sudden downward swing against an otherwise very bullish trend for gold. If the trend is to keep going higher, the plunges will be ever more violent in the future. If you want to buy shiny metal, you should be expecting this - remember that buying gold is effectively a vote of no confidence in the banking system and government i.e. you're betting against the big boys.

When I saw the plunge this morning, I laughed. My guess is that worse tests await gold owners yet.

Friday, December 4, 2009 11:42PM Report Comment

6. enuii said...

Sold a good proportion of mine today from my personal vault, may have slightly overdone it though and depressed the market a bit!

Friday, December 4, 2009 11:49PM Report Comment

7. Bear said...

Gold is correcting to its breakout level in Sterling, Euro and more, testing the breakout to confirm it. It didn't break, so, as long as gold prices rise again Monday, the bull market is confirmed by the slump, and we have only just begun.

Saturday, December 5, 2009 12:10AM Report Comment

8. general congreve said...

Enjoy your schadenfreude Number Cruncher, let's check back in year to compare notes.

Saturday, December 5, 2009 01:13AM Report Comment

9. Dilsummers said...

In sterling the fall was about 4% I think: I have a problem with this absurd (to me) idea of the UK financial press only commenting on the DOLLAR price of gold.

The dollar price of gold is an irrelevance to me.

There are three assets of interest to me: UK houses, UK pounds and gold price measured in either of the other 2.

If the dollar gold price falls simply because of a strong dollar (imagining a hypothetical scenario where the dollar rises uniformly against all assets including gold and UK pounds), that's irrelevant to me because it will have no effect on the sterling price. If the dollar gold price falls because, say, demand for gold falls but the dollar:pound exchange rate is remains the same, that's relevant to me.

I wish the UK financial press would acknowledge this distinction.

Saturday, December 5, 2009 10:51AM Report Comment

10. techieman said...

many a tear has to fall but its all in the game....

Saturday, December 5, 2009 10:53AM Report Comment

11. hpwatcher said...

many a tear has to fall but its all in the game....

I have always thought pure wave theory a load of's so easy to get it wrong. Events are all that matter.

Saturday, December 5, 2009 01:30PM Report Comment

12. techieman said...

Think what you like HPW! Its not my job to convince anyone of anything. We can all have different opinions - thats the definition of a market.

I just put it in there to help - but you can infer whatever you like from it. Its got nice colours if nothing else! :-).

I am not as far away from you as you think HPW - " - Comment 24:

"The gold chart though still looks ok though for the bulls, but we shall see!"

Basically the "count" told you to look out for a reasonable sized fall but still on the way to new highs thereafter. Of course in hindsight the count can be changed (thats why its an art - and different people have different interpretations) but to me this looks a pretty good example. However once its over it (and perhaps after some extreme moves up) it may very well collapse - a bit like oil last year. i.e. after the 5th of the 5th.

I would take issue with "events are all that matter" purley because events can be interpreted many ways - look at yesterday's employment numbers for instance. For people to explain why events move the market the opposite way to what they expect they say things like "buy on the rumour sell on the fact". That would be fine if they always said that but they dont.

As someone that used to work on the LSE floor as a jobber and on LIFFE i can tell you that yes events move markets sometimes but sometimes they dont and sometimes they move the opposite to what they are "supposed" to. Whether these moves can be accomodated by curved fit wave counts or not make the wave counts as bad or as good an indicator of the underlying "events" that are supposed to move them.

Lets look at Dubai - the FTSE opened with a big gap down and hit the bottom of a trend channel - where i bought some. At the time it looked like we would be dumping - but it always looks like that. Admidedly i got out for a small upward move - about 85points, and yes i am a bear, but it looked such an obvious dump down to encourage the bears to sell and the boyzs to load up. i have maintained for some time that the risk is now to the upside for shares, but i also think we will have a sharp rally into the year end. So although i am short i am very small short. Wating to play with the big boys when the downmove begins earlyish next year.....

Or maybe before.

Saturday, December 5, 2009 02:21PM Report Comment

13. crunchy said...

Some people know little of how the gold/dollar market works. It is a relatively small market and thus prone to being volitile, which will get wilder as the battle commences. Seek advice from the best in the business, and don't listen to tittle tattle.

China has a huge population. You should save wisely Grasshopper!

Saturday, December 5, 2009 02:24PM Report Comment

14. crunchy said...

"Gold has hit a number of record highs in recent weeks" lol

Gold is not halfway near the highs of the past, in inflation terms. "tittle tattle."

Saturday, December 5, 2009 02:46PM Report Comment

15. hpwatcher said...

Think what you like HPW!

I usually do ;-)

But, seriously though, the thing with wave theory, is that it is so difficult - probably impossible - to forcast exactly what will happen. Easy in retrospect, but those events just will keep on happening!

Saturday, December 5, 2009 04:30PM Report Comment

16. techieman said...

hpw you miss the point - its not the events but the market reaction to them. That can range from being exagerated, muted or opposite to the prevailing wisdom. I take the point re the predictive or lack of predictive nature of the principle. However i would say that a certain percentage of the time you will get an extremely high probability (no certainties) that a move will go where the theory predicts - in both price and time parameters - whereas other times the theory is more difficult to apply or indeed can be read either way. So i would only agree to a limited extent re the inability to forecast exactly what will happen (in any case exactly is not really a requirement - approximately is very much good enough).

If you disagree then thats fine but that really shows that you probably havent learnt the theory properly. Thats obviously a personal choice (im not being critical) but its a bit like a language you can learn the basics quite quickly and easily but the devil's in the detail.

What to do? Concentrate on the markets where AT THE CURRENT TIME the form has a good probability of being predictive and avoid those where thats not the case. Which is which? hmmm thats where the skill and/or experience comes in.

I believe as you mature you get bored with easy calls and making the cash, so you end up looking for times and prices where current trends will reverse. That's the interesting part as far as im concerned.

I don't know your background or your depth of study - but i personally don't know enough about fundamental analysis to produce a co-herent bullish or bearish argument. That can also be done but not for long periods of time. Believe me i have tried the fundamental approach and (maybe its just me) i couldn't get it to work. I was then introduced to TA. If that fundamental approach works for you then i wouldn't dream of telling you that its invalid..... but it seems that fundamentalists are far too keen to do criticise TA, for reasons that escape me. Dont worry i have had this discussion many times before, most fundamentalists are however wedded to their position - they have invested emotions in it, whereas most TAs are anything but. I have even tried a blended approach and that don't work either!

TA works like this, if the market does this then its likely to do that, e.g. if it breaks resistance its likely to go up to the next level of resistance. Fundamentalists say it MUST do this or it MUST do that. Gold MUST go up because they are inflating the fiat currencies. I think MG got it right a few weeks ago - he said if the prior trading range was broken he would go long or short, depending if it broke the range to the upside or downside... i.e. the market tells you what is happening.

Sorry if this sounds like a lecture, but i just feel that people would do themselves a favour to have an open mind. At the end of the day though its your money and your decision.

Saturday, December 5, 2009 10:27PM Report Comment

17. kruador said...

For a tangential note on commodity index speculation, see this article on aluminium prices and supply and demand:

Aluminum Bubble Concerns Mount as Surplus May Add 29%

Warehouses holding enough aluminum to build 69,000 Boeing 747 jumbo jets are why Peter Sorrentino says the most abundant metallic element in the earth’s crust is too expensive.

“I don’t see why the aluminum price has gotten so high,” said Sorrentino, who helps manage $13.8 billion at Huntington Asset Advisors in Cincinnati. “There’s plenty of supply around and demand is still quiet. There’s a disconnect between the price and reality.”

Barclays Capital forecasts that the global surplus in aluminum will increase 29 percent to 1.63 million metric tons next year as the biggest annual price increase since 1994 spurs producers to increase output. Emirates Aluminium Co. will start the world’s biggest smelter in April, and a plant part-owned by Norsk Hydro ASA in Qatar fires up next month.

This year’s 32 percent rally in aluminum and the 46 percent jump in the S&P GSCI index of commodities is prompting concerns of a bubble in the making. China, the biggest aluminum producer, is at risk from an absence of consumer demand from trading partners, said Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. Exxon Mobil Corp. Chief Executive Officer Rex Tillerson said on Nov. 13 that oil prices aren’t supported by market fundamentals.

Monday, December 7, 2009 12:51PM Report Comment

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