Wednesday, March 2, 2011

Could gold hit $1,500 by the end of May?

Could gold hit $1,500 by the end of May?

The price of gold has hit another new high. And what's significant is that it's now rising independently of other asset classes. Dominic Frisby examines if we really are seeing a de-coupling - and if so, what it means for the gold price, the economy and your investments.

Posted by damien @ 11:28 AM (4002 views)
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41 thoughts on “Could gold hit $1,500 by the end of May?

  • general congreve says:

    Cue Top of the Pops Led Zep chart countdown music:

    Here’s this weeks pick-of-the-pops top 5 anti-gold rants:

    5. A tin of baked beans is a better means of exchange (down from last week’s #3)
    4. Gold is no different to fiat currencies
    3. Gold is just an inert lump of metal
    2. You can’t eat gold (Double A side with: I’ll have the shredded paper salad for starter and the plastic card with a side of chips for my main)

    And at number one, the Main Stream ‘we didn’t see the crash coming’ Media’s favourite:

    1. Gold is in a bubble!

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  • Of course what this reflects is the way that the value of the fiat pound and fiat dollar is collapsing.

    If you have savings in those paper currecnies WATCH OUT!

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  • general congreve says:

    @2 – Tis true. I in no way condone on-going mining operations, I think a halt should be put to gold mining immediately. Of course, any financial benefit to myself, as a holder of what will become a static supply of above ground gold, will just be an incidental side effect of this policy. As you can see, I am both an investor and an environmentalist.

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  • @General Congreve,
    You are showing your age – be careful! But we accept the sentiment.

    Coffee is also going up all the time. Buying a few big jars is just “good housekeeping”. But at the bottom of it all is the feeling that people don’t trust the politicians. Pound and dollar are slipping away (Peter @3 said it before me).

    Get ready for increased inflation. In a way, this will dampen the HPC as everyone will be paying £500,000 for that 2 bed flat along with a £10 loaf. This will be driven by pay rises. Expect big pay claims and strikes from the public sector workers (eg: airport and tube) as 2012 approaches.

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  • We’re a bit thin with the gold bears today. lol

    When will they actually twig on to this bull market and take the housing crash into their own hands.

    Hell, it’s in your control. Defence paralysis!

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  • Does it go without saying one should keep an eye on silver?

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  • general congreve says:

    @5 – Inflation essentials like fuel and food will actually be negative for house prices in real and nominal terms, this has been born out in every big and hyperinflationary event for which records exist. People are so busy spending all their shrinking income on the essentials that the market for property dies.

    @6 – Yes.

    @7 – Go easy HPW. While I have a different view of things from the likes of bellwether and flashman, they have often provided more substantial counterpoints than those listed @1, some of them that have given me serious pause for thought. Having said that, they have not managed to dissuade me from my bullishness on metals, but their insight has been useful in helping me evaluate the bigger picture and other considerations I may not have been fully aware of. Plus their presence is very much a requirement for the continuation of the bull market, with no bears griping it’d be a sure fire sign this bull may be about to run out of steam. Keep up the good work fellas, it’s working wonders! 😉

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  • general congreve says:

    @8 – That’s inflation ‘in’ essentials… typo.

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  • probably will :

    https://lh5.googleusercontent.com/-dLSkwqRg3Vw/TW1kGqs5W9I/AAAAAAAAIyc/67aBQSRpAmY/s1600/gold+weekly.png

    “Gold confirmed my wave 5 of (5) count today with a new high. Now we need to see how far it can spurt higher. Oil is at an extreme $100 and sentiment is too. Dollar is trying to find its footing and has very bearish sentiment. All markets seem to be lining up for a dramatic change:”

    https://lh6.googleusercontent.com/-c7-3_rjIz3Q/TW1j4tXWk4I/AAAAAAAAIyY/ctEgKmJHV5Q/s1600/gold.png

    See http://danericselliottwaves.blogspot.com/2011/03/elliott-wave-update-1-march-2011.html for complete.

    Of course the real question is will the trendlines be overthrown – perhaps some silly moves up? Then will we have a massive reversal?

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  • general congreve says:

    @5 – Was thinking that when I wrote it. The kids of today would laugh at the fact you had to wait all week to find out what was the latest and greatest music (as dictated by the MSM at 7.30pm on a Thursday) and then a further 2 days before you could pop down the shops on Saturday to see if they had any copies left in stock on a slab of black vinyl you played with a needle. HAHAHAHA!

    Having said that, at least I can at least claim I wasn’t born when Led Zep produced ‘Whole Lotta Love’. 🙂

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  • Of course the real question is will the trendlines be overthrown – perhaps some silly moves up? Then will we have a massive reversal

    I have been a little negative on the price of gold recently, though ‘things’ will keep on happening. The basic issue is that the times are very, very uncertain – certainly more now than in 2008, because the scale of the problem is starting to become a bit more clear.

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  • general congreve says:

    @10 – I have to admit Techieman, that I don’t usually fully digest your posts. Firstly because I am aware chartism is only correct 55% of the time at best (so really only giving a marginal edge over flipping a coin and then I imagine you still need to be world class at it), secondly because I often think that anyone using charts is inclined to see something that isn’t there and thirdly because it impossible to consistently beat the markets in the longer run, whatever methodology you are using.

    I’d be interest to know if you keep a log on your successes/failures and can let us know how it works out for you on your trades/predictions.

    My gold/silver bullishness is mainly due to a number of fundamental factors that all point in one direction (as far as I can see). It’s a near as one way bet as you can get if you are not trading in and out for short term gain and are in for the longer haul until the fundamentals start pointing elsewhere. Even if the charts point skywards, I think this is largely incidental, there are too factors that can cause volatility for me to have too much faith, even if our views coincide today on $1500 ultimately being reached.

    As for hitting $1500 and then a reversal, I think you are probably right, solely for the reason that $1500 is going to be another psychological market barrier and so it’ll probably break through by up to $40/Oz then do a little dance down to sub $1500, perhaps $1470 and consolidate before it attempts $1650 later in the year. This analysis is based purely on what I call the ‘ratchet effect’, which is something I have noticed during my time invested in the market (2 steps forward, 1 back). Hmmm, actually that’s almost making me sound like a chartist, excuse me while I go and eat a large slice of humble pie 😉

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  • hpw -you might want to look at

    https://lh5.googleusercontent.com/-dLSkwqRg3Vw/TW1kGqs5W9I/AAAAAAAAIyc/67aBQSRpAmY/s1600/gold+weekly.png

    So you can see that the [3] is the high in March 2008 above $1,000 [not 2009 as you incorrectly stated i said]. So the point is that since then we have had approx 40-50% move up in 3 years and if you look at [4] since the 2008 highs we have had around a 40% fall. So really unless we get some large lumps up (which admittedly we may), on a ROI basis over the last 3 years really nothing to get overly excited about.

    No i dont mind being wrong but i do object to being called a liar by someone who cant be ar5ed to look at the facts.

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  • GC – you are right, but some markets lend themselves to this analysis at SOME times better than others.So 50 – 55% is a good rule of thumb, but some times and in some markets it can go much much higher – whereas in others its much lower. This is one of the things you of course have to calculate – which market is which and when. But i take on board what you say. For example under Elliott you can have 5 waves up from a particular point with the 5 wave of that move itself consisting of 5 waves, and so on – effectively ad-infinitum. [well not really but it just illustrates the point].

    To be fair Daneric has been posting the bullish case ever since the March 08 top and reversal back to the 680s so he has been consistent AND correct on this market. [thats not true of all of the markets btw].

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  • No i dont mind being wrong but i do object to being called a liar by someone who cant be ar5ed to look at the facts.

    Well, well I never – always spoiling for a fight. POPCORN!!!!

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  • Sorry GC – in terms of a log etc. nope i used to do that but not anymore. i can tell you that if i am wrong i am normally very right about being wrong. By that i mean if i think the maket goes up to say 1,000 but that up move is invalidated by a fall below say 900, then i will buy towards 900 on a pullback with a stop to prove i am wrong. If i am wrong the market mostly moves further – i.e. the sale at 900 is right. Using that logic some of my best trades have actually occurred being “wrong”. For me i am probably (initially wrong) around 60-65% of the time – but its the amount made and lost thats the issue. My wrong trades are normally very defined in terms of quite small risk, the rewards are normally much bigger.

    Not sure that answers your question. But the latest call i made here was to say i thought the S&P had topped, and that we were due a retracement to around 1322 before the next downleg (it went to above 1330… just). In terms of what i did the sale was partly at 1318 and partly at 1324, stops at 1345. I dont make many calls on here these days, but its fair to say i have been looking for a top in the S&P with no real reason to get short. The only other call on here was the Euro / dollar, and was mostly right on that.Although the last couple of weeks its about even, after quite a reasonable amount made before then to buck the dollar bears. As we speak i am short Euro @ 1.3827 stop at around 13880.

    That leads to how i analyse things basically i work on the if it gets to y its likely to go to x. Of course if i was certain it would get to x then i would never lose money and frankly there would be no challenge and no fund. Frustrating? Sometimes.

    This is what hpw doesnt get – he says its important for me to be proved right. Its really not as i am ALWAYS wrong even when i am right – thats because if i am wrong i have too much on the line and if i am right not enough! Perhaps that why its called spread BETTING.

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  • Me spoiling for a fight? ok lets look at the facts of what YOU posted:

    You:

    “Techie you have definitely stated in the past that the hold gold. I know that appearing to be in the right is very important for you, but face it…. Do you remember your claim, some time ago, about selling gold for 1,000 USD an ounce in 2009, when it only got to 1,000 USD in 2010…lol”

    Me:

    “…. As for when i got out of a substantial amount that was (for the last time) March 2008. If , again, you bother to go check your facts you will see that – as i said it was around $1,030 high in March of that year. I have said too that i held onto the rest basically because of S2R1. [after the high in March 2008 it went as low as …. well i am sure you can find that out for yourself]. Had i got out of it all (which i may well have done) then i would have bought some more per my comment above. Otherwise why would i say that?? Looking at it logically its only gone up 40% in 3 years – and even then in the meantime its gone down 40% from where it was. So in the grand scheme of things i dont know why anyone is excited…. but i take the point that MIGHT change.

    “MONDAY, MARCH 17, 2008

    Today the Gold Price Jumped as High as $1,029 on Fears the Entire World and Several Adjacent Planets Would Financially Melt Down”

    http://silver-and-gold-prices.goldprice.org/2008_03_01_archive.html

    Now if you want to call me a liar at least have the decency to check your facts first. In fact if you want to have a look at the archive you will see that i did tell people i was getting out just then. By the way this is how you spell R-E-S-E-A-R-C-H. Its comments like that where you are clueless that makes people realise what an idiot you are. “LOL”.”

    http://www.housepricecrash.co.uk/newsblog/2011/02/blog-could-all-be-back-to-normal-soon-but-i-bet-prices-at-teh-pump-remain-high-32552.php

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  • selling gold for 1,000 USD an ounce in 2009

    I’m talking about 2009 not 2008.

    So in the grand scheme of things i dont know why anyone is excited…..

    I think there is a lot to get excited about if you bought at 750 dollars around the time of the Lehmans collapse – at that rate you would have made around 45% which isn’t bad – or even doubled your money if you would have bought platinum or siilver – which I did. The return there is almost 100%.

    If you had really done your homework on gold, you would be selling now, or continuing to hold.

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  • usual response from someone cornered.

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  • usual response from someone cornered.

    Perhaps I have realised that using the boards to fight ones personal battles does not make good reading for other HPC people – it is boring. I think you need to realise the same.

    I know it’s anoying when one invests lots of time in research and still gets it wrong – but that’s the way of the world.

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  • the only thing you are talking is … for a change complete b0llox. You were telling me i told you i sold above $1,000 in 2009. But I never said that or did it since as you say that was impossible. Are you really that thick?

    For the final time – I actually said (and you can look at the archive) I sold a high % of gold at over $1,000 in march 2008!!!

    The point is I was long from years ago. Long at $360 average, so I could say if you had done your homework maybe you were actually really doing homework – then you would have bought then. Of course you have no idea what I used that money for and how I did with it, so again your comments are of no value.

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  • For the final time – I actually said (and you can look at the archive) I sold a high % of gold at over $1,000 in march 2008!!!

    How well you did depends how how exposed you were. Which, knowing your dislike of gold, probably wasn’t much.

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  • you forgot to finish with a “so ner ner ner ner ner”…. some of us left the playground decades ago.

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  • some of us left the playground decades ago.

    You clearly haven’t…lol

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  • There is no pressure on gold at the moment to keep its rise in check. Interest rates remain way negative; there’s little political appetite to raise them either in europe or the US. And all the time we hear more and more scare strories about the inflationary dragon re-awakening, plus all this chaos in the middle east. It’s the perfect storm for further gold advances. Wish I’d bought when Gordon sold!

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  • What we’re seeing is the inflation stage to be shortly followed by the blowoff as US & Allies are successful in invading Libya and dividing up the spoils. Anyone in gold had better have strong nerves.

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  • the number cruncher says:

    GC

    There’s a Bloke who’s sure, All that glitters is gold And he thinks its buying him a stairway to heaven

    When he gets there he knows, If the stores are all closed its With Gold he can get what he came for

    Ooh, it makes me wonder…

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  • I don’t often see eye to eye with you NC but I echo your thoughts on the general.

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  • 30 comments on Gold. Jeez. Silver, Palladium have way outstripped it.

    If you’re so hooked on metals – consider Zinc as a “long” hold.

    DYOR

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  • the number cruncher says:

    As much as I like led zep, attested to the many hours I spent perfecting stairway in my bedroom as a teenager, I would choose love over gold any-day:

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  • What we’re seeing is the inflation stage to be shortly followed by the blowoff as US & Allies are successful in invading Libya and dividing up the spoils. Anyone in gold had better have strong nerves.

    Not if something like this happens –

    Saudi Arabia contagion triggers Gulf rout

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  • Ooh, it makes me wonder…

    LOL that’s the most desparate and daft put-down of gold I have ever come across!!!

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  • the number cruncher says:

    HPW – I thought it witty and imaginative, lost on you though, shame

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  • What Dill said. Gold might be good if/when(eventually) things flip, but until then there are better places for money, past, present and future. Much ado about (chicken) little.

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  • general congreve says:

    @17 – At first I found them difficult to get along with, but I took a look at myself and decided I was probably a bit antagonistic too, now there is a peace accord of sorts. While I sometimes value their perspective, it doesn’t mean they have persuaded me to their way of thinking, it just means I keep and open mind, as it doesn’t pay to be too rigid in your beliefs (I know that’ll make a few of you laugh coming from GC the Gold Nazi). Anyway HPW, sorry you made the mistake of listening to them and lost out on some silver cashola. I think the best advice is to ignore peer pressure and STICK TO YOUR GUNS!!!

    @29 – Very droll NC, very droll, gave me a good chuckle.

    @30 – Yep, long silver too. Platinum and Palladium have performed exceptionally well too, but if you look further back a few years they have been much more volatile, only recently nearing or remaking pre crash highs (that’s not to say I haven’t missed a trick on them in the last 2 years).

    @36 – Indeed. 40% or so in 2 years, whilevery decent when most of us are currently paying the bank to look after our fiat through negative IR, isn’t awe inspiring. The real rocket under gold will be when everything flips. As we know, when things flip, they flip in an instant, just think of all the stock market crashes, or fires in nightclubs you read about where everyone thinks ‘no rush’ before suddenly being burnt to a crisp as they amble towards the exits. When the flip comes you want to make sure you are holding gold, afterwards will be too late. Cub Scout Motto: Be Prepared.

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  • I was prepared a number of years ago, then realised that the ‘no rush’ was indeed ‘no rush’. Ditched it. Prepared is one thing, premature another.

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  • general congreve says:

    @38 – And what did you ditch it for?

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  • general congreve says:

    @38 and @39 – Actually forget I asked, you’re obviously trolling. We’ll see if you’re so c0cky in a year.

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  • I was prepared a number of years ago, then realised that the ‘no rush’ was indeed ‘no rush’. Ditched it. Prepared is one thing, premature another.

    You didn’t go into property did you? If you actually held gold, then you sold too soon.

    You won’t get any clues from looking at the charts alone – look at techieman. He is a classic example of what goes wrong when you look at the charts alone and ignore the bigger picture. Investing simply cannot be reduced to charts alone.

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  • Really HPW you are just a wind up metrchant – and not a very good one at that.

    First of all you cant be man enough to admit to a factual mistake – its ok we all make em, but most sane people don’t have a go at others predicated on them. Even when they do they then have the manners to admit they were wrong and apologise. I have never seen you apologise to any poster and some of the stuff you have said (to others) has been plain rude and uncalled for. For example telling people – in no uncertain terms – that they shouldn’t be on the site because they have bullish views on the housing market, I didn’t realise you believe yourself to be the webmaster.

    Secd @ 25 you say:

    “How well you did depends how how exposed you were. Which, knowing your dislike of gold, probably wasn’t much.”

    I did two major what I would call accumulation trades when I was younger. The first was zero coupon bonds – bought when the IR was around 15%, and the second was Gold which I accumulated over a long period, when it was unfashionable to do so.

    In terms of how much I bought you would be very very unpleasantly surprised. But that is the point – you get in and out early and make most of the money in the middle. My middle was to get long below $500 and sell above $1000. That decision was made years ago, yes in hindsight I could have bought more and yes in hindsight I could have held on for longer. If I had then when the market went back to $700 then I may have got a bit concerned. As it happens the next time I could have a high confidence that Gold would go higher was when I posted Ricks views. If you don’t believe me – and frankly who cares – you can check the post and what I said.

    So to say I “dislike” gold is rubbish. It’s a trading commodity for me, end of – if you want to sleep with it that’s really up to you! I don’t like or dislike anything – what a dumb comment. Its people like you sadly who get wedded to positions and then cant get out since they have no game plan when things don’t go as planned. Trading is about defence and limiting losses, the winning trades take care of themselves.

    Will it go to $2,000 or $20,000 I have no idea but doubt it very much indeed. You will never get it, because you live in a blinkered pick n mix world.

    As for 41 – well each to their own. Im not really sure what you are going on about things “going wrong” for me. I think GCs comments were fair @15 and I responded to them @18.

    As for being wrong (or it being important that I am right ) it isn’t that important as I have explained. I am ALWAYS wrong – we all are its just HOW we are wrong, and how quickly we can admit it. Read some stuff on Soros and Paul Tudor Jones and you will realise even the “greats” are wrong…. A lot more that you would think.

    You want to have a go at Flash because you took notice and didn’t invest as much as you should of done… boo hoo .! Then to have a snigger at b/wether – to try and prove he is wrong and you are right . Grow up FFS

    I don’t understand what you get out of trying to annoy people or why spend your time doing it – still its obviously the personality of someone who has a bit of a king Edward on their shoulder. I can only think your actions toward me and other posters is one of jealousy for some reason that I cant understand.

    Ok well as b/wether and Flash have said breath is wasted on you. Personally whenever I respond to someone or direct a post to people specifically – you want to hijack it and try to wind up. I don’t really know why. A weird existence to be sure. I hope you enjoy your own company since that’s what you will no doubt be stuck with. I will now desist from replying to your stupid worthless rants – and its really a waste of time , Im not the first and doubt I will be the last.

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