Posts Tagged ‘Gold’

What happens to gold?

Posted: July 21, 2015 in Uncategorized
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Well it got really smashed with billion of paper worth of value sold.

The target was to breach 1,080 (a multi year support channel) which open the wave to the ultimate target $900 -$1,000.

Why?

The Chinese sold a lot of gold (possibly as the Chinese got a lot of margin calls in the stock market and the new rules forbid to sell shares).

Whatever the reason (conspiracy theory included), it is better to keep gold as an edge in your portfolio.

The last two times the media screamed “the end of gold” it was around 1975 (over +1000% in the next 5 years) and 1999 (+650% in the next 12 years).

The Reserve banks are still hoarding gold – so nothing is changed in reality.

Winston Churchill said “The further back you look , the further ahead  you will see”.

If we look at the 1970s on gold in this perspective it looks very similar to the current situation

1970 USD35

Then a furious rally in 1974 to USD 180 (peak USD 195).

Then a mega crash in 1976 to US100 (and it really was an effort to keep the $100 as everyone left gold as it shows that exceptionally bad forecast from that period as usual from Citibank (and all the rest such as Goldman Sachs) (which usually tells you the reverse of what you should do (for one reason or another, your choice).

“The economic recovery that is now under way in most countries will likely continue for the next year, gold will lose some of its allure as an investment…[and] with inflation on the wane…[we] foresee the possibility of a price as low as $60 an ounce.”

Then Gold closed the decade…not at USD 60 as per Goldman forecast, but at over USD900 in the 1980!

So if the pattern should repeat we could see a low around USD900 this yearwhere everybody will leave the boat….and then it will soar to USD 12,600 by 2020 (USD9,000 inflation adjusted) (even I do not believe it – it is just maths applied to the 1970s situation….and I hope not as it would means that all my nightmares would come true).

Whatever the outcome for gold – this looks like the mid cycle lull. Hopefully not hinting at a USD12,600 rally.

What you should do? Just be un-emotional. The gold position are meant to be an hedge, so just let it be.

A similar situation (previously discussed, so I do not delve in it…there is a specific post in early January ) in 1985/86 the oil went as low as USD10 …which would be now USD35. Then it recovered to the equivalent of USD65/USD75 and stayed there till 1993 (US invasion of Iraq)

By the way in the 1970s the stock market really got killed – and as usual in 1982 the big Investment banks where pumping article re The Death of the Stock Market…just at the beginning of the greatest bull market 1982/2003

Gold and oil 2015

Posted: January 13, 2015 in Uncategorized
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Oil has been the great casualty of 2014…what will happen to it?

Looking at  the similarity with 1986 and the current much more challenging geopolitical situation (previously described)  oil will probably try to find a base about USD35-40 between now and the third quarter of 2015. In the third quarter of 2015 two things should happen. The oversupplied stock will start to decrease and also the the protective hedges set by the US shale oil producers will expire. This combined effect will probably get oil up to $65 by the end of the year.

The great unknown is the geopolitical side. Nigeria, Libya, Iraq, Iran and Venezuela cannot withstand such low prices for oil before dissolving in non-state entity, easy prey of Islamic State and the likes of it. Also the terrorist have a clear objective in disrupting the Suez Canal passage – it will not be easy as they stand against some of the most ruthless secret service alliances (US, Israel, Saudi and Egypt), but they will try. An attack there will sharply bring oil back to USD 100.

Gold: gold probably will basing all year and end up towards $1,300. There are selling pressures, but with all the mounting tensions around the globe is hard to see it falling too much.

 

Gold

Posted: May 22, 2014 in Uncategorized
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Gold tried to breakthrough spurred by Ukraine by failed and now it looks like consolidating around USD 1,280/1,325.

It is very difficult, but it looks like prepping for moving higher (USD1,400/1,480). But it needs a catalyst that could be

– New Indian Government stopping the restrictions on gold purchases (it looks like they will do, so to sop the gold smuggling

– A geopololitical risk like Ukraine being invaded (I do not think so – Putin just need to destabilise it.

– Deflation in Europe

-Real interest rate spike in the US (hard to tell, but food inflation in the US is high and skilled job unemployment is under the long range term…these two factors are currently hidden from the macro data…but if they come out in the media they could wreak havoc)

– A stock related risk event, that we are still missing

– (remote) the financial details of the Russia-China deal that could agree that the settlement will be in Yuan Rouble rather than US Dollar (it would be a crucial decision, but I do  not think that people will realize the systemic shift that such an event could provoke. Practically a serious dent in the US Dollar as reserve currency)

Some people believe in patterns some not. I just watch and be aware of them.

SP500 looks like a 3 five year wave higher highs/lower. Gold USD is resting on a 20 years support

.Sp Monthly Long GOLD MONTHLY

And then you add what institutional money are doing now

Capture Smart Money

And then make up your mind.

Gold Rush

Posted: January 31, 2014 in Uncategorized
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January….Gold has been one of the best asset….just when all Global Research Houses downgraded their forecast on Gold.

As usual it is the famous saying “do what Wall Street does, not what Wall Street says” – Specially when Goldman Sachs say something you should do the reverse….up to you guessing why.

Jokes apart – the rise of Gold is one of the various unintended consequences of the tapering. And we had just 2 tapering episodes. So if the FED keeps on tapering (as they will do)  and create shockwaves in the emerging market – emerging market will keep on increasing their flight to safety …US treasury bonds, USD and gold. Gold will be mostly physical…so there will be a delay in the price movement.

The big resistance for gold is USD 1270 , then USD1,340 and USD1,420. As usual it is a good hedge versus equity – and very dangerous play.

The double bottom plus bear trap at USD1,180 looks pretty solid – but Gold is pretty wild at the moment.