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Author Topic: Gold: I smell a trap  (Read 78390 times)
BitcoinBug
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August 18, 2011, 03:47:56 PM
 #161

Gold can't go up and up all the time, you must expect corrections. If you have the time, expertise and appetite for risk you can short these corrections but over the long term gold is going up.

What he said. I will add, that it's extremely hard to predict those corrections. Better just buy and hold, like bitcoins. Don't forget the silver, I see a great long-term potential there, much greater than gold.
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August 18, 2011, 04:19:56 PM
 #162

@ bitcool, MatthewLM, BitcoinBug:

Yes, yes and yes. Smiley

Long-term, follow the fundamentals. Short-term, the manipulation can easily wipe you out.

As proposed earlier, I'm expecting major fireworks to happen with gold rising well over USD$2000/oz then experiencing the usual slam down near the previous base, currently around the $1600 level. As the gold price rises, holders of the metal are more likely to sell, leaving margin traders who can be easily forced out through margin calls. That causes the price to plummet, scaring off investors as the gold-is-a-bubble mentality takes hold again. Meanwhile, the banks cover their previously underwater shorts and continue the games all over again.

Gold will continue to rise because of monetary inflation; the government has no alternative - it's either massive pain and potential economic ruin now or complete collapse further down the road. Putting the day of reckoning off for as long as possible is the easier route and those in power think they can hold things together long enough for real recovery to take root. The current administration will not allow the failure to occur during its time in office, so only the question of how they'll proceed remains.

Here is the most likely means of implementing QE3, as explained by Alasdair Macleod: Repo markets. If you've been wondering who will buy treasuries when China and India are refusing to do so and Europe can't, the major banks will be "encouraged" to (read: forced).

The rules of the game must be changed to keep those in power, in power. Government is the problem.

Bitcoin is better (even more so with Altcoin).
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August 22, 2011, 06:46:28 AM
 #163

This week is another turn window for Gold (the last window did produce a decline, but only temporary).

So I will go short again around 1880-1920$. Stop loss for me is above 1950 $, but I don't think it will reach it.

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August 22, 2011, 06:53:54 AM
 #164

My plan is to exit my trading position (40%)  between 2050~2100, reload 1650~1700. fingers crossed.
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August 22, 2011, 02:22:47 PM
 #165

This week is another turn window for Gold (the last window did produce a decline, but only temporary).

So I will go short again around 1880-1920$. Stop loss for me is above 1950 $, but I don't think it will reach it.


Unless you make an effort to understand gold (or any underlying instrument you trade), you will continue making the same amateur mistakes with your analysis. Predictions of sub-$1,500/oz gold are absurd - this will only happen in paper markets that are not associated with actual metal, and by then you either have physical gold or you might never be able to obtain it.

Capital flows must be taken into account, not just price action.

Lastly, this thread is not in the speculation sub-forum.
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August 22, 2011, 04:56:06 PM
 #166

This week is another turn window for Gold (the last window did produce a decline, but only temporary).

So I will go short again around 1880-1920$. Stop loss for me is above 1950 $, but I don't think it will reach it.


Unless you make an effort to understand gold (or any underlying instrument you trade), you will continue making the same amateur mistakes with your analysis. Predictions of sub-$1,500/oz gold are absurd - this will only happen in paper markets that are not associated with actual metal, and by then you either have physical gold or you might never be able to obtain it.

Capital flows must be taken into account, not just price action.

Lastly, this thread is not in the speculation sub-forum.

while i certainly have been early in selling PM's, the problem with your argument is that:

1.  USD still has not dropped out of its consolidation window below $72.69
2.  UST's still continue to rally despite the debt downgrade
3.  Europe is still demanding USD's to prop up its system
4.  gold has entered a parabolic move.  usually a terminal ending pattern but this could be exception.
5.  no one here has explained to me how gold will interact with the digital age in re-establishing itself as the world reserve currency in a satisfactory way.
6.  predictions of ever rising gold prices is just as much speculation as ours about a terminal ending pattern.  no one knows for sure including me.
7.  the gold rush depends on Ben continuing QE, IMO. not something i want to depend on.
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August 22, 2011, 05:07:46 PM
 #167

while i have been depending mostly on technicals in analyzing the PM market i also look for fundamental setups.  this Friday could be important with Jackson Hole.  if Ben doesn't say something about further QE or the market interprets his speech as precluding further QE, along with the potential parabolic blowoff of gold, the selloff could begin in earnest. 

as i've said all along, i've been a gold lover in the past (still hold my last batch of coins) so a part of me cheers whats happening.  for me however, bitcoin was the game changer.   
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August 22, 2011, 05:26:55 PM
 #168

the other thing bothering me is that for silver to clear its previous high, it would have to rally approx. 17% from here.  if we assume gold would also rally at least that much for this to occur, gold would have to reach $2211 which would extend its parabola monumentally.  i just don't see it.  for me, silver is sending off warning signals.
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August 22, 2011, 06:33:42 PM
 #169

while i certainly have been early in selling PM's, the problem with your argument is that:

1.  USD still has not dropped out of its consolidation window below $72.69
2.  UST's still continue to rally despite the debt downgrade
3.  Europe is still demanding USD's to prop up its system
4.  gold has entered a parabolic move.  usually a terminal ending pattern but this could be exception.
5.  no one here has explained to me how gold will interact with the digital age in re-establishing itself as the world reserve currency in a satisfactory way.
6.  predictions of ever rising gold prices is just as much speculation as ours about a terminal ending pattern.  no one knows for sure including me.
7.  the gold rush depends on Ben continuing QE, IMO. not something i want to depend on.

Neither has the USD rallied. From the price charts alone, it's heavy.

Who is buying the treasuries? Why - confidence or fear? All that's needed is for the rest of the world to stop buying USG debt for the Fed to become the only buyer propping up treasury prices. Who's to say they aren't approaching that point already? As mentioned, the only possible outcomes are devastating deflation or putting the problem off further. Nobody with any clout wants deflation and will fight it tooth and nail, so QE3 is inevitable.

Demand for US debt does not increase the value of the dollar; increasing demand and velocity only increase the push for QE.

Gold is entering a parabolic move, but it has done so numerous times. For this to be a long-term blow-off, Martin Armstrong points at a yearly close above ~USD$2,500/oz. I agree with that.

The behavior of gold in a digital world is two-fold. It's physical world function can be understood via Freegold. In the virtual world, it will act in conjunction with Bitcoin (or whatever appropriate crypto-currency dominates) to form a focal point, a bridge between the purely abstract and the contemporary physical realm. I know that's starting to sound like a page out of Thor comics, but the lines delineating the perception between what we experience directly and what is purely abstract are blurring. You can choose to look at Bitcoin (virtual) as a digital representation of gold, or of gold (real) as a physical manifestation of Bitcoin. They act like anchor points.

If a balloon is held very deep underwater for a long time, it might be easy to forget how deep it is from where it normally sits. When that balloon is finally released, it will continue up until it reaches equilibrium at the surface. Without having familiarity with the point of equilibrium, that action could seem to defy reason. Gold is still very deep underwater.

Gold's rise does not depend on the continuation of QE. There has already been more than enough damage done to the global financial system for gold to be revalued to high 4-digit or even low 5-digit ranges. QE will only move that point of equilibrium to higher fiat-denominated prices. Even ignoring all of that, estimates suggest that gold has been leased or swapped to a point where there are 100 claims for every ounce. Those suspicions are starting to be validated and the consequences are much higher prices.

Keep an eye on the Venezuela gold request - official numbers show many metric tons of gold being moved daily in the major warehouses. At the fastest, it should take a week for the delivery request to be honored. At the slowest, no more than two months. If there are serious delays, big players will begin to panic and demand their gold. Then you'll see a parabolic rise on the multi-decade charts. I think the most likely play for now is the Fed using the repo markets as outlined by Alasdair Macleod while the bullion banks (JPM, GS, et al.) raid the GLD ETF for its physical metal, giving another year or so for the financial games to continue.

while i have been depending mostly on technicals in analyzing the PM market i also look for fundamental setups.  this Friday could be important with Jackson Hole.  if Ben doesn't say something about further QE or the market interprets his speech as precluding further QE, along with the potential parabolic blowoff of gold, the selloff could begin in earnest. 

as i've said all along, i've been a gold lover in the past (still hold my last batch of coins) so a part of me cheers whats happening.  for me however, bitcoin was the game changer.   

I wouldn't be too concerned about Jackhole. It's like a gnat buzzing around a giant - insignificant in the big picture. It doesn't matter if QE is put off in the US; it's already being implemented by the EFSF. Remember: the US is only one player in this game and the money printing has already commenced.

Gold has a purpose as money that suits it perfectly. Bitcoin is finding its feet. Sure, Bitcoin has amazing potential as a digital equivalent of gold, but there are numerous applications beyond that from direct democracy to resource distribution and management. It could even conceivably act as a structure for organic decision-making in a non-human intelligence. I mentioned elsewhere that I think Bitcoin (crypto-currency/transaction or what-have-you) is as big of an impact as written language.

the other thing bothering me is that for silver to clear its previous high, it would have to rally approx. 17% from here.  if we assume gold would also rally at least that much for this to occur, gold would have to reach $2211 which would extend its parabola monumentally.  i just don't see it.  for me, silver is sending off warning signals.

The gold-silver ratio has been stretched to a limit. Value is being found in silver. This is the normal pattern (it's happened dozens of times over the past decade) before the ratio drops and silver will appear to slingshot past gold in relative value gain.



Like I've said, the only thing different now is the magnitude.
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August 22, 2011, 07:27:41 PM
 #170

QE means nothing much. It's a label central banks put on a particular package of purchases using new money. When their QE packages end it doesn't mean they stop with the purchases. They just continue doing the same thing. I don't think people understand this.

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August 23, 2011, 02:14:35 PM
 #171

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Lastly, this thread is not in the speculation sub-forum.

i would ask that you be respectful to others who have opinions different than yours.  your passion and eloquence concerning your opinion is morphing into "preaching".  i would submit that your arguments are speculation as well.  no one knows exactly what will happen here.

Quote

quoting yourself doesn't engender any confidence in me.  no offense.

Quote
Gold is entering a parabolic move, but it has done so numerous times. For this to be a long-term blow-off, Martin Armstrong points at a yearly close above ~USD$2,500/oz. I agree with that.

speculation.

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In the virtual world, it will act in conjunction with Bitcoin (or whatever appropriate crypto-currency dominates) to form a focal point, a bridge between the purely abstract and the contemporary physical realm. I know that's starting to sound like a page out of Thor comics, but the lines delineating the perception between what we experience directly and what is purely abstract are blurring. You can choose to look at Bitcoin (virtual) as a digital representation of gold, or of gold (real) as a physical manifestation of Bitcoin. They act like anchor points.

i don't think so.  to argue that BOTH will be successful isn't reasonable by my estimation.  it will be one or the other and i'd rather invest in the undervalued asset; bitcoin.  my opinion.

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If a balloon is held very deep underwater for a long time, it might be easy to forget how deep it is from where it normally sits. When that balloon is finally released, it will continue up until it reaches equilibrium at the surface. Without having familiarity with the point of equilibrium, that action could seem to defy reason. Gold is still very deep underwater.

this is true IF you believe the gold price has been suppressed.  while there are very suspicious signs this might be the case (i'm familiar with the arguments: naked shorting on Comex by JPM, GS, huge paper values related to bullion, multiple gold claims on bullion, suppressed gold lease rates, futures backwardation, etc) one cannot ignore the fact that you and i trade gold in a free market.  we look at the price, we trade it b/c its going up, so who's to say it isn't free market?  you're opinion has become gospel.  ask yourself;  what if it hasn't been manipulated but in fact represents wild self perpetuating speculation?

your agreement with me that gold is an asset is problematic for your argument.  the way i see it is that if it is an asset, then bullion, just like the paper proxies (GLD, futures) is being pushed up by the inflation of USD's.  when the paper prices crash, bullion will crash too and the USD which was used to pump these assets up will skyrocket.  however, if gold was MONEY, then i might agree with you that the crash in paper proxies would drive the real money, bullion, UP as the scramble for real money ensues and the USD would crash.

Quote
QE3 is inevitable.

this, has become this:

Quote

Gold's rise does not depend on the continuation of QE.

and

I wouldn't be too concerned about Jackhole. It's like a gnat buzzing around a giant - insignificant in the big picture. It doesn't matter if QE is put off in the US;

this type of logic extension reminds me of the top in the housing bubble.  everyone was saying that RE prices could not possibly go anywhere but up.  remember?  "its a hard asset, RE never goes down, Ben was saying that housing never had suffered a major setback in the US, never mind subprime,  its contained, its a goldilocks economy, etc, etc.  As the evidence came in to the contrary, all sorts of excuses were made with logic extensions which turned out to be disastrous.

Quote

The gold-silver ratio has been stretched to a limit. Value is being found in silver. This is the normal pattern (it's happened dozens of times over the past decade) before the ratio drops and silver will appear to slingshot past gold in relative value gain.

its NEVER gone this parabolic.  reliance on past indicators is dangerous.  as you know, every cycle is different so pointing to the gold/silver ratio as some sort of predictor isn't rational.

while you combine compelling arguments with long and patient well written prose i believe the odds are higher of the following, esp. since you agree with me that gold is an asset:

1.  parabolic blowoffs end badly
2.  what can't go on forever won't
3.  bullion will prove to be the ultimate pain due to its illiquidity
4.  the USD system will self correct itself since i believe the Fed does not want to destroy itself
5.  the 11 yr bull in PM's is close to coming to an end.
6.  for gold to do what you say, you have to believe that Armageddon is upon us.  it may be, but i don't think it unfolds as you say.

speculation, yes.
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August 23, 2011, 02:47:28 PM
 #172

what i think will happen is that the stock mkt will enter a multi day/week rally during which the final bull mkt, gold, will top out its 11 yr bull and begin a multi year decline. it could be beginning today.  i sense more instability in the gold price and instead of it being a simple correction this will be THE top.   the PM miners were the first mkt to roll over and leading indicator that QE was finished and this last major reflationary effort since 3/09 has failed.  as i said before, at transitions you can have diff mkts inflating and some deflating but when they all get in gear as i believe they will in the Fall, they become all one mkt with ALL of them falling and the USD rising.
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August 23, 2011, 03:56:05 PM
 #173

what i think will happen is that the stock mkt will enter a multi day/week rally during which the final bull mkt, gold, will top out its 11 yr bull and begin a multi year decline. it could be beginning today.  i sense more instability in the gold price and instead of it being a simple correction this will be THE top.   the PM miners were the first mkt to roll over and leading indicator that QE was finished and this last major reflationary effort since 3/09 has failed.  as i said before, at transitions you can have diff mkts inflating and some deflating but when they all get in gear as i believe they will in the Fall, they become all one mkt with ALL of them falling and the USD rising.

This is in line with my forecast and trading..

As indicated in my last posts, I shorted. I got it between 1890-1910. Lets see how many hundred points we see Gold going lower.

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August 23, 2011, 04:13:49 PM
 #174

what i think will happen is that the stock mkt will enter a multi day/week rally during which the final bull mkt, gold, will top out its 11 yr bull and begin a multi year decline. it could be beginning today.  i sense more instability in the gold price and instead of it being a simple correction this will be THE top.   the PM miners were the first mkt to roll over and leading indicator that QE was finished and this last major reflationary effort since 3/09 has failed.  as i said before, at transitions you can have diff mkts inflating and some deflating but when they all get in gear as i believe they will in the Fall, they become all one mkt with ALL of them falling and the USD rising.

This is in line with my forecast and trading..

As indicated in my last posts, I shorted. I got it between 1890-1910. Lets see how many hundred points we see Gold going lower.


i think it will ultimately go down thousands of dollars back into 3 digits.  not in a straight line but my target remains the same.  what will happen is that as it hits resistance areas the bulls will call it a buying opportunity to get everyone back in and we'll do a nice Fib retrace before falling further.  just like the Dow.
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August 23, 2011, 04:21:45 PM
 #175

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I can’t imagine who is dumb enough to be shorting gold.   People who are short gold or silver have to go and buy to mitigate their losses because now the prices are going up and you are looking at unlimited loss potential when you are short.  There is no way to measure resistance in gold because we are in unchartered territory.  Even if you are short silver there is a big move from $43.50 where it is now and $50, so that’s $6.50 of pain if you’re short.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/8/22_Schiff_-_When_Silver_Breaks_$50_Shorts_to_Propel_it_to_$75-$100.html

The fact the people like you lot are shorting gold makes me think gold we rocket upwards as it breaks through these shorts. Silver too.

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August 23, 2011, 04:29:30 PM
 #176

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I can’t imagine who is dumb enough to be shorting gold.   People who are short gold or silver have to go and buy to mitigate their losses because now the prices are going up and you are looking at unlimited loss potential when you are short.  There is no way to measure resistance in gold because we are in unchartered territory.  Even if you are short silver there is a big move from $43.50 where it is now and $50, so that’s $6.50 of pain if you’re short.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/8/22_Schiff_-_When_Silver_Breaks_$50_Shorts_to_Propel_it_to_$75-$100.html

The fact the people like you lot are shorting gold makes me think gold we rocket upwards as it breaks through these shorts. Silver too.

Peter Schiff was badly wrong in 2008 esp in regards to pm miners and emerging mkts.  we've entered phase 2 of the deflationary decline.  this could wipe him out.
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August 23, 2011, 04:37:21 PM
 #177

i still vividly remember Jim Puplava of Financial Sense Online having to take a month off from podcasting from being so distraught with the miners plunge.  he kept saying "i know i'm right, i know i'm right.  i don't care what any of the doubters say!"

i predict we will have a replay of this mentality from the linear thinkers.
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August 23, 2011, 04:41:10 PM
 #178

What did he say about PM mining stocks? Quite a few have held back against gold and silver rises so they can be seen as undervalued.

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August 23, 2011, 04:42:11 PM
 #179

look at the volume already today on the gold future /YG.  it has a chance to exceed the buy volume on 8/9/11.  if it does that, batten down the hatches.
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August 23, 2011, 04:43:10 PM
 #180


reliance on past indicators is dangerous.  as you know, every cycle is different so pointing to the gold/silver ratio as some sort of predictor isn't rational.

.......

Peter Schiff was badly wrong in 2008 esp in regards to pm miners and emerging mkts.  we've entered phase 2 of the deflationary decline.  this could wipe him out.

Contradiction?

Implode-o-Meter blog explains why they believe the PM's market won't repeat the 2008 scenario:
http://blog.ml-implode.com/2011/08/watch-goldsilveroil-price-ratios/
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