Gold: I smell a trap

[miscreanity]

(pretty pictures)

Reading tea leaves from spoon-fed graphs do little to help you actually understand a market.

As I said, just hold onto your physical gold.

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[cypherdoc]

(pretty pictures)

Reading tea leaves from spoon-fed graphs do little to help you actually understand a market.

As I said, just hold onto your physical gold.

its amazing how much we agree upon yet also disagree upon.  i would guess at least half of the total investors out there believe in technical analysis and would disagree with you as do i. 

i believe in fundamentals supplementing technicals.  but there are those who only follow technicals and would say that ALL information is imbedded in the charts and no fundamentals need be known.  as good as you are with fundamentals, you cannot possibly know everything especially those things going on under the surface.  i have come to respect those individuals more and more as the years go by.

[MatthewLM]

Let's say someone invents a new power source which uses silver. Investors begin to go into silver upon the announcement, later the producers of this new power source make large orders and silver goes up and up. The technical peculators will say "Wow, look at this, bubble! It will crash to $10 again obviously, let's short it.". In reality, of-course, it seems a lot of uses for silver are constantly being found. Shame it's relatively rare.

[cypherdoc]

Let's say someone invents a new power source which uses silver. Investors begin to go into silver upon the announcement, later the producers of this new power source make large orders and silver goes up and up. The technical peculators will say "Wow, look at this, bubble! It will crash to $10 again obviously, let's short it.". In reality, of-course, it seems a lot of uses for silver are constantly being found. Shame it's relatively rare.

sure thats possible but following fundamentals will reveal the source of the price rise.  but those types of price rises will be slow and steady with pullbacks along the way.

parabolic moves with breaks way over long term trend lines demand attention in regards to speculative blowoffs.  these usually end badly.

[CurbsideProphet]

Correction or bubble burst?  Too early to tell.  I'm watching the M3.

If the M3 money supply growth stagnates and/or the economy recovers, the gold price will drop and stay down as investors shift from gold to stocks. (This is what happened in 2003, when the price of gold fell to $250 per ounce during the mid-2000s stock bull market.)

However, if the M3 money supply grows and the economy falls back into recession (which will increase Federal deficits), the price of gold will recover and may make new highs.

[MatthewLM]

Gold has risen quickly recently and so if you were to say it is overbought, it is so on the recent price moves. There is no reason to suggest the long term trend for gold is dead.

[cypherdoc]

Gold has risen quickly recently and so if you were to say it is overbought, it is so on the recent price moves. There is no reason to suggest the long term trend for gold is dead.

there are plenty of reasons IMO to think that its over.  start with my OP and work forward.

[miscreanity]

its amazing how much we agree upon yet also disagree upon.  i would guess at least half of the total investors out there believe in technical analysis and would disagree with you as do i. 

i believe in fundamentals supplementing technicals.  but there are those who only follow technicals and would say that ALL information is imbedded in the charts and no fundamentals need be known.  as good as you are with fundamentals, you cannot possibly know everything especially those things going on under the surface.  i have come to respect those individuals more and more as the years go by.

Isn't it? Fishing sounds better. Less to disagree on. Maybe after gold goes past $10,000/oz.

I've learned the principles that can be applied from those whom have been right about precious metals over the past decade or longer; standing on the shoulders of giants, whether using fundamental or technical analysis. It's the ol' give a man a fish or teach him how to fish. Patience has been the hardest lesson by far.

[cypherdoc]

this is /GC, another gold futures contract.  this goes back to 6/05.  see that volume bar all the way to the right?  highest volume EVER since the creation of this contract.  ignore at your peril.

[miscreanity]

Volume alone does not dictate direction. This is an obvious transfer of wealth from new entrants and/or weak hands to interests recognizing gold as money. Like taking candy from a baby.

this is /GC, another gold futures contract.  this goes back to 6/05.  see that volume bar all the way to the right?  highest volume EVER since the creation of this contract.  ignore at your peril.

That's like saying that Bitcoin will crash because the price has risen as more participants invest in it.

The same price drop would occur if just one giant fund sold several tonnes in one order. With high volume, it's a lot of little guys bailing out while the big fish scoop up the goodies. As offered above: like taking candy from a baby - by startling it into dropping the candy. Start thinking like a big fish, leave the emotions behind.

What needs to be paid attention to is the fact that there are three instances where you could've claimed the same as what you're saying now.

"Highest volume ever with the drop in early 2008!"

"Highest volume ever on a decline at the end of 2009!"

"Highest volume ever with the fall in mid-2011!"

All of those during the time since housing collapsed and triggered a global panic. That was the point when control really started slipping and it's getting to a stage where control is lost. Not there yet, but it will get there.

I'll be buying hand-over-fist this week, then selling in stages above $2000/oz. None of my physical metal is for sale at any price.

[S3052]

Volume alone does not dictate direction. This is an obvious transfer of wealth from new entrants and/or weak hands to interests recognizing gold as money. Like taking candy from a baby.

this is /GC, another gold futures contract.  this goes back to 6/05.  see that volume bar all the way to the right?  highest volume EVER since the creation of this contract.  ignore at your peril.

That's like saying that Bitcoin will crash because the price has risen as more participants invest in it.

The same price drop would occur if just one giant fund sold several tonnes in one order. With high volume, it's a lot of little guys bailing out while the big fish scoop up the goodies. As offered above: like taking candy from a baby - by startling it into dropping the candy. Start thinking like a big fish, leave the emotions behind.

What needs to be paid attention to is the fact that there are three instances where you could've claimed the same as what you're saying now.

"Highest volume ever with the drop in early 2008!"

"Highest volume ever on a decline at the end of 2009!"

"Highest volume ever with the fall in mid-2011!"

All of those during the time since housing collapsed and triggered a global panic. That was the point when control really started slipping and it's getting to a stage where control is lost. Not there yet, but it will get there.

I'll be buying hand-over-fist this week, then selling in stages above $2000/oz. None of my physical metal is for sale at any price.

Nothing against you personally. Instead, I really like your depth of fundamental analysis. At the same time, it feels that you are too emotional, clearly showing that you HOPE that prices stay up because you are fully invested in Gold. I wish you are right. But at least see the risk for a much more significant decline.

And if you are in the same way bullish Silver as you are with Gold, then I would be very very careful, because I expext the bigegst silver decline in this century.

[MatthewLM]

Before the recent sharp inclines in the gold price the trend was pointing to $1600 by now. If gold goes down to $1600 it's a very good buying opportunity but I don't think it's going to go down to $1600 because of all the recent factors which is pushing more longer term investors to go into gold. It's only the short-term speculators that will be selling.

Gold has risen quickly recently and so if you were to say it is overbought, it is so on the recent price moves. There is no reason to suggest the long term trend for gold is dead.

there are plenty of reasons IMO to think that its over.  start with my OP and work forward.

I read that you think there is going to be price deflation which is ludicrous.

[cypherdoc]

None of my physical metal is for sale at any price.

damn, thats confidence for ya.  a solid one way position with no flexibility in sight!  gotta love it!

i, OTOH, freely admit there will be a time when i'll consider buying gold again and hard.  it'll be years though.  i prefer to stick with market dynamics and playing the cycles up or down.

[cypherdoc]

Before the recent sharp inclines in the gold price the trend was pointing to $1600 by now. If gold goes down to $1600 it's a very good buying opportunity but I don't think it's going to go down to $1600 because of all the recent factors which is pushing more longer term investors to go into gold. It's only the short-term speculators that will be selling.

Gold has risen quickly recently and so if you were to say it is overbought, it is so on the recent price moves. There is no reason to suggest the long term trend for gold is dead.

there are plenty of reasons IMO to think that its over.  start with my OP and work forward.

I read that you think there is going to be price deflation which is ludicrous.

Deflation ludicrous?  Really?  Just what does this chart of the S&P 500 since 1928 tell you?  onward and upward or some fundamental change going on since 2000?  You've lived with inflation your whole life and cannot fathom the idea of deflation i would say.  Linear thinking again.

edit:  i see a giant head and shoulders formation which means DOWN over the coming years.

[S3052]

cypherdoc: Agree on deflation. Big time.

It just seems that there are some hardcore inflationists with linear thinking that we can only convince them once S&P is below 600 and Silver bewlo 10 $. But I am happy to wait for this to happen until posting in this thread again :-)

[cypherdoc]

cypherdoc: Agree on deflation. Big time.

It just seems that there are some hardcore inflationists with linear thinking that we can only convince them once S&P is below 600 and Silver bewlo 10 $. But I am happy to wait for this to happen until posting in this thread again :-)

no, no, no.  you can't leave me here alone with these guys until 2016 when the grand finale hits.  this will be a long tortuous journey down the rat hole.  "hardcore" doesn't come close to describing these guys.

[MatthewLM]

Or dear looking t the graphs again. One bust and then a greater one proves deflation will happen somehow, when in reality is that central banks will continue to flood economies with more and more money.

[cypherdoc]

Or dear looking t the graphs again. One bust and then a greater one proves deflation will happen somehow, when in reality is that central banks will continue to flood economies with more and more money.

OMG, facepalm #2 (twice in one day!)

once again, an investment thesis depending on the whims of central bankers whom you should trust the least.

[MatthewLM]

You act as if the actions of central banks mean nothing. Trust me it bloody well does.

Also there is latency between monetary inflation and price inflation. The full effects of previous money creation still needs time to set in. With interest rates forced low and where governments attempt to get banks to lend out as much as possible more and more the effects should show more quickly.

[cypherdoc]

You act as if the actions of central banks mean nothing. Trust me it bloody well does.

Also there is latency between monetary inflation and price inflation. The full effects of previous money creation still needs time to set in. With interest rates forced low and where governments attempt to get banks to lend out as much as possible more and more the effects should show more quickly.

i remember so well from 2002-2009 guys like Eric Sprott and James Turk getting up to a podium and saying "why are central banks selling gold?  oh well, we'll be happy to take gold off their hands.  haha!!!".  And the price kept rising.

so, i submit to you, now when they are buying, the price can very well keep dropping.