Bye Bye Gold Nonsense

[phk]

For the first time in 100 trading days, the price of gold (using the front month futures contract) dropped below its 50-day moving average.  This ends the third longest streak of trading above its 50-day that the commodity has had since 2000.  

The prior two streaks ended back in 2002 (124 trading days) and 2008 (143 trading days). All times of uncertainty.  As shown in the charts below, in each of those periods the price of gold took some time before rebounding to prior highs.

[phk]

The price of gold is rallying this morning on US dollar weakness, but the commodity still has some work to do before it gets back above its 50-day moving average (DMA).  The metal has been treading water just below its 50-day after falling through it earlier this month (1/4).  So far it has had little success keeping its head above this level.

[phk]

[phk]

Au close Friday:  $1369.90

Au close 2/9/01:  $260.00

Sure glad the "nonsense" has ended.

So adjusted for inflation, there's been a 1k increase per ounce since 2001? This is probably the maximum you could get before it lulls again.

[phk]

Gold Closing in On All-Time High
Tuesday, July 12, 2011 at 01:51PM

While silver remains stuck in the doldrums, gold is currently trading at its highest level since May 2nd when it traded to an all-time high of 1,577.40.

[phk]

Gold is still in a long-term bull market - that much is certain.  Unlike almost all other commodities of which questions are much greater.

Wrong. It has peaked and will soon fall spectacularly, just like oil. It isn't that hard to spot these bubbles. When "everybody" is talking about them and how great they're doing (ditto for real estate few years back) it's time to sell, or if you're adventurous, short in a big way.

It was being said that it had peaked about 200$ ago. And again about 400$ before that. Etc.

Gold is a hedge against inflation and currency devaluation, both of which are occurring across the world (especially in the UK, US, China, and Japan). If currencies resume their strength, gold will fall. Except if that happened it would imply that inflation has cut off which would require that the Fed stop its various programs which would result in the recession coming back in full force and then some (not that they are actually preventing it so much as delaying it).

But please, keep on claiming that gold is in a bubble and that it has peaked, I would love it to drop back down a couple hundred dollars so I can buy some more.

You want to buy it when it's falling? Ok.......

Anybody who bought Gold when the thread was made would have made a 14% or (28% annualized) return if they sold today.

[phk]

Gold may still have more to go with Asian economies growing and being part of Asian culture to buy lots of Gold.

China may overtake India in gold demand

Bloomberg Jul 30, 2011, 05.40am IST


VANCOUVER: Demand for physical gold in China may exceed consumption in India by the end of this year, said Chuck Jeannes, chief executive officer of Goldcorp, the world's No. 2 producer of the metal by market value. "Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India," Jeannes said on Thursday from New York. "Now it looks like that could happen as early as the end of this year.

And that's while Indian demand is increasing." While global demand for gold is advancing on concerns about financial turmoil in the US and some European countries, consumers in China are buying larger amounts of the metal as an inflation hedge, Jeannes said.

Investment demand in China more than doubled in the first quarter to 90.9 metric tonne as the nation overtook India to become the largest market for coins and bars, the World Gold Council said in May. India was the largest consumer of gold jewellery last year, according to data compiled by Bloomberg. Gold reached a record $1,631.20 an ounce on July 27 in New York on concern about a potential US default and is heading for an 11th straight annual increase.

[phk]

Today, Goldman Sachs raised its 12-month target from $1,730 per ounce to $1,880 an ounce.

[phk]

A lot of people are missing is that it's part of Asian culture to buy lots of Gold. Demand in China and India is spiking after 9% GDP growth for the past 10 years. Indian demand went up 63% in 2010 alone.