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Gold is Now At the Deep End of the Pool.
For me, the best case scenario which I have been predicting for nearly two years has arrived. But as much as I love gold for the long term, I have to take note when a number of short term technical and momentum models start flashing red lights that it is entering extremely overbought levels. The yellow metal has now risen for 12 out of the past 14 days.
Aaron Regent, Barrack Gold’s (ABX) CEO, the world’s largest gold producer, says he can’t imagine ever needing to hedge the company’s output again. Not a day goes by without an emerging market central banks making new purchases, with announcements this week coming from India and Sri Lanka. Gluskin Sheff’s permabear David Rosenberg, trotted out his own target for the barbarous relic of $3,000/ounce.
Look at the chart below of the S&P 500 priced in gold, and you can only conclude that gold has to reach $10,000/ounce for the ratio to reach the last trough we saw in 1979. Higher predictions are more common that National Rifle Association bumper stickers at a Sarah Palin rally.
I remember all too well when gold last traded like this in that earth shaking year. Just as I boarded a flight in Hong Kong, my long futures position ticked $750. By the time I landed in Johannesburg 20 hours later, it was trading at $900. I bailed. The fat lady then sang, and gold then bled for 20 years. Investors married to their positions got wiped out.
Traders who stay involved here should do so only against buying cheap out of the money puts for insurance. Remember, this is the commodity that takes the elevator up and the elevator down, and year end book closings are not far off.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Gold may be overbought in US$ ... but
1. In percentage terms this rally has not been that large.
2. Is gold overbought in Euros? (No!) In Euros gold is not even near its all time high (967 vs. 1040). It is up a mere 6% from its August low and still 10% below its June high.
Screw the euro. I don't live in euroland, I am not going to euroland, unless I can buy gold for 1 euro /oz
Gold at the deep end of the pool! The pool is overflowing with an ever growing ocean of fiat thingys, silver and gold paper thingys, CDO thingys, CDS thingys. all kinds of derivitives of every scheme under the sun thingys and lastly treasury thingys and derivitives thereof. I'm trusting that gold will still be there after the drain is opened.
Madhedgefundtrader, you're turning into another manic-depressive Leo like poster. Good God man, get a grip on what's happening around you! Your "short term technical and momentum models," most likely the usual dashboard of technical indicators, are overbought & flashing red lights, why is that? You really don't get "it" do you?
Your posts are usually 1 to 2 weeks behind on recommendations that others have made preceding you. I suppose you waited til your "models" gave you the flashing green light. Please, don't mis-lead readers here with your opinions. ZH is helping folks staying ahead of the news, you're trying to use linear tools in a geometric market & asking folks to pay for a flawed method.
If a large, meaningful QE2 was possible, the Fed would have already done it. Goldbugs see salvation through inflation, the general economy not so much. The Fed is out of ammo, and there is zero political will for any further large scale interventions.
We're witnessing a virtual QE event courtesy of the Fed Open Mouth Committee. It will work well enough to get them through the first Tuesday in November, then the debt demons come out to play. The dollar will rally, several TBTF banks will "merge", and just like '08, overbought commodities will tank.
Depression v2.0 is on deck.
Roger wilco Johny Bravo
OT Do you guys do a stand-up routine somewhere?
The Fed isn't out of ammo because they have infinite ammo. The political will is there because the politicos like enormous budgets with $1.5 trillion dollar deficits. The Fed is still active in the bond market, having never really quit. QE is never going to be an all-in-one shot. They are going to print as much as it takes every week forever.
"If a large, meaningful QE2 was possible, the Fed would have already done it"
Not true. They are going to milk it in every possible way first. The market rebounded on the premise it was going to happen even before they said it would happen. They're going to milk this as long as they can before they actually do something.
Cash is trash and bendover burndorkio knows it!! Debtors prison for all US debtors!! That's a lot of nuts!! Nanny 3rd world banna republic broke and FRN's are simply slippery peals to doom; financial disaster for DIMMS of AmeriCON'd! Dumb Ignorant Mental Midget Sheeple or innocent have all the risk shoveled or heaped upon them and duh DIMMS have no clue!
I seriously doubt your momentum models have any bearing within the current context of the economy. As an analogy, you've got a model assuming laminar flow and we're in an age of high turbulence.
Were talking apples and oranges here. Today buying climate is nothing like the last Gold rush in 1979. How can you see Gold's flashing red light with 50 other flashing red lights all going off at the same time? Many are buying for a far more serious reason now. The dollar and its destruction by the hands of the Federal Reserve. Say what you want, I'm not selling. Let's see that big plunge in the national debt and I might consider it.
Well said. Even if you agree that it's overbought - no one is selling. That's the irony here - I wonder how high it would have to go before people start selling in a meaningful way. Gold is becoming a necessity to many in the same way food and water is.
I really wish to wake up one day and NOT see a post from this moron who thinks gold is 'commodity' like soy bean. Tyler, please don't post any more of this guy's shit anymore I'm begging you man
I think Tyler allows MHFT & Leo as sort of a yardstick of measuring suck as compared the better contributers (eg. everyone else).
MHFT doesn't acknowledge QE2 as other have noted, nor did he point to the coordinated efforts on the park of central banks to manipulate PM prices in the past. This is a new game, folks.
+1
Your call is noted as was your cotton call. Let us know when you think cotton is red.
Since TARP and Bubble Ben Bailout Bernanke working to cover the asses of the banking cartel, TA has been worthless. It's the dollar that's in doubt. Do you think the world is going to suddenly drop their Gold and say "hey give me some of those secure greenbacks?"
Only a very small percentage of Americans own any physical gold or silver; the numbers I have seen suggest 1% . Should even upper-middle class (not the rich) decide to get into gold, the price will go up even further. This is something that the post is not taking into account.
What is left of the middle class anyways.
So did he fly first class to Johannesburg, that's what I want to know.
hold phys and trade etfs
Wake me up when gold spikes 20% in 20 hours like your $750 to $900 move back in 1979. That's going to be closer to a $300 up move nowadays. I've been in physical gold and silver since early 2003. I've waited this long for things to get interesting, I'm not bailing when the best is yet to come. This is a whole different ballgame than 1979-1980. We've still got 6-7 years left for this bull to run.
Agreed - in fact in this instance there will be no dip at the other end - it'll just inflate and stay there, permanently. FIAT = FUBAR
That'll trigger a trading stop on the comex.
I think youre very correct. For those not professional traders, just buy and hold. Wait for the big move up. Otherwise, you stand the chance of selling, then if the big correction doesnt happen, its psychologically VERY difficult to buy back in, especially at a higher price.
Eric King has been pounding the table with this point and i think he's dead on. You should buy long term, not play short term moves and get caught with nothing when the big move happens.
I believe the proffessional money (GS, UBS, other big guys) TRIES to purposely shake us out, so that this happens to us. Dont let it happen to you.
I think youre very correct. For those not professional traders, just buy and hold. Wait for the big move up. Otherwise, you stand the chance of selling, then if the big correction doesnt happen, its psychologically VERY difficult to buy back in, especially at a higher price.
Eric King has been pounding the table with this point and i think he's dead on. You should buy long term, not play short term moves and get caught with nothing when the big move happens.
I believe the proffessional money (GS, UBS, other big guys) TRIES to purposely shake us out, so that this happens to us. Dont let it happen to you.
Just dosen,t realise that people are just starting to protect their wealth as they have done for the last 2000 years,he actually thinks the modern economy is working,well it won,t take long to find out who is right.Gold and Silver have a lot further to go yet this is just the start.
This is not a phenomenon that sits within a TA or mathematical model or thought process. This is a political issue and the CON game of CONfidence in $ and other fiat is either coming to an impass or its business as usual.
You choose what you think.
Au/Ag OR $.
It is the PHYSICAL MARKET that is driving gold/silver higher; not the PAPER MARKET. The physical buyers don't give a DAMN about overbought/oversold or any other technical garbage. There is HUGE money driving this market and, as Dr. Jim Willie has confirmed, they are out to DESTROY the paper-manipulator CROOKS at the COMEX and the CROOKS at the LBMA.
Does anyone have a link to the latest Jim Willie?
Here you go, my friend:
http://news.goldseek.com/GoldenJackass/1286398800.php
Jim Willie bitchez.
=
http://www.financialsense.com/contributors/jim-willie/thoreau-rico-and-m...
http://news.goldseek.com/GoldenJackass/
:)
Central banks are buying Gold while they still can.Just look at the collapse in fiat currencies recently,China situation,QE2,Commodity prices rising daily,get in the real world mate,the arse is falling out of everything else.Gold and Silver are being purchased by the elites because they know whats coming.
The GLD is just starting a new, steeper uptrend....If it breaks back into the old channel, then I will say you're right.....But I remember gold's run in 1980. But it was silver getting all the headlines back then....NBC was showing folks cashing in their silver dollars for $20 a piece....Back near the silver peak at $50, dealers wouldn't pay anywhere near $50. They were paying around $36 as they new this was a market going ballistic and dangerous.
Ok, and who ended that drive. SEC, CFTC and DOJ. Theres a real group of ethical strength.
ZH'ers AND SMART TRADERS KNOW GLD IS A FARCE! You either get physical bars/coin or get an actual COMEX/etc contract and stand for delivery. Of course HSBC, UBS, JP Morgan, etc may try to pay you a premium to not take delivery of your COMEX contract (because they do not want to deliver the actual metal).
PS: Take a look at who holds GLD's claimed physical metal. Put 1+1 together and it'll all make sense why to avoid ETFs like GLD.
Agreed.
Over the past 2-3 days I have noted the repeated build up of this theme in the media. I wonder, are we seeing the beginning of a subtle and shrewed campaign to create doubt around the strategy of going physical in PMs. Are the CBs and investment banks getting nervous the that confidence game is up?
Of course HSBC, UBS, JP Morgan, etc may try to pay you a premium to not take delivery of your COMEX contract
U.S. Mint Raises Premiums 33% to Shut Off Physical Demand
http://news.silverseek.com/SilverSeek/1286388589.php
It is going to take more than 50 cents an eagle to turn me off.
And yen 150. This should be reminded.
Don't forget this rally in GOLD is all about dollar weakness. Check it in other currencies.
Gold has been rallying in ALL currencies you care to name (Euro, British pound, Ruble, etc...). This can be easily checked on any web site worth its salt. Try kitco.com or goldprice.org for starters.
You obviously have NO idea what you are talking about.
Ooh. I like it when special people are on here! Although I definitely should have said "apparent" rally in GOLD as the others above mentioned. Let's look at one of your brilliant examples, which you can even find for free on this internet thing if you look:
http://stockcharts.com/h-sc/ui?s=$GOLD:$XEU
Golly gee. That's flat for the last month & a half. And if it's not even at 6 month highs in the JPY, Aussie Dollar.
Just keep repeating to yourself. "The dollar is fine. Kool-Aid tastes delicious. I already know everything."
You still have no idea what you are talking about. It is all a matter of perspective, little grasshopper.
Price of Gold, in Euro, let's say for the past 5 years: http://goldprice.org/charts/history/gold_5_year_o_eur.png
Sure, that looks very "flat" to me - if your definition of "flat" really is "steadily climbing".
Oh wait, here is the 10 year price in Euro: http://goldprice.org/charts/history/gold_10_year_o_eur.png
Put that in your pipe and smoke it, "sheldboy".
And here is the site that will give it all to you, in glorious colors: http://goldprice.org/gold-price-history.html
Check it out: most major currencies are there.
Now just go away and find some other web site where you can post your drivel. You are welcome.
Rally my ass. Gold does not rally, gold does not fall. Gold is merely a barometer of how mainipulated individual currencies are. You want paper, buy paper and shut the hell up.
Precisely. The MHFT has ..... well ..... gone mad.