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Gold Rush or Just a Streak?

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Gold had a good run for twelve years but has fallen by as much as 20% this year alone. Is that set to continue? It looks as if gold will increase marginally again this week and may even continue reaching a peak next month due to the weak dollar and the fact that the world’s highest consumer of gold (India) will be entering a festive season typically associated with marriages and gold-buying time. But, will investors soon be losing interest in gold? Prices are predicted to increase by at least 3.8% on average (as in previous years) in November. It may even be beyond that percentage increase due to the weakened dollar.

  • 68% of those people polled by CNBC believed that gold would increase again this week after last week topped the highest price in gold for the past four weeks.
  • Now, there is some belief that there will be a high that goes beyond August’s $1, 400.
  • Only 18% of people believe that gold will drop this week while the rest see prices remaining stable.

     Gold Rush or Gold Streak?


    Gold Rush or Gold Streak?

Bullion increased last week by 1.7% and that was mainly due to the lower-than-expected US non-farm-payrolls data that was finally released by the administration for the first time since the government shutdown. The Bureau of Labor Statistics was inevitably one of the non-essential federal government departments that were asked not to come into work. Why on earth do we have non-essential government departments anyhow and why did they come back to work? It was probably only so the administration could inform us that despite the shutdown there was a 0.1% drop in unemployment from 7.3% to 7.2%.

My, the economy is really taking off! You’ll have to hold on to your hat President Obama as the wind that gets whipped up might just knock it off your head as the people stampede to the factories to get to work. Of course, the real unemployment figure is still roughly nearly 15% and that looks like it is set to increase even more as people become more and more discouraged about looking for work. Dropping out of the work market means dropping out of the figures.

But, the current situation means that the Federal Reserve will definitely not be able to withdraw its stimulus plan and Quantitative Easing will end up becoming a lengthy drawn-out process that could be equated with doing nothing more than lining the pockets of the banks so that they can create the next bubble on the stock market. The dollar will be weakened even further by the mere fact that tapering has yet again been postponed. It’s also lower still as a result of the shutdown and worry over the ability to pay back debt for the US.

This week it is expected that the two-day policy meeting for the Federal Reserve will end in an announcement that the easy money will continue well into 2014 and even beyond. Normally it’s loose lips that sink ships. But, this ship will be well and truly sunk by the loose money of Ben Bernanke and President Obama’s monetary policy that is far from conventional.

There are some analysts that believe that the strife for the dollar will bring about a rally in gold that will amount to+$200 in the next few weeks. There are even some that expect gold to go beyond $1, 500 by the end of December 2013. That would mean getting back to levels that have not been seen since April 2013. Gold came down pretty quickly after QE tapering was being bandied about and it could go up just as quickly now that tapering is being postponed. The dire situation of the US will certainly give gold a push and that could be good business to invest in. US debt is not going to go away and the country will end up spending more and more. People will inevitably go back into gold to secure their money. The price of gold can only go up and now is the time to cash in on that.

If the US is going to be in a position to deal with its national debt, paying it down, then it will have to let a little bit of inflation creep in there. That in itself will be more fuel to the fire and will drive up the price of gold again.

So is it a gold rush or a gold streak? Most people will be betting on the fact that this is not just a short burst and that it will last a lot longer than a wet firework that fizzles out.

Originally posted: Gold Rush or Just a Streak?

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Fri, 11/01/2013 - 14:40 | 4112685 TheObsoleteMan
TheObsoleteMan's picture

What happened was this: Gold reached $2k and silver reached $50. It was time to hit the panic button. Resort to desperate tactics. Raising the margin requirements wasn't enough anymore. So, they began to short the metals with paper. Even though they don't hold the metal to back the contracts {naked shorting}, they sell massive amounts of contracts {paper gold} and never settle in the metal. They pay a premium to settle in cash. This has worked for 2 1/2 years now. How much longer this will continue is anyone's guess. They did it yesterday and again today. By any definition, THIS IS FRAUD. But it's not like they haven't resorted to dirty tricks before, hell, they do it all the time. It's just that in the past, they weren't so obvious about it. When they find themselves painted into a corner, they just change the rules. Ask Bunker Hunt about that.

Fri, 11/01/2013 - 12:21 | 4112085 Getting Old Sucks
Getting Old Sucks's picture

Sorry to post off topic but I don't know how to contact Tyler.

 

Here's a good headline and wonder what the EMPIRE is going to do about it.

http://www.washingtontimes.com/news/2013/oct/31/inside-china-nuclear-sub...

Fri, 11/01/2013 - 13:41 | 4112443 RafterManFMJ
RafterManFMJ's picture

Seriously? That sub could never come close to beating one of ours in "the twisties."

Fri, 11/01/2013 - 12:45 | 4112172 Dr. Bonzo
Dr. Bonzo's picture

In the sidebar:

Tips: tips [ at ] zerohedge.com

Fri, 11/01/2013 - 12:08 | 4112044 steveo77
steveo77's picture

SPX futures pinging off the Bernoulli 133 channel line 
When the chart "pings" off an important channel line, that gives a lot of credibility to the channel. Futures ES is shown here, with a perfect ping off the Bernoulli 133 channel line extension.  
 
Bernoulli channels (my creation) are like Fibonacci, but they take into account uptrends and downtrends, i.e. headwinds and tailwinds, organic buying and selling amidst the trading moves. 
 
As predicted a few days ago, I expect a move to 1700 to the Bernoulli mid channel line, the B50. 
http://oahutrading.blogspot.com/2013/11/spx-futures-pinging-off- bernoulli-133.html

Fri, 11/01/2013 - 12:08 | 4112035 Seeking Aphids
Seeking Aphids's picture

Again an article which is NA-centric......the real action in gold is happening in China and they don't seem too worried about tapering - it seems that they are engaged in stealth gold buying, scooping up all of their own production while buying discretely on the open market and encouraging their population to buy gold. When the true amount of Chinese gold holdings becomes apparent it could "shock" (in public at least) many of the pundits in NA. So the whole taper on/off drama is just a sideshow from a gold perspective. As long as the US is spending more than it brings in and as long as the rest of the world continues to seek safer havens than the $US we should see gold's true value go up imho....not sure what that will look like in 'paper' gold prices,however.......not that the paper market is manipulated, or anything...........

Fri, 11/01/2013 - 11:36 | 4111911 fijisailor
fijisailor's picture

The dollar is starting to rally and gold will continue lower for at least a couple more weeks.  Im waiting for the bottom.

Fri, 11/01/2013 - 11:00 | 4111779 lasvegaspersona
lasvegaspersona's picture

Physical purchases could double without causing a blip on the price radar. All pricing is done with paper.

Fri, 11/01/2013 - 10:31 | 4111692 unwashedmass
unwashedmass's picture

watching what's happening now. 

this, the arrogance of these guys, what do they think is going to happen? 

everyone who has held their gold to this point is going to be scared out? the chinese have it now, and its not coming back no matter how low they take the paper price. 

the arrogance is stunning.....

and...what's worse, they don't seem to care whether or not this implodes......

and if it implodes, its going to cause....unreal......jesus......

sociopaths. sociopaths. 

Fri, 11/01/2013 - 09:57 | 4111597 Kina
Kina's picture

The 'Price' of Gold since its $1,925 peak has absollutely nothing to do with fundamentals and market dynamics.

There is zero relationship between supply/demand etc of gold and the 'price' of gold.

There has been only one element for the price of gold since its peak and that is what the Fed and Cartel banks want it to be.

They drop paper gold in whatever quanitities they want to produce whatever price they want.

The analysis of the gold price should be based around what it might be without persistent corrupt manipulation.

 

Fri, 11/01/2013 - 13:05 | 4112272 Dr. Bonzo
Dr. Bonzo's picture

This is a very astute observation. I think a lot of gold owners don't understand the central bank position and / or influence on gold prices. I also think a gold repricing could follow the 1971 US abandonment of the Gold Standard in a very similar fashion.... I.e., a very rapid and unforeseen repricing to meet a currency crisis. Taking the 1971 event as a model, when gold was revalued from $35 / ounce to $120.00, corrected to $85 then shot up ten-fold when most market participants had thought gold was done. When all was said and done by 1980 gold settled around $250 and that became the market price for the next 20 some years with some fluctuations. In todays terms this would suggest an upward spike toward $13,000 at the peak of the coming crisis (Dow-Gold 1:1), and and eventual resettling in the $2000-$4000 range when the dust has cleared. So any gold purchase under $2000 is still buying at a discount.

Fri, 11/01/2013 - 09:38 | 4111495 Blue Dog
Blue Dog's picture

The Fed is destroying the dollar. Gold and silver are hedges against hyperinflation. We're going to see $50,000 gold and $1,000 silver as the dollar dies. I couldn't care less about short term gains for either metal.

Fri, 11/01/2013 - 08:25 | 4111295 Quinvarius
Quinvarius's picture

The entire Vietnam war cost 111 billion dollars.  It destroyed our economy, ruined our federal debt, and caused a massive currency crisis.  We now print that much currency every month and a half.  The gold rally has not even started yet.  People still have hope in paper even as the gold price stubbornly marches out of bank vaults like 1 ounce rats off of a sinking ship.

If you are trading gold, except for fun, you are missing the entire point.  This whole chart we are looking at over the past ten years will look like flat line compared to the prices physical gold will command.  Maybe paper keeps up.  Maybe not.  Physical gold and silver are two of the things that they cannot control with paper.

Fri, 11/01/2013 - 12:36 | 4112139 SRSrocco
SRSrocco's picture
TRICK OR TREAT: Fed Smashes Gold & Silver While 2,000 Gold Eagles Were Sold

While the Fed was smashing the precious metals yesterday, investors bought 2,000 Gold Eagles.  Looks like demand for the Gold Eagles has picked up signficantly recently

Fri, 11/01/2013 - 09:34 | 4111488 Carl Popper
Carl Popper's picture

Now one knows the future. This is another piece long on belief and short on facts.

I suppose with sentiment so negative and so few people caring about gold that it could have a run.

However the gold run is over, if our future is low growth and low inflation.

That said I do have 10 percent of what little assets I have in precious metals as a hedge of the unknown.

Invest in your ability to produce an income and your health. Get off your butt and exercise. That will help you survive a reset better than gold.

Fri, 11/01/2013 - 05:45 | 4111139 Truthseeker2
Truthseeker2's picture

* Why Gold Always Goes Up During Quantitative Easing

http://stateofthenation2012.com/?p=911

 

*

Fri, 11/01/2013 - 06:38 | 4111170 strannick
strannick's picture

Assinine article. You'd do better reading about gold at Zerohedge than writing about it.

Fri, 11/01/2013 - 07:34 | 4111218 JerseyJoe
JerseyJoe's picture

Most people don't know who Joe Biden.   The Lamestream media...why?  

Fri, 11/01/2013 - 01:18 | 4110979 disabledvet
disabledvet's picture

895,000 for 500 sq feet in Santa Monica. Incredible. "Detroit is next." California is swimming in a surplus...not that the natives are probably taking note. Can they even afford to stay? What ever happened to Desperate Housewives anyways? CRAZY. I think the Fed is serious about taper this time...I think they will do it right and I think that dollar is primed and ready for a move higher. that'll drive these real estate prices even higher. from "gold rush" to "land rush."

Fri, 11/01/2013 - 06:21 | 4111154 Tall Tom
Tall Tom's picture

Yeah. Right. I am hoping that you are writing in jest with sarcasm. In the case that you are not...

 

If the Federal Reserve Tapers it means that they will be buying less Foreclosed Homes. Those Foreclosures will be allowed to be auctioned of on the open market. (What do you think an MBS, a Mortgage Backed Security, is? It is a bundle of Foreclosed Non-Perfoming Mortgages).

 

That increases the SUPPLY of available homes. Increase in SUPPLY with a constant DEMAND means that Home Prices DECLINE.

 

Let's see. If the Federal Reserve TAPERS and does not purcHase US Treasuries (the other half of what they are buying with that $85 Billion per Month) it means that Interest Rates on US Treasuries will increase. This will happen to make the Bonds "attractive" to other investors.

 

(Some will liken that to putting lipstick on a pig...but setting that aside...) 

 

Of course this makes the Adjustable Rate Mortgages holders more likely to DEFAULT and be foreclosed upon. Furthermore it increases the amount of the Finance Expenses on United States outstanding Debt when Interest Rates increase. That will be a stroke of BRILLIANCE.

 

This also has the affect of creating imbalances in the Interest Rate Swaps that JP Morgan-Chase has and may, if unchecked, cause a Derivatives Meltdown.

 

You know that I really hope that they Taper and the price of Gold declines. I am really praying for that. (I can buy even more Gold at cheaper prices.)

 

Collapse...baby...collapse.

Fri, 11/01/2013 - 06:55 | 4111174 philipat
philipat's picture

The "Taper Caper" is being used as an excuse by The Fed/BIS to slam Gold again at a time of Fiat weakness reaching technically important lows.

Has Gold been inlated into bubble territory by The Fed's POMO? Of course not, in fact it is the one thing that hadn't. So being logical for a minute, if the Fed truly does start to "Taper" (Which IMHO is a long way out) would it not be reasonable to expect that the asset classes which have gone into bubble territory purely as a result of POMO and QEinfinity (Equities and Treasuries) would be those that suffer most?

The Financial MSM and Financial comdey TV channels continue just to repeat the BS they are fed (Pun intended) and are, as usual, semmingly totally incapable of any critical thought.

Fri, 11/01/2013 - 09:34 | 4111396 LawsofPhysics
LawsofPhysics's picture

Indeed.  While the "value" of any physical asset can be argued, gold has a history as a monetary metal and the liabilities of the earth are very real.  As for those paper promises...

http://research.stlouisfed.org/fred2/series/BASE/

 

Fri, 11/01/2013 - 09:56 | 4111593 Carl Popper
Carl Popper's picture

Fucking bring it, right?

Let's have real price discovery in everything, including the true worth of a goddamn bureaucrat

Fri, 11/01/2013 - 10:15 | 4111646 LawsofPhysics
LawsofPhysics's picture

Yes, bring it.  Remind me, what the real value of all the fucking paper-pushers?

Can I interest you in a financial "product" of mass destruction?

Fri, 11/01/2013 - 09:52 | 4111573 SafelyGraze
SafelyGraze's picture

a low silver price reinforces the low gold price, so it is incumbent on us all to make the possession, sale, and use of silver illegal or undesirable.

hugs,
blythe's little finger 

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