Gold just went past $1230 per troy ounce. This beat the last high in December of this year.
Now will gold keep going or is it hovering around a former top?
Gold has been in a consolidation phase since December. It looks kind of messy without any real coiling. It looks like it broke through some triggers in a pattern and some people may contend that it is a new leg up. It looks rather messy and like there is not any pressure. However, as we know sometimes the big trade trades these patterns.
Will gold travel up with the bad news in Europe? Can it remain high and travel in inverse relationship with industrial metals like copper which is taking a hit now?
I tend to think in the near future we will see a small rise but I think the lack of price pressure is going to send the price into consolidation again. The next day or two will show the conviction of gold.
They just installed a Gold Bar Vending Machine in a Hotel in Dubai - you put in some banknotes and you buy a small bar of gold - sounds good but it also sounds like the sort of thing that happens at the tops of markets
The is a strong force that push gold price upward,
The underlying reason for that is fully explained in my hub
with governments pumping out trillions of extra paper money into the system, paper money is getting devalued in the eyes of the market, but if it doesn't reflect this reality now, it is because people still perceived the dollars to worth what it worth right now. But it ISN'T!
So gold is indeed undervalued and paper money overvalued. Which direction do you think the price of gold is eventually going, in light of what I just said? (if you agree w/ what i said at all)
I am a swing trader and I am very familiar with the value of gold with respect to to paper money.
Now part of the rise has been due to the devaluation of the dollar as well as other currencies. However, with that said gold did not move lock step with the value of currencies. Now gold and the value of currencies are an inverse relationship and gold has moved much higher and much faster than the dollar has lost value. This is part of the market as people will pay as much as the market perception dictates.
With that said one can see that a good portion of the rise is just trading. That is why I look at the charts because at a minimum they are predictive of the markets behavior.
As a swing trader, I cant just use fundamental reasoning for trades. I dont know what the long term sense for gold is and I am not saying it is not going to rise. There is ,however at least in the short term, a possibility of a correction. If I were to invest in gold I would wait it is just too risky.
Here is the problem with investing.............While with gold there are many things that provide a catalyst for it to rise but there are also things that may cause risk. There could be a huge gold find. Countries with large holdings of gold may sell them. The market may see stabilization and that may cause the price of gold to go down.
The old adage is the trend is your friend until it ends. For now at least short therm the price of gold is consolidating and there is not enough pressure to push it to a new high. In fact conviction is very anemic. I personally would stay away from that because it very well could drop and the floor is pretty low. I am not saying this is going to happen but I will say there is a risk.
This trend is no secret. Memos from within Citigroup surfaced almost 2 years ago stating that the price of gold, by the end of this year, would reach 2 thousand dollars an ounce.
The primary cause for this rise in price, according to these documents, was because of civil dischord, like is being seen in Greece, and as well due to the amount of paper currency entering into the flow because of the bailouts.
So far the Citigroup memos have been correct, which is not a good thing.
In the news today, there is a hotel in Abu Dhabi that has installed an ATM that dispenses gold instead of cash!
http://uk.biz.yahoo.com/13052010/389/go … -gulf.html
The recent hikes in gold prices is because of europe concerns as most of the market indices have fallen sharply so poeple are investing in gold as a substitute , they will increase for another month and then after markets become stable there would be profit booking in gold bringing the value down again
Gold currently is not traveling with conviction. The new highs are not held today and it is dropping. While the daily trade is not a good way to watch charts. The past few days may set a weekly trend.
The line was held pretty even for a 2 days and now it looks like it is giving back some of the gains. It has therefore formed a pretty solid resistance at a little over $1240.
The likelyhood right now is a small correction with a consolidation. Any serious test of 1240 will mean a large rise. The buy and sell side are even right now but the daily trade has the sell side slightly winning right now.
The price of gold was already estimated by Wall Street Analysts and they figure gold will reach $2000 per ounce troy weight by the end of 2010, providing government does not slow down the printing press of money it's been using.
Just a thought.
There are some analysts that believe that gold is going to go real high. There are also some who believe it wont. I agree that there are deflationary pressures on currencies.
With that said, I believe the market is currently overbought in gold. That is just my opinion. Now one thing with gold is that these wall street analysts are not close at all to making the market. The major players are big countries like the US which has around 300 billion in reserves.
Right now if you look at the charts, they are quite lazy. There are no coils or no pressure which means the market is somewhat stable between buyers and sellers. There has to be an inbalance to cause the market to rise or fall. With the year half way over, 800 is quite a large pole for gold to achieve.
Could it achieve 2000 by the end of the year. I would at least say it is very very very unlikely. That is not to say it is imposible but there is too much rise in too little time and right now there is no price pressure and before it rises there is more of a chance that it will correct before it rises.....or it may just keep floating around 1200.
The last big consolidation on gold lasted more than a year. In some stable enviroments, it may last and stabilize many years. As to whether it will rise in the future. I say it has a good chance. I however will not stake my money on it. I will wait for a good entry point.
Nice opinion Ben, but do realize U.S. currencies is no longer based on the gold standard and hasn't been for years. The leverage presently is based on foreign oil reserves and not on anything the U.S. has control of in the first place.
Again, if U.S. continues printing money it will put huge amounts of pressure on U.S. currencies, and deflation will be your last problem, because the degeneration of value will crush the U.S. Economic future.
Yes, I am saying that if not careful, then the U.S. so-called currency is and will become absolutely worthless. Kind of like it is now, yet no one is willing to say it.
If you've not read my hub on it, I would suggest everyone does.
One of the countries that buy a lot of gold is China, and US is still owing China tremendous amount of money (In other words, Chinese ppl have a lot of US's IOU, which is the US dollars bills). So it is not in the interest of Chinese people to sell the gold they have in exchange of more overvalued US dollars
US dollar is in fact worth less to China than the current exchange rate says it worth (In relation to Chinese money) because Chinese government got smarty pant and thought that keeping their currency low through political mean is keeping its export high. True, but why keep exporting if the US dollars that they earn from export aren't going to be spent anyway?
So US dollars is still being overvalued and gold is undervalued. The Chinese isn't going to keep the US dollars and let them sit there to do nothing, so one of the best ways these conservative people would do is to use the US dollars they earned to buy gold.
Remember, there are tons of US paper money, trillions that we are talking about, sitting in the hands of foreigners like the Chinese who don't know where to spend them.
See my post: http://hubpages.com/hub/Why-Buy-Gold
While I agree that there are many countries like China who have very large surpluses with the US. Unfortunately they must either keep holding onto their US dollars or risk all their holdings withering away to nothing. To peg the currency China needs to buy US debt. The money is not free to buy gold at this point in time. Also China is number six in gold reserves and by themselves they do are not capitalized enough at this point to make a very large rise...........If China keeps increasing their holdings this may change.
Gold has risen from below $300 to over $1200 in less than 8 years. This is quite a large rise. The US dollar has lost a lot of value against gold since then. So what is the magical point?
With all due respect, I dont think anyone really knows. I will say that gold has had a monumental rise and it rose much faster and further than the dollar depreciated. Is that to say that gold wont go up any further?
Gold may rise a lot more. Most of the pressure on gold right now is what is traded not a fundamental. This is one reason I go to the charts. The charts show an undecided market. I personally have no gold holdings. I am compelled by some companies like FCX and SCCO. I have not researched them but the dropped a lot on Friday. They are mainly copper
miners and gold is a secondary product.
I appreciate your conviction but I personally think there is a lot of potential risk right now in gold. That is not to say it wont go up but that there is nothing currently proping it and it has potential to give some of value back through a market capitulation.;
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