Posted on 12/21/2005 3:44:45 AM PST by Toddsterpatriot
JOHANNESBURG (Mineweb.com) -- Gold’s growing legion of supporters could be in for a testing few weeks.
Bullion’s price tumbled overnight to $490 an ounce, a drop of $12 from 24 hours earlier. Insiders are not overly concerned, though, noting that the drop is being driven by a lack of interest rather than any new factors.
Trading and liquidity in most investment markets are drying up as both professional and amateur punters wind down ahead of the Western World’s festive season.
The overnight drop, however, dashed hopes that the recent out-performance of gold shares was a portent for another strong move for the bullion price. The fall also served as a timely reminder that nothing, especially not gold, rises in a straight line.
A longer-term chart of the bullion price suggests a pull back to the $470 level is possible before the next wave hits. Since the Bull Market started in mid 2001, the gold price’s progression has been marked by six distinctive mini-cycles.
First of these saw its value rise from around $250 to $280. Gold then consolidated around $275 before its next sprint, to $325 (in 2002).Next came a run from $300 to early 2003’s new peak of $370, followed by the retracement in the gold price to $330 and the subsequent rise to $425 (early 2004).
Last year the run saw gold moving from $380 to $450 before consolidating around $420. That was where the most recent surge started, with the price touching a 24-year high of $540 before the easing experienced during the last few trading sessions.
Only with hindsight will we know where the next run started and peaked. But given historic trends and the force of the recent upward move, there’s little question a period of consolidation is due.
That doesn’t mean gold’s day in the sun is over.
Attention of the mass media grows almost daily. This morning’s Financial Times of London joined the expanding pack, devoting a full page to the metal and concluding that further price gains are likely. For investment classes in Bull trends, no publicity is bad publicity.
More important than its newfound friends is that gold’s strong fundamentals remain firmly in place.
Fresh demand will keep flowing from economic growth in India and China; the oil-rich Arab world’s switch from the US Dollar to bullion; and the increasing monetization of gold among investors because of faltering confidence in paper alternatives.
All of this suggests the four year long Bull Market is intact. But given the recent price action and the seasonally quiet period, gold bugs might need to exercise some patience.
Then again, with gold one often profits from expecting the unexpected. It has a nasty habit of surprising even its most ardent fans.
"Gold is down - great buying opportunity!"
If gold rebounds, we'll then hear:
"Gold is moving up! Get in now before it's too late!"
For the gold bug [or better put, the gold sellers], it's ALWAYS the perfect moment to buy gold.
Is playing "GLD" a bad thing?
The Barnum Market at work.
Gold today. Housing tomorrow.
I've been watch gold on and off from the late 70's. Just as a causual observer, you can make an lose a fortune many times over. Also, when the excrement hits the air distribution device you can not eat gold.
BTW - Yes I kick myself often for not buying gold back then at $145/oz. If I only has a time machine, and inventment cash.... and this thermos. That's all I need... (sorry, I've been infected with the Steve Martin bug again.)
We've seen the pump, now let's watch the dump.
That don't happen.
Probably the quickest, easiest way to play gold. In a discount brokerage account you'll probably pay less in fees than you would if you bought physical gold. But it's no fun if you can't hold a big hunk of gold in your hand, now is it?
What price does gold preserve wealth at? $850 back in 1980? Or maybe $250 in 1999?
Anyone have a link to a decent timechart that displays gold or silver's price fluctuations? I used to have one several years ago when I was following their values quite closely but I simply cannot find the bloody thing at the moment.
Try the above.
My thanks for the link. Not the line graph I was looking for but it looks like something to check out later on after I finish up on emails. Quite appreciate it, mate.
Excuse me for barging in, but I believe the correct term is "bigass hunk of gold," the fiat metal.
That's why. It get real pleasantly quiet when gold is sucking back into the depths of despair.
Talking Point No. 112.
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