Posted on 09/14/2009 12:47:13 AM PDT by bruinbirdman
London's leading gold forecaster has advised clients to liquidate holdings of gold and silver until the latest speculative fever abates, warning that futures contracts on New York's Comex exchange are flashing warning signals.
John Reade, an analyst at UBS, said the number of "net long" positions held by speculators reached 29.02m an ounce last week, a record high.
Investors watch Comex contracts as an indicator of froth in the market. Last week saw a jump of 6.4m ounces in net long contracts, a rare occurrence. When such sudden moves have occurred in the past, gold has fallen 5pc over the subsequent month on average.
The buying frenzy last week followed Chinese comments on the need for reserve diversification from dollars into euros, yen, and gold, as well as a proposal by the United Nations for a world currency. The dollar fell sharply, propelling gold to $1011 an ounce – tantalizingly close to its all-time high of $1030.
Mr Reade, a repeat winner of the London Bullion Market Association's forecasting prize, said speculation in silver futures is even more extreme by some measures.
Demand for physical gold – as opposed to paper contracts – has been flagging, with Indian jewellery demand well down on the levels a year ago and poor volumes reported in Turkey and Switzerland. The metal is trading at a discount on Istanbul's exchange.
"We recommend that nimble investors take profits on any long gold and silver positions, looking to re-enter after a correction," said Mr Reade. His price target is $950 over the next month, with fresh rallies in 2010.
The last time net long contracts on Comex reached levels close to last week's high was in February 2008 as gold screamed to its historic peak. Prices crashed by $150 an ounce shortly afterwards.
However, chartists say
(Excerpt) Read more at telegraph.co.uk ...
It’s fools gold.
It’s not really going up, the dollar is just buying less of it.
Buy it in a more stable currency, like canuck bucks, which are going up and will reach par soon, and go beyond as our dollar continues it’s slide into Zimbabwe territory.
Well if it aint now it will be by end of business tomorrow once all the bliss-ninnies see off everything including grandmas gold teeth...
see=sell
I think $750-$800 is more realistic.
I think you may start seeing people jumping out of windows below 700. heck, I may jump at 750. One thing about gold and silver though, it has utility as well as potential. In this environment I sure like it better then the dollar or the stock market.
Perhaps Ambrose was writing for the trader rather than the hoarder.
yi8tbos
The Chinese have more or less publicly stated they are converting some of their 2 trillion dollar reserves into commodities such as gold and silver. They are also buying in steps because they do not want to drive the price too high. You can see it in silver prices since the start of the year. Three major buying splurges, then pull backs. We are currently at the top of the third buying splurge. The pull back stop points have been slowly increasing. The next silver pull back should be to around 14. Gold is harder to read. IMHO.
Also, from this article, “However, chartists say the technical signals are entirely different this time. Gold appears to be breaking through a “triple top”,
which could push prices much higher.” I think old Ambrose is trying to help his friends with short positions.
Gold has roughly the same value today as it did when it was first brought to the surface of the Earth. It’s price includes the cost to discover it’s location, dig it up out of the ground and bring it to the surface.
What has changed is the number of $’s we are will to trade for the metal. If you want to see vivid illustration of this, chart the price of oil from 1946 until today, expressed not in dollars, but in the gram value of gold through the period. What you will have is a roughly flat chart of two almost parallel lines. Now create the same chart using $’s as the denominator. See the difference?
I, along with just about everybody else, saw my 401k lose 45% of it’s value last September. After the recent market recovery, I gained back some of it’s value. I then sold off the whole thing and rolled it over to a self directed IRA, all bullion.
I don’t know what the value of my new IRA will be in ten years when I go to get it, but the gold will still be there and it will still be worth something. I have also converted a great deal of my savings and other cash that used to to be in the stock market and converted it to either US farmland or gold. Predominately numismatic gold. It is mostly immune to swings in bullion price and has a greater appreciation rate than bullion. Also, when FDR made gold illegal for Americans to own, a prospect not impossible to imagine happening again, this didn’t apply to collectable coins.
On days when the economic events seem to be overpowering, I go down to the basement, open the vault, and take out a $20 Liberty and put it in my pocket. You have no idea how much better the news sounds for the rest of the day.
Hey...sounds like you got the right idea. If you have any info I would like to change my dollars into something stable. Thanks, Eric
lot o gold bears around here
Greater fool theory; reality check: hello mr bear.
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