Posted on 02/07/2010 3:39:23 PM PST by blam
Gold, Stay Away Until the Dust Settles
Commodities / Gold and Silver 2010
Feb 07, 2010 - 11:27 AM
By: Merv Burak
Gold looks great if you turn the page upside down.
Otherwise, one might just stay away for a while until the dust settles.
The NYMEX close for gold was $1052.80 while only an hour or two later the Globex electronic trading showed gold at $1065. One might just wonder what goes on here.
GOLD LONG TERM
Whether gold closed at $1052.80 or $1065 does not change the long term picture. It traded below the $1065 level and therefore triggered a bear signal from the long term perspective.
As mentioned last week, this is not a MAJOR event (from the P&F perspective) as the down side projection is only to the $975 level. I have long learned that unless the P&F projection is for a major move (relative to the P&F parameters used) the move may not even get to the projected level so it will be interesting where this takes us before a reversal of trend is signaled.
Looking at the usual indicators the NYMEX close was below the long term moving average line while the Globex price at around 4:00 P.M. was above the moving average line. In either case the moving average remained in an upward trend. The long term momentum indicator is moving lower fast and is below its negative trigger line but is still slightly above its neutral line in the positive zone.
The volume indicator, although moving lower, has held up pretty well. It is still above its lows from the previous Dec action but has dropped below its trigger line. The trigger has not yet reversed and is still pointing upward. The long term indicators are weakening but have not yet turned fully bearish. The rating for now can be classified as – NEUTRAL, one level above a full bear rating.
INTERMEDIATE TERM
The week started promising with the price of gold just about reaching the intermediate term moving average line before the price turned around and continued its downward spiral. It ended the week below a negative sloping moving average line.
The momentum indicator was just a tinge below its neutral line the previous Friday but quickly rebounded higher as the price turned upward at the beginning of the week. Unfortunately, everything went south on Wed and the momentum indicator is once more in its negative zone below a negative trigger line.
As for the volume indicator, it dropped below its trigger line the previous week and remained below throughout this past week. The trigger line has turned to the down side as a result. The intermediate term rating remains BEARISH.
SHORT TERM
This is where the difference in the two closing prices (NYMEX and Globex electronic trading) makes a difference. Without the knowledge of the Globex close everything on the short term would be looking very bearish. With the knowledge of the Globex close we can see an end of day turn around in the immediate trend of the price.
[snip]
Silver is a pretty decent buy right now IMO.
Although when I think about what I was paying for it 10 years ago I can’t believe I’m saying that.
Best buy = Cases of Spam. That’s right, cans of Spam. Gold is a fools game .
Perhaps. But holding dollars is a greater fools game.
Silver, however, I've been buying at the rate of 2-5 ounces a month for the last 10 years or so no matter what the price was. At least I was up until it became practically unobtainable.
When I figure my dollar cost average I'm still well under $10.00 an ounce. Not too bad all things considered.
Plus I've got a tidy little pile of 'real' money locked up where the Feds can't get at it unless they literally kick my door in.
If they do that, well, let's just say Lurker will no longer be posting on FR and several Federal Agents won't be showing up for work the next day.
L
“One might just wonder what goes on here.”
What goes on here is that gold is a tiny market compared to most others. It can surprise in the short term because is it an attraction for “hot money” which distorts any attempt to analyze gold price “fundamentals.” I’m not convinced there is such a thing as a fundamental when it comes to gold. Long term, the record of price prediction accuracy is laughable.
No country or group of countries can go on a gold standard as there is not enough gold in the world to support such a standard. So gold is stuck with being a speculative commodity with little in the way of fundamentals to help predict it’s movements.
One will always hear indivduals bragging about making money in gold, but that is meaningless. Individuals are always bragging about maming a killing at this or that. Gold is for gamblers, and it’s movements are harder to predict that most other investment vehicles.
I’ll stick with a tiny permanent position and look in other places for profits/income. Nat gas looks very good to me medium and long term, for example. The companies like ETP that move gas through pipelines look very favorable.
Try cashing in $10,000 worth of spam sometime when you need the money.
I disagree. Gold is actually very stable over the centuries. 150 years ago an ounce of gold equaled a week of pay for a skilled worker. It still does today, partly because the supply adjusts to the price. When it gets too high, new mines are opened up, and old mines that were too expensive to operate become profitable again, increasing supply and stablizing prices. When the price drops, the opposite occurs.
He would be at the flea market for three years selling that stuff on the weekends! lol
Newbie brains.
Try eating $10,000 worth of gold if no one has any food.
“Gold is actually very stable over the centuries. 150 years ago an ounce of gold equaled a week of pay for a skilled worker.”
Agreed. But I don’t have centuries.
with tge chatter about the collapse of the dollar popping up weekly... why would I consider? gee... I wonder
and strangely enough, Chiba has been buying gold steady since at least last spring. they also encourage their people to buy gold, if possible. meanwhile the US is trying to push the cost if gold down... like a type of payment
My little rural neighborhood/community is prepared to take out any gangs that 'rove' around here.
Try eating a gold sandwich.
Don’t get me wrong, I’m all in favor of stockpiling a year or so worth of food, and guns and ammo. Eat what you store, and store what you eat.
In the long run, “space capsule survivalism” is a dead end. People need to be able to produce food, and need a community. So the best investment long term is a small farm in a small town, not too close to a major city, where you can get to know your neighbors and count on each other if TSHTF.
Finally, if you have excess weath at that point, gold and silver are excellent long term storage media. BTW, I was talking with the owner of a coin shop recently, who was telling me about an elderly German woman who regularly buys silver coins. She survived the 20s in Germany, and always buys silver dimes and quarters, because back then when she would trade silver coins for goods, there was no way to get change back. Something to think about.
My personal belief about the money situation is there will be a period of hyperinflation, and eventually the government will have to stop spending money it doesn’t have, and issue “new dollars” at 100 or 1000 old per new. That’s what happened in Mexico back in the 80s. People’s savings get wiped out, but they can get back to living.
The solution to economic survival is hedging all your bets in tangible and intangible invests; commodities, currencys, debt, equities and cash. Avoid all singular themes of prophets and soothsayers. As for me, if these are the end times, a few extra cans of spam will give me strength to witness the last battle. Faith in God will conquer fear, always.
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