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  • Gold and silver price dramatic increase

    While watching Kitco's prices for the past three days I was gradually becoming more and more nervous. Gold and silver are both up and they're very high, they are getting quite expensive.

    Although, the signs were there, many of us didn't buy when they were low:
    http://www.youtube.com/watch?v=pTJqD1ZM2QY

    ETF's are up as well:
    http://www.primevalues.org/market-wa...lver-spike.htm

    Before we knew it, we set up on the (probably) next bull market, as gold and silver are climbing quite similarly to the 1976 scenario.

  • #2
    Re: Gold and silver price dramatic increase

    were you the member who was asking "if EJ says gold may go to 1100, why dont we sell and buy it back later"
    If so, I feel sorry for you, you have just tasted the whip saw.

    I was buying into the dip, and will continue to do so to bring my allocation back to 25%.

    Gold being very volatile, it is really hard to guess short term price action.

    Why is gold rising so fast with T rates are increasing? Are people losing faith in t-bonds? TIC is down are foreigners buying gold with T sales?

    If GDX hits 35, i will sell it and buy GTU/phys with the proceeds. I am sorry I am holding miners. Just too volatile for me.

    Comment


    • #3
      Re: Gold and silver price dramatic increase

      No I wasn't that guy...
      I think we should still focus on silver. Still quite affordable, I say...

      Gold is very risky right now. Too expensive and I am not sure whether it will fall further down... who knows. If they taper, physical holders are doomed!

      Comment


      • #4
        Re: Gold and silver price dramatic increase

        i dont have the stomach to hold a lot of silver. So far we have seen 50 -> 20. Gold was 1800 -> 1100.

        A lot of silver is consumed by industry. If we have another deep recession it may cause another big downdraft in the silver price. That may be the time to buy.

        Comment


        • #5
          Re: Gold and silver price dramatic increase

          Originally posted by GoldMiner View Post
          While watching Kitco's prices for the past three days I was gradually becoming more and more nervous. Gold and silver are both up and they're very high, they are getting quite expensive.

          Although, the signs were there, many of us didn't buy when they were low:
          http://www.youtube.com/watch?v=pTJqD1ZM2QY

          ETF's are up as well:
          http://www.primevalues.org/market-wa...lver-spike.htm

          Before we knew it, we set up on the (probably) next bull market, as gold and silver are climbing quite similarly to the 1976 scenario.
          I have read posts from some saying how some of our itulipers missed the low and how they feel sorry for them. IMO it appears that the excitement over gold will be short lived even though i personally like to see the losses reduced in my account. These wild swings will be norm and i think EJ has said as much. I am now 17% in PMs and miners with most of miners in SLW a proxy for silver that pay me a dividend for holding. Why only 17% and not 30%? I am trying to follow more than the US but Intl market with capital flows and look at other asset classes for better risk adjusted returns. Today, the US stock market esp. small cap looks promising- well after this correction takes shape- then may be a better time to reinvest.

          Here is EJ's bottom line from his last piece on the Post Market Economy. I would not focus on the gold price range as much as the how wide the range can be and for other events to play out:

          "Bottom line: I think we should be prepared for gold prices to fall to approximately $1000 and remain in the $1000 to $1300 range for several years during the period when foreign central banks accept USD and UST as nearly "good as gold for oil." That said, a Ka-Poom type UST crisis that is our reason for holding gold could send the dollar up and gold down to well under $1000 before ultimately rising to $4000 or more. If you think investors are emotional now over this decline, imagine a future scenario where gold recovers, to say, $2000, plunges to $500, then rises to $5000. That's the kind of gold price volatility that the Janszen Scenario entails."

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          • #6
            Re: Gold and silver price dramatic increase

            It's interesting what you're saying. I also read many predictions for lower gold prices as well. But: check the charts, the spike is very strong now... I first thought it would go down to near 1,000 $, but it's been to the 1,180's already, so I don't know what to think now with it in the 1,370-1,380 $ range... some are expecting 1,400 $ gold for next week already.

            I'm a bit concerned about silver. It climbed high from 18 $ to above 23 $ and it's scary.

            It's traditional in the precious metals market to increase in late summer.

            Comment


            • #7
              Re: Gold and silver price dramatic increase

              Originally posted by GoldMiner View Post
              It's interesting what you're saying. I also read many predictions for lower gold prices as well. But: check the charts, the spike is very strong now... I first thought it would go down to near 1,000 $, but it's been to the 1,180's already, so I don't know what to think now with it in the 1,370-1,380 $ range... some are expecting 1,400 $ gold for next week already.

              I'm a bit concerned about silver. It climbed high from 18 $ to above 23 $ and it's scary.

              It's traditional in the precious metals market to increase in late summer.
              Yes i know about seasonality in gold. You are correct the possibility for a rise in gold right now is catching many off guard.

              on looking the charts, i did as you requested. There is a short term point and figure chart which shows a target for GLD of 1410 which i think takes us to 1470 spot. Taking a look at the long term chart, you will see gld needs to break 1440 for a double top breakout which is 1500 gold. So gold spot price can trade in a range 1180 to high 1400's and be range bound. The question you need to ask is what will be the catalyst driving this move? Besides short covering, i see the same thing happening all over again, with traders riding the momentum. Like i said last week in finisher market discussion blog, this is a great time to buy gold if you are a trader with short term view. I may add gold if/when it restests support as we just broke a double bottom in june.

              On checking Eric's last piece you can read more about his GAGFO concept. Under the chart showing correlation to net imports to gold price, he says the following

              "When the cost of net import imports as units (barrels/day x price in USD) increases or decreases, then so does the gold price.
              The mechanism is in the ratio of gold reserves to USD reserves on the balance sheets of foreign central banks.
              The period of rapid gold price appreciation coincided with the rise in oil prices, the U.S. oil import trade deficit, and the accumulation of USD reserves of both oil producers and oil consuming countries. "

              BTW- you can check up to date graphs at
              http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTIMUS2&f=W

              then later on he says which is a concern for continued rise at this point

              "Think of this as the foundation or fundamental basis of the gold price as distinct from other commodity prices. It impacts the gold price over a timeframe of six months or longer. All other factors aside, it may take the market six months or more to respond to changes in GAGFO that it determines to be long-term changes. But keep in mind that gold also responds to factors that impact commodities in the short term. These short-term factors include:


              1) Capital inflows due to relative outperformance of the U.S. Economy versus others. In particular, the credit crisis in China and the ill-fated attempts by the BoJ to reflate the Japanese economy that triggered a severe stock market correction.
              2) A change in the Fed's posture away from accommodation. Rising interest rates in a low inflation environment will pull money out of the gold market."


              In the end we each are responsible for our own decisions and i can be totally off with my charts. I doubt less that Eric is off still realizing the unknowns in this market can be daunting to track and follow.
              Attached Files

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              • #8
                Re: Gold and silver price dramatic increase

                I can be off with my chart work also. But I believe I'm correct more often than not.

                Just remember: Technical analysis is a windsock - NOT a crystal ball!
                Attached Files

                Comment


                • #9
                  Re: Gold and silver price dramatic increase

                  I think a lot of predictions fail to account for a global financial collapse, in which case I think gold would rise dramatically.
                  Most scenarios look at more-or-less gradual changes, rather than a precipitous crash . . . like 2008, but a lot worse.
                  If you are trading in and out, and you happen to be out when that happens, you've missed the boat.
                  raja
                  Boycott Big Banks Vote Out Incumbents

                  Comment


                  • #10
                    Re: Gold and silver price dramatic increase

                    Originally posted by Raz View Post
                    I can be off with my chart work also. But I believe I'm correct more often than not.

                    Just remember: Technical analysis is a windsock - NOT a crystal ball!
                    Thanks, Raz!

                    Be kinder than necessary because everyone you meet is fighting some kind of battle.

                    Comment


                    • #11
                      Re: Gold and silver price dramatic increase

                      Originally posted by raja View Post
                      I think a lot of predictions fail to account for a global financial collapse, in which case I think gold would rise dramatically.
                      Most scenarios look at more-or-less gradual changes, rather than a precipitous crash . . . like 2008, but a lot worse.
                      If you are trading in and out, and you happen to be out when that happens, you've missed the boat.
                      What do you mean by "trading in and out"?

                      I do think that buying precious metals at a cheaper price and selling when the price is higher is a good idea. But you should always keep some metals for yourself.

                      Profits when re-selling could be huge!
                      But the risk is big as well.

                      Comment


                      • #12
                        Re: Gold and silver price dramatic increase

                        Originally posted by GoldMiner View Post
                        What do you mean by "trading in and out"?

                        I do think that buying precious metals at a cheaper price and selling when the price is higher is a good idea. But you should always keep some metals for yourself.

                        Profits when re-selling could be huge!
                        But the risk is big as well.
                        If you happen to have just sold gold -- taking a profit by "trading out" -- and an unexpected "event" occurs that precipitates a quick secular collapse (i.e., not the usual price gyrations) resulting in a spike in gold, you have just missed a lot of profit.

                        I'm sympathetic to trading in and out of gold to garner profits, but anyone who bought gold went from around 1900 to 1860 -- thinking it was a temporary dip -- has not been happy.
                        raja
                        Boycott Big Banks Vote Out Incumbents

                        Comment

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