Gold

[rffrydr]

Breaking a long triangle....and so go the metals:

http://futuresource.quote.com/markets/market.jsp?id=metal
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Silver today was masacreed.

Rallies to the wedge WILL be sold--by me
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Gold not giving Central Banks a pass.

http://futuresource.quote.com/markets/market.jsp?id=metal

http://stockcharts.com/h-sc/ui?s=$HUI&p=DAILY&b=5&g=0&id=p31606973496

http://www.financialsense.com/fsu/editorials/dorsch/2007/0905.html

Stopped out GCSI so fast. Bill, what 's the little lady to say about this?
_________________
Today is the Tomorrow you worried about Yesterday!

[nodoodahs]

We'll see what she has to say about it!

I've heard this song before, I would like to see a full-blown mania return, complete with a new high, before believing in it. I may speculate in it, but I won't believe in it.

Gold still basing at 4% below its May '06 high, stocks are still 13% above their May '06 high ... and still in a correction.
_________________
He was wearing my Harvard tie. Can you believe it? My Harvard tie. Like oh, sure, HE went to Harvard.

[rffrydr]

I'm suddenly worried she's uncorked the bottle:



http://futuresource.quote.com/charts/charts.jsp?s=QED%20U7

http://futuresource.quote.com/charts/charts.jsp?s=EL%20H1-SI
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

From this week's Mauldin:

[rffrydr]

Mazda takes some of the steam out of the rarified metals with new catalyst development:

http://blogs.motortrend.com/6217759/technology/new-mazda-catalyst-uses-nanotech-to-reduce-metal-content/
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Harmony Gold mining crisis did nothing for the price. Now the correction.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Silver failed to make new highs. If turn here will exhibit the divergences with Gold.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

This stuff still cost money to hold--unless you make it matter of "full faith and credit."

http://news.silverseek.com/TedButler/1193161018.php
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Huge gold find in Sweden. That is all anyone is talking about right now - but there should be ample amounts of silver, zinc, and copper as well:

http://www.thelocal.se/9264/20071130/

[BlueDaze]

Hi Mr Henry,

Given that you think the US Dollar is due to a rally soon, do you expect the price of gold to decline significantly?

From my limited understanding, the price of gold is primarily driven by:

- Investment demand as an inflation hedge;

- Dollar weakness; and

- Liquidity and safe haven status from financial crisis.

With the massive increase in golobal M3 and rising inflation (esp from food and energy), it looks like demand for gold could still be strong inspite of relative dollar strength (in the next few months).

Longer-term in 2008 and 2009, I do think gold will reassert its strong uptrend.

Welcome your views.


P.S. If you expect to trade the US Dollar, why not gold also since they have the tendency to trade inversely to each other? ie. if long the dollar, to short gold and vice versa.

[BlueDaze]

December 03, 2007

Exploration-Stage Gold Stocks
by Steve Saville

http://www.safehaven.com/article-8950.htm

Below is an extract from a commentary originally posted at www.speculative-investor.com on 2nd December 2007.

Last week's NovaGold news underlined the cost issues that are plaguing the gold mining industry. However, while the situation on the cost front is adding to the considerable angst that already exists within the ranks of gold-mining investors and is having an especially adverse effect on the demand for the most speculative gold stocks (the explorers and developers), it is important to keep the big picture firmly in mind.

The fact is that the gold sector of the stock market has failed to provide any leverage whatsoever to the gold price over the past 4 years because the price gain achieved by gold has not been substantially greater than the increase in the average cost of producing an ounce of gold or the increase in the cost of building a new mine. But that was then and this is now. The situation has been turning in favour of gold-mining stocks in general and exploration/development-stage gold-mining stocks in particular over the past six months, as evidenced by the major upward reversal in the gold/GYX ratio (gold relative to a basket of industrial metals).

What we are currently seeing are the effects on mining costs of years of rampant inflation (money-supply growth). It is quite likely, though, that costs are approaching an intermediate-term peak and will either soon begin to trend lower or, more likely, plateau near current levels. If our outlook is correct then this won't do much for the producers of base metals because the same factors that are expected to put a lid on mining costs over the next couple of years (slower economic growth and reduced financial-market liquidity) will also put downward pressure on base-metal prices. It should, however, do wonders for the producers of gold by bringing about a large rise in the price of gold relative to the cost of mining gold (a large rise in profit margins within the gold mining industry, that is). And if things pan out this way then we should eventually see a veritable feeding frenzy amongst the stocks of companies that have substantial in-ground gold.

Be aware, though, that the aforementioned feeding frenzy could still be up to 12 months away. For one thing, gold's current upward trend relative to most other commodities is still quite young -- gold only began to trend upward relative to the industrial metals in May of this year and was making new 52-week lows relative to oil as recently as 2 weeks ago -- so the large increase in gold-mining profit margins that we are anticipating probably won't start appearing in reported financial results until at least the second quarter of next year. For another thing, a strong US$ rebound is likely to provide a temporary obstacle at some point over the next few months.

The cost issue is not the only reason why most exploration/development-stage gold mining stocks haven't done as well as would be expected given the performance of the US$ gold price. These stocks have also been weighed down by gold's less-than-stellar performance in Canadian dollar terms, by the large amount of new equity issued over the past two years, and, perhaps most importantly of all, by the financial world's shift away from risk. However, we expect the first of these depressants to disappear within the coming 6 months due to a sustained upside breakout in the C$-denominated gold price. The second one will always be around, but there will be times when the supply of stock gets totally overwhelmed by the speculative demand for stock even though the share counts of most gold juniors will remain in strong upward trends. And the third depressant will stop being so as more and more people come to realise that gold in the ground in a politically secure location is a safe investment relative to most alternatives.

Intelligent speculators in exploration/development-stage gold mining stocks have made huge sums of money over the past several years and are very likely to make huge sums of money over the next several years. However, to play this game well you need a lot of patience because short periods of frenetic price increases are usually separated by very long periods when the stocks drift sideways or downward. The idea is to methodically build positions during the long periods of 'drift' and to harvest profits during the relatively short periods of speculative frenzy.

[HenryTo]

Hi BlueDaze,

I am neutral to slightly bearish on gold over the next 6 to 12 months, but still bullish over the long-run. Anyway, here is what I am seeing.

Over the long-run, the gold price is determined by the following factors (from highest to lowest impact):

1) Jewelry demand - in particular increasing jewelry demand from China and India. From a tonnage standpoint, jewlery demand of gold had been on a secular decline in both the US and Western Europe for a generation now;

2) Industrial demand;

3) Demand from traditional retail investments, such as coins, and bar hoarding;

4) Demand from speculators and relatively short-term investors via ETFs. This is the most volatile statistic on a quarter-over-quarter basis and thus represents the factor that drives marginal demand and thus short-term prices.

As you can see from the recent credit crunch, investors fled to US Treasuries and European government bonds (issued in Germany only) in the latest financial crisis - not to gold. Even in times of war, gold has not been the perfect insurance. Case in point: During the Japanese occupation in Hong Kong in World War II, the best "currency" was nice jewelry pieces, including gems, diamonds, and pearls. The Japanese soldiers could subsequently utilize the jewelery as gifts for local women or for prostitution - which gold or even gold coins would not suffice. Similarly, when Jesse Livermore quickly needed cash and did not have any sitting in his bank account, he would always raid his wife's jewelery stash. Nowhere in the literature has he ever mentioned using gold as "insurance."

As for hedging inflation, institutional investors or high net worth individuals can do so simply by shorting the 30-year Treasury bond, and retail investors can do so by buying TIPS. Gold as an inflation hedge is more attractive in China and India - where there aren't any similar products available such as T-Bond futures or TIPS - and that's why they have bidded up both stock and real estate prices. Once a bond and a futures market for bond indices have developed (or once local investors can start investing or speculating on the Hong Kong exchanges), then gold as an inflation hedge will no longer be as attractive, if only because there are other factors that can influence gold prices, such as consumer tastes (e.g. if Indian jewelry demand suddenly opt for palladium as opposed to gold), marginal cost of production, and central bank selling.

Given the continued declines in the latest OECD leading indicators, I expect global economic growth to decline over the next 6 to 9 months, and thus for both jewelry and industrial demand in gold to decrease.

Over the next two to five years, however, I am still looking for gold prices to rise, but mainly because of a continued rise in Asian jewelry and global industrial demand.

As for the US Dollar Index, it is important to note that the Euro makes up over 50% the index. The other components are the Yen, Pound Sterling, Canadian Dollar, Australia Dollar, Swiss Franc, and so forth. Nowhere does it have the Chinese Renminbi or the Indian Rupee - and these are the countries where we are seeing the incremental growth in gold demand - and should continue to see going forward. So yes, we could very well see a rising USD and a rising gold price over the next 2 to 3 years (i.e. USD to decline versus the Renminbi and Rupee but rise against the Euro and the Pound Sterling), but in the meantime, I am looking for USD to do well in 2008 and for gold to fall slightly or remain at current prices.

Best regards,

Henry

[rffrydr]

Unprecedented strike in SA may explain some of the divergence between the metal and the buck:

http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=41249&sn=Detail
_________________
Today is the Tomorrow you worried about Yesterday!