Thursday, February 24, 2011

Emas kini lebih RM4,284 satu auns

2011/02/22

Ahmet Davutoglu
Ahmet Davutoglu
Ketegangan Afrika Utara, Asia Barat pengaruhi harga

HARGA emas meningkat melebihi AS$1,400 (RM4,284) satu auns semalam, pertama kali dalam tempoh hampir tujuh minggu, berikutan ketegangan yang terus memuncak di Afrika Utara dan Asia Barat.
Ketegangan kini merebak dari Mesir dan Tunisia ke negara Asia Barat dan Afrika Utara lain apabila penunjuk perasaan berkumpul membantah pemerintahan pemimpin yang sudah memegang kuasa begitu lama.
Harga emas sesi dagangan semalam naik sehingga AS$1,400.40 (RM5,041.44) satu auns daripada paras AS$1,388.58 (RM4,249.05) satu auns ketika didagangkan di New York Jumaat lalu.

Harga kontrak hadapan emas bagi April naik AS$11.70 (RM35.8) satu auns kepada AS$1,400.30 (RM4,284.91).

“Tidak dapat disangsikan lagi bahawa kenaikan logam berharga itu yang berlaku sejak kebelakangan ini berikutan ketegangan di Asia Barat,” kata Daniel Major, Penganalisis di RBS Global Banking & Markets.

“Jika (pembelian) tidak dibuat menerusi dana dagangan bursa atau di Comex, ia kemungkinan besar dibuat menerusi pasaran dagangan fizikal iaitu pembelian syiling atau jongkong emas kecil, dan saya tidak menolak kemungkinan adanya pembelian lebih besar oleh individu kaya jika dilihat daripada keadaan ketegangan yang belum berkesudahan,” katanya.
Menteri Luar Turki, Ahmet Davutoglu, semalam berkata revolusi di Tunisia akan menjadi model kepada lain-lain negara yang ingin melakukan pembaharuan politik.

Tentangan terus diberikan kepada pemimpin Libya, Muammar Gaddafi yang terus merebak di ibu negara, Tripoli kelmarin dan anak lelaki berikrar untuk terus bertahan ketika semakin ramai penunjuk perasaan terbunuh di timur negara itu.

Harga minyak pula terus naik hampir sebanyak AS$3 setong kepada paras tertinggi dalam tempoh dua setengah tahun ketika peniaga melihat berlakunya ketegangan yang tidak berkesudahan di negara pengeluar minyak utama, Libya.

Harga saham di Eropah turut jatuh berikutan krisis itu.

Dalam dagangan semalam, harga perak naik setinggi AS$33.46 (RM102.38) satu auns, platinum pada AS$1,844.25 (RM5,643.4) satu auns manakala palladium pada AS$859 (RM2,628.54) satu auns. – REUTERS

Tuesday, February 8, 2011

Why it is still important to have gold in your portfolio

Why it is still important to have gold in your portfolio - David Levenstein - Mineweb PDF Print E-mail

JOHANNESBURG -

As we live in very uncertain times at the moment it is prudent to adjust to the prevailing circumstances in order to make the appropriate investment choices. And, as an investor, it is important to make the correct choices in order to maximize returns. The traditional investment instruments have always been equities, bonds and properties. And, since these are the investments most commonly touted and discussed by the main stream media, alternative investment classes are often overlooked.

While I most certainly do not have anything against equities, I do believe that commodities, currencies and precious metals should all constitute a part of any investment portfolio. I also believe that property and bonds do not offer any value at this stage. And, when it comes to precious metals, I think most precious metals such as gold, platinum, palladium and particularly silver are going to out-perform most other asset classes during the next five to ten years. But, no matter your personal investment choice and no matter what your stock broker tells you, every single investment portfolio should hold a percent of gold and silver. And, when it comes to gold, it is important to understand the dynamics of this precious metal.

For centuries gold has been a monetary metal and although bankers have tried continually to abolish the metal from the monetary system, they have always failed. And, instead, each time it has been their fiat currency that has failed, and gold has always re-emerged as an important component of the monetary system.

During the last three years we have witnessed the largest financial crisis on record which in turn led to one of the worst global recessions. Yet, as the values of equities and property plummeted, and as currencies fluctuated widely the price of gold soared to new all-time highs. The combination of economic gloom and currency devaluation led investors to seek a safe haven for their hard earned money. Gold has once again performed its traditional role as a hedge against the declining values of currencies as well as being a way to protect ones wealth. Historically, gold has been a very effective way to preserve wealth. So, it is not surprising that the price of the yellow metal increased by more than five-fold in the last ten years. Gold has out-performed most equities, corporate as well as government bonds, property and most currencies over the last ten years. Yet despite its incredible performance most analysts denigrate it as an investment. And, now that there are signs of a recovery, these same analysts are touting their favourite investment... equities.

As I have mentioned, while I think carefully selected shares can offer good returns, gold should not be overlooked. And, it is not because I am judging its past performance and suggesting that it will continue at this unrelenting pace. No, it has nothing to do with that. It has everything to do with evaluating current economic and geopolitical trends as these are two main issues that will likely impact on the gold price in the next few years.

If we already know that the main driving forces behind the higher gold prices include massive government debt issues, currency devaluation combined with general global economic problems plus geo-political tensions, then it is logical to assume that as long as these issues are not resolved, the price of gold is unlikely to fall. However, this is merely a rather simplified view. When we look deeper and see that governments, especially the USA, have been debasing their currencies by their expansionary monetary policies we should understand the ramifications of this. What this has done and will continue to do is to make the US dollar weak. In the last ten years the US dollar has already lost more than 30% of its value when compared with other currencies. But, ultimately, since the US dollar is the reserve currency of the world this devaluation will drive the prices of commodities higher. Now, not only do governments have to find a way to stimulate their economies, they also have to find a way to deal with the burgeoning debt as well as high unemployment. But, in addition, as commodities become more expensive, the rate of inflation is going to increase. And, when these higher prices affect the price of staple foods of many poorer nations, we can expect to see unrest amongst the population. So, now in addition, to huge national debt, currency wars, slow GDP growth, high levels of unemployment, increasing inflation we are also going to see more geopolitical turmoil. Unless you believe that this scenario is not nearly as bad as it seems and a remedy can be found overnight, then I strongly suggest that you add gold to your investment portfolios.

Peter Munk, chairman of the world's largest gold producer Barrick Gold, couldn't have said any better when he spoke in an interview at Davos recently. He said, "If you are a utopian, if you believe the problems of currency, the problems of terrorism, the problems of unrest around the world will all be resolved by the end of the year, then gold would have a difficult path. If you believe like I do that we bought ourselves a temporary peace from the panic of last year and the year before, [and] that the fundamentality of the problems are long term still issues, then your attitude will be a bit more positive toward gold."

Even though gold maintains a special reputation as a safe haven in uncertain times, there are many other reasons why investors should keep a portion of their funds invested in the precious metal. And, when I mention gold , I mean gold bullion...physical gold in the form of gold bars and gold coins; not limited edition medallions, so called " rare" coins which are really medallions. As far as I am concerned these have no investor value whatsoever, and should be left for the collectors.

TECHNICAL ANALYSIS

8-feb-1.jpgGold prices found good support above $1325 last week. While prices remain neutral for the time being, a decisive break above $1350 is needed to push prices higher.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=120041&sn=Detail&pid=102055

The Manipulation Behind Gold And Silver Prices

The Manipulation Behind Gold And Silver Prices - Elizabeth Kraus - Gold Coin Blogger PDF Print E-mail

A strange start to the year and a strange end to a volatile week, so we take a whiz across the air waves in order to get a ‘feel’ of what’s going on, so this will be a mixed bag of data. The first eye catcher is this: Eric Sprott: Expects $50 for Silver, and for gold possibly $2,150 by Spring 2012.

Eric Sprott recently launched a silver fund and so entered the market to acquire 15 million ounces of physical silver. To his surprise, it wasn’t readily available and in fact it took 10 weeks to get his order filled. Another order placed for 1 million ounces has been given a delivery period of around 2 months. The silver that he received looks to have come directly from the refiners; it is that new. This also tells us that that the supply side is indeed very tight. On the subject of China, Eric drew listeners’ attention to this interesting dynamic: In 2005 China exported 100 million ounces of silver. Fast forward to 2010 and China imported 100 million ounces of silver; that’s a 200 million ounce turnaround in an 800 million ounce market.

Other influential factors:

One of China’s major banks has offered its customers a facility whereby they can save a portion of their savings in gold. Since the offer, the bank had to open one million accounts, which required 10 tonnes of gold to satisfy the demand. Sprott ponders the outcome: What if this idea were to spread throughout China and further afield, say to India? What is the effect if we get an extension to QE2 or even a QE3? What about the possibility of a trillion dollar fund, an idea that is being considered at the current meeting at Davos? What about the impact of the U.K., where economic confidence remains rather weak? The Bank of England supremo, Mervyn King talks of the U.K. being in a depression. Over in the United States, the social security department has announced a $45 billion overspend for 2011.
So, there appears to be no hiding place as the currencies vie for position in a race to the bottom. Rallies are no longer based on the merits of individual currencies, but rather just how slowly the other fiat currencies are falling apart.

In India, China, Asia and many other countries throughout the world, the concept of receiving money for doing nothing is laughable. For the western world to remain remotely competitive, welfare, social security, bailouts, handouts, freebie benefits are existing on borrowed time. You have been warned. Securing your own financial independence has now reached a critical stage; think, plan and implement new ways to supplement your income.

Now, just what was the reason for gold prices taking a dip recently? We take a quick look at a possible scenario as proffered by Zerohedge from an original piece in the WSJ: Over the past several weeks there had been rumors that the reason for the precipitous drop in gold was primarily driven by a hedge fund liquidating its futures positions. This has now been confirmed: “Yeah, that was just me liquidating my spread position,” Mr. Daniel Shak, [of SHK Asset Management] 51 years old, said in an interview. “I had a significant, fully margined position. The dollar amount of the gold liquidation was very small, it was just a lot of contracts.”

Of course, in the extremely jittery gold market, the kind of persistent marginal gross selling of contracts was all that was needed to spook weak hands into a consistent dump of the precious metal (which as we pointed out, was beyond overdone).

Judging by Monday morning’s jump in the Precious Metals complex, SHK’s liquidation is now not only over but about to promptly reverse as daytrading momos realize they were duped by one single guy. Look for gold to resume its upward advance as investors realize that the gold dump was nothing more than an ongoing futures position liquidation.

A huge trade by a tiny hedge fund has sent shudders through the gold market.

Thanks to the nature of futures trading, Daniel Shak’s $10 million hedge fund held gold contracts valued at more than $850 million, more than 10% of the main U.S. futures market, and the equivalent of South Africa’s annual gold production. It just goes to show how sensitive this market can be when the above action has such an impact. No doubt there are other contributing factors that also gave weight to the movement in gold prices, but this will suffice for now.

While Italy could be the next candidate for a bailout, despite the soothing words from the Eurocrats… investor appetite for gold will move gold further North. All in all, in a report from Barclays Capital, while exchange-traded-fund holdings of gold fell in January, Asian gold premiums nevertheless remained strong. Barclays said that Asian gold premiums have hit record highs last month. The bank said that gold premiums rose as consumers in China purchased ahead of the Chinese New Year, Indian consumers bought gold ahead of the February wedding season and demand was supported by the re-emergence of geopolitical concerns.

Source: http://goldcoinblogger.com/despite-the-dip-bright-future-in-silver-and-gold-awaits-investors-in-2011/#more-2715

Gold Has Cleaned Up Its Act And Washed Out The Weak

Gold Has Cleaned Up Its Act And Washed Out The Weak - Elizabeth Kraus - Gold Coin Blogger PDF Print E-mail

I am constantly amazed at the gold (and silver) bashers who, if they are not economically illiterate or challenged, must be shills for the propaganda machines. This government and those in Europe are pulling out all the stops to indoctrinate the people that wealth can only be measured in terms of fiat currencies. They’ll make you cry they’ll make you laugh while they hypnotize you with words about a staff of humble beginnings! One of the truly a funny moment to me in President Obama’s speech, which I assumed was to be a turning point to have confidence in our government is, when he almost made Boehner cry as he spoke of his and Biden’s humble roots (as if that takes much effort to make Boehner cry). It is a mistake to not acknowledge Obama’s gift of deep empathy. Paul Ryan I think had the winning message of the evening when he said that government plays an important role in setting the stage–but ultimately our nation’s greatness rests in the “importance of limited government” and the “blessings of self-government.”

If all that was said in that speech was true, then why do we see an increasing distrust of any government pronouncements these days when they say, who has come from humble roots. WHO HAS NOT? Even the silver fed, had come from roots of humbleness from a gold invested relative! Meanwhile…here are some facts about gold. The “capitulation” in gold that drove the metal to its worst January in 14 years may be ending as escalating violence in northern Africa spurs demand for a haven and after a key technical indicator held.

“The capitulation is over,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, who correctly predicted in September that the metal would keep rallying to $1,350 an ounce after reaching a record. “The liquidation has washed out the weak trades and put gold at a point that looks attractive to new buyers.”

While futures fell as much as 8.1 percent this month, they are still 24 percent higher than a year ago. The metal has risen for 10 consecutive years in London trading, the longest winning streak in at least nine decades. That’s attracted investors including John Paulson’s Paulson & Co. and George Soros’s Soros Fund Management LLC. Paulson has denominated some share classes of his funds in gold, something that at least doubled their gain last year relative to the dollar-denominated shares, according to a performance report sent to clients this month.
Gold’s rebound from the 150-day moving average of about $1,306 is a sign that prices are poised to rally, said David Hightower, the president of the research firm based in Chicago. The metal may climb to $1,630 by the end of June, he said.

150-Day Moving Average

Prices rebounded from the 150-day moving average three other times in the past year, data compiled by Bloomberg show. The last time gold traded near the average was in late July. Since Aug. 1, prices have advanced 13 percent. They touched a record $1,432.50 on Dec. 7. The metal has not fallen below the average since January 2009.

“People take these longer moving averages as a key measure of confidence,” said Hightower, who correctly forecast that gold would rally above $1,400 last year. “Gold has respected the 150-day average in the past. By repelling from that level, it suggests that gold has value, and that the bull camp was not scared and forced out of their positions.”

The metal’s 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, was at 31.7 on Jan. 27, the lowest level since October 2008. Some analysts view a level of 30 as a sign that prices may be poised to jump.

Trading Patterns

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. On Jan. 28, gold futures for April delivery rose $21.90 to $1,341.70 on the Comex in New York as stocks worldwide plunged the most since November because of the violence in Egypt. Earlier, the most-active contract touched $1,309.10, the lowest since Oct. 1. The metal has dropped 5.6 percent this month and reached a record $1,432.50 on Dec. 7.

Gold fell this month as hedge funds cut their bets on higher prices. In the week end Jan. 25, three days before prices rebounded on the violence in Egypt, net-long positions dropped 3.6 percent to 129,664 contracts on the Comex, the lowest since May 2009, U.S. Commodity Futures Trading Commission data show. It was the fourth consecutive weekly drop, the longest decline since November.

Reduced Bets

Investors in exchange-traded products backed by gold also reduced their bets. Combined holdings across ETPs from 10 providers were at 2,033.8 metric tons by Jan. 28, the lowest since June, according to data compiled by Bloomberg. That’s still more gold than all but four countries’ official reserves, data from the World Gold Council in London show.

The metal’s decline this month is “a healthy break,” Hightower said. “Gold has cleaned up its act and washed out the weak hands.”
This month’s decline in prices has precedents in the decade-long bull market. Futures slumped about 8.5 percent in the five weeks to July 28 and almost 15 percent in a two-month stretch that ended in February 2010. There was also a 34 percent retreat from March 2008 to October of that year. Prices have more than doubled since then.

“The short-term negative sentiment in gold will be dramatically curtailed,” said Jon Spall, a product manager for precious metals at Barclays Capital in London, who expects the commodity to reach $1,700 this year. “Gold is a great hedge against financial uncertainty,” Spall said. “Nimble money gets in and out, but there are still plenty of people with long-term interest in gold.”

Source: http://goldcoinblogger.com/gold-has-cleaned-up-its-act-and-washed-out-the-weak/#more-2712

The Truth about Gold Correction, and its Monster Move North Again

The Truth about Gold Correction, and its Monster Move North Again - Elizabeth Kraus - Gold Coin Blog PDF Print E-mail

Beware of the point when the U.S. Federal Reserve ends the cheap-money mindset that’s fueling the Economy… That uncertainty will bring the best opportunity for Gold! The majority of economists and strategists are now telling anyone who will listen that, the economic recovery is now normal, and are trumpeting this view to jump-start the stock market. They are confidently asserting that “the new normal” concept popularized by Pimco is now a moot issue.

In fact, there is nothing in the major economic indicators to indicate that the current recovery is anything other than anemic recovery. Asians these days say US is in depression and it’s only a matter of time before it gets declared officially. What is told and shown to the public about gold, and what actually is, is hidden manipulation of its worst kind. Let’s not be a gullible bunch! A very famous banker once said :” BUY WHEN THERE IS BLOOD IN THE STREETS”!

While we have unemployment at a historical level and the debts of various states and counties are teetering on bankruptcy, the Federal Reserve balance sheet filled with toxic mortgage crash, the American army is overextended in 720 bases while also fighting unpopular wars in Iraq and Afghanistan, America has to borrow from China to finance its own house, corporate debt is high, private debt is astronomical, the dollar has lost 96% of its value since 1913……. and the fools tell you to pile up some more PAPER ASSETS!

Economy, economics…play their role on Gold as God’s more than ever before! While Gold operates in a society full of economic traps and snares, one has to have a sense and sensibility for it or falter. Some things are just too important to leave to the Economists—and that is the Economy, itself!

Funny thing, since Russia said they will take control of physical gold they have purchased, gold and silver have been going down. Could the Central banks be pushing the price down so they can purchase the required amount for Russia?

It also took a hedge fund manager over two months to get his physical silver from the bank holding it. Hmmmmm, do you think Central banks are trying to scare people out of their gold and silver so they can fill their orders?

Bernanke and other central banks have not pulled money out of the market yet. Ben kept interest rates the same. FOMO bought more bonds today, just like every day. SO what has changed? China’s domestic gold market hasn’t. It’s actually facing supply shortage as the gold demand continues to surge amid the upcoming traditional Chinese Spring Festival. A statistical report earlier released by the World Gold Council showed that the gold investment demand has become the dominated factor affecting the gold prices after the global financial crisis. The global gold demand still remains strong, said the report. And will be even stronger after the veil is lifted off Gold!

During the first three quarters of last year, developing countries, including China, India and Russia, have present huge demand for gold. The world largest gold-backed Exchange Traded Funds has cut 31.26 metric tons of gold recently, bringing its gold reserves to the lowest in the past five months. Gold and silver have been some of the best performing asset classes for the past 10 years! The dow is flat, has been at the same level since 2000s, unadjusted for INFLATION!

Utter nonsense! BUY GOLD, RACK UP ALL THE SILVER YOU CAN LAY YOUR HANDS ON! The Indians are buying, the Chinese are buying, the Japanese and Russians are buying, and the world is buying! There is shortage of the physical stuff, the real stuff! Even dictators in Tunisia know about it!

While enjoying the QE2 inflated stock markups, those of sense and sensibility know the reality. The simple fact that we live in an ‘ artificial” monetary system, based on government issued fiat monies should be a reason enough for smart individual to buy gold! Beyond that fact; our recent history shows that governments will not relinquish any means to save themselves and their corporate acolytes; aka quantitative easing! This is the fundamental reason behind our recent surge in price inflation. What is the point of having a DOW at 20,000 if the price of oil is at 200 a barrel and a loaf of bread is 10 dollars? Does that really matter? That’s my “contrarian paradigm.” Blood in the street has to do with food riots, price inflation, and overvalued securities already happening in the Middle East and South Asia! Undervalued commodities are still being disregarded despite the fact that they have been outperforming other asset classes for 10 years! Holding real hard assets such as gold, silver, platinum, palladium and a whole set of commodities that have been doing much, is much sensible than paper assets!

The yen fell sharply against both the U.S. dollar and the euro on Thursday after Standard & Poor’s cut Japan’s long-term credit rating while the increased prospect of rising European interest rates weighed on commodities. Wall Street stock indexes held near 29-month highs, boosted by strong earnings from companies like heavy equipment maker Caterpillar Inc (CAT.N: Quote) , news that also supported European equities.
Standard & Poor’s cut Japan’s rating one notch to AA-minus, citing the country’s ballooning deficit, which it said will further reduce Tokyo’s already restricted fiscal flexibility. The move will have a limited impact on Japan’s ability to raise money on financial markets, but it raised a red flag with investors about other leading countries’ fiscal imbalances. “It is reasonable to expect that the Japanese downgrade will raise concerns over the sovereign rating of the U.S.,” said Vasileios Gkionakis, macro strategist at Fulcrum Asset Management LLP in London, which oversees $900 million in assets.

The euro’s gains were sharply curtailed against the U.S. dollar on profit taking and a rebound in the greenback based on lower gold prices. Commodity prices were mostly lower as the prospect of rising interest rates in Europe grew after European Central Bank member Lorenzo Bini Smaghi said an expected rise in imported goods inflation could not be ignored. [ID:nFLARCE7IJ]

“The ECB has started to show more concern about secondary price pressures, and the market has acknowledged that,” said Gavin Friend, currency strategist at nabCapital.

Bini Smaghi’s comments went to the heart of current investor concerns, highlighting the potential for inflation to prompt central banks to raise interest rates at a time when low rates are seen as key to boosting renewed economic growth.

Now, as of this morning I was also informed through a Bloomberg article that the Financial Crisis Inquiry Commission has faulted the Fed for lax mortgage regulation helping lead to our most recent financial crisis. Talk about the tip of the iceberg. The article also informed me that Mr. Alan Greenspan declined to comment on the Commission’s findings, as did his spokeswoman, Katie Byers Broom. When Fed spokeswoman, Michelle Smith, was asked to comment she also declined, saying that she had not seen the report yet. Funny, isn’t it? I am sure that Mr. Greenspan did not want to comment on the Commission report because it might raise questions about the significant role he played in our current debacle. It might also raise questions regarding the significant level of consulting fees he is earning for warning us now about the risk associated with the type of Debt Buildup that he created during his realm. I am still baffled, how do these people keep getting away with it!

Based upon what we all know, doesn’t it make you wonder who is paying our ex-Great Economist for his advice these days? And why the television networks still bring him on for his insightful vision? Talk about a risk factor—The truth of the matter is this: during Mr. Greenspan’s full reign at the Fed, the United States was practicing a form of “reverse” Keynesian economics and we applauded him. Not only was Mr. Greenspan jacking up our somewhat growing economy with steroids using mortgage debt, he was allowing the same thing with our National debt. In fact, the Fed was practicing so much “reverse” Keynesian economics during Mr. Greenspan’s reign that we have no room to use it now. Why or how did we let this happen? There is one reason and one reason only. Because we defaulted our own common sense to our non-business oriented economists, who don’t know a damn thing about business, nor seemingly, the economy, itself. I say some things are too important to leave to the economists, and the most important of these things is the Economy.

I also find it rather interesting that Bloomberg News found it important enough to get an early copy of the Financial Crisis Inquiry Commission report to see what they had to say but the Fed seemingly did not? All I can say is this–typical of our economists. Sitting high on top of their Golden Perches, people like Mr. Greenspan, Mr. Bernanke, and the Fed Governors don’t have to listen to anyone other than their own group of selectively groomed economists with like minds, who will support everything they say. And keep quiet about any opposing views. I can almost hear the Fed talking these past couple of days in their secretive little cliquish gathering: “The Financial Crisis Inquiry Commission report? Ah, we don’t need to worry about that. That’s just something a bunch of laymen non-economists put out, looking for someone to blame after the fact.

They don’t know anything about the economy or economics. So, who do we listen too? After all, no one saw this crisis coming. No one other than Roubini, where history has proven, all he does is throw things up against the wall and hope something sticks. Who would want to bet on his projections? And Krugman, who simply says about the economy: “We’re okay. Let’s just stay pat for awhile and let this thing blow over.”

Through all the nonsense, hidden agendas, miss communicated facts, “Gold prices may have seen heavy corrections in the recent days from its unquestionable number uno position, and had fallen slightly putting investors to panic, but technical indicators are showing high and sufficient signs that it will have a super rebound, “says Commodity Oneline. And, wow! Look what happened to gold Friday the 28th…flying North again!

Source: http://goldcoinblogger.com/the-truth-about-gold-correction-and-its-monster-move-north-again/#more-2708

Tuesday, February 1, 2011

Gold Bottoming? - Richard Russell - Financial Sense

Gold has risen a fantastic ten years in succession. Gold, of late, has been receiving a lot of interest and publicity and advertising. Gold is probably overdue for a correction in this ongoing bull market. Analysts are talking about “gold correcting down to 1200 or even 1000.” However, I believe that the more important picture is that the gold bull market has much further to go on the upside.

I’ve been reading the McClellan Market report for years. It’s one of the better and more intelligent reports that I read. McClellan does a good deal of research on cycles, and I must say some of their cycle studies work out quite well.

McClellan has discovered that there’s a cycle low that appears for gold roughly every 12.5 months. The cycle lows have run as follows: Jan 6, ’06, Jan 8, ’07, Jan 7, ’08, Jan 5, ’09, Jan. 4, ’10, Jan 8, ’11. McClellan puts the next cycle bottom for gold at February 8, 2011. Which means that the cycle low for gold should arrive at any time between now and February 8, give or take a few weeks before or after that date.

Interestingly, the McClellan cycle bottom for gold is due to arrive amid a good deal of professional bearishness regarding gold (“gold overdue for a major correction”). Thus, many traders have traded out of their gold positions, just as we near the date for the McClellan cycle bottom. Below, the red arrows mark the McClellan cycle lows.

1-feb-1.png

The Russell view — It’s virtually impossible to successfully time in-and-out trades during an ongoing primary bull market. Usually what happens is that the trader has moved out of the market just as the bull trend resumes. Thus, the bull market does what it’s supposed to do — advance while leaving most traders and Johnny-come-latelies behind.

Today I received the “Bullish Review of Commodity Insider”. I’ve been reading this excellent publication for years, and it’s proved its accuracy many times over. The “Review” is based to a large extent on the action of traders (large speculators, commercials and small speculators) on the COMEX. The latest issue of the Bullish Review has just arrived, and it features gold. About gold, the Review writes, “Commercials were quick to jump on a relative small price correction; with enough buying to trigger a major COT (commitment of traders) buy signal.”

1-feb-2.png

So as for gold, we have a McClellan cycle bottom and a COT major buy signal from the Bullish Review, both in force in the current area. So let’s see what happens. Above I show a P&F chart of GLD. If GLD hits the 128 box, it will be giving a sell signal for GLD and obviously for gold as well. GLD has support in the 114 to 122 zone. GLD closed at 130.10 on Tuesday.

BULLS WIN — The stock market is a “weighing machine.” Daily it weighs the net opinions and actions of millions of traders and investors in the US and around the world — all attempting to discount the future. When opinions are divided, the stock market reflects this by becoming erratic and almost schizophrenic. Which is where we are now. However, I have my faithful PTI to depend on. My PTI has been bullish for months on end, and during the few times when it has turned temporarily bearish, it immediately swung back to the bull side.

Conclusion — This has been a difficult stock market to follow, but the verdict must go to the stubborn bulls.

Source: http://www.financialsense.com/contributors/richard-russell/gold-bottoming

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