<b>Gold</b> Bulls' Favorite <b>Chart</b> Died In 2013 - Business Insider |
- <b>Gold</b> Bulls' Favorite <b>Chart</b> Died In 2013 - Business Insider
- <b>Gold</b> Set for Steepest Fall in 32 Years: Weekly <b>Gold</b> ETF Update
- Will <b>Gold</b> and Silver <b>Prices</b> Drop Any Further? :: The Market Oracle <b>...</b>
- <b>Gold Price</b> and Time Preference :: The Market Oracle :: Financial <b>...</b>
- New Trend Guarantees Higher <b>Gold Prices</b> 2014 - The Market Oracle
- <b>Gold Charts</b>: 2000-Present, 2011, '12, '13 | The Big Picture
| <b>Gold</b> Bulls' Favorite <b>Chart</b> Died In 2013 - Business Insider Posted: 23 Dec 2013 11:35 AM PST  Philipp Klinger They would often publish charts overlaying the price of gold and the size of a central bank's balance sheet as proof. For years, that correlation seemed to hold. The theory was that ongoing economic and financial woes would force central banks to keep stimulating, which would in turn devalue local currencies. And in a flight for safety and wealth preservation, investors would flock to gold. Not in 2013. "Gold lost its role as a safe haven against systemic risk in 2013," writes SocGen's Patrick Legland and Daniel Fermon. "The Italian elections, the Cyprus bail-in and even the U.S. shutdown and debt ceiling failed to drive gold higher." Legland and Fermon say that financial markets began to price in the reduction of quantitative easing in the early part of the year. "This maintained pressure on the gold price throughout the year, as the expansion of central bank balance sheets was considered to be a key gold driver," they write. Now that the Fed has indeed announced the tapering of its asset purchasing program, "gold (and silver) will no longer benefit from the Fed's unlimited liquidity." For what it's worth, tapering does not mean balance sheet reduction. Rather, its a deceleration asset purchases. Regardless, the relationship between central bank balance sheets and the price of gold has died. Gold, below the $1,200 mark, is basically at a three-year low right now. Check out the chart. RIP: Societe Generale  | |
| <b>Gold</b> Set for Steepest Fall in 32 Years: Weekly <b>Gold</b> ETF Update Posted: 28 Dec 2013 07:57 PM PST Although a weakened dollar helped give gold prices a slight boost during the past week, the spot price for gold is Gold prices had been suffering from publicity surrounding the anticipated taper of the Federal Reserve's bond-buying program. The quantitative easing program is credited with pushing gold prices to record highs during 2011. The weakening of the dollar resulting from quantitative easing had enhanced gold's status as a "safe haven". As a result, the phase-out of QE has been seen as a threat to gold prices. Although many commentators believed that the impact of the taper on the gold market had already been priced-in, trading activity since the December 18 FOMC meeting has proved them wrong. By December 18, the latest bearish, head-and-shoulders pattern was fully-formed on the chart for gold's spot price, setting the stage for the 2.52 percent swoon on December 19. Despite gold's advances since that point, it has not yet reached the December 18 closing price of $1,217.80. The spot price of gold will need to reach $1,235 per ounce before it can break the neckline of the December head-and-shoulders pattern. More important, it must reach $1,322 per ounce before it reaches the neckline of the October 17 – November 11 head-and-shoulders pattern in order to break its curse. The chart below depicts the trading activity in the SPDR Gold Trust ETF (NYSEARCA:GLD) during the past 180 days (Chart courtesy of Stockcharts.com). As with the spot price of gold, yet another bearish, head-and-shoulders pattern has been formed on the chart for GLD during December. (This pattern is more readily-apparent on a chart drawn with a solid line rather than candlesticks.) Although GLD managed to advance 1.01 percent to $117.12 during Christmas week, GLD finished Friday's session 4.37 percent below its 50-day moving average of $122.48. GLD's Relative Strength Index climbed to 42.64 from last week's 37.22. The MACD has just crossed above the signal line, suggesting that GLD could continue its advance during the immediate future. .Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector's Disclaimer, Terms of Use, and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC. | |
| Will <b>Gold</b> and Silver <b>Prices</b> Drop Any Further? :: The Market Oracle <b>...</b> Posted: 20 Dec 2013 12:05 PM PST By: P_Radomski_CFA
A week ago we introduced you to 3 signs of gold's upcoming decline. At that time we wrote in the summary: (…) the medium-term outlook for gold remains bearish and it seems that we might see another sizable downswing shortly. In the following days, after the essay was posted, gold, silver and mining stocks reversed and started their recent declines. Day by day, we saw lower values of gold, silver and mining stock indices. With this downward move, the yellow metal, the HUI Index and the AXU Index declined below their December's lows (to be precise: at the same time silver dropped to slightly above its previous low). Taking these circumstances into account, you are probably wondering whether the recent declines will continue or not. Although we saw a small rebound in the early European session, we clearly see that the precious metal sector remains weak. As we emphasized in our previous essays, many times in the past the situation in the U.S. dollar and the euro gave us important clues about future precious metals' moves. Therefore, today we'll examine the US Dollar Index (from many perspectives) and the Euro Index to see if there's anything on the horizon that could drive the precious metal market higher or lower in the near future. We'll start with the medium-term USD Index chart (charts courtesy by http://stockcharts.com). Looking at the above chart, we see that earlier this week we had a similar situation to the one that we saw last week. Just like a week ago, the USD Index broke below the medium-term support line based on the February 2012, September 2012 and January 2013 lows (the bold black line) and the lower medium-term line based on the September 2012 and the January 2013 lows (the thin black line). However, once again this deterioration was only temporary. The dollar quickly rebounded and invalidated the breakdown below both medium-term support/resistance lines, which is a sign of strength and a bullish factor. From this perspective, there was no true breakdown and the trend remains up. Let's check the short-term outlook. On the above chart, we see that earlier this week, the USD Index tried to break above its horizontal support line based on the June low without a positive result. These circumstances triggered a sharp decline on Wednesday - just before the Fed released its statement. However, the greenback quickly reversed course when the Federal Reserve announced that it will start winding down its stimulus program (small, but still) and rallied above the 80.5 level. With this upswing, the U.S. dollar broke above the declining short-term resistance line. Although, the USD Index declined in the following hours and came back below both resistance lines, it turned out on the following day that this small deterioration was temporary. On Tuesday, the greenback extended its rally and moved higher breaking above both resistance lines once again. Taking this fact into account, we can conclude that the outlook remains bullish and that it could be the case that the decline is already over and that another rally in the US Dollar is just starting. Let's now take a look at the long-term Euro Index chart. The first thing that catches the eye on the above chart is the target area, which was reached once again. In the previous week, the European currency almost reached the October high. Back then, it seemed that further growth was limited, not only because of this resistance level, but - even more importantly – because of the long-term declining resistance line based on the 2008 and 2011 highs (in terms of weekly closing prices). As a reminder, this strong resistance line successfully stopped growth in October and triggered a sharp decline. Additionally, at that time, a similar situation preceded a local top in precious metals. On top of that, previous tops (in 2008 and then in 2011) were followed by major declines in the precious metals sector. If history repeats itself, we may see similar price action in this situation. Looking at the above chart, we clearly see that earlier this week the Euro Index reversed course after reaching a strong resistance zone and declined below the level of 137. What's most interesting, precious metals followed that decline, which suggests that we'll likely see further deterioration in the PM's sector – similarly to the one seen in the past. Please take a moment to compare the euro's performance in the past few weeks with the performance of the precious metals sector (lower part of the above chart). Let's now take a look at the medium-term Euro Index chart. Looking at the above chart, we see that the Euro Index climbed once again this week and reached its very strong resistance zone created by the previous 2013 high and the short-term rising support line based on the July and September lows. As you see on the weekly chart, the European currency didn't manage to break above these levels, which triggered a sharp decline and pushed the euro slightly above the 38.2% Fibonacci retracement level based on the Nov.-Dec. rally. From this perspective, the outlook for the coming weeks is bearish. Having discussed the above, let's take a look at our Correlation Matrix to find out how all this can translate to precious metals and mining stock prices. Basically, the short-term numbers don't tell us much at this time when we look at them directly, but can tell us something if we look a bit beyond them. The correlation between the USD Index and the precious metals sector is slightly positive in the 30-day column (and even moderately significant in the case of the mining stocks), which tells us that in the past 30 days PMs and the USD Index have moved on average in a similar direction. However, this was the case when they both declined. When the USD moved higher (this week), metals and miners declined even more. This is a very bearish combination – whatever the USD does, the precious metals sector seems to either decline modestly or strongly. Once we know the relationship between the U.S. currency and the precious metal sector, let's check the current situation in gold. In our essay on gold from Dec. 6, 2013 we wrote the following: (…) earlier this week we saw a major change on the above chart as gold broke below the rising long-term support line (…) the implications are bearish, especially that the RSI indicator is currently not oversold – it's above 30 and well above its previous 2013 lows. Back in 2008, the RSI indicator moved close to its previous lows when the final bottom was in. In this case we would need to see much lower gold prices to have RSI close to the 20 level. The next stop for gold is at its 2013 low, slightly above $1,170. It seems to us, however, that this will not be the final bottom for this decline, we expect the final one to form close to $1,100, possibly even at $1,050. Last week, we saw a very temporary move above the previously-broken rising long-term support line, which was followed by another decline. In our previous Premium Update, we wrote that if gold was not able to hold above this line despite a decline in the USD Index, then it was truly a weak market and quite likely to decline much more. Looking at the above chart, we see that earlier this week we had such price action. Gold didn't manage to successfully climb above the rising long-term support line (not to mention staying above it), which triggered a sharp decline. With this downward move, the yellow metal not only declined below last week's low, but also slipped below the level of $1,200. These circumstances clearly show the weakness of the buyers and it seems that the previous 2013 low will be reached quite soon. The exact target for gold is quite difficult to provide. For silver and mining stocks there are, respectively: combinations of strong support levels, and a major support in the form of the 2008 low. In the case of gold, there are 4 support levels that could stop the decline and each of them is coincidentally located $50 below the previous one starting at $1,150: $1,150, $1,100, $1,050, and $1,000. Summing up, the current situation in both currencies suggests that we are likely to see further deterioration in the Euro Index and improvement in the USD Index in the near future. Taking these facts into account and combining them with the current relationship between the U.S. dollar and the PMs, we can conclude that the implications for the precious metal market are bearish. Please note that the exact target for gold is quite difficult to provide based on the gold chart alone. While it's likely that the final bottom will form below $1,150 and above $1,000 (or at least not much below this level), if we want to get a more specific price projection, we should use other techniques, especially those which worked in mid-2013 when the previous gold's low was formed. To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold newsletter. Sign up today and you'll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It's free and you may unsubscribe at any time. Thank you for reading. Przemyslaw Radomski, CFA Founder, Editor-in-chief Gold & Silver Investment & Trading Website - SunshineProfits.com * * * * * About Sunshine Profits Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing. Disclaimer All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
© 2005-2013 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. | |
| <b>Gold Price</b> and Time Preference :: The Market Oracle :: Financial <b>...</b> Posted: 03 Jan 2014 09:55 AM PST By: Alasdair_Macleod The future price of gold cannot be discussed without considering its implied discount rate expressed through time-preference. This is the relative desire to own goods at an earlier date rather than later. There are several reasons gold is almost certainly more valuable sooner rather than later, including the fact that when someone wants something he naturally wants it now, and there is always the risk that a promise for future delivery will not be kept. Bear in mind that time-preference for one good is not necessarily the same for another, reflecting factors peculiar to any good such as supply and demand. The other side of the coin, a lower preference for money, is compensated for by payment of interest on currency that reflects a balance between current and future demand for all goods generally. This is the starting-point for understanding the true relationship between paper currency and gold, now that gold is no longer circulating as money. Currency pays interest and gold we are often reminded does not. If this were the end of the matter time-preference for gold would coincide more or less with the norm for all other goods. However, individuals have widely differing ideas of gold's time-preference. If you think there is systemic and currency risk your time-preference for gold will be high, or put another way it will take a significant discount to tempt you to buy it for forward settlement compared with paying for immediate delivery. If you think that the banking system is completely safe and there is no risk in holding currency, you will accept a far lower discount for forward settlement of gold, reflecting approximately current currency interest rates. Near-zero interest rates for the four major currencies and time-preference rates for gold as indicated by lease rates suggest either there is minimal systemic and currency risk or gold's forward discount rate is badly mispriced. Given the rapid expansion of central bank balance sheets, logically the latter must be the case. Back in 1980 interest rates were raised to choke off price inflation: this is the same as saying time-preferences for goods were discouraged from rising further and began to fall. Gold also became less desired as an inflation hedge, so its time-preference reduced as well. Later that decade the London bullion market began to lease central bank gold in large quantities and gold's time-preference continued to fall, suppressed well below the return available on dollars in the interbank market. In other words the London bullion market developed by treating gold as an asset whose lease rate was to be permanently below LIBOR. Therefore gold's time-preference discount is radically different from what it would otherwise be in an unfettered market. Instead, gold's time-preference should reflect that of other goods, adjusted by gold's own specific characteristics, including its soundness relative to fiat currencies. And therefore the gold forward rate (GOFO) in a free market should normally be negative, given that expansionary monetary policies for currencies are the norm, because GOFO is defined as LIBOR less the gold lease rate. Instead it has been nearly always positive. Sooner or later a more realistic time-preference for gold is bound to return as leasing by central banks dries up. This explains why GOFO tried to go negative on several occasions in 2013. All that's happening is time-preference is beginning to be rightfully re-instated. Head of research, GoldMoney Alasdair.Macleod@GoldMoney.com Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is also a contributor to GoldMoney - The best way to buy gold online. © 2013 Copyright Alasdair Macleod - All Rights Reserved © 2005-2013 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. | |
| New Trend Guarantees Higher <b>Gold Prices</b> 2014 - The Market Oracle Posted: 02 Jan 2014 01:58 PM PST By: Jeff_Clark
These are valid, core reasons to hold gold in a portfolio at this point in time. But a new trend is under way, and someday soon it will be just as much a driving force for gold prices as anything else: a good old-fashioned supply crunch. A few metals analysts have mentioned it, but it escapes many and certainly is off the radar of the mainstream financial media. But unless several critical factors reverse course, a supply shortage is on the way with clear implications for the price of gold. The following four factors are combining to diminish gold supply. While we've touched on some of them before, put together they're creating a perfect storm that will, sooner or later, impact the gold market in several powerful ways. As these forces gather steam, you'll want to make sure you've already built a substantial position in physical bullion. Factor #1: Production Pullbacks, Development Delays, Exploration CancelationsGold producers don't operate in a vacuum. If the price of their product falls by 30% over a two-year period, they've got to make some adjustments. And those adjustments, more often than not, result in lower production, delayed mine development plans, and cuts in exploration budgets. The response is industrywide, and even low-cost producers are not immune. The drop in metals prices means some mines can't operate profitably, and if the losses exceed the cost of closure (and possibly, restart in the future), these mines will be shut down. As operations come offline, global output falls. While lower metals prices are not what any of us want, they're long-term bullish because, as they say, the cure for low prices is low prices. If prices drop further, a greater number of projects will be unable to maintain production levels. For example, we know of several operating mines that, in spite of large reserves, will be forced offline if the gold price falls to the $1,100 level. The impact on development and exploration projects is even greater—it's easy to postpone construction on tomorrow's new mine when you're worried about cash flow today. As a result, many companies have cut drilling projects and laid off geologists. The chart below shows the precipitous decline in the number of drilling projects around the world. Through the first nine months of 2013, 52% fewer drills have been turning compared to the same period last year. And it's not just fewer holes being poked in the ground—ore grades are declining too. As of last year, ore grades of the ten largest gold operations are less than a third of what they were just five years ago, and less than a quarter of what they were 14 years ago. Here's the troubling aspect: This trend cannot be easily reversed. It takes about a decade to bring new projects on line, and even shuttered, recently producing mines held on "care and maintenance" take time and money to get going again. In other words, even when gold prices start rising again, new mine supply will take years to rebuild. Many companies will find themselves with a lack of readily available ore, and the market with fewer ounces. Lower metals prices obviously have an impact on how much metal gets dug up. This alone is bad enough for supply, but unfortunately it's not the only factor… Factor #2: Now You See 'Em, Now You Don'tMany mining projects have both low-grade and high-grade zones. When prices fall, a company can mine the richer ore and still make money. It may sound shortsighted, but it can be the right thing to do to stay profitable and be able to survive in a temporarily weak price environment. But high-grading, as it's called, can make low-grade ore part of a disappearing act. Here's how: When metals prices are low and companies focus on high-grade ore, the low-grade material is temporarily bypassed. It's still physically there, so one might assume the company will come back at a later time to mine it. But not only is it not economic at lower metals prices, it may never get mined at all. That's because some low-grade ore only "works" when it's mixed with high-grade ore. Even when gold moves back up, it doesn't matter, because the high-grade ore is gone. So it's not just gone legally, as per regulatory definitions of mining reserves—it may be economically gone for good. Miners could return to some of these zones in a very high gold price environment (something well north of $2,000), but that's a concern for another day. The point for now is that many of today's low-grade zones would be written off if the high-grade they need to work is gone. Critical point: You may read reports early next year that global production is rising. However, to the degree that's due to high-grading, it virtually guarantees lower production is around the corner. Factor #3: Greed Is Good—Says the PoliticianIt's become increasingly difficult for mining companies to navigate the political minefield. Many governments have become so rapacious that supply is already suffering. We've mentioned this issue before, but take a look at how governments and NGOs (nongovernment organizations) put an effective halt to some of the biggest precious metals discoveries seen this cycle… Pebble Project in Alaska. Anglo American (AAUKY) spent $540 million on one of the biggest copper/gold discoveries ever, but recently announced that it will walk away from it. The company said it wants to focus on lower-risk projects and is undoubtedly tired of putting up with ongoing environmental scares and regulatory delays. Fruta del Norte in Ecuador. Kinross Gold (KGC) bought Aurelian shortly after what many called the discovery of the decade, but the politicos demanded such a big slice of the pie that Kinross stopped developing the project. New Prosperity Mine in British Columbia. Taseko Mines (TGB) has been relentlessly challenged by environmental activists at the world's tenth-largest undeveloped gold/copper deposit and pushed politicians to continually delay permitting. Pascua-Lama in Argentina & Chile. This giant deposit has been postponed for several years, largely due to environmental issues and unmet regulatory requirements. Some analysts think it may never enter production. Navidad in Argentina. Pan American Silver (PAAS) was forced to admit that the Navidad silver deposit—one of the world's biggest silver-primary deposits—was "uneconomic at any reasonable estimate of long-term silver prices" when the local governor announced he wanted "greater state ownership" and increased royalties from 3% to 8%. Minas Conga in Peru. Newmont's (NEM) multibillion-dollar project was put on the back burner last year when the government gave the company two years to develop a way to guarantee water supplies for residents of the Cajamarca region. Certainly bigger projects attract greater attention and scrutiny, but as it stands now, none of the above projects are in operation. This list is by no means exhaustive; large numbers of smaller projects all around the world face similar challenges. The bottom line is that finding economic gold deposits in pro-mining jurisdictions is getting increasingly difficult. The result? The metal stays in the ground. Factor #4: Implosion ExplosionAs you've likely read, the gold mining industry in South Africa is imploding.
The breakdown in South Africa is important because as recently as 2006, it was the world's top producing country; it's now #5. Unfortunately, there's every reason to expect this trend to continue, in many countries around the world. The result is—you guessed it—fewer ounces come to market.
The net result of this perfect storm is that we should expect gold supply to decline until prices are much higher. Even when prices do rise, management teams will be reluctant to expand operations, reopen mines, or buy new projects until they feel the new price level is sustainable. As a result, this trend will almost certainly last several years. Based on the research we've done, it is my opinion that after a bump in output early in 2014, the shortfall will become increasingly evident by the end of the year and reach fractious levels by 2015. If demand remains at current levels, or even if it falls by less than the decrease in supply, gold and silver prices will be forced up. And in an environment of currency depreciation, we should see more demand, not less. We have the makings of a classic supply squeeze. Higher metals prices are not the only ramification, however: Investors will be required to pay higher premiums on bullion. Further, we can expect a lack of available product, most likely resulting in delivery delays or even rationing. That's why it's so important to buy bullion now, before the storm. Even if you need to sell a little to maintain your standard of living, the effects on you will be all positive. The product you sell will…
All it takes to capitalize on this opportunity is to recognize the supply shortage that's on the way and act accordingly. Critical point: Buy the physical gold and silver you think you'll need for the future NOW. One of the best places I know has among the lowest premiums available in the industry, and also offers several international storage locations in case things get bad in your home country. This breakthrough program is as liquid as GLD and offers greater safety than storing bullion at home. Click here to find out more. © 2013 Copyright Casey Research - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. © 2005-2013 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. | |
| <b>Gold Charts</b>: 2000-Present, 2011, '12, '13 | The Big Picture Posted: 31 Dec 2013 12:30 PM PST This is from a bigger project I am working on. I found it interesting that even thought Gold hit its peak in 2011, it did not have a negative year until 2013: 2000-2013 ~~~ 2011 2012 2013 Category: Gold & Precious Metals, Technical Analysis Leave a ReplyYou must be logged in to post a comment. |
expected to register a nearly 30-percent drop during 2013, for the most significant decline since 1981. Worse yet, a number of analysts – such as Jeffrey Currie at Goldman Sachs – see gold prices falling lower. Currie expects gold to sink as far as $1,050 per ounce at this point next year.
These four factors are already affecting gold supply. Gold production in the US was already 8% lower in the first half of 2013 vs. the first half of 2012. Through June of each year, output dropped from 655,875 ounces last year to 623,724 in 2013.
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