Use access key #2 to skip to page content.

Please Comment if You Love/Hate Gold!! / Gold and US Dollar Charts

Recs

27

December 04, 2009 – Comments (50)

Please feel free to unleash. Write lots of comments about why you love/hate gold, think it is a smart investment/stupid useless shiny metal. All the comments go to a good cause!!!

----------------------------------

No long diatribes in this post. For my long term take on Gold (fundamentally and technically), see this post: The Gold Blog. Gold/Silver/GSMs (and a little Oil for good measure), for my long term take on the Dollar (fundamentally and technically), see Thoughts on the US Dollar, Analysis of the USDX Long Term, Follow up on the Gold Blog.

I have read so many posts and comments that gold is either

a) A stupid useless shiny metal, a relic, a dead currency, a good / commodity
or
b) in a bubble and it is about to burst.

Awesome. I love it. If you want to read my really nice and polite versions of why I think you should invest in gold and avoid the dollar, see my two links above. But right now my annoyance and impatience is showing. So I am simply going to be terse for awhile.

As an investor, this mis-information and misunderstanding of gold makes me very happy.

So bring on more comments of variant a or b above!

Meanwhile, I am quite content in my long term gold positions.

50 Comments – Post Your Own

#1) On December 04, 2009 at 9:00 PM, binve (< 20) wrote:

Gold Monthly Chart



My Gold Elliot Wave Counts starting from the most recent and going back to 1920 - the are obviously very bullish









Dow-Gold Ratio (DGR)





Other Gold Ratios





Silver



Oil



HUI Count



Gold/Dollar Correlation



US Dollar EW Counts









30 year Treasury Bond and 10 year Treasury Note



Equity Dollar Correlation Long Term

Report this comment
#2) On December 04, 2009 at 9:04 PM, 100ozRound (29.72) wrote:

YaY for charts.  I don't know what they mean. but YaY!

Report this comment
#3) On December 04, 2009 at 9:13 PM, Option1307 (29.97) wrote:

They sure are purrrrty, kinda like gold and silver. Which gets me thinking. I sure love them!

As I mentoned earlier to Sinch, am a holder of metals in my RL account. However, the extent and specifically the rate at which gold has shot up the past year, past 2 months scares me. Add into the mix that everybody under the sun, investor or not, is talking about gold, buying gold, etc really scares me. I believe in the long term fundamentals of gold/silver, but you have to admit the above mentioned are very characteristic of bubbles. Which is why I'm scared.

I don't believe gold will crash like the last yrs' oil bubble or RE etc. but there certainly is the possibility of a significant correction to eliminate the faint of heart.

Thoughts..?

Report this comment
#4) On December 04, 2009 at 10:02 PM, 1315623493 wrote:

Gold can be over priced just like any other asset. I won't be buying gold any time soon unless it corrected at least 15%.

Report this comment
#5) On December 04, 2009 at 10:02 PM, starbucks4ever (98.98) wrote:

Gold will go up as long as greater fools will be available in sufficient quantities to purchase the shiny metal from the lesser fools who want to cash out. And sure, the Universe is a large place and there are too many fools to go around. But even the supply of fools in the Universe is not infinite.

Report this comment
#6) On December 04, 2009 at 10:22 PM, devoish (99.10) wrote:

Today there are a lot of people recommending I buy gold and silver and miners.

Four years ago there were a lot of people recommending I buy a house, and a condo and Home Depot.

Ten years ago there were a lot of people recommending I buy dot coms.

Fifteen years ago there were a lot of people recommending I use credit.

Twenty years ago there were a lot of people recommending I buy Gov't bonds and CD's.

Gold is like most of those things. It is only worth tomorrow what someone says it is worth tomorrow.

A new log splitter will make me money.

 

Report this comment
#7) On December 04, 2009 at 10:29 PM, XMFSinchiruna (27.99) wrote:

BetapegLLC

If you mean 15% from the top, then you could just be right this time. :)

Of course, I wouldn't bet the farm on it ... that's why I only raised my cah position to 15% and left the remainder of my gold/silver allocation staunchly long. I am only willing to trade in and out with a maximum of 10% of my allocation or so, because the greater risk in a bull market scenario is to miss the next big surge and thus be left behind.

15% from 1,227 would be $1,043. Since that number is not a significant level of technical support, one might consider gravitating towards $1,050 (round numbers frequently come into play as a result of human nature). The potential exists to test $1,000, but I won't be leaving much to chance with that expectation. I'll be re-building positions near $1,100 and aggressively at $1,050. If we don't even get to $1,100, then I will still have a 15% cash position waiting for the next big pullback... or perhaps to deploy in other sectors after a dollar-rally-fed broader equity pullback.

If you step aside completely though, and get the bottom call on a single near-term correction wrong, one can be left behind faster that one can say: "hey, which Central Bank bought that much gold?" Hopefully, I don't need to repeat myself thatgold is not under any circumstances  suitable asset to consider shorting at any time during this bull market.

Leave the gold shorting to the market making bullion banks. :)

Report this comment
#8) On December 04, 2009 at 10:33 PM, XMFSinchiruna (27.99) wrote:

binve,

your inflation-adjusted LT gold chart is a thing of beauty. Great job!

Report this comment
#9) On December 04, 2009 at 10:38 PM, XMFSinchiruna (27.99) wrote:

Just a little something to keep in mind:

Report this comment
#10) On December 04, 2009 at 10:40 PM, XMFSinchiruna (27.99) wrote:

And this one is simply mind-boggling.

Seriously ...

Report this comment
#11) On December 04, 2009 at 10:50 PM, binve (< 20) wrote:

100ozRound , LOL! Thanks :)..

Report this comment
#12) On December 04, 2009 at 10:52 PM, binve (< 20) wrote:

Option1307, My opinion, is I agree gold will be very volatile (it is a very emotional investment). And any large pullback is a gift. The move from 1000 to 650 was a gift. And I bought all the way down. I view any major pullback in the future as a buying opportunity. My $0.02. Thanks!..

Report this comment
#13) On December 04, 2009 at 10:53 PM, binve (< 20) wrote:

BetapegLLC, Fair Enough. Thanks for the comment!.

Report this comment
#14) On December 04, 2009 at 10:54 PM, binve (< 20) wrote:

zloj, LOL! I would have been disappointed with any other comment from you :)..

Report this comment
#15) On December 04, 2009 at 10:54 PM, binve (< 20) wrote:

devoish, Fair enough. Thanks for the comment!..

Report this comment
#16) On December 04, 2009 at 10:56 PM, binve (< 20) wrote:

TMFSinchiruna, Hey man! Actually all those charts above are nominal charts. I do have a really good inflation adjusted chart somewhere (somebody else made it), but I have misplaced it.

Those 2 charts from Casey Research (those guys are awesome) are excellent!

Thanks!!..

Report this comment
#17) On December 04, 2009 at 10:59 PM, XMFSinchiruna (27.99) wrote:

binve

This one has to be inflation-adjusted ... it shows the 1980 peak above today's level. :) Am I missing something?

Report this comment
#18) On December 04, 2009 at 11:00 PM, binve (< 20) wrote:

TMFSinchiruna , Yeah, it stops at 2005 :) Says so on the top of the chart :)..

Report this comment
#19) On December 04, 2009 at 11:01 PM, portefeuille (99.44) wrote:

#10 If you exclude Roche (now mother of Genentech), the "entire biotech industry" is even smaller than that (maybe even if you include Roche). And they at least produce something other than a useless, shiny metal, hehe ...

Report this comment
#20) On December 04, 2009 at 11:02 PM, binve (< 20) wrote:

portefeuille, LOL! Thanks port :)..

Report this comment
#21) On December 04, 2009 at 11:03 PM, portefeuille (99.44) wrote:

something other than a useless, shiny metal

something more useful than that shiny metal 

Report this comment
#22) On December 04, 2009 at 11:07 PM, ChrisGraley (30.30) wrote:

binve I bought another 15 pounds of silver on the dip today!

Sinch, Your charts are things of beauty as well.

devoish you've been recommending government healthcare for a while too! Maybe you should reconsider. If the log splitter takes off a finger, can you afford the loss of blood for the 4 months it'll take to to finally see a doctor?

Report this comment
#23) On December 04, 2009 at 11:29 PM, lquadland10 (< 20) wrote:

I like gold and silver what with the hanky panky that is going on.

Report this comment
#24) On December 04, 2009 at 11:30 PM, XMFSinchiruna (27.99) wrote:

ChrisGraley

You, my friend, found a great bargain!  :)

binve

Oh yeah... oops!  :) Too many hours staring at this screen. 

Have a great weekend all!

Report this comment
#25) On December 04, 2009 at 11:40 PM, neenrneenr (37.39) wrote:

I like to trade gold and silver etfs & I would love to have a gold Tiffany's Heart toggle bracelet, I can honestly say I LOVE  the shiny part about gold : )

Thanks to miss malibu I was very successful shorting both today, made some extra XMAS $ for more American Girl Dolls. : )

I pay attention to a few things that Charles Nenner has to say about the market, He recently said that gold would rally until the end of January 2010. February will end the gold rally is what he said.  I don't understand his "wave charts"

 

 

Report this comment
#26) On December 04, 2009 at 11:46 PM, XMFSinchiruna (27.99) wrote:

neenrneenr

I'm always wary of price predictions that are tied to specific points in time.

I made a couple of those kind of predictions early on in my career, and have since learned that timing is the unknowable x factor in virtually all price projections.

One can be happy when analysis is conducted well in real time, but that's different from time-stamped predictions.

Jim Sinclair, who knows more about gold than any man alive, seems to be learning that lesson as well. :)

Report this comment
#27) On December 04, 2009 at 11:54 PM, binve (< 20) wrote:

ChrisGraley, Nice man! I got a few big bricks of Silver and a mess of coins myself :) Thanks! ..

Report this comment
#28) On December 04, 2009 at 11:55 PM, binve (< 20) wrote:

lquadland10, Amen sister! Thanks :)..

Report this comment
#29) On December 04, 2009 at 11:56 PM, binve (< 20) wrote:

TMFSinchiruna, LOL! No worries man :)..

Report this comment
#30) On December 04, 2009 at 11:56 PM, binve (< 20) wrote:

neenrneenr, Thanks for the comment!..

Report this comment
#31) On December 05, 2009 at 12:31 AM, awallejr (82.76) wrote:

It's a hedge and pretty jewelry and nothing more.  Should it be figured out how to transmute copper into gold then its value could become worthless.  Reminds me of an old "Twilight Zone" show where 3 bank robbers of gold time traveled into the future through "stasis."  They found themselves in a desert with little water and slowly died off trading bars of gold to whoever had water.  Ultimately the last guy finally found a road, and died while offering gold for a drink.  The couple that found him thought it odd since by then gold had no real value.

I will never mock anyone who owns gold.  I think gold will continue to forever increase in value unless it can be made through transmutaion or a buttload can be found on the moon or Mars. 

Report this comment
#32) On December 05, 2009 at 1:06 AM, blake303 (29.51) wrote:

Geodes!

Report this comment
#33) On December 05, 2009 at 1:11 AM, ajm101 (32.28) wrote:

What awallejr said.  There are too many easy thought experiments to invalidate gold as a currency (what if a small country found large reserves.. it it 'big' then?   or given 8b people in the world, how much do you have to adulterate the gold to have a suffient amount to trade?)

Sorry to not comment in a while.  Busy helping to build next generation system tools to manage cloud computing environments...

Report this comment
#34) On December 05, 2009 at 2:28 AM, 1315623493 wrote:

TMFSinchiruna

1050 huh? Well, I hope it breaks 1000. In fact, I hope the price of gold crashes! 900, 800, 700?

Report this comment
#35) On December 05, 2009 at 4:15 AM, uclayoda87 (29.46) wrote:

In real life, I bought SLW last Friday morning, I bought TGB early Monday morning and I bought SLW again this Friday when it fell below 16.  I now have a buy order open for CDE.  Yes, I like the opportunity to decrease my cash holdings and buy metals and miners on irrational sell offs.

Does anybody really believe that the Fed will ever raise the interest rate above say 1%.  Will this really change the down hill course of the US dollar or the long term commodity bull run?

I'm betting with real money that the answer is NO.

Report this comment
#36) On December 05, 2009 at 8:33 AM, hhasia (62.39) wrote:

Hi Binve

Well, when steaming smoldering cow dung arrives at the local ATM which will not accept any card, that Bar will be good for what?  Oh, bopping the grocery checkout teller over the head...."This IS money you twit." Then barter on line investing tips for that head of lettuce.  So that when things open up again the teller can get rich and  you can eat today. I'm with devoish on this one. I'll join the log splitter camp. Better yet let me purchase a horse farm and compete with the railroads.

Nevertheless you make the best charts.

HHASIA

Report this comment
#37) On December 05, 2009 at 10:10 AM, binve (< 20) wrote:

awallejr, Nice. Actually your thoughts are very similiar to my own and exactly why gold is money.

Take your story and substitue gold for 1 trillion Federal Reserve Notes (Dollars), at the end of the story 1 trillion dollars was offered, but since the United States doesn't exisit it is just worthless paper. Maybe that is too extreme. Lets say you a 1 trillion Continentals. And the US Government does still exist. But the Continential is an obsolete currency.

This is exactly why I veiw gold as money and not a "commodity" with intrinsic value of its own (I talk about this very point here: The Gold Blog. Gold/Silver/GSMs (and a little Oil for ......, ).

Here is my ultimate thought on why I own gold now, and why in the future I will sell all of it for something productive and useful:

In my investment account that I am in gold and oil. Why? Because I am bullish on the very long term prospects for the economy of the US and the world.

.... Now that might seem odd, because aren't all the people who invest in gold assuming the world will end? The answer is no, at least for this gold investor. I invest in gold not because the world might end, but I invest because I firmly believe it WILL NOT!!. If I was uber-bearish for the very long term, I would build a bunker underground, stocked with years of food and buy guns. Gold? For the end of the world? It makes no sense. Why would a useless shiny metal rock be something to collect if civilization ends?

It is the same thing with fiat currency (such as the US dollar). If you really thought the world would end, why collect little pieces of green paper with faces on it? How is that possibly useful? If there is no government to give you goods in exchange for it, then there are better items for a bunker mentality.

So I invest in gold because I am an optimist.

I am not bullish on the US government. I think they will inflate the dollar into worthlessness (or devalue it highly at least). But ultimately economies WILL recover, and I want to trade my gold in for something useful. Shares in a profitable alternative energy company, or a company the produces / distributes water from seawater to sustain drought countries, or any number of productive future endeavors.

Gold is simply a way to maintain purchasing power as the worlds economy goes through this large and needed contraction. So as an optimist, you should invest in gold :) Just my $0.02 (silver coins of course, not actual pennies ... :) )..

Report this comment
#38) On December 05, 2009 at 10:10 AM, binve (< 20) wrote:

blake303, Balloons!!..

Report this comment
#39) On December 05, 2009 at 10:11 AM, binve (< 20) wrote:

ajm101, Thanks man :) See my response above #37..

Report this comment
#40) On December 05, 2009 at 10:14 AM, binve (< 20) wrote:

uclayoda87, I am with you on that bet. And eventually the Fed will raise rates, but by then it will be too late and instead of helping to prevent a currency crisis it will exacebate it. They only way to prevent a currency crisis is to become hawkish immediately. Otherwise, they are prolonging the inevitable and making it worse. Thanks man!..

Report this comment
#41) On December 05, 2009 at 10:15 AM, binve (< 20) wrote:

BetapegLLC, Me too! Man 700 gold again, I would be buying with both hands (again)..

Report this comment
#42) On December 05, 2009 at 10:16 AM, binve (< 20) wrote:

hhasia, Thanks :) See my response above to awallejr, #37..

Report this comment
#43) On December 05, 2009 at 12:44 PM, hhasia (62.39) wrote:

Binve

Thanks for the response. I wish you the best of luck on the timing of the sale. Most folks will wait too late, then look for that "productive" investment only to find them over sold, with a long waiting list. Of course not talking about shares here. A family retreat in the mountains with lots of fresh water and trout, should do nice for low maintenance provisions.  The trauma will, I believe, bring out the best and worst like the Gulf Coast hurricanes.

Report this comment
#44) On December 05, 2009 at 3:21 PM, Earendil (< 20) wrote:

Binve, congratulations on all the work.  Very interesting charts.

Here are two questions that occurred to me while studying them:

On your 13th chart, you show that gold is usually strongly inversely correlated to the dollar, and only rarely moves synchronously.

On your 14th and 15th charts, your Elliott wave count shows the dollar near the bottom of a major wave down (wave 1 of 3), and you explore the possibility of a considerable dollar rally (wave 2 of 3), possibly retracing 61.8% of the previous fall.

On your second and third charts, your Elliott wave count for gold shows gold near the top of a more minor wave up (wave 3 of 3 of 3), and you explore the possibility of a more modest gold pullback (wave 4 of 3 of 3) which you draw as retracing less than 50% of the previous more minor wave up.

Your projected gold pull-back seems considerably shorter in time and money than your projected dollar rally.

Why would the Elliott wave counts for gold and the dollar not have a better inverse correlation?

What would be the reasons and mechanisms whereby the inverse correlation would break down, and gold would have a short and mild pull-back while the dollar had a longer and stronger rally?

I would be very interested in your thinking on those questions. 

Thank you.

Report this comment
#45) On December 05, 2009 at 4:40 PM, Mary953 (62.05) wrote:

thanks for your blog, Binve.  I hope you get a high total - and if you get a chance, put a banner on CIL for the posting frenzy. 

Report this comment
#46) On December 05, 2009 at 4:57 PM, binv271828 (< 20) wrote:

Earendil , Thanks! I appreciate that!

Those are fair questions and my answer lies in the note on the 13th chart. These are almost all of my gold and dollar charts. The notes on them explain most of their purpose, but in the blog post where I talk about the gold / dollar correlation, I delve into it further See this post: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=271636, comments 4,5, and 6.

But the short answer is: I think we are coming up on one of those time where the dollar and gold go up together. P3 will be getting underway and a lot of people will get of of their long positions and go to cash (and for large instiutions, that means going into short term treasuries, which of course means buying the Dollar). At the same time there will be another corresponding flight to safety in gold.

Look at that chart again and notice the last time gold and the dollar traded up together: End of 2008, beginning of 2009 as we were still crashing at the end of P1.

So that is my take and my $0.02.

Thanks!!..

Report this comment
#47) On December 05, 2009 at 4:57 PM, binv271828 (< 20) wrote:

Mary953, Thanks! Good idea!.

Report this comment
#48) On December 11, 2009 at 5:09 PM, kstarich (30.66) wrote:

Binve

You are such a gem!!!! I can't believe how much you put into doing these charts.  I look at alot of peoples charts and yours are truly a cut above.

Can you do an updated chart for gold as of 12/11/09.  Next week I will be back in with all my favorite miners!

Report this comment
#49) On December 12, 2009 at 11:02 AM, binve (< 20) wrote:

kstarich, Thanks!! What a nice thing to say, thank you :) I really do appreciate that!

Absolutely, here is my updated short term count, and all of my longer term counts above are still valid.

Thanks!! Can't wait for a miner update!!

..

Report this comment
#50) On December 15, 2009 at 12:09 AM, kstarich (30.66) wrote:

Binve

As I wrote in my blog here the correction in gold would make an about face Dec. 14.  There is a big inflation  aspect hitting this week until Dec. 26 and I expect a very big move in the metals as well as the markets.  This run for gold is good until the end of January, so look for my upcoming blog on that

Report this comment

Featured Broker Partners


Advertisement