Next Gold Buying Opportunity at $950?

[pianodoctor]

That's what Ambrose Evans-Pritchard says. http://www.telegraph.co.uk/finance/c...ng-frenzy.html

"Gold investors warned to liquidate after 'buying frenzy' London's leading gold forecaster has advised clients to liquidate holdings of gold and silver until the latest speculative fever abates, warning that futures contracts on New York's Comex exchange are flashing warning signals.

By Ambrose Evans-Pritchard, International Business Editor
Published: 8:29PM BST 13 Sep 2009

John Reade, an analyst at UBS, said the number of "net long" positions held by speculators reached 29.02m an ounce last week, a record high.
Investors watch Comex contracts as an indicator of froth in the market. Last week saw a jump of 6.4m ounces in net long contracts, a rare occurrence. When such sudden moves have occurred in the past, gold has fallen 5pc over the subsequent month on average.

The buying frenzy last week followed Chinese comments on the need for reserve diversification from dollars into euros, yen, and gold, as well as a proposal by the United Nations for a world currency. The dollar fell sharply, propelling gold to $1011 an ounce – tantalizingly close to its all-time high of $1030.
Mr Reade, a repeat winner of the London Bullion Market Association's forecasting prize, said speculation in silver futures is even more extreme by some measures.
Demand for physical gold – as opposed to paper contracts – has been flagging, with Indian jewellery demand well down on the levels a year ago and poor volumes reported in Turkey and Switzerland. The metal is trading at a discount on Istanbul's exchange.
"We recommend that nimble investors take profits on any long gold and silver positions, looking to re-enter after a correction," said Mr Reade. His price target is $950 over the next month, with fresh rallies in 2010.
The last time net long contracts on Comex reached levels close to last week's high was in February 2008 as gold screamed to its historic peak. Prices crashed by $150 an ounce shortly afterwards.
However, chartists say the technical signals are entirely different this time. Gold appears to be breaking through a "triple top",
which could push prices much higher."

[cjppjc]

Re: Next Gold Buying Opportunity at $950?

[quote=pianodoctor;122473]
"We recommend that nimble investors take profits on any long gold and silver positions, [quote]


What exactly is a "nimble investor." Someone who trades in ballet shoes? I can't take seriously anyone who talks like that.

[ThePythonicCow]

Re: Next Gold Buying Opportunity at $950?

John Reade, an analyst at UBS, said the number of "net long" positions held by speculators reached 29.02m an ounce last week, a record high.
Investors watch Comex contracts as an indicator of froth in the market. Last week saw a jump of 6.4m ounces in net long contracts, a rare occurrence. When such sudden moves have occurred in the past, gold has fallen 5pc over the subsequent month on average.

This makes a fatal assumption. It assumes gold is range bound. So long as it is range bound, then aggressive buying interest marks the top, and aggressive selling interest marks the bottom.

This works until it doesn't. The day comes when aggressive buying interest means more buying.

[Slimprofits]

Re: Next Gold Buying Opportunity at $950?

Without a doubt there will be some liquidation, i.e. the taking of profits.

How much downward pressure this produces, no one knows, but I will say the following.

This is not an original thought and perhaps a little late, but a return to $700 is probably a pipedream, even if there is another massive so-called flight to safety. Way, way too many big & small buyers out there now that have caught the bug.

[Diarmuid]

Re: Next Gold Buying Opportunity at $950?

.
However, chartists say the technical signals are entirely different this time. Gold appears to be breaking through a "triple top",
which could push prices much higher."

Maybe not?, at least in the short term, an article on shorts in the market, buckle up, this roller coaster may be about to take a turn.

And now for the Commitment of Traders report. I knew it would be bad, but just the sight of the numbers took my breath away. In silver, the bullion banks went short another 8,345 contracts... 41.73 million ounces. That's more silver than the entire U.S. mining industry will produce in one year! As of Tuesday's cut-off, '4 or less' bullion banks are now net short 56,401 contracts... 282.0 million ounces of silver. The full-colour COT graph for silver is linked here.

Silver was bad enough... but gold...wow! As you know, in the week that was, and as of the close of trading on Tuesday, these same bullion banks went massively short gold as well. As Ted says in his interview with Eric King below, it's the biggest one week change he has ever seen in his three decades of watching it. The gold net short position by the bullion banks increased by... wait for it... 54,089 contracts. That's 5.4 million ounces of gold that the banks shorted in just one week!!! Anyway, 'da boyz' [as of Tuesday's close] have a total net short position in gold of 270,797 contracts... 27.1 million ounces. And, like silver, the short position in gold has deteriorated significantly since then... Ted figures around 20,000... I'd say closer to 30,000 contracts. I say that because 'da boyz' threw everything at the gold and silver market on Friday. The open interest report on Monday [for Friday's trading] will tell all... and it won't be pretty. The full-colour COT report for gold is linked here. It's a horrifying picture... and if it doesn't scare you half to death, it's obvious that you don't understand the problem.

As I mentioned in the last paragraph, Eric King interviewed Ted Butler yesterday about 'all of the above'... and it's a must listen... and the link is here.

http://www.caseyresearch.com/displayGsd.php

[renewable]

Re: Next Gold Buying Opportunity at $950?

What exactly is a "nimble investor." Someone who trades in ballet shoes? I can't take seriously anyone who talks like that.

Must be holders of paper gold or futures. Reade/UBS are only talking about a 5% drop - barely enough to cover the physical gold bid/ask spread.

[*T*]

Re: Next Gold Buying Opportunity at $950?

The guy's a n00b.
Why try to time it exactly? Build a position over time, liquidate it over time.

[Mega]

Re: Next Gold Buying Opportunity at $950?

Gosh, yes lets SELlL our Gold, get lots of lovely paper for it i mean its not they going to PRINT SHED FULL of money anytime soon!

Mike

[D-Mack]

Re: Next Gold Buying Opportunity at $950?

Looks like the repeated winner isn't one of the winners this year

John Reade We forecast that gold will average $700/oz in 2009, the first decline in the average price since 2001. The metal will be hurt by a number of negative headwinds this year: a stronger US dollar; deflationary risks in developed markets; weaker jewellery demand from major consuming countries such as India and the US; and a decline in producer de-hedging. Although the strong physical investment demand that characterised the second half of 2008 is likely to continue along with further inflows into the gold ETFs, disinvestment and deleveraging in the futures and OTC markets are likely to limit gold’s upside; even the physical investment may slow should concerns about the failure of the financial system recede somewhat. Gold will have a volatile year, however, and we see the metal trading as low as $600/oz and as high as $1000/oz.

http://www.lbma.org.uk/pubs/forecasts

[Kadriana]

Re: Next Gold Buying Opportunity at $950?

All I know is I overheard my husband have a discussion with someone at church about silver prices. Not quite sure if that is a bullish or bearish sign but everyone is starting to talk about gold and silver now.

[raja]

Re: Next Gold Buying Opportunity at $950?

The buying frenzy last week followed Chinese comments on the need for reserve diversification from dollars into euros, yen, and gold, as well as a proposal by the United Nations for a world currency. The dollar fell sharply, propelling gold to $1011 an ounce – tantalizingly close to its all-time high of $1030.

This was sent to me by a friend in an email this morning. I don't know anything about the author . . . .

Passionate Plea From Asia
by Larry Edelson Dear Subscriber,
Martin's off this week. So I'm writing you today from Asia with a passionate plea to our country — to its citizens and especially to our leaders in Washington.
We are now the laughing stock of Asia. Our dollars are no longer respected; our ambitions, no longer mimicked.
Our way of life, often based on consuming far beyond our means, is being flat-out rejected.
I can't even exchange a $100 bill on the street here anymore: Most of the street money changers will take euros, Singapore dollars, even Chinese yuan. But fearful of losing their shirt with sinking exchange rates, they don't want U.S. dollars.
Not long ago, I never traveled without my American Express card. Now, it sits in my office safe. Many in Asia no longer accept the card anymore. MasterCard and Visa are still OK, but they're also losing market share to locally grown cards like Aeon.
The running joke in Singapore, Hong Kong, Bangkok, and Kuala Lumpur is that the U.S. is the place where even your pet could get a credit card or a home mortgage.
So to Asians, the crisis we're going through is our own fault. And although it was also caused by blunders in Western Europe and other regions, truth be told, they are mostly right.
The message is clear: We need to immediately stop living beyond our means. But can we?

Perhaps some of the iTulip members living in Asia can confirm or deny . . . . . ?

[jpatter666]

Re: Next Gold Buying Opportunity at $950?

Found the following comment on Fleckenstein's blog today.

"On the subject of gold, I've been told that GLD/GDX are not borrowable and AEM is hard to borrow at Fidelity. Meanwhile, AEM and NEM are hard to borrow at Schwab. Thus, the bear viewpoint on gold may be a bit crowded."

Looks like some level of drop or a short squeeze may be in the short-term cards. We'll find out....

[aaron]

Re: Next Gold Buying Opportunity at $950?

All I know is I overheard my husband have a discussion with someone at church about silver prices. Not quite sure if that is a bullish or bearish sign but everyone is starting to talk about gold and silver now.

I have heard more talk around the office about gold/silver too. Nobody is buying any, mainly because they do not know how. "It's not like you can buy it on the Internet or something" (real quote)

[pwcmba]

Re: Next Gold Buying Opportunity at $950?

It's not worth the trade for 5%. Don't loose your insurance. It would be like seeing the hurricane in the ocean and someone tells you it has stalled out and you should cancel your policy for a month / save the premium and just sign up for that hurricane insurance next month. Good luck with that!