Dollar Depreciates, gold... stagnates?

[DemonD]

So the dollar keeps hitting new lows against all major currencies... but not gold. In fact gold lost ground to the dollar today (7/16/07). So I'm wondering if the minds of itulip could shed some light on what the hell is going on with the PM's right now.

On a completely different topic, the thought occurred to me that the Fed and US Gov't are purposefully depreciating the dollar to increase manufacturing for export, almost like a subsidy of manufacturing and agribusiness exporting (similar to what China does - artificially keep the yuan low to maintain competitive export pricing power)

Thoughts on either of these ideas, anyone?

[spunky]

Re: Dollar Depreciates, gold... stagnates?

So the dollar keeps hitting new lows against all major currencies... but not gold. In fact gold lost ground to the dollar today (7/16/07). So I'm wondering if the minds of itulip could shed some light on what the hell is going on with the PM's right now.

On a completely different topic, the thought occurred to me that the Fed and US Gov't are purposefully depreciating the dollar to increase manufacturing for export, almost like a subsidy of manufacturing and agribusiness exporting (similar to what China does - artificially keep the yuan low to maintain competitive export pricing power)

Thoughts on either of these ideas, anyone?

No, Ben is stuck between a rock and a hard place. Alot more places to park your money nowadays, other than PM's . Buck is at all time lows aganist the major currencies and wont rally anytime soon with our ( american economic ) woes.


Since I have been trading currencies in the retail online market, I am not nearly as much of a " gold bug " as I used to be. The rest of the world wont get sick if the american consumer sneezes, and alot more investment options out there nowadays than in the 1970's

and no I am not schizophrenic, though after reading my posts, you might think so

Demon this is a huge topic worthy of its own forum

[grapejelly]

Re: Dollar Depreciates, gold... stagnates?

perhaps it is nothing but simple market manipulation as many goldbugs believe. Currencies too are manipulated heavily of course, unless they are going in the direction that the CBs wish in which case of course manipulation is unnecessary.

I believe the price of gold is critically important to CBs and they will do their best to allow the POG to rise slowly but not quickly.

[zoog]

Re: Dollar Depreciates, gold... stagnates?

So the dollar keeps hitting new lows against all major currencies... but not gold. In fact gold lost ground to the dollar today (7/16/07). So I'm wondering if the minds of itulip could shed some light on what the hell is going on with the PM's right now.

Adam Hamilton from Zeal wrote a piece on Friday about the seasonality of gold that you might find enlightening. Of course, he's very bullish on gold over the long term, so bear that in mind.

It is actually off of the mid-March seasonal low when gold’s first big seasonal rally launches. It tends to run until late May before a pullback into the summer. This year gold started its first big seasonal rally on schedule in mid-March, but it failed early in late April due to abnormally heavy central-bank gold sales...

After the usual May top, gold’s seasonally weakest time of the year comes into play. From May to late July, gold tends to grind sideways to lower... this necessary consolidation leads up to the biggest seasonal gains of the year.

In late July, in the next couple weeks here, gold tends to bottom and then start powering higher as autumn gold demand builds worldwide. The second big seasonal rally in gold occurs between late July and late September...

After a brief seasonal pullback in early October, gold starts its third and greatest seasonal rally... After this low, gold exhibits great seasonal strength in November and December. This third major rally continues into January and early February... this third rally is about twice as big as either of the first two.

We'll see what happens. From what I've observed, the big gold couplings like gold/dollar and gold/oil do not always match up as one might expect. Sometimes, gold just does its own thing. The central bank sales are a major wildcard which can obfuscate a trend or even change it temporarily. I believe some of these sales are deliberate manipulation to protect fiat currencies, but some are just business as usual.

[Guest]

Re: Dollar Depreciates, gold... stagnates?

DemonD -

I notice after a cordial greeting on these forums you've not had any comment to any post of mine, since we discussed energy depletion. This in fact seems to be either the "third rail topic" or the "big synthetic yawn" on these pages. It's apparently just not making the grade as a cool topic. Maybe I "third railed myself"? (LOL!)

I posted a collection of news extracts on another thread about the possibility 2 billion people may experience hunger directly because of America's infatuation with ethanol, but people seem much more interested in how to protect their investments right now.

Regarding your read of the bullion markets as "stagnating" - I disagree. People are analyzing the heartbeat of the gold market for signs of it's continuing health at every turn in this sector. This is an overly technical bias.

I think there's less need to be analyzing or dissecting the bull market in precious metals very often. A true secular trend, once under way, will proceed until another secular trend change occurs. This is actually a quite big idea!

Secular trends are long, take lots of steps back and forth, and are boring to watch every week once the shorter term gyrations are filtered out. Doubtless you know this - I'm just making the observation.

When the really long term secular trend breaks, we will see a reversal of the long term chart trend channel, and it will be time to patiently invest in the next long term secular trend. A lot of people don't seem to accept what these long term charts are displaying.

If one's investment is in metals and not shares, the whole point of this asset class is that it should protect people from the impulse to get shaken out of it, at some steep market turn. And notably, that psychological stability in the investment for the long haul is optimal holding physical gold, not when holding a paper certificate for it. The paper certificate will lead people to trade it like a stock more easily if or when things get ugly.

As secular trend changes are extremely rare - when they occur, they should be highly predictive of a period of time longer than normal market gyrations. A break on a twenty year trend is all the signal we need for holding five, seven, or even ten year positions.

We don't see those more than once or twice in a lifetime, and when we do we can bank on them.

Not to be pedantic about it - but simply executing the trade and letting it ride is the only further action required.

The biggest risk to the investment thereafter is that we talk ourselves out of it during a downturn, because our time horizons are short, and the investment theme is long. So for me, the trick is to watch myself, to keep from getting skittish, and I'm watching the monthly price of gold actually much less.

The rule seems to hold. A trend will simply continue until an equal opposing trend-event derails it into a new secular trend.

[Guest]

Re: Dollar Depreciates, gold... stagnates?

OOPS! Chart missing from above post -

[Jim Nickerson]

Re: Dollar Depreciates, gold... stagnates?

OOPS! Chart missing from above post -

I believe I would argue the "secular trend" in gold was broken, not at the top of the price action as labeled in red, but when the price action broke beneath an extension of the left-side-upward-slanting price channel, maybe at 6.8 on the left scale, that would be an extension of the bottom red-dotted line, wouldn't it? So rather than selling at 10, and being able to define that a new secular change had begun, one might sell at 6.8 and worry whether the violation of the channel was going to hold up.

Edit: Were it so, that life was as easy as looking back on charts and seeing clearly what was what. It is not so easy when one is at today and deciding what will happen tomorrow.

[jk]

Re: Dollar Depreciates, gold... stagnates?

OOPS! Chart missing from above post -

lukester, what is this chart? what is the "score" which is being graphed? i went over to look at its source website, but i'd like your own take on it.

[c1ue]

Re: Dollar Depreciates, gold... stagnates?

DD,

Check out my post in the commodities thread - buried near the bottom.

I'll freely admit I have a bit of the tin foil hat on this topic, but the hedges do exist and will exist for another year or so. This was posted after both Barrick and Newmont exited their gold hedge positions...more or less...officially...

Another shoe falling: Newmont exits its gold hedges

http://media.corporate-ir.net/media_...old_Hedges.pdf

A possible reason why gold was treading water/down slightly in the past month.

2nd shoe has dropped - there are many more to go.

There are probably around 30 Moz Au of hedges still left with AngloGold being the largest and Barrick's new mine finance hedge being similar size.

Hence my extreme caution w/ regards to gold as an investment.

Top 10 gold producers? For 2003:

Barrick+Placer (9.37 Moz Au)
Newmont (7.38)
AngloGold (5.63)
Gold Fields (4.2)
Harmony (3.33)
Rio Tinto (2.73)
Freeport (2.46)
Kinross (1.65)
Buenaventura (1.53)

http://www.mbendi.co.za/indy/ming/gold/p0005.htm

[Guest]

Re: Dollar Depreciates, gold... stagnates?

Jim & "Mr. Monk",

It's a really good precious metals tracking service I only subscribed to recently.

I recommend it.

[Finster]

Re: Dollar Depreciates, gold... stagnates?

So the dollar keeps hitting new lows against all major currencies... but not gold. In fact gold lost ground to the dollar today (7/16/07). So I'm wondering if the minds of itulip could shed some light on what the hell is going on with the PM's right now?...

Gold is basically the asset of last resort. A couple of years ago, virtually all currencies were depreciating faster than interest rates could compensate for, and gold was a beneficiary. More recently, the dollar has been falling not only against stocks, gold, oil, eceteras, but against foreign currencies. In comparison to our own Fed, foreign central banks are relatively unconstrained by our collapsing mortgage bubble, and have been bolder in dealing with inflation in their respective currencies. And stocks have been doing well lately, too.

But this too, shall pass. In the 1970's there was a deep retrenchment in gold prices in the middle of the bull market in gold; the latter came in two major waves. This time, global economic imbalances appear to again be sufficient for another stiff round of gold price appreciation. When that happens is hard to say, so it seems prudent to maintain a gold position. You might also check out EJ's commentary in No Deflation! Disinflation then Lots of Inflation.