Archive for the ‘Gold as an investment’ Tag

Gold Reversion to the Mean price rise.

GLD representing gold
is currently:

–Greater than 2 Standard Deviations below it’s 200 EMA
–Greater than 20% below it’s 200 SMA.

Gold Reversion to the mean

These are historical extremes
and similar locations to the 2008 stretched bottoms.

Gold appears due for a
reversion to the mean
[at least to its 200 MA]
price rise.

Tho note,
In 2008, after returning to it’s 200 MA
gold plunged again below its prior low.


The future price movement of gold may be forecast.

As of today, Jan 25th 2013,
the gold price is currently falling.
So, it is good to remember
the long term future price movement of gold
may be forecast.

–The gold price correlates with the US National Debt.
National Debt vs. Gold Price 1

And the Fed plans to continue to print:

Dec 13, 2012
“The Federal Reserve officially announced QE4+2 yesterday….
The FOMC statement said it would consider raising the federal funds rate above 0%-0.25%
if the unemployment rate fell to 6.5% or the inflation rate hit 2.5%.”

and *must* continue to print.

Jan 24, 2013
“The Federal Reserve pushed its balance sheet beyond $3 trillion
for the first time this week
while undertaking open-ended purchases
of Treasuries and mortgage-backed securities

Fed Balance Sht 2

and major international Central Banks
will continue to spend

Central Bank Balance Sheets 3

–The gold price correlates with the Debt Limit.

Debt Limit vs. Gold Price 4

“The Treasury Department’s own projections
have US debt at $23 trillion by 2015
a 64 percent increase to the current debt limit.
As the Fed continues to print
the Monetary Base increases.”

–The gold price also correlates with the Monetary Base.

MZM Money Stock vs. Gold Price 5

And, the Monetary Base is increasing.

MZM Money Stock 6

Trend Channel

Gold Trend Channel LogScale 7

Drive back target is base of pierce bar.

As in Feb 2004
and Mar 2009
now in Dec 2012
after the breakout
above the top of the W pattern
the target on the drive back down
has been the base of the bar
piercing the W top.

After this drive back target has been hit
the move has been
in the opposite direction
and gold has made substantial moves up.

The target has been hit.
The downward move in gold
is now likely complete.

Targ Hit

Below article posted Aug 2012

Since its Low on 12/29/11
Gold has been moving up
for longer than any other up move
since it’s Top on 9/6/11.

So, per Gann the trend is up.

$GOLD has now pierced
and GLD has now pierced
it’s W pattern center high
formed on 6/6/12.

When the center high is pierced
Per Gann this is a safe place to enter.

If the market moves
as it has in the past
we can then expect
based on the HUI chart:

1 2000
A launch straight up.

2 2004
A few weeks attempt
to break the bottom of the pierce bar
[close the gap]
then a launch straight up.

3 2009
A couple of weeks attempt
to break the bottom of the pierce bar
[close the gap]
then a launch straight up.

Market Manipulation – Driving the Market Down

Banks or Funds
can profitably
drive the gold market down
by first buying puts or selling calls
or selling futures
then dumping large quantities of gold or gold stocks
in a short period of time.

09 17 2012 Volume Driv Dn

Then buying in, or covering
at the new lower price level.

There will come a time
wen they cant driv th mkt dn any further,
cause *sentiment is at an xtrm*
and no one wil buy their protective calls
or sel them protectiv puts
and no one wil buy their future cntrts
so they will not be able t hedge
a large short position
in order t continu th driv dn.
Then th mkt must rise
as they cvr their shts,
in order to reset sentiment.

But there r xceptns eg.
an investment bank/broker
could driv prices dn
without shorting from their own acct
by selling out [redeeming] client shares:

MORGAN STANLEY‘s Wealth platform unit has finally,
after months and months of considerations,
pulled the plug on the fund [A PAULSON & CO FUND] that for the second year in a row
is one of the three worst performing in the weekly HSBC report
What however is notable is that
MS withdrawing HUNDREDS OF MILLIONS in feeder capital
may well explain why gold has seen such a dramatic dislocation [ie BIG DROP]
in the past week.
Recall that at Paulson & Co, gold is not simply an investment –
the bulk of direct gold investments at the once legendary investor
are in the form of (largely underperforming) gold mining stocks –
but an actual investment class.
In other words, instead of being denominated in USD,
investors are actually denominated in (paper) gold,
with a fixed conversion into GLD at inception.
This means that upon liquidation of gold-denominated shares,
any gold-denominated shares,
he has no choice but to sell GLD,
and by virtue of this being the most liquid paper instrument in the PM space, gold.

“Does the massive gold dislocation [ie BIG DROP] in the chart below

Fund Redemptions

now make more sense
especially since Paulson was aware of MS’ intentions days in advance and traded,
or in this case liquidated, appropriately)?”

Factors affecting the future gold price.

Gold Lease Rates

“On September 6, 2011, gold reached a high of $1920;
but when bullion banks intervened by pushing gold lease rates
deep into negative territory in early September,
they made sure enough leased gold would reach the markets
to drive the price of gold lower.

“By late September, gold had fallen back to $1600;
and when gold began to again rise,
gold lease rates were pushed even lower
forcing gold this time below $1600.
The bullion banks one-two punch
took the momentum out of gold’s 27 % summer rally
and by year’s end gold would still be at $1600.

“Lease rates are calculated as:
London Interbank Offered Rate – Gold Forward Offered rate.

“LIBOR had been manipulated
lower than the Gold Forward Offered rate.,
resulting in negative gold lease rates.
Reform in LIBOR will make an end to this suppression.”

Gold as Tier 1 Asset

“if gold is officially confirmed as a “riskless” asset by the European Banking Authority,
then an increase in demand for gold may be seen in the EU.”

Printing Yen

“The Bank of Japan became the latest central bank
to announce further quantitative easing measures.

“If interest rates rose by a mere 2% for Japan,
they would be spending more than 70% of their budget
on just interest expense

“When the savings rates goes negative,
and it is a demographic certainty that it will,
JAPAN will either be forced to pay higher interest rates
or print massive amounts of yen
or cut government spending by equally massive amounts.”

An attempt by Western Central Banks
to recall their swapped and/or lent out gold.

“Over the past several years, we’ve collected data on physical demand for gold
Global annual gold mine supply … is actually lower than it was in year 2000,
there hasn’t been any large, publicly-disclosed seller of physical gold in the market
for almost two years.
Given the significant increase in physical demand
that we’ve seen over the past decade,
particularly from buyers in Asia,
it suffices to say that we cannot identify
where all the gold is coming from to supply it.

“Western central banks are probably under the impression
that the gold they’ve swapped and/or lent out is still legally theirs,
which technically it may be.
But if … those reserves are not physically theirs;
not physically in their possession…
then …”

An audit or an attempt by central banks to regain their gold
would support a higher gold market price.

Dollar as Reserve Currency

“As of, Thursday, Sept. 6,
any nation in the world that wishes from this point on,
to buy, sell, or trade crude oil,
can do using the Chinese currency,
not the American dollar.

“the Russian Federation agreed to sell oil to China
in any and all amounts they desired.
there is no limit.
And Russia will NOT sell or trade this crude oil to China
using the American dollar.”
Never, ever has crude oil been sold, bought, traded,
in any country in the world,
without using the American dollar.”


“the $3.2 TRILLION in official DOLLAR RESERVES that China has accumulated
in maintaining the yuan’s semi-fixed peg to the dollar
tie Beijing’s policy hands.
That is because any hostile gesture,
such as a threat to shift out of dollars,
would destroy Chinese wealth.”


John Williams of
“there is 12 trillion in liquid dollar assets held outside the U.S.
it is only a matter of time before all the Fed money printing will “trigger a sell-off”

Causing the gold price to rise in US dollars.

  Leave a comment

The commercials [JPM and possibly HSBC]
who are in the process of covering their shorts

have tried three times in May
to  break the Dec 29, 2011 gold low
and cover their shorts
by buying the sell stops below.

Anyone who wants gold around that low level
probably could not buy the stops below the low
cause JPM probably put their orders in for those stops
when they started to drive the market down.
And, as I understand it
the High Frequency Traders [JPM]
pay off the exchange
for the privlage of front running other orders.
So, other purchasers must place their orders
above the Dec low.

If the Chinese [or any sovereign nation]
wants to buy gold,
as JPM sells to drive the price down
they can grab that gold for sale
at no cost to them,
because they can buy gold
the same way they buy bonds.
When an enterprise does business in dollars
and wants to exchange those dollars for Yuan,
the government takes the dollars
and prints the Yuan for payment.
They then use the dollars received to buy bonds…
or gold.

Since the gold is paid for in printed money
and is free to the government
[tho not to the taxpayers]
their purchasing power is unlimited.
They can hold a basket above the low,
The huge buying volume
on June 1st
appears to be capitulation by JPM
and loading of longs
for the next move up.

There is reason to believe
the gold price will be at $1950
before it will fall below $1523.

  Leave a comment

This is hard to believe.
Clearly JPM is dumping their shorts

But despite two hi vol drives down:
7,500 contracts on Monday, Apr 30th.
14,000 lots  Tuesday May 8th
the continued attempt has been unsuccessful
in breaking the Dec Lo,
and buying all the stops below it,
on the May 15 down move or today.
And today after approaching it
a long tailed hammer reversal.

Either they are luring in more longs
to build up the stops
or there are veeery strong interested buyers.

at this level.