Silver

If enough cash based buying enters the physical silver market then regardless of the silver market fundamentals (which are supportive) the price will quickly rally. The move should be similar to the second half 2005<> first half 2006 in which silver climbed about 130% in 8 month. 12.30$ today is like 6.70$ in 2005 so the target is about 27.80$ which is between the short and long 261.8 Fibonacci levels.


Spot Silver {XAGUSD} Weekly Log Chart

Today commentary

It might be the case that criminal acts, corruption and the highest level of abusive acts against people's freedoms are taking place. Authorities all over the world have pushed themselves into the darkest corners. Top academics and high rank officials are refusing to admit their own mistakes which are based on false economic theories. One should be careful and consider all options. Disinformation is running at extremely high level but the trend is changing with the expansion of the internet and generosity of moral people.

In regard to gold, silver, forex, stocks or any other market - you should spend your time better by learning the charts, particularly the long term charts. Charts are the most efficient and concentrated data you can find. Learning charts is not an easy task and the short term charts are vulnerable to abusive manipulative acts, paint the charts they call it. Fundamentals, fundamentals, fundamentals, learn history; concentrate on numerical facts not opinions. It is best when the technicals and fundamentals point in the same direction.


Good Luck, for peace, freedom and prosperity…

Update

It appears that after yesterday slump some technical repair is currently taking place. This is not the time to sell gold and silver as February 26 was not the time to buy. Yesterday action is nothing new for anyone watching the precious metals, gold has seen moves of ~ 40$ in 24 hours more then once , sharp moves like that are typical at bottoms or tops though it is not always the case.

For readers who need to buy physical gold and silver this is a rare opportunity and you might want to buy a larger amount then you normally do. Long term investors which buy gold physically or gold funds can enter the market gradually. Speculators need to be on the watch for buy signals.

I see quiet a few bearish gold articles with targets of 600$ and 570$ which should be viewed as a contrary indicator (The majority of investors and traders tend to be bearish at bottoms and bullish at tops). It appears there is allot of speculative short selling taking place with intention to capitalize on a falling gold and silver prices. Are the short sellers getting over confident? Time will tell…

If you think like I do that gold is in a multi years / decades bull market then you have to be bullish most of the time , sometimes natural but never bearish.

Overall, initiating bullish positions with medium to long term time frame seems favorable both in terms of price and time.




Bill Cara has posted about Gold mining costs and you might want to read that:

Goldminer Report

Real Drivers of Gold

The annual mine production of gold is around 2500 metric ton. The notional amount of gold over the counter (OTC) derivatives is 463 Billion USD (BIS Dec 2006). This numbers alone support much higher gold price, just do the simple math.

This is only small part of the story as Total OTC derivatives (most are interest rate contracts and credit default swaps) amount at 415 Trillion USD. Gold derivatives are just 0.1% of the total amount. Compare that to an annual total world GDP of about 70 Trillion.

In addition it is strongly recommended that you review this post : Gold Market Overview


Gold Anti-Trust Action Committee(GATA) documentary video(2005)

Gold , Silver

Gold and particularly silver are down sharply today. Gold and silver are about at the same point as in the beginning of the year and April 2006. Volume at futures exchanges was large. It was like traders got scared that their gold would catch rust. I estimate that the high volume was due to fundamentals, value and de hedging.

Dow Jones /Gold ratio making new highs, inline with recent out performance of stocks vs. gold. My opinion is that Higher gold price will be necessary for the continuation of the stocks bull market.


Gold (XAUUSD)



















Silver (XAGUSD)



















Some of you might want to read this article : Booms Were Made to Go Bust(Robert Kiyosaki)

Gold Market Update

Gold trading is directionless, sentiment is negative as I observe at mainstream media publications.


Gold markets structural developments:


Small-Lot Gold Futures

100 gram gold contracts to be issued in China and Japan :



"BEIJING, June 26 -- The Shanghai Gold Exchange will launch individual gold bullion trading nationwide in July by teaming up with Industrial Bank."

-source


"TOCOM hopes to inaugurate the new section, aimed at attracting individual investors with reduced trading risks, on July 9. The basic trading unit will be lowered to 100 grams from one kilogram for the existing gold futures. The per-lot margin will be fixed at 12,000 yen for July compared with 90,000 yen for the existing market. Transactions will be settled with cash, not with physical delivery. The daily price fluctuation range will be initially set at 120 yen, twice as wide as for the existing gold futures."
-source


India Gold ETF's


"Sandesh Kirkire, CEO of Kotak Mahindra AMC:

Q: Can you put into perspective as to how much you would actually be investing in physical gold and how much would be in money markets?
A: I think a significant portion will be in physical gold and very marginal amount will remain in cash and cash equivalents. "

-source

Gold, Forex

If you look at gold compared to other major nations currencies like Yuan, Rupee, Pound, Ruble, Real, Etc. you can see that some of them have been more strong then others and gold retraced a large amount of time and price . It has long been my opinion that gold will appreciate vs. most if not all national currencies. In terms of some national currencies gold is currently trading at serious discount. For monitoring the price of gold and other precious metals / hard currencies Vs. most national currencies I use FX CHARTS & PLOTS (v2.12)

And they tell you it is not a currency….

Today gold was clearly trading like a currency and no wonder that silver lagged. (The monetary component within silver certainly exist but for lesser extant compared to gold) Before the New York open gold was higher both in terms of Euro and USD then moved higher in USD and Lower in Euro, later the opposite: up in Euro down in USD, a sell off in both majors then a strong impulsive rally into the close.(Compare minutes XAUUSD with XAUEUR charts to notice that)


Added:

XAUUSD and XAUEUR 2 minutes chart






















The day to day action is trend less, the downside momentum is gone but some trend line resistance exists.

Gold continue to present a relatively rare opportunity in the global financial market place. An Item which is liquid, time lasting and provides insurance against systematical issues. In addition the possibility for significant price appreciation certainly exists. This is my opinion.


XAUUSD weekly log chart with Fibonacci price projections

Few clarifications

Dear readers,


I got some nasty massages and emails lately, namely personal attacks. I just want to remind that I'm not a registered investment advisor, broker or dealer. All content on this site is either quoted from other online sources (normally linked to the source) or it is my own analysis and thoughts. Either way I do not recommend that anyone will act upon my analysis.

If you want to trade / speculate in capital markets be sure to take the time and study.

Regarding IMF, BIS, any other official organization and its employees: I have respect for all of those as I do think that some kind of supervision on the system is required. If I ever insult anyone or anything, please forgive me, I bag your pardon. My intention in referring to official institutions is to educate or archive events that I see as remarkable.

If time allows I will keep this blog up to date with my occasional analysis and anything interesting for me and my readers that I might find elsewhere.

As for the price of gold, it might be the case that higher gold prices will be required to support the structure of the global monetary system and general capital markets. Timing however remains a mystery.


Good Luck.

XAGUSD Chart

The Silver wave count seems to be a bit head of gold as observed by comparing recent cycles lows. Overall gold and silver haven't done much lately but continue to be attractive at current prices with significant upside potential.



XAGUSD Daily Chart

Switzerland gold sell ?!

The sell if they will isn't as meaningful as the reporter wants you to believe. Consider that the outstanding notional amount of gold over the counter derivatives is 463 billion USD , reported by the BIS December 2006.

Switzerland's central bank is to sell a further 250 tonnes of gold, dashing hopes for a revival in depressed bullion prices after months of heavy selling by Spain and Belgium.

The Swiss National Bank is world's fourth biggest holder of gold after the European Central Bank system, the United States, and the IMF. Most analysts thought it had stopped selling its horde after a 1,300 tonne "purge" between 2000 and 2004,

The SNB said yesterday it would feed a fifth of its remaining gold onto the market gradually between now and September 2009 as part of a rejigging strategy for its reserves.

source


COMEX gold contract for December 2009 is currently priced at about 750$