Gold or Silver prices, what will make the prices go up?? Did we top out already?

I know someone on this forum has an idea or even a guess on what will make gold go up. We're heading for December and gold seems to be stuck in low. Any ideas? Will this Fiscal Cliff gathering turn into a huge bump or a big nada? Will Germany's approaching audit of their gold we hold at Fort Knox bring on a price hike? Something's gotta give, silver what the heck is going on are we (USA) doing that well financially that the price of both gold and silver will stay right where they're at? What will it take for silver to reach $50 an oz? What will take for gold to hit $1850 an oz? Those prices are certainly do-able, what gives? Anyone?

 

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1) A fairly well-informed discussion on NPR the other day described the new "consensus" (ahem.) The Fiscal Cliff won't be a catastrophe as many reckoned earlier but more like a slow bleed, with anticipated decline on various econ/mkt factors. More bearishly, I suppose the stock mkt has a -25% downside here, warranting reallocation (REDUCING RISK, RAISING CASH and ADDING HEDGES in spec paper portfolios.) But I'm a bear by nature and very cynical that 'problems unsolved must get worse.'

2) Germany's audit of NYFed Au: nada. Call for withdrawing said Au from USA > Ger: maybe marginally bullish for Au, on the news/interest.

3) 'Something's Gotta Give' : I agree, but what? Perhaps there's a spookier outlier (exogenous event) that will tank mkts instead? idk.

4) Silver @ $50.: I think very very unlikely until AFTER the next sharp selloff/flash crash/leg of deflation is over and mkts have been juiced by yet another round of QE. Iminently, I foresee volatility with bigger downside risk: POS @ $20. = -43% decline off the near peak. That's the lower end of any sharp shock I'd "anticipate." All this printing/easing of the past few years - and very little financial reform - has NOT made the mkts 'more stable' so know-your-risk and avoid panic surprises.

Gold @ 1850: more likely in mid-Spring 2013 IF the winter retrace is far weaker than I imagine, less than -11%: 1792 > 1600 ...... 1600 > 1850 = 15.6%.

Just my two cents.

 

I think it is too difficult to predict the price of gold by looking at events.

I've been watching gold build a cup and handle formation, visible on a two year chart. The price stayed above 1625, which to me would have resulted in a failed formation. Now, if it can get above 1800 and close there for at least three consecutive days, the next big move appears to be up. This might take a few more weeks.

Why will this happen? I don't know. But as long as gold stays in a bull market as evidenced by the charts, I'm sticking with it.

 

I discount almost all chartists but love to read their "technical opinions" anyway. The same chart can be read soooo many different ways, LOL

Statistically speaking, November and '30-day periods after Hurricanes' are typically BULLISH for POG so history's on your side for an UPTREND by 11/30.

Contrarily I believe more bad news will send Gold lower. Do you suppose Au and the stock mkts are decoupled? Do you see any counterparty risks looming (say, insurance cos) or anything to trigger less-dramatic stock mkt failures repeating 2008? I won't touch on anything "political" here but those reasons/explanations might become the game of whack-a-mole, if a sharp declines ensue across stock/commodity indices (and not all, the same, at once.)

 

Me too. But I've found that if you limit technical analysis to one pattern - breakouts from basing patterns in the middle of bull market moves - the success rate goes up. But if you see any chartist draw a line into the future, you know they are guessing.

 

fwiw an analyst (David Kostin) at GS just predicted the S&P500 down -10% from Friday's close (11/9/2012) through 12/31/2012.

Do we alll accept the premise of RISING ASSET CLASS CORRELATION with QE? I think this 24 month rolling correlation chart shows that's been true for US stocks & Gold.



Then look at a specific SP500 retracements (>- 7%) since 3/9/2009. Consider POG's correlation by time, duration, magnitude: rarely, sometimes, mostly?
I proxy w/ SPY and GLD and see MIXED RESULTS.

6/12-7/10/2009......SPY -7%; GLD -4.4%
4/23-7/2/2010.......SPY -14.4%; GLD +6.5%
7/22-8/19/2011......SPY -16%; GLD +5%
11/4-11/23/2011...SPY -9.4%; GLD -3%
4/2-6/4/2012........SPY -9%; GLD -3%

In these reflationary QE days, IF we assume Au/Ag and US stocks are very highly correlated (same trend) THEN a -10% decline puts ~POG USD 1,560.
IF we assume Au/Ag and US stocks are correlated but Gold has only 1/3rd the downside THEN a -6% decline puts ~POG USD 1,684.

On this thread I suggested other & different reasons for an -8% Decline in POG from 10/29/2012:
http://www.cointalk.com/t216905-2/

 

Asset prices rise in low interest rate environments, because there is a lot of free money being created for the sake of cheap loans.

The bellwhether is whether interest is higher or lower than inflation. If inflation outpaces interest, it doesn't matter how high interest rates go, it is still a negative REAL interest rate.

If interest outpaces inflation then you have positive real interest rates. Until this becomes a reality, or until we can turn lead into gold, there is no reason the price will not continue to rise overall.

 

I also put a very slim chance silver breaks $50 without another, bigger MF Global or outright failure to deliver the metal on the COMEX. Plenty of room to raise margins otherwise. Gold will have to break $2000 for this to happen IMO which I put the biggest likelihood on happening due to instabilitly in MENA. Ultimately I believe it will take a silver shortage, so I watch the COMEX inventories which at last estimates are around 200 MOz, which is roughly 10 weeks worth of mining supply. Not a lot of room to breathe if you ask me.

To my knowledge (per Reuters) Germany is willing to accept a written response of their gold audit, and will trust the Fed's word. That gold is under Manhattan at the bottom of the ocean. It has a very interesting vault system design that is for all intents and purposes impossible to rob. It commands a high level of trust. Fort Knox has the nation's money, and it is probably not there, but there is little concern about Manhattan apparently.

 

People asked the same questions 12 years ago when gold was less than $300/oz. The question should be, what has changed with the economy as to keep it from going up now.

 

Are we reading different OPs? "We're heading for December and gold seems to be stuck in low" and "the Fiscal Cliff" (1Q 2013) refers to the imminent future, the very short term ahead: within the next 1-4 months. Unless someone foresees significantly higher inflation or deteriorating MENA events within that time frame, POG over the next 12 years isn't really to the point. (And I'm bullish on Gold longer term, too.)

Let's keep it simple: where will Gold be (~$) on December 31, 2012? Or: what's the downside/volatility that PM investors ought to understand & accept, at this point and over the next 1-2 years?

Over the last 6 years (and excluding, the 2008 Crash, POG -29%!) I see an average decline of -12% in weeks- or months-long retracements. A moderate decline of that magnitude shouldn't freak anyone out, it's just another BUYING OPPORTUNITY.

From POG USD$ 1791.75, this discounted gold TARGET ahead is ~USD$ 1,573. or lower. Dip-buyers look for that price-range ($1560 - 1575) but not necessarily on 12/31/12.

 

Yeah the Fiscal Cliff will most likely go unoticed but how about Israel firing on Syria? For all anyone knows Iran has military in Syria and is firing on Israel just to stir up some dust. Everyone knows there are unstable regimes in the world and it's fairly easy to become subversive. Israel, Iran and Syria. That could stir up the price of gold, what do you think?

 

Not a simple question [for me]. I think if gold goes below $1625 and stays lower for more than a couple of days, one has to question whether that is the end of the bull market. I don't expect this to happen, and I think the gold bull will end with a blow-off top at some point. I don't know when.

 

If you are an investor of physical bullion, your outlook should be a lot longer than this.

 

Yes, of course. But that's not the point of the OP.

A bullionist really ought to have a +5-25 year horizon. Anything less, the Paper PMs (ETFs) are preferable and far more economical for trading.

I asked my coin guy about this, he swears the last time "political events" affected the POG was in the 1970s. Is this considered true by old timers?

As an aside, I have my own 'conspiracy theory' that the 1979/80 Investor's Death Spike (POG) began as the Islamic Revolutionary junta dumped the Iran's US paper assets from May 1979 onwards, buying Gold in London - and so not as a result of the Soviet Invasion of Afghanistan. (I have no proof of this, however.)

An equivalent event presumes market machinations by several MENA/OPEC countries against the US Treasury Bond mkt in retaliation for something. I really don't see that happening in six months, though.

 

I'm no old timer, but how about the US debt ceiling last year? That was pretty much the sole catalyst for 1600-1900 in a matter of weeks. That is in part why I think gold will move on possible MENA escalation, and also because gold is too large of a market to be controlled by paper contracts. There's so much of it and it costs so much. Silver on the other hand is easier to push around by at least an order of 500, since it is ~50 times cheaper and ~10 times less abundant in the marketplace. So I don't think such events will be able to push silver over it's old highs on their own, although $2000 gold would certainly help bring people into the silver market and force the rules of supply and demand to go back into effect.

 

And perhaps unnoticed by some and under appreciated by many as a factor, the USD continues to stay strong. Some may not like it, but it is in no real danger of default IMO, and should be considered a primary ( if not the main primary) reason currently for the price of gold.

 

Jim,
That is so easy to agree with.

 

However, Let's just hope that the OPEC countries, the dictator countries, and the oil manipulating countries, continue to keep things in "order".

 

I'm not sure what this actually means. Strong against other fiat currencies? Strong buying power? (there are a lot of people living on the edge that might tell you otherwise) How is it to be appreciated in terms of being strong?

The only advantage that I can see for the USD, relative to any other currency on the planet, is the US Military.

 

Seriously? What do the other currencies have going for them instead? Middle East? We only need their oil since everything else there is worthless, and N America will be energy independent in 15 years. Africa? Only natural resources. China? What is China without the US consumer buying their products? Europe? They have similar or worst problems to the US. Don't forget the US is one of the largest producers of FOOD in the world. We do have terrific advantages in certain areas.

I simply do not see why you are so hateful on the dollar. I do not see it as the clearly superior currency any longer, but do not see it as worthless versus other currencies. Every major currency out there has "issues".

Now, if you wish to compare the dollar vs PM, or other forms of assets, that is a different discussion, one that we have had on here endlessly.