Precious metals, where are the prices headed? Gold, the jobs report?

Anyone have a feeling on whether gold will hit that $2000 mark? The jobs report came out and blamo, another bump to both gold and silver. How high can we go before total chaos?

http://www.marketwatch.com/story/go...of-jobs-report-2011-09-02?link=MW_latest_news

 

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The article says this is the weakest jobs report since September 2010, which some people think bolsters support for monetary easing. I have a feeling if QE3 is officially announced we will see gold challenge $2000 and silver challenge $50, but if things start going parabolic I would expect more margin hikes. I have little doubt those numbers will be surpassed before the end of the year. I do not think we will see sub $40 silver again unless there's a coordinated take down.

If QE3 does happen, it would boost stocks as well which I think will go a long way to reduce the probability of chaos as people who do not understand that their buying power is diminishing will continue to think everything is on the up and up. Meanwhile gold and silver would likely reach all time highs, and should continue to garner attention gradually.

One thing I've noticed since I began paying attention to all this stuff is that things never happen as quickly as expected. I think now is a good time to get on board. Here's a chart I drew on to illustrate where I think the trend is going for silver. What I did was draw a line from the peak at $50 through the subsequent highs and lows (which are circled), which I used as a basis for predicting the next trend which I drew in purple.

 

Double post. Permission to delete =)

 

I don't see QE3 as really helpig domestic stocks, only those with international operations. I believe the market would be worried all of this cash will lead to either higher inflation or higher taxes to pay for debt. Either will lower future profit expectations, which is what drive stock prices.

All I can say for predictions is uncertainty will drive higher PM, good news will drive it lower. Look at what has happened in just a week of so. Good news drive the market up, bad down, and PM typically the inverse. This is why trying to predict the future, or playing games on charts, is so hard. It is these major surprises that typically lead to large movements.

I will say the general public and the market both are in a down mood. Further bad news will depress them to an extent, but at a point it will jsut be shrugged off. However, good news could really lead to a rally since it will be more unexpected. Such unexpected good news, if it were to occur, would not be good for PM, especially gold. I am not predicting that, just saying how I think the market would react to it. I would think most likely good news would be some mergers in this lower stock price market, or greater share buyback programs.

Btw, loosely related, did anyone else read about how the US is a net exporter of gasoline and has been for 2 years now? They say US demand is down, and not anticipated to return to earlier levels, so for the foreseeable future they expect us to be exporter of gasoline to the rest of the world.

 

Since we don't import gasoline, then even 1 gallon shipped out of the country would make us a net exporter.

 

We used to import extremely heavily Fatima. The low gas prices in the 90's were a result of the massive imports of gasoline into the US from Europe. What was happening is in Europe diesel cars took off, but their refineries needed time to get more diesel out of every gallon of oil. Last I heard they were still importing gasoline into the East Coast.

Where did you here we do not import? I heard on NPR this morning, and later read online about the fact we are a major gasoline exporter now.

Chris

 

I don't really think news has the ability to move things outside the trend boundaries, but rather just ping pong between them. The trends are there because of real concerns and real actions that exist whether or not the news reports them one way or another or at all. Of course if nobody knew what was going on then nobody would change their habits, but it seems to me that insiders dominate trading volume anyway since most market moves happen at or before the actual announcement, prior to stories being published. This was especially notable with the US debt downgrade and the margin hikes this year. Now if the underlying concerns and actions behind the news change then I would expect the trend to adjust accordingly.

As to whether QE3 will help stocks, I figure people will have increased risk appetite instead of seeking safe haven, as it would give the appearance of a better recovery than in actuality due to propping things up. This mentality would seem to indicate that precious metals should drop, but I think that the monetary debasement would account for any lack in safe haven demand. There's always more factors than meets the eye though.

 

I disagree sir. All of the news and expectiations are priced into markets and trends. Any information that is greatly different than expectations do have the power to set new trends. Look back at major changes in the past in the stock market, and if you look deeper into them you will find where new information, either good or bad, created a break in the trend either to the up or down.

To say that new information cannot change a trend, well then what sets the trend? It is not autopilot. What exactly do you see as setting a trend in any market?

There is a distinct danger in looking at graphs. A graph will never tell you when some new information will hit a market and change all of your carefully planned trends, market high and low resistances, etc etc etc. There may be some value in looking at such things absent major events, (I know Cloud believes in chart analysis more than I), but be very aware nothing in your chart will ever warn you to changes in the market. Be honest, did looking at your chart last November predict the spike to $49? Did it then predict the flash crash?

Chris

P.S. I am simply predicting that some day, whenever it is, there will be either 5 pieces of good news, or 5 pieces of bad news, all in the same day. I don't care what anyone's chart says, the market will react strongly in either direction to that new information. It always does. Lets pretend that the Treasury announces that no one showed up to by at their latest auction, and therefor they will not have the money to pay SS and other US payments. Do you think any chart will predict that spike?

 

It's an interesting story but there are a few things that make me not believe it. The first one is technical. Gasoline is a complex mix of chemicals and we don't use the same stuff here in the USA as used in Europe and even the grade is different as they basically use 91 octane. It would seem unlikely they would reset their refineries to produce American gasoline. Second, gasoline is perishable. It's not stable which makes it troublesome to put in a tanker and ship around the world. Third, gasoline is extremely price sensitive. I don't see how it could be produced at a reasonable price in Europe and shipped to the USA and sold at American prices.

I know that most of the East coast gets it's gasoline from the Colonial pipeline that connects it to the Gulf area. There are numerous gasoline farms located off this pipeline where it's then trucked to the local area. The NE also has a number of oil wells and another pipeline distribution system.

 

You don't have to believe me sir, but its very common knowledge.

http://www.ftc.gov/reports/gasprices05/050705gaspricesrpt.pdf

Page 59 details US imported gasoline. The report does not go into WHY Europe was in a position to export gasoline to us, but basically to meet their diesel needs, they had to overproduce gasoline. Basically the excess gasoline was a byproduct to them, so they needed to sell. Over time they have changed their refineries to yield more diesel and less gasoline.

Chris

 

I think we actually agree to a point. I was merely making the distinction between the media itself and the information it is reporting. I did say that the underlying reasons and actions behind the news could definitely change the trend, however whether or not it makes the news is irrelevant to the trend and is where the ping pong effect comes in that I mentioned. That is based on emotion more than anything. So I'm not saying that information can't change a trend, but rather that the dissemination of the information (or lack thereof) is much less important than the information itself.

As far as what I see setting the trend in a market, it's a complicated hodgepodge of things since markets are influenced by everybody, but in a word I would say fundamentals. However we don't need to know why the trend is what it is to see that a trend is there. Of course knowing the fundamentals behind the trend is a requirement for me personally to feel comfortable with getting on board.

I am aware that graphs are not indicative of future performance, but what they are indicative of is market sentiment which can be used as a basis for inferring what future performance will be under the current circumstances. As circumstances change, so too does the sentiment, and so too must the outlook. I was just offering my interpretation of where things are heading on the current course, and I actually expect monetary easing cause my expectations to be exceeded, but that hasn't been confirmed yet.

 

The report is from 2004 and it simply states a figure for refined petroleum products (this is 25 different items) from all countries including Canada and South America. The total from all these countries is less than 8%.

Relative to this topic, I don't think this small amount of fuel has any bearing on the state of the US economy or where PM prices are headed.