February Gold (ZGG8)

Again, I agree with realist here. We might see a small pop in gold, but I agree that we ...are entering a downtrend. The degree of bullishness was way overdone.

Plus, since the usd is holding up, I think the FED will come out with a waping cut, 75 may not be unreasonable, since the market creamed him with the last cut being too weak, plus there has been some serious damage to the markets.

Looks to me like we are entering a shift away from commodities back into stocks, even financials.

Daddyeaux,

Interesting you should post Chan's charts, as I do follow them. Problem with MACD is that it is a lagging indicator. I find Chan slightly behind the curve. He missed out on the December rally....but again, no system is 100%....we have to trade what fits our style.
 
Aside from US/ECB Interest Rate policy moving forward, traders also need to recognize the fact that the majority of the gains in the metals complex have coincided with strength in the global stock indexes since 2003. Even though gold has outperformed the US indices dramatically, there is also a very strong correlation between rises in Crude Oil and in Gold. Every US recession has resulted in substantially lower Crude prices and therefore gold should correct as well. The flip side to all of this is that gold will hold up better than most assets and I expect a worst case correction down to its relative 200EMA which is about $750 as of today. However should the correction span over the course of 4-6 weeks, then the 200EMA will likely match the early December 07 low of $770/oz. This price target would also match the May/June '06 correction. I believe cash in the form of US T-Bills and Gold/Platinum will be the best assets to own in the coming years. Silver and Copper will likely get blasted in the months to come as the $GYX industrial metals complex appears to be teetering on edge now. Traders will attempt to play the bear market in equities which will be very difficult to trade imo as vicious bear rallies come out from nowhere to give traders a nice reminder of how exactly the bear operates...
 

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Quote from Realist:

Aside from US/ECB Interest Rate policy moving forward, traders also need to recognize the fact that the majority of the gains in the metals complex have coincided with strength in the global stock indexes since 2003. Even though gold has outperformed the US indices dramatically, there is also a very strong correlation between rises in Crude Oil and in Gold. Every US recession has resulted in substantially lower Crude prices and therefore gold should correct as well. The flip side to all of this is that gold will hold up better than most assets and I expect a worst case correction down to its relative 200EMA which is about $750 as of today. However should the correction span over the course of 4-6 weeks, then the 200EMA will likely match the early December 07 low of $770/oz. This price target would also match the May/June '06 correction. I believe cash in the form of US T-Bills and Gold/Platinum will be the best assets to own in the coming years. Silver and Copper will likely get blasted in the months to come as the $GYX industrial metals complex appears to be teetering on edge now. Traders will attempt to play the bear market in equities which will be very difficult to trade imo as vicious bear rallies come out from nowhere to give traders a nice reminder of how exactly the bear operates...
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I heard Steve Forbes give a talk a couple months ago. He made one simple point .... He said --- if you want to figure out if the FED is printing too much money - watch the price of gold

food for thought
 
According to Jim Rogers, Bernanke is a big time money printer. I don't expect him to stop. After all, he started injecting when the market was only 6% off it's highs in order to save his Street buddies. Gold is in a bull and I'm buying the retracements for now.
 
I'm not even going to bother looking back through the thread but it seems someone suggested that a good reason to short gold is that the MACD indicator has turned at the top (fast line or slow line or whatever it is).

Anyone who has spent any time looking at this indicator knows that it can wobble around up there for weeks without price ever retracing significantly. At the very least, use MACD in the direction of the trend, for God's sake.

Important S & R levels are a way better reason to short something that has just exploded massively to the upside out of a clear consolidation pattern like gold just did.

In answer to the poster above who asks why people insist on and persist in calling tops and bottoms, I am convinced it's because they're on the wrong side of the market and there's some psychological mechanism which compels them to tell others who will understand what they're talking about (other traders, as opposed to the local gorcer), that a reversal is imminent.
 
This is not likely "the top" but quite possibly the start of a extended correction to alleviate overbought conditions and to unwind hugely speculative fund positions via the COMEX open interest. Think about this for a moment, in May 2006, gold only spent about 2 days over $700 before the gold market began to fall apart. This time around, gold only spent 2 days above $900 in which the intermediate MACD was identical to the May '06 timeframe. Now what worked in the past may very well not work in the future. However, one would think that with the Fed and ECB injections in the past few months that gold would already be well over $1000/oz. but the reality is that gold is not even halfway priced to its inflation adjusted high of $2300/oz. The simple fact here is this, the gold producers have a very difficult time selling product when prices are this high as jewelry remains their bread and butter business. Take a look at the chart of AngloGold (AAUK)which has been an institutional favorite among many well to know European funds for the last few years. It has now decisively put in a bear cross and looks ready to go full blown bear. I am of the belief that many funds are unwinding everything in an attempt to raise cash to survive the oncoming carnage...
 
one more thing to consider ... silver was relatively strong compared to gold on friday ... ( of course this could change as soon as the markets re open )
 
Quote from Realist:

However, one would think that with the Fed and ECB injections in the past few months that gold would already be well over $1000/oz.
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I wouldn't think that at all. Gold broke massively to the upside out of the large triangle formed on the daily chart. This is weekly so the triangle isn't as clear.

Does this look like a bear forming up to you?

[img=http://img139.imageshack.us/img139/5233/goldui4.th.png]

I'm not a gold permabull at all, it just puzzles me when people try to float predictions about when a chart like this has finally topped. The last time gold got to these heights we saw the top clearly with a massive blowoff spike upon high volume. Shouldn't we at least wait for something that looks remotely like that before speculating about a top?

In fact, don't the majority of huge sudden bull runs end in this way?

I'm praying for a touch of 844 to re-enter.
 
Quote from Realist:

What this tells me is that every asset class except short-term treasuries are about to get hit severely. I believe that a massive unwinding is coming and the commodities complex is likely going to get hit very hard.
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Since I didn't come to ET to be challenged by other posters, I will be exiting stage left along with today's disaster that is unfolding right before everyone's eyes. Traders staying long the metals via futures expecting a safe haven are surely going to be disappointed when the cartel gets done with them...

It's been a pleasure.. Cheers...
 
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