Gold may be on the verge of a major price collapse

Quote from Rearden Metal:

All I see is a nice buyable dip in a raging bull market.

East-Asians love to hoard their gold bullion, so I don't see gold weakening much at all until the Asian Tiger quits roaring.
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If it was a buyable dip, wouldn't you have some fear in the market after this rapid decline, rather than the complaceny that we now see?

In comparison to prior small dips, this time we have massive one-way speculation on the gold price, as seen by both sentiment and the COT report showing record longs recently. That adds a large element of short-term risk that has not been present during most of this bull market. Now while the price is still going up with strong momentum, it's fine to ride the trend. But when sentiment is very bullish, the long side crowded, and yet price is acting weak - in my experience that is the time to be looking to short, not buy.

You got bearish on oil in mid 2006 for similar reasons. I think they apply here to gold just as well.
 
I'm sorry Cutten but I don't think you could be more incorrect. When gold corrects from extremely overbought positions it usually corrects back down to the 50 day MA, with an initial bounce off the 20 day and takes 6-10 days dropping between 35 and 40 on the RSI.

Today is day 8, we've had the initial bounce off the 20 day and we've dropped 32 on the RSI. Currently sitting $12.50 off the 50 day MA.

Gold rose $204 almost vertically and is simply taking a breather in a bull market. Your analysis should be telling you to view this as a buying opp, rather than suggesting the bull run is over and prices are heading towards $600. Absolutely laughable.

IMO, this year is the last time you'll see Gold in the $700's and silver in the $14's. I'll be back to hear to eat my humble pie if I'm wrong...will you?
 
Quote from Adwebster:

I'm sorry Cutten but I don't think you could be more incorrect. When gold corrects from extremely overbought positions it usually corrects back down to the 50 day MA, with an initial bounce off the 20 day and takes 6-10 days dropping between 35 and 40 on the RSI.

Today is day 8, we've had the initial bounce off the 20 day and we've dropped 32 on the RSI. Currently sitting $12.50 off the 50 day MA.

Gold rose $204 almost vertically and is simply taking a breather in a bull market. Your analysis should be telling you to view this as a buying opp, rather than suggesting the bull run is over and prices are heading towards $600. Absolutely laughable.

IMO, this year is the last time you'll see Gold in the $700's and silver in the $14's. I'll be back to hear to eat my humble pie if I'm wrong...will you?
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I didn't say prices are headed towards $600, neither did I say the long-term bull market is over. I don't think it's "absolutely laughable" to say that a move to $730-635 is on the cards - that's a 14-25% correction, in line with prior percentage declines such as summer 2006 (gold corrected 25%) or 2003 where gold corrected about 20%, which both took place during a long-term bull market. Why is a $60+ decline laughable, when you expect a rally of $60 or higher?

As for the humble pie comment - in my original post I clearly stated my stop. Since then gold moved down to $775 then bounced, and the dollar has fallen to new all-time lows vs the Euro, so I have moved my stop lower accordingly. I am out of half my gold futures shorts if it closes above $790 today, and the other half if it hits $810, whilst I will leave the options to expire. So, barring a gap move, if it gets hit I will be roughly breakeven on my futures and lose the premium on my open OTM put positions, which will so far be more then offset by the puts I bought on Nov 7th (http://elitetrader.com/vb/showthread.php?s=&threadid=108767) and have already rolled down in strike at a healthy profit. I certainly don't see why I should be humble, given that my likely worst case is to have cleared a small profit on the overall trade, whereas if I turn out to be right, the profit will be substantial.

How about you? I don't see you posting a stop, I don't see you posting your trade entry (either time/date of entry, or price), I don't see you updating people on your position. Why the double standards? After all, it is only fair that you hold your own view to the same standards that you hold mine - so please post your call with a specific entry time/price and a stop, and let us know how you have done so far. When did you get long, where do you plan to exit if you are wrong etc? Enlighten us please.
 
Hmm, Let's see here...

Dollar at new all times lows... Check!
Euro at new all time highs... Check!
Crude at new all time highs... Check!

Gold at new all time highs... ???
Silver at new all time highs... ???

The smell of manipulation and intervention in the precious metals complex grows more foul as each passing day approaches...
 
Whats laughable is the title of the thread, as mentioned by others posters. You did state that Gold may head down to $630 or $640, so read your original post before denying it. As for Gold having a 25% correction like it did in 2006, that was after a primary leg of a bull run that went for six months and finished in the traditionally week summer period. This run has lasted all of 2 months, has hardly even begun, and still has the strongest seasonal period ahead of it and certainly isn't on the verge of a 'major price collapse'.

I posted my analysis on another forum (hotcopper.com.au - feel free to check it out, I post under the same name) which went along the lines of this is a breather after Gold ran up $204. When gold corrects (notice the difference) after being extremely overbought, it usually takes 6-10 days to return to within reach of the 50 day MA with an initial bounce of the 20 day, and the RSI usually drops around 35 points. I also stated that we were unlikely to quite reach the 50 day MA as we were in a strong bull market (again notice the difference), so don't wait for this as a buying signal.

I bought yesterday when I noticed buying coming in towards the end of the Asian session and before the European session opened, which often implies the buying is coming from the middle east, who I often noticed buying in the $200 run of the past few months. I bought at $780 with my stops below the 'correction' low of $773 at $770.

I'm sorry but I just can't ignore when people post ludicrous statements like 'Gold may be on the verge of a major price collapse' when it clearly isn't.
 
Quote from Realist:

Hmm, Let's see here...

Dollar at new all times lows... Check!
Euro at new all time highs... Check!
Crude at new all time highs... Check!

Gold at new all time highs... ???
Silver at new all time highs... ???

The smell of manipulation and intervention in the precious metals complex grows more foul as each passing day approaches...
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Realist, dont you think there is a possibility that the current dip in Gold and Silver maybe just a temporary correction. I mean it seems like Gold and Silver are resuming their run. Adwebster is laying out a very good argument here.
 
There is just so much riding on end of year expectations. I think a lot of larger players have squared up already and are out of the market unless they are sucking wind (I want to hold on to my bonus, thanks) so volatility is increased and it just gets... stupid.

Yeah, we know that the asians and mideasterners are buyers for whatever reason, but they could get pretty panicky about their equities positions in their stratospheric markets and end up selling EVERYTHING securitized and then everyone else starts...

Physical gold that has diffused into the hands of investors, etc... is really just off the market. It doesn't make a difference. If it trades hands it does so outside of the securities markets, so its a non-event. I don't think you are going to see chinese lining up outside of the BOC to sell their gold coin.

Geopolitical factors will demand a retracement in the dollar even if only temporary. Gold will strengthen, and likely be sold off. Unless the world isn't working any more. And then all bets are off! (don't count on that) I still like $720 ish to buy.
 
I should also add two things. Firstly this is just my analysis, and all kinds of things could turn that on its head. Secondly, on charts of US$ Gold, in Australian time frames, gold completed a key reversal yesterday, opening below the previous days close, moving below the previous days low, then reversing and moving higher than the previous days high and closing above it.

Key reversals are generally quite powerful reversal signals, so in MY book now is a low risk entry point.

Also Cullen, just to clarify, its not your analysis that I derided as laughable, I'm sorry if it seemed that way - everyone is entitled to their take on things and your assessment of support levels etc is probably spot on, I'm just sick and tired of people using scarmongering titles to threads to draw people in, when in actual fact even a fall back to the prevous high in May 06 does not constitute a 'major price collapse', simply a retracement back to resistance turned support.

And re the 'humble pie' - Don't take Aussie humour so seriously, we say many things in jest. Read again and you might realise this was one occasion. Good trading all
 
Quote from Cutten:


You got bearish on oil in mid 2006 for similar reasons. I think they apply here to gold just as well.
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This isn't the same situation, IMO. Last year, I dumped my oil long right before a sharp decline because it just seemed like EVERYONE was long oil and NO-ONE wanted to be on the other side. With gold today, you can see from this thread alone that the prevailing sentiment is quite mixed.

BTW, I kind of screwed up- I didn't get long gold in my trading account. However, I do still have my large long-term investment position in gold. Most of this was purchased back in 2000-2001.
Since gold is the only 'real' currency, I never intend to get completely flat, regardless of where the price goes.
 
Quote from Khaled187:

Realist, dont you think there is a possibility that the current dip in Gold and Silver maybe just a temporary correction. I mean it seems like Gold and Silver are resuming their run. Adwebster is laying out a very good argument here.
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Yes, it is looking more like the correction is complete in the metals now. However, with the DX hitting 74.60 last nite, gold is still only at 815 which is pretty disappointing imo. I reloaded a small gold position at 805 and instead of silver I have a basket of $XEU, $GBP and $CHF. Until some major entity decides to unleash the fury on the commercials, the suppresion will unfortunately continue as I see it so its better to diversify into other anti-dollar plays...
 
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