GOLD is due for about a 30% +/- CORRECTION, let me convince you in this thread

This thread will most likely not be too controversial, but I believe nonetheless it should be posted.

We know historically in the markets when something goes STRAIGHT UP or STRAIGHT DOWN that this is a preceding move to another violent move the OTHER WAY.

Such was a case in the market earlier this year, and I believe this is happening in GOLD right now. I am going to convince you of this by using:

1. Historical price movement

2. Linear Regression

First, this is

a) a WEEKLY CHART of GLD (Gold ETF - tracks very accurately)

b) from late 2005 I believe until present


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This is very simple, only a couple things to look at.

1. The 3 lines are the model for the linear regression setup. You will notice back in 2008 when we touched the top linear regression resistance we took about a 35 pt loss from 100 to 65 area

2. The green lines
- Top one is the first price target - right around 100, now notice how this intersects the MIDDLE LINEAR REGRESSION LINE and the SUPPORT from the PREVIOUS RESISTANCE

- Bottom Green Line would be the place of last support for this current rally in gold. Notice how this area as well coincides with a lot of consolidation from late 2008.

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Now I am far from a "gold bug" but I do not see this rally ending in gold, even though I believe we have hit a big resistance here. In the coming weeks we will find out how strong gold really is. It has been in an enormous rally, and like everyone knows, no one knows the future -

The last correction was 35% - but this one IMO will be less as it coincides with the BOTTOM LR Line and the CONSOLIDATION from late 2008 (support from volume)

Anyway, just food for thought before any of you decide you want to put all your piggy bank in this commodity which I have been seeing a lot lately. A lot of false reports etc. (IMO) that go along with this as well to lure RETAIL into gold, that scares me - should scare you too. Does anything think China will keep buying gold at historically high prices?? Maybe, and maybe gold just keeps going up and up and up and up - but lets be real - so just be careful is all.

Here is the chart

CHART

i think you should specify between gold the stock, and gold, the physical asset. in times of uncertainty (and these certainly are), gold bullion is always a safe bet. in history, gold only looses value when there is a tremendous amount of it in circulation (which is difficult to achieve when gold is a rare element) when spain brought back gold from the new world, boat loads of it, it was immeditely circulated into the spanish economy. it created mass amounts of deflation, made gold worthless...so unless we come across a lot of physical gold and immediately circulate it, gold WILL always be a safe bet for ensuring that you have value in this economic cluster-f.

reply to post by Terces_Pot_Evoba


Gold Bullion loses value just like GLD the ETF.

If the spot price of gold is 1200 and loses 30%, so will you.

Originally posted by Terces_Pot_Evoba
i think you should specify between gold the stock, and gold, the physical asset. in times of uncertainty (and these certainly are), gold bullion is always a safe bet. in history, gold only looses value when there is a tremendous amount of it in circulation (which is difficult to achieve when gold is a rare element) when spain brought back gold from the new world, boat loads of it, it was immeditely circulated into the spanish economy. it created mass amounts of deflation, made gold worthless...so unless we come across a lot of physical gold and immediately circulate it, gold WILL always be a safe bet for ensuring that you have value in this economic cluster-f.

You are about to find out how wrong you are. Production of gold is going sky high with these prices. The market wil be flooded. Once the last scared sucker buys his buillion and stashes it in his closet safe, gold will fall back into the 3-400's again. It happens every time. The cost of a round trip trade in buillion will keep people from taking profits. As a result they will be sitting on it with a loss for the next couple of decades until we get another huge scare.

Gold simply has no use that makes it worth anywhere near what it is now selling for. Gold is like tulips, tech stocks and real estate. Learn your lessons or keep losing.

Remember the housing bubble? Remember the Stock bubble? Gold...dont get squashed again....

reply to post by sligtlyskeptical


While a lot of retail buying is pretty damn scary to me at least, the trend would still have to be my friend in this case - although anything is possible for certain

Let's try to get some perspective on this:
The Glenn Beck and other right wingers have been hawking gold for some time, espousing the decline of the world as we know it.
Should you be as fortunate as they, go buy the gold.
If you are like me and live weekly, buying foodstuff is the only way to go.
Ask you and yours an honest question, can I do I, will I, have the where-withall to trade miniscule chunk of my gold for food?
Or should I be the guy that decides a piece of gold is worth me and mine eating for the next two months.

Is it the gold bubble or the dollar bubble that is about to pop?

What if the gold prices are going up in responce to everyone's growing realization that the dollar is on it's way to hyper-inflation?

The govt has been spending money at a far greater rate than what is brought in by taxes for decades now. The current administration has ramped up the spending to unprescedented levels, resulting in the monitizing of the debt.
This means no one is buting our debt anymore and the govt is just printing the dollars it needs to cover expences. Any idiot can see this is the definition of inflation.

As confidence in the dollar goes down, the price of gold will continue to rise. Only by reigning in spending and seriously restricting lending practices will we be able to save the dollar.

If we can reduce the dollar supply and stabilize our currency, then, and only then, will the price of gold begin to fall. As the price of gold falls, the buying power of the dollar will rise.

In the end, gold investors will retain the buying power of their original investment.

I believe the price of gold is the best indicator of inflation. The skyrocketing price of gold today is a sign that our currency is rapidly loosing it's value.

[edit on 4-12-2009 by FortAnthem]

reply to post by FortAnthem


I do not know if any/both of these are "bubbles".

Although not everything goes straight up/straight down without a lot of "noise" inbetween.

Gold is bought by a lot of people for more than a few reasons I guess, but IMO if we are in a range, we are at the top of it currently

reply to post by FortAnthem


Nah its just the Elite that are in control moving the cheese. They invest when its low then make up News and reports and advertisements to get everyone to buy in. At some point they will send the signal and the Elites will dump take their cash and move to the next bubble. If you don't get to greedy you can watch the cheese then sell early and wait for them to move the cheese again. Most people wait to long and end up losing. Someone has gota lose money for the Elite to make money without actually working for it.

Was housing then stocks now gold. Looks like to me the cheese is about to move again.

I think gold could go much higher over the next year or so. However, like another poster said, if inflation does not completely destroy the dollar, the gold market will be flush, and the price of gold will come crashing down like....Well, like a ton of gold bricks.

reply to post by projectvxn


I think gold moves higher as well - although when it moves too violently up that is either

a) bad overall

b) needs a correction

I think its "b" in this case - but mean reversion never hurt anyone in a bull tape

reply to post by GreenBicMan


In my opinion, the last thing we need is a bull run in the gold market. Because we all know what that means. I would prefer to see a correction in the near term, but I'm afraid that won't be the case, people are losing a lot of confidence in the dollar. And diversification away from the dollar is still on everyone's tongue...For once, it seems, it is more than just idle rhetoric.

If this trend is followed by more action(Like those rumors of Japan wanting to dump 100 billion in Treasuries to finance national spending) then we can see a case for a long term bull run on gold. But that too will come to an end quite violently in 2 to 5 years as the dollar is replaced and gold is priced using another currency, or a basket of currencies...Which is entirely possible.

There is also a potential for a forex crash based on lack of physical delivery...Let's hope all those gold buyers don't want their gold hidden away in the safe...There's about 100 ETFs for every ounce of gold available on the open market...If that is allowed to grow we may, indeed, be looking at the future collapse of the gold market.

reply to post by projectvxn


Well as long as we agree that it could be a short term top then I will chalk you up as one. As to the future, well that it is anyones guess.

Today was interesting in the mkt.

Dollar up

DOW up

That hasn't happened in a long time.

Employment report shows new faith in the dollar - but who knows what will happen down the line. My argument though is just a weekly short term top that looks like a good place to short this market etc.

reply to post by GreenBicMan


I saw that. I remember thinking how weird that is considering the environment...Maybe someone set a bunch of hundred dollar bills on fire somewhere.

reply to post by projectvxn


Im pretty sure the unemployment curve is now in "x" % within their model and im pretty sure this recovery is for real. We gained 2+ dollars on the YEN. Fridays are reversal days. Im sold on this, although I know others arent yet.

I am strongly bullish on the dollar as well - but that is another thread my friend

reply to post by GreenBicMan


You're what I term a permabull...But it's nice to have your optimism in these boards...You tend to check the pessimism. And even though I'm not bullish on much, I can appreciate your perspective and your accuracy for short term market moves...The long term, however, does not bode well for us.

There is an economic war afoot. Between the east and west. We're not the only ones in the position we are in. And there are those that seek to manipulate the situation. I posit that WW 3 is being fought right now, on the financial front. We may come out on top...But it's gonna hurt.

reply to post by projectvxn


I dont know about any of that haha, but I am one. I even call myself that on my profile, but that is 61.x% (positive thinkers) of the world my friend. Most are not represented on this board often, but I just happen to apply it to financial charts.

[edit on 4-12-2009 by GreenBicMan]

reply to post by GreenBicMan


It's nice to see the silver lining in things..But it's the drag net, where you and I can find the holes to squeeze between, there will be so many more who get caught up in it, and these people suffer. We are in a war. There are people out there who use finance as a weapon. The casualties are slow rising. Death comes but it is deferred. Homelessness, hunger, crushing debt, joblessness. We need to create millions of jobs, and we may go broke trying with the kind of incompetence we're seeing from governments around the world. There are other factors as well, like the derivatives bubble. Gold is such a small component of all of this, but it's moves should be seen as heralds of things to come, especially if sustained.

I too expected an uptick in "economic growth" but that is government money, and they can't do it forever. As far as jobs go..We can thank temps for the holiday season for that..Come January all of those people will be let go.

[edit on 4-12-2009 by projectvxn]

I disagree with the 30% correction call primarily on fundamentals....but I agree that the long-term trend remains fully intact. My focus is on short-term trades & low risk entries.

In contrast to the OP' long-term weekly , I'll post a short-term GLD daily depicting what I saw happening on Wednesday prior to Friday's pullback. Then I'll comment on what I see moving into next week.


[atsimg]http://files.abovetopsecret.com/images/member/8e06b067dfe2.jpg[/atsimg]

Wednesday's break above the upper end of the channel (bearish hanging-man candlestick in star position) signaled that a pullback was imminent.

Here's what happened....


[atsimg]http://files.abovetopsecret.com/images/member/a861803b0e42.jpg[/atsimg]

Thursday's close below the hanging man = exit trading positions...Friday we got the sharp reversal.

Referring back to the first chart , I expect a maximum 10% correction to the blue line , lasting approx 2-4 trading days...low-risk re-entry @ 106-ish. This would equate to a max pullback in spot Gold 1080 - 1090 approx.

*Not advise...with Gold , anything can happen*






[edit on 5-12-2009 by OBE1]