Tag: how to trade gold

Gold's Plunge Ultimately Healthy for the Sector: Michael Gray

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The Gold Report: On April 15, gold dropped to a two-year low as panic selling set in across many mined commodities. Was this the larger players showing the retail market who is in control or was it inevitable?

Michael Gray: Several firms have been predicting a mid-cycle correction for gold; it just happened faster and with more volatility than expected. It also seems to be a very well-timed short-selling trade, especially on the back of the positive gold price correlation with quantitative easing (QE) breaking down and reversing post-QE3. In addition, there was no response in the gold price to the debt crisis in Cyprus or political concerns with North Korea. This was an opportunistic time for the shorts to come in, and they did, forcefully.

TGR: Does this indicate that investors prefer equities to gold? Continue reading "Gold's Plunge Ultimately Healthy for the Sector: Michael Gray" →

Portfolio Manager Greg Orrell: 'My Belief in Gold Has Not Wavered'

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The Gold Report: How has your bullish view on the gold sector evolved as a series of crises has jolted both the international stock market and the price of gold?

Greg Orrell: First off, my belief in gold as a monetary asset has not wavered. Japan basically admitted that it is bankrupt with its intention to aggressively debase its currency. Normally such actions would invoke, and may still, a race to the bottom as each country engages in economic warfare to deal with its debt issues. At this juncture the fear of global deflation among the G7 crowd remains its worst nightmare, especially as additional stimulus by the Federal Reserve is showing diminishing returns. With high debt levels in both the private and public sectors around the world, stimulating economic growth is proving elusive. These alarming events are setting the stage for the next leg up in the dollar gold price, in my opinion. The fiscal and monetary crisis is ongoing and underscores the necessity of owning gold assets.

Though agonizing, the past 18 months have been nothing more than a consolidation for gold from the September 2011 highs of $1,900/ounce ($1,900/oz). The recent decline in gold prices below $1,500/oz is not the end of the bull market in gold, despite the barrage of negative commentary by those wanting to dance on gold's grave. The destruction of currencies is in full bloom, but it is not a straight line. The problem for many gold investors is that they can see the endgame. Gold prices rise in a straight line at the end of a monetary system, but we are not there yet. It takes some patience to hold the course while the establishment fights tooth and nail to keep the dollar system from failing. Continue reading "Portfolio Manager Greg Orrell: 'My Belief in Gold Has Not Wavered'" →

Is Gold as an Investment Finished?

Posted on by The INO.com Team

Before delving deeper into that question, perhaps we should see what the mainstream media thinks.  In fairness to the MSM, we note there are plenty of articles on both sides of the debate.  Yet there has been some media piling-on since the recent hard breakdown in gold.  The aptly named Howard Gold explains:

The Case for Owning Gold Has Collapsed; Yellow metal could be headed much, much lower .

Gold could be headed not much lower, but much much lower.  This was written on April 18, when the value assigned to the monetary relic (AKA its nominal price) resided at $1391 per ounce.  So be warned, Mr. Gold advises that gold could go much much lower.  Gold bugs take heed; Mr. Gold himself has put the double ‘much’ whammy on you!

After critical support at 1524 was lost our first downside target of 1440 or so was sawn through like Balsa Wood.  Okay fine.  For those who micro manage every tick in the price of gold (I am not one), then here is the situation; the current little rebound must extend back up to and through the broken support level at 1440 or the next target in the low 1200’s is up next. Continue reading "Is Gold as an Investment Finished?" →

Physical Gold vs. Paper Gold: The Ultimate Disconnect

Posted on by The INO.com Team

By Bud Conrad, Chief Economist

How can we explain gold dropping into the $1,300 level in less than a week?

Here are some of the factors:

  • George Soros cut his fund holdings in the biggest gold ETF by 55% in the fourth quarter of 2012.
  • He was not alone: the gold holdings of GLD have contracted all year, down about 12.2% at present.
  • On April 9, the FOMC minutes were leaked a day early and revealed that some members were discussing slowing the Fed $85 billion per month buying of Treasuries and MBS. If the money stimulus might not last as long as thought before, the "printing" may not cause as much dollar debasement.
  • On April 10, Goldman Sachs warned that gold could go lower and lowered its target price. It even recommended getting out of gold.
  • COT Reports showed a decrease in the bullishness of large speculators this year (much more on this technical point below).
  • The lackluster price movement since September 2011 fatigued some speculators and trend followers.
  • Cyprus was rumored to need to sell some 400 million euros' worth of its gold to cover its bank bailouts. While small at only about 350,000 ounces, there was a fear that other weak European countries with too much debt and sizable gold holdings could be forced into the same action. Cyprus officials have denied the sale, so the question is still in debate, even though the market has already moved. Doug Casey believes that if weak European countries were forced to sell, the gold would mostly be absorbed by China and other sovereign Asian buyers, rather than flood the physical markets.

My opinion, looking at the list of items above, is that they are not big enough by themselves to have created such a large disruption in the gold market. Continue reading "Physical Gold vs. Paper Gold: The Ultimate Disconnect" →

Gold Chart of The Week

Posted on by The INO.com Team

Each Week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.

Weekly Gold Report (April 22nd through April 26th)

Without any big news to play off of, most markets begin the week a bit flat. Traders this morning are trying to decide whether the only standout rally in the Gold is here to stay, or if it is an early stop hunt to begin the week. We won’t soon forget the Sunday overnight in the Metals last week when Gold continued a drop that we have not seen in over thirty years. So who can blame anyone for being once bitten, twice shy?

A scan across the board does not reveal much except for a majority of the market sectors making an effort to retrace the price action we experienced a week ago. Korea has been rather silent, the tragedy in Boston is seemingly on the mend, and the parade of FED Member interviews is slowly coming to a close. In the absence of these headlines, we will likely go back to trading the actual reports that are scheduled this week. Continue reading "Gold Chart of The Week" →