Gold Trend Forecast for 1st Quarter of 2012

By Chris Vermeulen

Over the past five months gold has fallen sharply and is no longer headline news which it once dominated back in 2011 when it was making new highs every day. The shiny metal has been under pressure because traders and investors started to pull some money off the table to lock in gains. Gold prices had surged so fast most advanced traders knew that final high volume surge was not sustainable. But the main reason gold topped out in my opinion was because the US Dollar index had put in a bottom and started to build a base. As we all know a rising dollar typically means lower stocks and commodity prices.

I have posted some charts below covering gold in detail using multiple time frames. The weekly which is long term, daily which is the intermediate trend and the 4 hour chart which shows gold momentum and intraday action. At the very bottom I talk about the US Dollar and what is happening with that.
  
Gold Weekly Long Term Trend Analysis

The weekly chart is not the most exciting time frame to follow as you will grow old watching it. That being said it is crucial for understanding the long term trend, price and volume analysis.

Below you can see that gold's recent pullback has been a 3 wave correction, which is a normal pullback for any investment. But taking into account the rally from 2008 - 2011 I feel this pullback will have one more low put in before bottoming out. This would make for a 5 wave correction much like what happened in 2008.

 

Daily Chart of Gold Showing the Intermediate Trend

The daily chart allows us to see gold intra-week price action and use the 150 moving average which is my preferred daily moving average. As you can see we are getting a similar pullback as 2008 with gold now trading under the 150 MA.

I would like to see gold make another lower low in the next 2-3 months. If that happens I feel it complete the correction and trigger a strong multi month or multiyear rally in gold.

 

 

4 Hour Intraday Chart of Gold 

The 4 hour chart of gold allows us to see all the intraday price action which would normally not be seen with a daily chart. It also gives us enough data to build our analysis upon.

My preferred setup for gold which I feel if happens will trigger major buying in the yellow metal. If/when we get a rally in gold would also likely mean some more economic uncertainty has entered the market either from within the USA, Europe or China…

Weekly Dollar Index Long Term Analysis

The dollar has the potential to rally to the 87 - 88 level before putting in a major top. For this to happen we will need to see the Euro crumble (both currency and countries divide) in my opinion.
If you look at the weekly chart of gold and this chart of the dollar index you will notice that gold topped when the dollar bottomed. Over the past couple year's gold and the dollar have had an inverse relationship to each other.

With all kinds of crap about to hit the fan overseas I think it's very possible gold will rally with the dollar. Reason being there is way more people overseas who want to unload their euro's and with all the negative talk and doubt with the US Dollar individuals will naturally want to buy more gold.

Weekend Trend Trading Conclusion: 

In short, I expect a bumpy ride for both stocks and commodities in the first quarter of 2012. With any luck gold will pull back into my price zone shaking the majority of short term traders out just before it bottoms. And we will be positioning ourselves for a strong rally buying into their panic selling.

To just touch base on the general stock market quickly. I have a very bearish outlook for stocks. If the dollar continues to rise it is very likely the stock market will fall into a bear market. So I am VERY cautious with stock at this time.

 www.GoldAndOilGuy.com

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Gold Model Forecasts $4380 Gold Price

By Willem Weytjens

  

You've probably heard it many times: "Gold is a good hedge against inflation".

But IS it? That's the question we will try to answer in this article.
Let's have a look at a chart:

The chart above shows us the gold price (left hand scale, red line) since 1968, when the Gold Pool broke down. At that time, the gold price was no longer fixed, and was able to rise (substantially). From February 1968 to February 1980, gold rose almost 25-fold, from $35,50 per ounce to as high as $875 per ounce. From that point, gold started a multi-decade long decline towards $250 per ounce at the beginning of the 21st century. In the same time period, CPI doubled from 78 to 175,60. From then on, gold rose substantially, from about $250 to $1,920 earlier this year (x7.68), while the CPI rose from 175,60 to 226,42 (only 29%). So for that matter, it seems there isn't really a strong correlation between the gold price and the general price level.

I thus figured there had to be other forces at play that influence the price movement of Gold, and yes, I think there are… Eddy Elfenbein from Crossingwallstreet wrote an article that really intrigued me. He had found a "model" to explain the movements in the Gold price.
He said:

• The first and perhaps the most significant key takeaway is that gold isn't tied to inflation. It's tied to low real rates which are often the by-product of inflation.
• The second point is that when real rates are low, the price of gold can rise very, very rapidly.
• The third is that when real rates are high, gold can fall very, very quickly.

Special thanks goes to Jake from EconompicData, who also wrote about this topic, and who has helped me a lot with solving formulas.

So mr. Elfenbein wrote that gold isn't tied to inflation. It's tied to low real rates which are often the by-product of inflation (high nominal rates can still lead to low real rates if inflation is also high).
That's an interesting observation, as Ben Bernanke promised to keep rates at record low levels throughout 2013 in order to stimulate the economy. When nominal rates are near zero, every bit of inflation we get will lead to negative real yields, causing the gold price to rise substantially over the next two years, according to the model.

I wanted to see it myself, and I was thinking if I could improve the "model". I think I managed to do so, as my model "gold price" has a higher correlation with the gold price. With a lot of formulas in excel, I calculated the real short term rates, level of inflation, and "calculated" a model price for gold, based on the models of Jake and Eddy. I didn't calculate everything manually (I used about 2,000 combinations), but instead worked with a Macro in Excel, which makes my computer do all the work for me. It took the Macro about 1 hour to calculate every combination of 100 leverage factors and 20 deflator factors. I found out that a deflator of 2,15% and 2,20% gave the best results, with a leverage between 5.7 and 6.95, instead of the 2% Deflator and 8x leverage as Jake and Eddy found out. Based on these combinations, I was able to reproduce a "model" price for gold. The results were rather impressive to say the least. For example, the model price of gold based on a deflator of 2.15% and a leverage factor of 6.90, had a 95.52% correlation with the actual gold price:

 For those who prefer to look at logarithmic charts:

 Now, what does this all mean? Does the model have the potential to "forecast" the gold price? Maybe. It depends on the nominal short term rates, and the level of inflation. The first one is pretty easy to "guesstimate", as Bernanke promised to keep rates near zero for the next 2 years. The average annual (officially reported) rate of inflation over the last 43 years, has been 4.44%. If we assume we would see a similar rate of inflation over the next 2 years, the Gold model "forecasts" a gold price of $4,380:

To put things in perspective, please have a look at the logarithmic chart if you think the chart above looks "bubbly".

 From the beginning of this bull market, it would "only" be a 17.5-fold increase, compared to the 25-fold increase from 1968 to 1980. A similar 25-fold increase would lead to a gold price of about $6,250.

We now have another reason to believe legendary gold experts Jim Sinclair, Alf Fields and plenty of other analysts who are fully confident of a parabolic rise in the price of gold with targets of $4,500 and above.


Source :  http://www.gold-eagle.com/editorials_08/weytjens121211.html

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European Crisis May Still Result In Recession, Despite Debt Deal

By DAVID McHUGH and PAUL WISEMAN

FRANKFURT, Germany — Even if Europe dodges a financial meltdown, it may not be able to avoid a recession.

The deal European leaders reached last week to defuse the continent's debt crisis was thrown into turmoil Tuesday by the Greek prime minister's surprise move to call a referendum on Greece's latest rescue package. If voters reject the package, Europe could face a potentially devastating Greek default on its debt.

Stock markets plunged around the world, particularly in Europe.

Even if the debt agreement leads to a long-term solution to the crisis, the pact does nothing about other threats to Europe's economy: deep cuts by over-indebted governments, high unemployment, stingier bank lending and declining exports.

Many economists think Europe is nearing a recession that would harm the United States, China and other countries whose economies depend on the continent. The problems are illustrated by The Associated Press' latest quarterly Global Economy Tracker, which monitors data in 30 countries:

_ Four nations – Italy, Spain, Britain and Norway – reported annualized growth of less 1 percent in the April-June quarter. Economies generally must grow at least 2.5 percent a year just to keep unemployment from rising.

_ Spain had the highest unemployment among countries the AP tracked: 21.2 percent in August, which rose to 22.6 percent in September.

_Greece and Italy were buckling under the weight of government debt. In Greece, those debts equaled 161 percent of national output in the January-March quarter, second to Japan's 244 percent. Italy's government debt equaled 113 percent.

Financial markets have been spooked by fears that Greece and perhaps larger countries, like Italy, would default on their debts.

Banks would be stuck with huge losses on their government bond holdings. A panic like the one that nearly toppled the U.S. financial system in 2008 could follow.

European banks agreed last week to take a 50 percent loss on their Greek bonds. They are also to set aside more money to cushion against future losses. In addition, eurozone leaders hope to strengthen their bailout fund to keep the crisis from spreading to bigger countries.

Financial markets initially roared their approval. But fears that the debt deal will collapse or fall short of solving the crisis have triggered deep selling since late last week.

Analysts noted the paucity of details, wondered how many banks would adopt a voluntary 50 percent write-down on Greek bonds and questioned where the money for the enlarged bailout fund would come from. European leaders last week approached China for financial help.

The Greek referendum heightens the doubts.

"There is a risk that in this case the politicians may cut off funds to Greece and that the country may even leave the eurozone eventually," economist Christoph Weil wrote Tuesday. "Uncertainty looks set to surge again in financial markets."

Even without more chaos, some economists think the continent will slip into a mild recession late this year or early next, though its strongest economy, Germany, may escape a downturn.

Economic growth in the 17 countries that use the euro will slow to 0.3 percent next year from 1.6 percent this year, the Organization for Economic Cooperation and Development estimated Monday. Some European economies may stop growing altogether, the organization of wealthy nations warned.

One reason for the pessimism: Smaller countries, particularly Greece, Ireland and Portugal, are slashing spending. The bigger ones are raising taxes and also cutting spending.

Italy, Europe's No. 3 economy, is carrying out a $76 billion package of spending cuts and tax increases to try to convince bond investors it won't default on its debt. Britain has imposed an austerity program that's stalled growth.

The debt crisis has shaken the confidence of those whose spending must fuel growth. Business executives and consumers seem less likely to step up purchases for new factories or SUVs.

And the prospect of having to absorb huge losses on their bond holdings has caused banks to retrench. The European Central Bank's October lending survey showed that banks cut net credit to businesses by 16 percent in the July-September quarter. The 124 surveyed banks expected even tighter credit as the year ends.

Automaker Daimler AG said last week that it saw little prospect of significant growth in Western Europe. Its French competitor Peugeot Citroen SA said it would cut 6,000 jobs because of flat demand in Europe.

The weakness has already caused pain across the Atlantic.

Jeff Fettig, CEO of U.S. appliance maker Whirlpool, said Friday that demand is tumbling in parts of Europe. Whirlpool cut its earnings estimates and said it would lay off 5,000 in North America and Europe.

The United States exported $240 billion in goods to the European Union last year – more than twice its export total to China. U.S. companies have also sunk $2.2 trillion into long-term investments in Europe, such as factories and acquired companies. No other region comes close to drawing so much U.S. investment.

Germany has 2,200 American-owned companies. General Motors and Ford Motor Co. have divisions based there. ExxonMobil Corp., ConocoPhillips, GE, IBM, Hewlett-Packard Co., Procter & Gamble Co. and Dow Chemical Co., all generate billions in annual European sales.

Exports have accounted for 47 percent of growth since the Great Recession ended in mid-2009. That's more than twice their share after the previous three recessions.

"It is the reason Europe matters," says Steve Blitz, senior economist at ITG Investment Research.

___

Wiseman reported from Washington.

Source: http://www.huffingtonpost.com/2011/11/01/european-recession-crisis-despite-debt-deal_n_1069144.html

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How Gold & Stocks are About to Repeat the 2010 Bottom

By Chris Vermeulen

In May of 2010, immediately following the flash crash many investors started to become bearish (nervous) regarding their position in gold and equities. Once the general public became aware that the stock market could fall 10% in a matter of minutes, investors became very cautious. Suddenly protecting their capital and current positions was at the forefront of their investment process.

A couple days later the market recovered most of its value, but it became clear that investors were going to sell their long positions if the market showed signs of weakness. It was this fear which pulled the market back down to the May lows and beyond over the next couple months which caused investors to panic and sell the majority of their positions. It is this strong wave of panic selling that triggers gold and stock prices to form intermediate bottoms. Emotional retail traders always seem to buy near the top and sell at the bottom which leads to further pain.

Now, fast forward to today........

This past August we saw another selloff similar to the “Flash Crash” in May of 2010. I warned followers that gold was on the edge of topping and that stocks would take some time for form a base and bottom. Over the past couple months gold, silver, and stocks have been trying to bottom but have yet to do so.

Just a couple weeks ago we saw gold, silver, and equities make new multi month lows. This has created a very negative outlook among investors which I highlighted in red on the chart below. Since the panic selling low was formed just recently we have seen money pile back into gold and stocks (more so stocks).

This strong bounce or rally which ever you would like to call it may be the beginning stages of a major bull leg higher which could last several months. Before that could happen, I am anticipating a market pullback which is highlighted with red arrows on the chart below.

Chart of SP500, Gold and Dollar Index Looking Back 18 Months

Reasons for gold and stocks to pullback:

Stocks are overbought and generally retracements of 50% or 61% are common following large rallies.
The dollar index looks ready to bounce which typically means lower gold and stock prices.
Gold continues to hold a bearish chart pattern pointing to lower prices still.

Weekly Trend Trading Ideas
A few weeks ago I warned my followers that stocks and gold are forming a bottom and that we should be on the lookout for further confirmation signs. I also mentioned that I was not trying to pick a bottom, rather that I was looking to go long once the odds were more in my favor.

This is a potentially very large opportunity unfolding and there will be several different ways to play this. However, right now I continue to wait for more confirming indicators and for more time to pass before getting subscribers and my own money involved.

Source: http://crudeoiltrader.blogspot.com/2011/10/how-gold-stocks-are-about-to-repeat.html

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David Banister: Gold Heading to $2,350 Per Ounce After 4th Wave Consolidation

In my most recent few forecasts for subscribers and public articles I’ve discussed a major correction in Gold, and it dropped $208 within 3 days of that forecast several weeks ago as Gold traders will recall. Last week I wrote about further consolidation being required in what I’m seeing as a either 4th wave likely “Triangle Pattern” that will consolidate the 34 month run from $681 to $1910 into August of this year, or a 3 wave “A B C” pattern. We are right now in some form of C wave, it’s just a matter now of confirming if we are going to get a “D and E” wave to follow, or the C wave drops lower before we bottom.

A Triangle pattern serves to let the “economics of the security” catch up with the prior large movement upwards in price. In essence, the crowd behavior pushed the price of Gold a bit too high too fast, and this consolidation pattern lets the fundamentals catch up to price action. We had a parabolic move I discussed many weeks ago, and those always end badly to the downside. The $208 drop in three days is a typical reaction to a spike run like that. At the end of the day though, I had been forecasting what I call a “Wave 3” top and was looking for a multi week or multi month consolidation pattern before Gold could move higher.

Let’s examine what that triangle projection may look like.

They take the form of 5 waves, or what we can call ABCDE in a pattern. The biggest drop is always the “A” wave, and that was 1910 to 1702 in 3 days or less. The next biggest drop is the “C” Wave, and that was 1920 to 1793, noting it was a Fibonacci 61.8% drop relative to the A wave. In other words, each successive wave down in the 5 wave triangle is smaller. This is due to the sentiment finally shifting and the trading patterns moving from people chasing the hot sector or stock or metal, to the long term investors accumulating the dips.

If we end up consolidating in a “Triangle”, then Gold should end up looking something like the below pattern I drew, with a target of $2,350 per ounce many months out:

The other pattern we are watching for at TMTF is the ABC Correction pattern. We had the A wave down to 1702, which corrected 50% of the move from 1480-1910 in 3 days. Rarely do you get a major move down like that and not get some type of “re-test” of that low, but because the fundamentals for Gold are strong and getting stronger, we are favoring the Triangle pattern still as most likely. With that said, there is a fat and juicy “Gap” sitting in the chart around 1660 on Gold and dropping down there is what a lot of traders are watching. If that were to fulfill, then we will see an ABC correction ending around $1643, and then Gold will begin another multi month rally to new highs:

Source : http://networkedblogs.com/n8YxP

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Negative Momentum In Gold And Silver To Continue?

Let's begin today's discussion with fresh Fed decisions and its implications on capital markets. Ben Bernanke sent a strong signal recently that despite weaker economic data, the US Federal Reserve is not planning to loosen monetary policy. He said that the recovery "appears to be proceeding at a moderate pace", in other words, no QE3, at least not for now. Wall Street turned south, the 10-year Treasury yield eased back under 3 per cent and gold futures fell. In the last Premium Update before we knew what Bernanke planned to say, we said that it was a good idea to close long speculative positions in gold. 


Mark your calendars. On June 30th the Fed will end its second round of quantitative easing, the money supply will tighten. It is the flood of money pumped out by the Fed that has propped up the stock market for the past three years. What will happen when the dollar pump shuts off? It seems plain common sense that the stock markets will go down. It also makes sense that when markets will plummet to where it really hurts; the politicians will demand a new round of QE. We find it difficult, if not impossible to believe that there will not be QE3 in the future.

It's only a matter of time before the Fed will have to turn on the presses again sending a message to America's creditors that they will be repaid in devalued fiat currency. All around the world, more and more central banks are selling dollars and buying gold. Apparently they have come to the conclusion that U.S. credit is not that reliable and that the value of the dollar is likely to decline. We have come to that conclusion long ago and have been recommending long-term positions in precious metals.

In desperate times it's good to hold some physical gold and silver. The investment demand is clearly strong from individual (small) buyers, but does it mean that markets will move up soon?
Let's move to chart analysis to find out more about the short-term trends. We will begin this technical part with the analysis of the Euro Index. We will start with the long-term chart (charts courtesy by http://stockcharts.com.)

We begin with the long-term Euro Index chart where we have seen a continuation of the trend to higher index levels. However, based on the price action seen this week, there may be a slight pause underway which perhaps will be followed by a retest of the declining support line. A move below this level could be followed by additional declines to yet another support level.
The implications for gold, silver and gold and silver mining stocks are the same as was seen in previous declines of the Euro Index where the precious metals sector generally declined as well. It is important at this time for all precious metals Investors to keep an eye on the decline of the euro for these reasons.

Additional implication is that currently the analysis of the short-term chart (below) is just no less important than the analysis of the long-term one (above).

 
In the short-term Euro Index chart, we can clearly see the important short-term cycles which generally have had profound impacts not only upon currencies but also upon gold. The chart suggests that the local top was in a few days ago and this will likely lead to lower Euro Index levels and lower gold prices in the days ahead. Note that these short-term cyclical tendencies have been particularly reliable on a short-term basis, but if we are, in fact, on the verge of a bigger downward move, this could very well be the trigger for it.

Moving on to the long-term USD Index chart, we see that index levels recently moved below the 2009 lows and then reversed direction. It is possible that we could see a local bottom as there is a support line here created by the 2009 November low.

Fundamentally speaking, the situation favors a short-term rally. The markets are digesting news that we won't see QE3 soon and that the supply of the USD will be at least somewhat limited. On the other hand problems within the EU make many market participants believe that EU will monetize its debt either directly or indirectly (without calling it such). Combining these two points provides us with a short- / medium-term bullish picture for the USD Index (recall that the EUR:USD exchange rate is the most important part of the USD Index).

In the short-term USD Index chart, we see the cyclical turning points, which are represented by the vertical lines in our chart. It's important to note here that these have medium-term magnitude with respect to index level trends. Presently, the USD Index is close to a local bottom and this is consistent with points made earlier.

The USD Index is therefore likely to move higher from here. It is unclear at this time whether the level of previous highs will be reached and/or surpassed (based on the strong support in Euro). Whatever the situation, generally speaking, higher USD Index values will likely have a negative impact upon gold, silver and gold and silver mining stocks and the signals from this chart also support this short-term outlook.

Summing up, the USD Index has become bullish at least for the short term and the Euro Index conversely appears to be in an analogous period of decline. These changes reflect the fundamental news of no QE3 that some market participants were counting on. Consequently, the short-term picture for gold, silver and mining stocks is now bearish.
Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
Sunshine Profits

Source :
http://www.gold-eagle.com/editorials_08/radomski061011.html

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Berlian Mahal, Batu Safir Semakin Bersinar

TREN KONSUMSI BATU MULIA
oleh Christine Novita Nababan
www.kontan.co.id

NEW YORK. Berlian adalah abadi. Tapi, seiring kenaikan harga berlian, para penggemarnya mulai "selingkuh". Para pasangan pengantin kini mulai memilih beragam pilihan batu cantik yang lebih miring harganya. Sebut saja batu safir, rubi, dan zamrud yang tidak kalah indah dibandingkan dengan berlian.

Contohnya Sarah De Remer, seorang teknisi medis dari Broadway, New Jersey, yang melangsungkan pertunangannya bulan lalu dengan cincin safir yang dirancang bersama tunangannya. "Saya suka tampil menonjol. Jadi, kami memilih sesuatu yang berbeda," kata Sarah.

Tren batu berwarna dipelopori kombinasi berlian-rubi milik pelantun lagu I Wanna Love You Forever, Jessica Simpson. Terakhir adalah berlian safir Kate Middleton yang menikah dengan Pangeran William.

Selain harga dan tren, faktor lain yang menyebabkan orang mencari alternatif berlian adalah karena batu mulia itu mendapat julukan buruk: blood diamond. Ia dipakai untuk membiayai perang saudara di Afrika.

Andrew Schloss, Direktur Reinstein Ross di New York mengakui, safir kini kian populer. Pemegang merek perhiasan Tiffany & Co ini telah menjual safir lebih dari 170 tahun. "Sekarang ini memang sangat populer menggunakan batu mulia berwarna," terang Schloss.

Menurut Heather Levine, Senior Editor Fashion TheKnot.com, safir merah jambu adalah warna yang paling populer saat ini. Dulu, Jennifer Lopez, penyanyi dan aktris, menggunakan batu safir berwarna merah jambu saat bertunangan dengan mantan kekasihnya Ben Affleck pada 2002 lalu. "Pilihan ini memberi rasa nyaman kepada pengantin," kata Levine.

Berdasarkan Wedding Report Inc, warga Amerika Serikat menghabiskan US$ 6,12 miliar untuk membeli 4.365 cincin pertunangan dari berlian sepanjang tahun lalu. Belanja itu itu turun 31% ketimbang 2009. "Ketika resesi 2008, banyak pasangan menyadari apa yang mereka sejatinya sanggup mereka beli," terang Shane Mc Murray, pengelola laporan pernikahan Tucson, Arizona.

Maklum, harga satu karat berlian berkualitas bisa mencapai US$ 11.000. Dengan ukuran yang sama, rubi bisa diperoleh seharga US$ 4.000, batu safir biru US$ 1.600-US$ 2.000, dan zamrud di kisaran US$ 8.000.

John Watkins, seorang perajin emas di California menambahkan, rubi dan safir terbuat dari korundum dan mineral yang sama dengan berlian. Skala Mohs, pengukur kekerasan mineral dari 1 sampai 10, menyebutkan, korundum rubi dan safir berada di peringkat 9, sedangkan berlian ada di urutan ke-10.

Sejak De Beers memperkenalkan slogan Diamond are Forever pada tahun 1948, batu-batu berharga menjadi pilihan utama cincin pertunangan para pasangan di dunia.

Sumber :
http://internasional.kontan.co.id/v2/read/1307173123/69321/Berlian-mahal-batu-safir-semakin-bersinar

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