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AverageJoe

41,593 Posts.

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27/07/17

00:57

Post #: 26102187
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Originally posted by loki01 ↑

V

I had to do something like that in September 2014 after losing most of the gains achieved in the previous 5 years.

My target was to get back in during the next major gold/goldie selldown, which on the basis of seasonal patterns was expected in December 2014. I got lucky because the AUD POG bottomed out around that time with the AUD declining relative to the USD. Our goldies also got a bit of tailwind from lower input costs as wages and oil price declined.

If there is a major gold/goldie selldown in the next few weeks then there could be the opportunity to enter for a significant bounce to benefit from the rise in gold demand as Indians gear up for their festivals. In recent years the gold price has tended to tumble from October into December, reach a low level of sentiment and give brave/foolhardy souls a chance to make large gains on goldies assuming things go to plan in January/February when Chinese demand is high for their new year celebrations.

A somewhat complicating factor in the last few weeks is that the AUD has been rising in relative terms to the USD.

I guess what I am saying is that its best to only trade very selectively when conditions are most likely to be in your favour, in particular use seasonal demand factors, market sentiment, CME COT positions, Fed FOMC meeting dates, and real interest rates in your considerations. If there is financial instability (eg Italian bank bailins) then expect a lift in gold demand in the region where the bailins are happening. Take note what is happening with Chindian gold demand, and any impediments to imports (eg the imposition of new taxes by the Indian govt.)

Finally you need to take a realistic view of the goldies. It is easy to get caught out. By concentrating your speculatiion on the larger profitable goldies you may not make as high a percentage gain, but at least there is more chance of them staying alive. Make smaller bets on some of more risky goldies, but limit losses there. SLR and RMS seem to be OK for speculation while BDR and BLK are questionable until they prove themselves so I would only bet on them when conditions are buoyant

I am beginning to think that there may now be only one or two points in time each year when its worthwhile to gamble on the goldies, firstly around July/August and secondly in the November or December low. So the idea would be to make whatever gain one can and then simply stay away until the next major low.

The easy gains happened from December 2014 to around September 2016.

I am concerned about the longterm downtrend line from March 2011 acting as a barrier to the POG, the lack of catalysts to generate interest in gold, what might happen if Chindian demand were to fall (eg due to the failure of the monsoon rains), higher real interest rates/lack of inflation, and that the sharemarkets around the world are still doing OK (but perhaps reaching the end of their run sometime next year).

There is always the possibility that hard commodities generally will not have another major run for the next 15 years, and the only reason why the USD POG may go up (or not collapse) is because of the growing income of countries where gold is valued (Chindia/Asia generally). I note that Japan has had low growth, low inflation, but not economic collapse after a major bout of credit creation and asset inflation, for the last 25 years - and I often wonder if the "west" is going down that path.

Good luck with your speculation.

loki (my point of view is worth as much as or as little as the next person's point of view.)

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"In recent years the gold price has tended to tumble from October into December, reach a low level of sentiment and give brave/foolhardy souls a chance to make large gains on goldies assuming things go to plan in January/February when Chinese demand is high for their new year celebrations."
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Interesting to note from 2014 except 2015, around december is the low then a nice bull swing in gold price. Ditto Dec 2016 & 2017. 2015 had the early starter from Nov. 2010, 2011 and 2012 also had similar December low then a bull swing. So this is the Chinese/Indian cycles of gold buying?

I also did an eye ball comparison of the 10y TB yields against gold price from 1998 (data restrictions) when yields started the bear trend of falling yield right to the present day! Gold had a very non volatile rise while the yields were much more volatile. The massive rise coincided with post-GFC destruction and the QE low yield engineering and 1900 peak coincided with the the reversal of the yield through expanding. 2013-2015 showed gold bearish move in line with yield falling which I find odd and from 2016 they are again negatively correlated. My observation is that the logical negative correlation had patches of divergence but is now back in natural negative sink.

Currently the talk of Feds having to reduce their bond holdings in the absence of inflationary numbers is like killing 2 birds with a stone. Usually inflationary pressures drives yields higher which then trigger the Feds to push IR higher. In the same fashion they pushed rates higher recently regardless of their target inflation being met, I suspect they will start reducing bond holdings in time. Tonight's FOMC is I think where traders will be looking for comments of any actions on this front. The yield I had noticed started rising this week and took off yesterday so this is clear indication bond traders are preempting her speech contents.

WOW, comparing USDJPY to that 10Y TB yield is like a pure tracking of each other no wonder a lot has seen the negatively correlation to the gold price! If we are on a higher yield environment through bond holding reduction and if the US economy can still maintain sustainable growth momentum then isn't that not conducive to a strong gold price move?

"I am concerned about the longterm downtrend line from March 2011 acting as a barrier to the POG, ..."
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This has also been my concern ever since that oct2016 massive thrashing of gold through KEY support that drop the price 50bucks from the NY open. I was watching it as it happened! Since then I can see some "manipulative" forces at play and I commented a lot of similarities to the 2013 thrashing of gold by 100bucks I recalled at the time, again through KEY support. These type of technical break do not just happen by coincidence! I have now gone on to the possibly daily/weekly swing holding rather than any long term trend trading simply because I don't have much confidence in the sustainability of any gold bull trend. Again I agree that this is not the time to be holding any small cap goldies beside a quick flip. The chart and the trend even using simple peak and trough analysis is so important to avoid any bull traps. I see the smaller end of town full of the bottom picking types.

I am looking for a big sell off to try and get in at value on my favorite goldies and if the coming Dec is another cycle turn then I am prepared to wait.

Regarding BDR, unfortunately the simplistic support broken turns resistance is playing out at that KEY 19.5. I contemplated not for very long before deciding this is too high risk a buy in but if the gold price spikes, these beaten down stocks will have a much greater run then the strongest in the sector.

What is your opinion of the Oz economy? I know Gov Lowe have been jaw boning it down after realising that his minutes had so called 'misleading' statements concerning neutral rates. The AUD bolted and when I hear all these experts saying that the 78-79C resistance will snap it back down, the more I am looking for a pullback to get in long. I suspect Lowe does not want to panic the continue growth in the syd/Mel property sector but he is caught between a rock and a hard place. If he keeps dillydallying on the rise, the bubbles in the 2 capital cities will only get larger and more unmanageable. This higher AUD is not helping local producer's margins.

Anyway will wake up to morrow to see how the risk assets perform with Yellen's jaw movements!

BDR Price at posting: 19.0¢ Sentiment: None Disclosure: Not Held
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