2 votes

Look for gold to drop back to 1200 in the next few weeks

by The Diamond Dog

Greetings fellow gold watchers. It is the evening of September 16, 2013.

At the moment, December gold (that is to say, gold futures for delivery in December 2013) is trading right around 1309, as seen in the chart below. Actually it has bounced up a little since I took the screencap of the chart, and is currently trading around 1313.9. No matter. This little bounce alters my prediction not.  Gold should be back down to 1200 within a few weeks.

How it gets there is anyone's guess.

Look for gold to fall back to 1200 in the next few weeks

Will we drift down, only to get whipsawed around as the chart builds a more perfect head and shoulders pattern? Or will we see a sharp drop this week, accompanied by the Fed meeting results?  No one knows.  But the Diamond Dog's money is riding on a drop - one way or another - back to 1200.

Once we get to 1200, there's a lot further to fall, as I've noted before:  The shakeout in gold is far from over. And its a long way down.

Don't forget - you heard it here first.  On a free website. On the internet. In a post written by a dog.  Complete with a corny video at the end.

Because it's a long way down.


http://youtu.be/8K0qCCfeMAE

It's a long way down to the place where we started from.

Where did this bull market start again?



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The greatest trick in the world...

getting people to 'sell' their gold.

Defeat the panda-industrial complex

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$1363.80

What a difference a day makes

What a difference a month makes

Back to where we were before.

Bernanke's sugar high has worn off.

Now comes the deflationary hangover.

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

maybe

$1321.10

$1200.00 is a distant memory. The new bottom is 1300, and it will be short-lived, moving to 1500.

This is just for base1ass for mentioning my name earlier.

The technician in me agrees with diamond dog, if this were anything but gold I would short it. The chart, coming off a head n shoulders top shows a slight support at 1200, but there is no near term support anywhere in the recent past….if this was a stock I would be all over it….especially with volume declines (lower open interest on futures contracts) If it were a stock I would probably go long some vertical put positions or short vertical calls……all day on those! But this is not a stock and I do not trade commodities…..even knowing as much as you can know about commodities……you will get your head handed to you quite often. I don’t gamble.

The fundamental analysis tells me
1. cost of production ……As long as the producer access to capital is not shut off they will continue to produce and inventory what they produce reducing supply until the price creates an economic profit, not just an accounting profit….so supply shortages
could develope.
2. Gold is not just a commodity to be used as a raw material it has an intrinsic value as hard money.Therefore it will not trade like a stock or any other commodity, Like dog stated, as it’s price declines so will demand, but in that same vain it will trade against paper money based on the Fiscal and Monetary Policies of the country in question…….does anyone on here really want to be on the same side as the USG on that trade……this will lend support at some price above calamity in this country for people that hold gold….for you investors get ready to buy more and hold.
3. If the Fed ever does taper and you have a flight from paper assets…..gold is a hard asset, just like real estate……If or when the fed stops paying interest on reserves, velocity will return and the inflation of the money multiplier will finally have its day, the market is not signaling this as it is in Contango today. But the path of money creation is this day and age is financial assets, real assets & then consumption, so get ready for houses to continue to climb even in face of raising interest rates and gas above 5 and milk above 4.50.

So I agree with Dog in the short term…..3 to 6 months, but after that I believe you will see those fundamentals in the charts. Dog I would cover my shorts at 1200 and then maybe straddle it.

You see base1ass this is what is referred to as “original thought”…….i know you are a stranger to this, but if you make your way out of the kiddy pool and to the “deep” end…..there’s folks in here that will hold your hand.

Goldspan

Why do you call James Corbett a racist? Why do you call me Base1ass?

You are just a troll, and you are hedging youself.

I know where Gold has Been, and I know where Gold is going. What it does in the meantime isn't as important as my garden.

Your claim to fame is being a 'financial analyst'. Good for you. If you are SO GOOD, why do you make your posting efforts here name calling?

I think you are nothing but a troll, but that is just my opinion.

Uh Oh?

Back up? A rare thing I have missed from this board. It's going to go down more. But then so is scrap.

If I disappear from a discussion please forgive me. My 24-7 business requires me to split mid-sentence to serve them. I am not ducking out, I will be back later to catch up.

Goldspan, I appreciate your backup on this

It means a lot to me.

Not that the words mean anything, really. We're all flying blind when it comes to the future, including me. We can opine all we want about what we think, but at the end of the day, there is only one opinion that matters, and that is Mr. Market himself. We must all bow down and accept his final decision, like it or not.

What I appreciate is that you're willing to take an objective look. Although your saying that if this were anything but gold I would short it shows you're not completely objective. That is okay, as long as you recognize it.

Jim Grant never saw the decline coming. I wish I could find that interview where he said it: "I never saw it coming." He sounded wistful, and I think he even said, "I wish I did." But what I like about that is that he's honest. I wish I could find that interview though. I think it might have been with the Money Honey - Maria Bartoromo. If I find some spare time, I'll look for it.

But it just goes to show that even the best of us - and I do consider Grant to be one of the best, even though I disagree with him on the direction of gold. Of course, in the long term, gold is money. Don't confuse me there. GOLD IS MONEY.

Where I disagree, and would ask you to reconsider, Mr. Goldspan, is on your point #3:

3. If the Fed ever does taper and you have a flight from paper assets…..gold is a hard asset, just like real estate……If or when the fed stops paying interest on reserves, velocity will return and the inflation of the money multiplier will finally have its day, the market is not signaling this as it is in Contango today. But the path of money creation is this day and age is financial assets, real assets & then consumption, so get ready for houses to continue to climb even in face of raising interest rates and gas above 5 and milk above 4.50.

The way The Dog sees it is that if the Fed does taper, there will be a flight from all financial assets -- including gold. The way I see it is that everything is inflated on all this fiat currency. When that starts to deflate, everything that has been pumped up on those steroids will start to deflate again. Stocks, bonds, real estate, used cars, and even gold and silver. Even the price of milk. Because it is all riding high on the juice of fiat money.

As credit is destroyed, the remaining dollars in circulation get more valuable. They buy more of everything. That is just another way of describing deflation.

Of course, this is all just a theory. Who knows what will happen in reality. And you bring up a good point, here:

If or when the fed stops paying interest on reserves, velocity will return and the inflation of the money multiplier will finally have its day, the market is not signaling this as it is in Contango today.

I haven't factored that one in. I'll have to ponder that.

BTW, I wish you told me to cover my short the last time Gold hit 1,200. You would have saved me some considerable pain! Oh well. I'll keep a close eye on the next time it comes near 1,200. It might bounce again. But it might slice through it like a knife through butter. Whatever it does, the market never makes it easy on us.

Thanks Man, for demonstrating that the Daily Paul does indeed exhibit signs of intelligent life. I was getting bogged down by the zombies.

Gold below 1,300 at the moment, per Kitco:

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

Ok be careful Dog

…..calling me objective is going to tarnish my street cred as a TROLL. Objective is a bad word to the religionist zealots of conspiracies, man you if don’t follow lockstep with this crowd, they want to burn you at the stake.

Here's a link for the video of Jim and Maria....but it was in April
http://www.grantspub.com/resources/video.cfm?vid=22

But no problems here, anyone that’s has ever traded has been humbled by the market. When you commented on what I said here, please allow me to clarify:…….. Although your saying that if this were anything but gold I would short it shows you're not completely objective.

I stated that to make sure people understood the different characteristics of gold as money and as a raw material and also the difference when selecting stocks to short. A stock can go to zero……gold could but highly unlikely…..the currency you are hedging could and the dollar probably will one day.

As far as point number three…..I look at it this way……QE2 ( I think it was 2) the Fed started purchasing 45 billion a month is MBS from the banks……I would image that was the toxic waste from the Housing Bubble. Well you know….in a pool where only 5% or less went bad, that left 95% that didn’t and there has to be some value there, if they marked to model (which I wrote a post on here back on June 16 on bond valuation) you can come up the present value of discounted cash flow that will allow you to put a fair value on the remaining bonds in the pool (not to mention the call option of refinancing)..…..so I think that portion of the Fed balance sheet might be healthy…..it’s the treasuries (QE3 45 billion) a month that are in trouble. A move from 1.70% to 3.0% represents a 10 to 11 percent decline in the price of this asset class. The Fed purchases have not really changed banks’ exposure regarding the treasuries on their balance sheet……the Prime Dealers have been selling the new issue treasuries to the Fed…….think about it……..why would the banks sell their “off the run” treasuries when interest rates were going down …..those bond were going up in price…….the banks have just shuffled all the low yielding new issue from crap to the Fed…..for the banks and their holdings of older higher yielding treasuries.....those assetsprices have peaked and are starting down and will start to show losses from the previous quarterly banks balance sheet statements which will prompt the banks to try and offset these losses with higher yielding assets….ie loans.

So that brings me to my analysis of velocity. The banks will start to forgo the 25basis points the Fed is paying on excess deposit reserves and make more loans (this will move those excess deposit reserves to capital reserves)….the loans will kick in the fractional reserve inflation everyone has been looking for….this is why I said real assets will go up (or the purchasing power of all those new credit dollars going down). You really have to think about the magnitude of this high powered money creation…..the fed balance sheet has gone from pre-crisis 800 billion to 4 trillion……that is huge….at a 10% reserve ratio that’s 32 trillion in credit creation that could take place….i don’t think it will be that much but just a small portion of that could be devastating, but deflation will not be the problem except in financial assets.

You can see what I am saying in the M3 money supply figures on shadow stats.
http://www.shadowstats.com/alternate_data/money-supply-charts

Remember when they create all this money they DO NOT know where it is going to go…..India and Indonesia are already seeing the reversal of hot money flows. They are SELLING DOLLARS to defend their currencies and this could unleash an unintended consequence for the dollar eventually because of the net 15 trillion dollar currency reserve position of the world. So with all that said……I am more bullish on gold then bearish……but I never buy or sell ANYTHING without knowing what the charts say……I am a contrary investor, but I will trade a trend and the trend right now according to the chart you created is lower for gold……but 1200 looks like support.

So Dog I'm with ya on the short term……long term I am with the kooks…..they hate when I call them that…….but anyone that thinks that we are the only generation of government corruption and “they’ve” discovered the “truth” is a kook. They lament all of us that don’t go “bat shit crazy” every time they discover the latest offense and call people nasty names because “they think” we buy the “official story”…..but they are the ones that live in the fairy-tale of the “official historical story”…….don’t ya base1ass

Bond valuation link
http://www.dailypaul.com/288528/bond-market-tremors-get-loud...

Bloomberg deleted the bond calculation tool so here in a different one
http://www.zenwealth.com/BusinessFinanceOnline/BV/BondCalcul...

solve for price, you’ll figure it out
http://www.grantspub.com/

Nothing will discredit your Street Cred as a troll.

Your have firmly and unashamedly established your credibility in that arena.

Time to make a new account or start servicing one already made for you.

thanks B1ass

I knew I could count on you to comment.....dummy......thats why I said it. Man it really easy to manipulate you……and the best part is you don’t even know its happening. But thats bores me....why don't you ever challenge the things I write.

I tell you what here is a short book for you.
Make sure you read the both forwards or you will miss the main point…….the government is the problem not the solution. The text of the book will support your kook religion.

http://mises.org/document/1223

Mr. Goldspan,

I always welcome you comments. They not only enlighten me to your cause, but others as well.

As I said earlier, I know where Gold has been and I know where it's going. What it does between now and then matters little to me.

And no I didn't read your link to mises, because I have spent a lot of time on the site, and you are a proven troll, possible cherry picking something to distort what freedom and honest money is all about.

The one thing you seem to hate, and that is whistle blowers like Karen Hudes.

Well buddy, you are about to face a pack of them ;;))
http://www.dailypaul.com/299714/the-great-spook-panel-we-hav...

Give my best to your group. You are falling into being insignificant.

Base…..the difference between you and I

Is that I go and read and listen everything you ask me too. In the realm of debate I owe my opponent this respect, can you say the same?

I listened to your Paul Revere (PR) post. I don’t have any problem with these folks, but their only comments on 9-11 were the things the USG have done after 9-11. Gezz……didn’t I say that exact thing? If you had read my post you would know that to be true. My problem with the 9-11 crowd is that if you don’t follow in lockstep with the kooks you are labeled as a sheeple or Troll or any of the other nasty things the kooks say when challenged. I even saw the word “whore” in a comment to one of the ladies that dared to challenge. Base you have to admit…..you “were” one of those kind of kook’s , you have been dialing down your “hate” towards others and directing it all towards me……since I dared to “treat you the same as you treat other”.

You have even tried to attack me professionally……which I found entertaining. The PR folks…..the first thing that stated of substance was about ethics. Do you know why I stopped handling other people’s money after 1994? I stated the Mexican debt crisis was the reason….. I was a broker with about 10 million under management….not a lot but enough to give you real heart burn when you get blindside by something that came out of left field…….well after working my ass off to try and make my clients whole again, I discovered the reasons why there was a Mexican debt crisis. Granted I had already been through the conspiracies and was on the other side through education. But I missed this one thing……but so did everyone else….I mean everyone. I could have remained on the job and hide behind that like most every else. But I dug in and wanted answers….and the answers I got were real….and not conspiracies. The answer was in the Balance of payments, Mexico’s external debt position and their reserve position……not a conspiracy…..real economics…..real Keynesian economics. I was already an Austrian and this flew right in the face of everything I believed. Then I looked at the U.S. negative balance of payment, external debt position and reserve position and I knew it would only be a matter of time for the dollar…..if I had only known the extent they would go to protect the dollar. But being a person of integrity there was no way I could continue to recommend dollar denominated investment to my clients…..So I left……walked away from serious money…….have you ever been tested? Well the Lord blessed me…….clients knew what i had done and hired me just for that reason. I went on to drive 500 million dollar projects in the cell phone industry for AT&T in NC and MetroPCS in Dallas, where 6 figures used to be a yearly salary……it became quarterly. ….. I have been truly blessed. Now I get to do basically anything I want……but I love to trade so that’s what I do.
But PR folks…..I commend them…… but I recommend you stop looking for the spooks and start looking for the real answers and be nice towards the newbies.

The reason I went at Corbett is because he really is a racist…you watch the post again and then honestly read what I wrote being “OBJECTIVE”..….I explained myself quite well. Did you read what I wrote on the “State of Religion”? …….I kind a thought that was my best stuff yet.

Sooner or later…….c’mon man you have to at least look at what I am saying honestly…..for the life of me I just cannot wrap my head around the fact the you desire to prove the USG is guilty and that people swallow the “official story” but think that we are the only generation that have suffered at the hands of the State……but god the fairy-tale of the “official historical story” has this divinity like status that is so sacrosanct that you consider me a Troll and dare I say a KOOK!
C'mon Man!

I suspect

...the Fed will 'taper' somewhat and the dollar will strengthen. Gold and silver will fall along w equities. The ten year note will gain a point or two. The fed will panic and 'untaper'... and from there it's inflation or bust. They will stabilize rates but they won't go down. Housing is toast as a result and the harsh reality of Amerika will come into full view for anyone to see.

lmao.

lmao.

Gold price update

http://www.barchart.com/chart.php?sym=GCZ13

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

Cyril's picture

I call it a blessing, as long as we can have it

Gold still capable to going lower in the next few weeks or for the next few months (a year?) is a pure blessing for all those simple folks who (like here) woke up late to the stakes of holding any sound money at all.

But let's not keep ourselves obsessed with gold or silver alone. It's also time to wake up to what, even beyond QE infinity, sustains this appalling giant with feet of clay that is.... the stock market.

Enjoy the time lapse and figures of this metrics; keep an eye on the scale, rightmost (quotes per second); if that doesn't give you some chills, nothing will :

Growth of High Frequency Quote Spam in the Stock Market

Period : 9/2009 - 9/2013


http://youtu.be/nXq8xiSSNkk

Hypnotic, uh?

Yup, that's also what's behind these stocks that perform "so well", in a "recovering" economy.

Yeah, right.

Or would that be one of the last few factors that still prevent it from a complete burst? Hmmm.

Keep yourself safe. That is, aware.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Beat the machine

John Henry never had it this rough.

No better reason,

to enjoy a Garden Cyril.

Thank you.

Perhaps someone here

would like to start a trading thread. Perceived Value, for Perceived value.

Don't think it's not happening elsewhere. OMG, it's even happening in Israel, by the people that have figured out how bad their government has been taken over, and corrupted.

Who cares about the $ value?

If people have their life in order in a community of friends they can trade with.

The Bastards of illusion are going to fight freedom to the end for their survival. Witness Fox, Cnn, Goldspan, and Granger.

They Hate the idea and will fight against Liberty until their, ... account runs out. They don't give a shit.

Why participate other than exposing the fraud?

Now I am a "bastard of Illusion"

you are losing your mind Base1ass.

Hahahaha!

eewww hoo hoo hoo hoo :)~

Sorry, you're wrong! Though

Sorry, you're wrong! Though it may drop some, it will not drop any where near that much and is likely ready to take off from here. It will reach a all time new high of over $2000 by the last quarter of 2013 or the first quarter of 2014. Then we have another bout of deflation and everything tanks for a while. You heard it here first.

I agree.

Below $1250 it costs more to produce out of the ground. It's hit it's limit.

As I said below, production cost is not a floor on prices

Why would it be? Your logic makes no sense. Price doesn't care what cost is.

Price is the intersection of supply and demand. Falling prices mean falling demand and too much supply.

A lower price is part of the act of creative destruction. Inefficient mines will be closed. Weak companies will be liquidated. Lower cost production methods will be found.

Carry on.

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

Rally begins tomorrow after

Rally begins tomorrow after Fed meeting minutes!

B I N G O

.

Why do you think that is a limit?

It only means that production stops. It means that producers look for cheaper ways to produce.

Cost of production is no limit on price, it is simply a limit on production.

There is no law that says prices must never fall below the cost of production.

For gold, and other financial assets (stocks, bonds, etc.) there is actually less demand when prices go down, not more.

Think about it.

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.