This is based on the assumption that the current top is the top,
which is inconsistent with the bullish trend for commodities. If
crude oil is going to $110 this year--as some commentators predict
-- will the $SPX go down? Or up?
How can oil go to 110 if the world economies are slowing down?
My brother works as an Engineer drilling oil/gas wells and has been
out of work for 1.5 years. He goes any where around the world and
there is no work.Even with crude in the 80 plus no one needed him.
There is No demand now .Have agreat weekend.
I am sorry to hear that your brother cannot find work for so
long. That's very depressing. As far as the price of oil is
concerned, I believe that now it has more to do with the value of
the dollar than with supply and demand. I assume that current price
of $75 pb is a fair price for the current state of economy, and the
economy is not going to depression within this year or a year and a
half. I know that the Fed doubled the amount of money supply
between August 2008 and roughly the end of last year. That money
will lead to increased prices of crude oil.
If an ounce of gold is worth on average about 15 barrels of
crude oil, and a price of one ounce of gold is to add $100 each
month after the correction is over (sometime in March?), we will
get about $1,700 per ounce of gold by the year's end (and about
$3,000 by the end of next year). Dividing 1700 by 15 gives
$113 per barrel of oil by the end of this year.
The above is based on hedging between gold and crude oil, which
is pretty reliable in my knowledge.
A trade of the year would be to buy crude oil on a technical
confirmation at about $50pb and hold it long term. Or gold. Or
both. I'd love to be disagreed with on this, so please
correct me or critique my reasoning. I believe in what I said. Have
a nice weekend as well!
You obviously have done your homework. I believe in the
Commercials [ Gold] and their large short position. Why would Gold
go lower except if the USD continues to rally. If there is hint of
the FED raising rates the USD will rally and Commodities in general
fall. Guess that is the question? USD up or down?We shall see.
Roger Wiegand, whom I read fully for his predictions based on
collecting information from multiple sources and not just chart
thinking, considers $USD at 80 to be the top, if it is reached.
http://www.kitco.com/ind/Wiegand/jan222010.html He predicts trading
in the range between 78.50 and 72.50 into the summer.
I don't see any real reason for gold heading lower than $1,000
down to $700, as EWI folks claim. If the Fed raises rates, it would
be in a year from now at least, and then the drop would be from
higher levels, perhaps $3,000 to a fraction of it. Not now.
One curious fact about commercials is that after $2,000 per
ounce they will not be able to deliver gold, as there will not be
enough of it for the current money supply. I was told that the Fed
might ban adding any new contracts after that level. Again, the
same might happen to crude oil too, at about $145pb. Till those
level are reached, the rise due to speculation will be relentless
IMO.
Posted by Palladin on 23rd of Jan 2010 at 04:41 pm
I personally would not bet against gold heading into the $700
region. You say you see no real reason for it but in actuality
there are many. Hell, maybe Bernanke gets canned (although that
might actually have the reverse effect)
The US is starting to posture with threats of banking
regulations and Volckerisms
China is reigning in growth (altough I don't quite understand
why that afects the markets negatively)
Fundamentally, seasonally and true gold valuation (by some
metrics), could do it. Throw in some deflation (perceived or real)
and voila $700 gold
But on the other hand, some more quantitative easing and we
punch up again. I'm going to be very very carefull next week till
the Fed meeting.
Yes, the downside risk $1092 down to $700 is only $392, and the
upside reward is $3000-1092=$1908. It's a 5:1 ticket, folks, and
the $3000 target will be reached. Gold is a hedge against deflation
(not inflation!), and we are in a deflationary environment. There
is no need to overcomplicate this. Gold bullion eventually will be
there, so there is no loss on this trade in the long term. I see no
basis for change of the deflationary projection anywhere on the
horizon.
A good point: Stagflation would be a more appropriate term then,
not deflation. Of 1930s and late 1970s style. Pure deflation does
not exist any more with fiat currencies.
another option from wave principle
Potential scenario for the next few weeks
Posted by frankwieder on 23rd of Jan 2010 at 08:55 am
http://1.bp.blogspot.com/_SRSTWZ5iCVs/S1oewRI_2wI/AAAAAAAABe4/TCNuafRvEtc/s1600-h/spx-eod-bhs.bmp
This is based on the
Posted by junkie on 23rd of Jan 2010 at 09:35 am
This is based on the assumption that the current top is the top, which is inconsistent with the bullish trend for commodities. If crude oil is going to $110 this year--as some commentators predict -- will the $SPX go down? Or up?
Top?
Posted by rbreese on 23rd of Jan 2010 at 10:22 am
How can oil go to 110 if the world economies are slowing down? My brother works as an Engineer drilling oil/gas wells and has been out of work for 1.5 years. He goes any where around the world and there is no work.Even with crude in the 80 plus no one needed him. There is No demand now .Have agreat weekend.
rbreese on a trend in crude oil
Posted by junkie on 23rd of Jan 2010 at 10:50 am
I am sorry to hear that your brother cannot find work for so long. That's very depressing. As far as the price of oil is concerned, I believe that now it has more to do with the value of the dollar than with supply and demand. I assume that current price of $75 pb is a fair price for the current state of economy, and the economy is not going to depression within this year or a year and a half. I know that the Fed doubled the amount of money supply between August 2008 and roughly the end of last year. That money will lead to increased prices of crude oil.
If an ounce of gold is worth on average about 15 barrels of crude oil, and a price of one ounce of gold is to add $100 each month after the correction is over (sometime in March?), we will get about $1,700 per ounce of gold by the year's end (and about $3,000 by the end of next year). Dividing 1700 by 15 gives $113 per barrel of oil by the end of this year.
The above is based on hedging between gold and crude oil, which is pretty reliable in my knowledge.
A trade of the year would be to buy crude oil on a technical confirmation at about $50pb and hold it long term. Or gold. Or both. I'd love to be disagreed with on this, so please correct me or critique my reasoning. I believe in what I said. Have a nice weekend as well!
Gold Commercials
Posted by rbreese on 23rd of Jan 2010 at 11:26 am
You obviously have done your homework. I believe in the Commercials [ Gold] and their large short position. Why would Gold go lower except if the USD continues to rally. If there is hint of the FED raising rates the USD will rally and Commodities in general fall. Guess that is the question? USD up or down?We shall see.
rbreese on $USD
Posted by junkie on 23rd of Jan 2010 at 11:49 am
Roger Wiegand, whom I read fully for his predictions based on collecting information from multiple sources and not just chart thinking, considers $USD at 80 to be the top, if it is reached. http://www.kitco.com/ind/Wiegand/jan222010.html He predicts trading in the range between 78.50 and 72.50 into the summer.
I don't see any real reason for gold heading lower than $1,000 down to $700, as EWI folks claim. If the Fed raises rates, it would be in a year from now at least, and then the drop would be from higher levels, perhaps $3,000 to a fraction of it. Not now.
One curious fact about commercials is that after $2,000 per ounce they will not be able to deliver gold, as there will not be enough of it for the current money supply. I was told that the Fed might ban adding any new contracts after that level. Again, the same might happen to crude oil too, at about $145pb. Till those level are reached, the rise due to speculation will be relentless IMO.
Thanks for your provocative comments!
I personally would not bet
Posted by Palladin on 23rd of Jan 2010 at 04:41 pm
I personally would not bet against gold heading into the $700 region. You say you see no real reason for it but in actuality there are many. Hell, maybe Bernanke gets canned (although that might actually have the reverse effect)
The US is starting to posture with threats of banking regulations and Volckerisms
China is reigning in growth (altough I don't quite understand why that afects the markets negatively)
Fundamentally, seasonally and true gold valuation (by some metrics), could do it. Throw in some deflation (perceived or real) and voila $700 gold
But on the other hand, some more quantitative easing and we punch up again. I'm going to be very very carefull next week till the Fed meeting.
Yes, the downside risk $1092
Posted by junkie on 23rd of Jan 2010 at 06:23 pm
Yes, the downside risk $1092 down to $700 is only $392, and the upside reward is $3000-1092=$1908. It's a 5:1 ticket, folks, and the $3000 target will be reached. Gold is a hedge against deflation (not inflation!), and we are in a deflationary environment. There is no need to overcomplicate this. Gold bullion eventually will be there, so there is no loss on this trade in the long term. I see no basis for change of the deflationary projection anywhere on the horizon.
Here's a fun strategy -
Posted by user32 on 23rd of Jan 2010 at 09:11 pm
Here's a fun strategy - buy gold or silver when the RSI is at 30. You won't be buying high then!
A hedge against deflation? Not many support
Posted by Palladin on 23rd of Jan 2010 at 08:09 pm
A hedge against deflation?
Not many support that view and most agree that deflation sinks all boats (including gold) except for the USD.
Of course, if fiat currency becomes total poop paper, well then that is another story for sure.
A good point: Stagflation would
Posted by junkie on 23rd of Jan 2010 at 11:21 pm
A good point: Stagflation would be a more appropriate term then, not deflation. Of 1930s and late 1970s style. Pure deflation does not exist any more with fiat currencies.
Title: "Pure deflation does not
Posted by Palladin on 24th of Jan 2010 at 01:00 pm
Ben, is that you lurking in BPT masquerading as "junkie"?
Stagflation is a very dirty word, don't let the cat out of the bag!
All in good fun