3SOF

David Randolph · March 01, 2007, 04:00:07 AM

If my bearish scenario is right, and until I'm proven wrong I believe it is, Gold will decouple from other "commodities" and will assume some role as an alternative financial asset.

I think Oil will go down due to a worldwide economic recession, but Gold will go up over the medium/long term (call it 3 years), as investors buy the shiny precious metal (in lack of better alternatives).

Technically gold is pretty constructive, after a sizable correction in mid 2006 it is approaching its all time high set in May 2006, at around $725. I think it will breakout above that high during the course of 2007.

Even if I'm wrong I don't see gold going down, I believe it will go up either way, so it is a good thing to have in any portfolio.

Trading plan:

Buy 6.66% of capital in GLD.

nullzero · March 01, 2007, 04:12:02 AM

Ah there is the gold

, also like to add gold will still be high demand for jewerly due to growing nations like China and India and their love for gold.

David Randolph · March 01, 2007, 04:18:52 AM

Quote from: nullzero on March 01, 2007, 04:12:02 AM
Ah there is the gold , also like to add gold will still be high demand for jewerly due to growing nations like China and India and their love for gold.

That is a concern nullzero, not a bullish factor for gold. But I guess the role of an alternative financial asset will overcome the slowdown/recession in those two countries that I foresee.

Good morning

chinaguru · March 01, 2007, 04:22:59 AM

so expensive, GLD

David, please give us some picks to short, I'm with you

nullzero · March 01, 2007, 04:25:50 AM

Either way of it playing out gold will be in high demand. We get world wide recession the Chinese will start stock piling gold and so will the rest of the world. Not to mention if the FED cuts interest rates gold will sky rocket on inflation risks... I think the U.S. is in a very hard place... right now if we cut rates to off set the slowing economy and housing market inflation will sky rocket. Cutting the interest rates wont save the real estate market either... The real estate market is very sick right now... I dont see a bottom in sight, I can walk down the block here in Orange County, California and count more houses for sale then I have fingers just in a 1-2 block area! Nothing is moving and the economy has just died down here with the massive layoffs from subprime lenders like New Century and Country Wide.

pompano · March 01, 2007, 05:17:29 PM

Quote from: David Randolph on March 01, 2007, 04:00:07 AM
If my bearish scenario is right, and until I'm proven wrong I believe it is, Gold will decouple from other "commodities" and will assume some role as an alternative financial asset.

I think Oil will go down due to a worldwide economic recession, but Gold will go up over the medium/long term (call it 3 years), as investors buy the shiny precious metal (in lack of better alternatives).

Technically gold is pretty constructive, after a sizable correction in mid 2006 it is approaching its all time high set in May 2006, at around $725. I think it will breakout above that high during the course of 2007.

Even if I'm wrong I don't see gold going down, I believe it will go up either way, so it is a good thing to have in any portfolio.

Trading plan:

Buy 6.66% of capital in GLD.

Great thinking in my opinion also. Before you posted this and after the "correction" I had decided to just watch many small cap gold stocks and comprise my portfolio with just gold and uranium.

David Randolph · March 02, 2007, 04:36:27 AM

Thanks nullzero, chinaguru and pompano

The jury is still out on the question if gold will decouple or not. If it were to decouple, it should rise when the stock market goes down, but that has not been happening, at least not yet.

I do have some worries that only when/if the FED cuts interest rates, and only when/if bond prices go down even with the economy slacking, will gold indeed decouple.

Perhaps I was too early on my gold judgment, as I was eager to find something to buy, since most of you can't or don't feel good about shorting.

I'm undecided if owning gold at this stage is an opportunity or a risk.

I'm losing just 0.78% on this trade and I have doubts that if the market tanks as I think it will, Gold won't tank with it. In doubt, stay out.

The trading plan is:

Sell GLD.

Melf Elf · March 03, 2007, 03:24:37 PM

Quote from: David Randolph on March 02, 2007, 04:36:27 AM
I'm undecided if owning gold at this stage is an opportunity or a risk.

David,

I've been very undecided about that, as well.

I very much have like the chart of AUY, but not many others. They either looked lousy, like GG and NEM, or wimpy, like GOLD, AEM and RGLD, to mention a few, which have every opportunity to break out on the rally in the POG, but didn't.

My upside targets of 14.94 and 15.15 in AUY ended up getting MADE without me (I sold at 13.96), so in hindsight, I should have stuck with it, but the action in other sector-related stocks put me off it.

I'm still undecided, because stocks like RGLD still have a chance of a Bullish Inverse H&S breakout, and the GLD, although a bit bloodied after last week, is back-testing its January 23 breakout of the Symmetrical Triangle (pattern in purple), after morphing into a Rising Channel (pattern in blue) after the breakout.

The top of the Symmetrical Triangle pattern came in on Friday at 63.33. The low was 63.34, so players know exactly where that support is, and they stepped in and bought. Not with any conviction, though, since the GLD closed near its low of the day, but as the chart stands, Friday's low was a successful re-test of the Symmetrical Triangle breakout.

That close near the low of the candle is alright, given the fact that players probably wanted to get flat and give it a think over at the weekend, but at a minimum, I'd want to see the Kumo (Cloud), or the bottom of the Rising Channel, hold next week, as support. The bottom of the channel comes in on Monday, March 5 at 62.202, and rises 0.062 each day.

BTW, the conventional wisdom about the POG not being a "safe haven during a time a crisis" last week seems to be that players were selling it to get out of a jam on the yen carry trade, Other excuses for the selloff in gold were offered, like the Chinese not being interest in buying it if there is much more trouble in their market, etc.

Conventional wisdom never has made me any money, that I can remember, nor have excuses. Charts holding support has made me money, so that's what I'll be watching next week.

Congratulations and applause for all of your hard work, David. I hope that you're getting a good rest this weekend. I chuckled at your remark about the emotions of the market last week.

"If we can keep our heads when all around us are losing theirs, I think that we should try to be as passionate about the stock market as they are."

- a Melf bastardization of Rudyard Kipling's "IF-"

traderjbr · March 21, 2007, 01:32:36 AM

The GLD wave pattern that I'm seeing tells me the corrective pattern may not be over with just yet,but I could be wrong.Also came across this article which I found rather interesting.

http://www.financialsense.com/fsu/editorials/deepcaster/2007/0316.html

la-onda · September 23, 2007, 01:55:47 AM

awesome charts, would this be again a long term play ?
cheers
Oliver

setravis · November 18, 2007, 09:26:41 PM

For those watching Gold.......

setravis · June 28, 2008, 12:47:24 PM

A copy of this post to here.......

setravis · June 28, 2008, 12:48:37 PM

Gold issues again shined as the precious metal tacked on $5.30 to $920.40 an ounce. Barrick Gold (ABX) rose 1.71 to 44.75 and regained its 50-day moving average.

Goldcorp (GG) gained 1.75 to 46.09 in fast trade. The Canadian gold producer reports earnings July 31. Profit is slated to more than double to 25 cents a share.

News:

GLD