Bumble

On Friday Aug 25 2017 an attempt was made to drive the price of gold down by selling 21,000 contracts on NY Comex in the space of a few minutes. A contract is 100 ozt of gold, so this amounts to over 2 million ounces, or over $2.5 billion worth of gold. This is actually not uncommon, particularly on Fridays, but this time it didn't work. The price bounced straight back. Look at the green lines on the charts below. This seems to me quite positive. In recent years when gold was knocked down it stayed down, but now it is proving resilient. This may well be an indicator that serious amounts of buyers are starting to move back into gold and are keen to buy the dips.

Nobody has mentioned the ping test yet. Balance the coin on the tip of your finger and tap it gently with a key or another coin. It should give a nice clear ring. Fakes don't sound the same. If in doubt, try a smartphone app like Bullion Test - it will compare the ring frequencies with the ones it expects and tell you whether it is fake.

I saw a chart I like in an article on SeekingAlpha (http://seekingalpha.com/article/4036568-gold-rally-sustainable). Most charts of the gold price are shown in USD and everyone repeats the mantra that "gold is priced in dollars". Well, gold is actually priced in any currency you want it to be priced in. By multiplying the price of gold by the dollar index (DXY) you can separate movements in the price of gold itself from movements in the value of the dollar. The striking difference between this chart and the usual gold/USD chart is that from mid 2013 to end 2015 gold trended downwards in USD but gold.DXY trended upwards. The result is a plausible looking secular bull trend, although of course any extrapolation is speculative.

I saw a chart I like in an article on SeekingAlpha (http://seekingalpha.com/article/4036568-gold-rally-sustainable). Most charts of the gold price are shown in USD and everyone repeats the mantra that "gold is priced in dollars". Well, gold is actually priced in any currency you want it to be priced in. By multiplying the price of gold by the dollar index (DXY) you can separate movements in the price of gold itself from movements in the value of the dollar. The striking difference between this chart and the usual gold/USD chart is that from mid 2013 to end 2015 gold trended downwards in USD but gold.DXY trended upwards. The result is a plausible looking secular bull trend, although of course any extrapolation is speculative.

This interview with Peter Hug gives a good account of what is going on.

This chart shows the news of the non-farm payroll numbers breaking at 9:00 - gold plunges down and takes only an hour to recover, and closes up on the day. A year ago, the price would have stayed down. The fact that gold is able to shake off 'bad' news as easily as this is a bullish signal.

Gold is still good in the longer term, but in the short term, I'm not so sure. For one thing, markets always overreact to bad news. Friday morning, gold lurched up to £1000 per ozT and then settled back; GBP/USD fell to 1.30 then recovered to 1.37; FTSE dropped 10% then recovered to down 3%. Over the next 3-4 months, the big event is the US election. The establishment are desperate to get Hillary elected and shut Trump out. Since the current president is a democrat, this means they will talk up the economy and publish lots of strong results: high GDP growth, low unemployment, high job creation, etc. Most of the results will be bull**** but people will believe them and it will make them want to vote for more of the same. This will be negative for gold. You may well be able to buy gold more cheaply in 3 months time than today. No guarantees of anything, just watch the price closely and maybe use cost averaging to get yourself in.

Well today (Friday 3rd June) was fun. A bad set of job figures from the USA and the market is now taking the view that a rate rise in June is off and even one in July is dubious. As a result, USD is down, and gold is up about 2.5%. The gold miners have gone crazy again: SGDM is up 11%, SGDJ up 12% and HUI up 11.5%. And here I was expecting a quiet summer with some profit-taking and consolidation.

Gold and the gold miners have been holding up pretty well recently. Every time they correct back, the correction is small and short-lived. If you wait for a large pull-back you may miss the boat. For myself, I'm an investor not a trader, so I doubt I could squeeze additional gains out of trying to time my transactions. I'd rather just buy and hold, and review periodically to see whether I need to rebalance things. That said, I would normally review only a few times a year, but the sharp moves we've seen in 2016 has me checking the prices every day.

Gold and the gold miners have been holding up pretty well recently. Every time they correct back, the correction is small and short-lived. If you wait for a large pull-back you may miss the boat. For myself, I'm an investor not a trader, so I doubt I could squeeze additional gains out of trying to time my transactions. I'd rather just buy and hold, and review periodically to see whether I need to rebalance things. That said, I would normally review only a few times a year, but the sharp moves we've seen in 2016 has me checking the prices every day.

For those who like to watch the gold/silver ratio, what we saw in Jan/Feb was gold lurch up and leave silver behind, and now silver has caught up.

For those who like to watch the gold/silver ratio, what we saw in Jan/Feb was gold lurch up and leave silver behind, and now silver has caught up.

Ratios are just correlations, and a correlation without a plausible causal story behind it has no predictive value. Some data miners showed that the quantity that is most closely correlated with the S&P 500 over many years is the price of butter in Bangladesh. I doubt whether GOR or GSR has any predictive value.

One interesting thing is that whereas gold and USD usually move in opposite directions, recently they are both rising. That seems to suggest there is a safe haven thing going on.

Although by most measures the stock markets are expensive, there is still one measure by which they are reasonable: yield. There are still big blue chips with a dividend of 3.5 to 5% which is much higher than anything you can get in a safe bond. The crucial question is whether these companies can maintain their dividends during the coming year. The oil companies clearly cannot. If others, such as pharma and retail, follow suit then there is a long way to fall.

Although by most measures the stock markets are expensive, there is still one measure by which they are reasonable: yield. There are still big blue chips with a dividend of 3.5 to 5% which is much higher than anything you can get in a safe bond. The crucial question is whether these companies can maintain their dividends during the coming year. The oil companies clearly cannot. If others, such as pharma and retail, follow suit then there is a long way to fall.

Indeed. I'm surprised at how little correction there has been in gold and the gold miners: usually you expect to see some profit-taking after a sharp increase. This seems to me to be bullish. I was rather hoping for a nice correction in order to buy some more, but now it's just wait and see time. Of course, if things get bad enough, there will be interest rate reductions and more QE and the stock market bubble will inflate one more time at gold's expense, but that game can only be played so many times before it fails.

Indeed. I'm surprised at how little correction there has been in gold and the gold miners: usually you expect to see some profit-taking after a sharp increase. This seems to me to be bullish. I was rather hoping for a nice correction in order to buy some more, but now it's just wait and see time. Of course, if things get bad enough, there will be interest rate reductions and more QE and the stock market bubble will inflate one more time at gold's expense, but that game can only be played so many times before it fails.

I don't set much store by studying charts. My usual approach is to build an altar to the god Plutus in my basement and sacrifice a virgin on it at midnight. There are not many virgins left in my neighbourhood, so the price may fall back for a while.

I don't set much store by studying charts. My usual approach is to build an altar to the god Plutus in my basement and sacrifice a virgin on it at midnight. There are not many virgins left in my neighbourhood, so the price may fall back for a while.

I don't set much store by studying charts. My usual approach is to build an altar to the god Plutus in my basement and sacrifice a virgin on it at midnight. There are not many virgins left in my neighbourhood, so the price may fall back for a while.

Gold is close to $1200 now. If it breaks through that price, it could go a lot higher quite quickly. If it consolidates back to $1170 over the next couple of days, it will be a buying opportunity. Gold miners are going crazy. I've not seen double digit gains in majors like this. Randgold is up 12%.

Gold is close to $1200 now. If it breaks through that price, it could go a lot higher quite quickly. If it consolidates back to $1170 over the next couple of days, it will be a buying opportunity. Gold miners are going crazy. I've not seen double digit gains in majors like this. Randgold is up 12%.

Gold is close to $1200 now. If it breaks through that price, it could go a lot higher quite quickly. If it consolidates back to $1170 over the next couple of days, it will be a buying opportunity. Gold miners are going crazy. I've not seen double digit gains in majors like this. Randgold is up 12%.