Why I think gold has bottomed

[jelly]

I've noticed lately different people have compared the gold market now to 1974, when gold lost nearly 50%.
I decided to do some research and found that the reason why gold lost so much in 1974 was because of central bank selling.

On January 1, 1975, after 42 years, it again became "legal" for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process. This had two results. It depressed the price of Gold, which fell to $US 103 in eighteen months. More important by far, it "burned" large numbers of small individual investors.

From: http://www.usagold.com/gildedopinion/buckler2.html I think it was Monty Guild that mentioned this as well in his interview with Chris Waltzek on goldseek.com radio.

So it wasn't because of the stock market rally that gold went down, as people often point to. Rather, central banks were suppressing the price of gold. Fast forward to today, it appears we are on the verge of another stock market rally. If the stock market does rally, this time things should be different simply because central banks are now net BUYERS of gold.

After saying all that, could gold go down some more? Sure, after all we are still in correction/consolidation mode right now. Anything is possible here. But something tells me we won't be seeing $1000 gold again. As others have said, "buy the dips!"
Enjoy the ride, people. We've got some gut wrenching days ahead as well as some awesome days ahead.

[jelly]

Also if you look at the latest Gold COT report from 321gold.com you'll see the commercials have closed many shorts, and added 20,000 long contracts. Often a good sign of a bottom, as the commercials are usually right.

[EO 11110]

mr whipsaw, dennis gartman sold at 1640 ish. THAT was the bottom (after he bought near the recent top)

dude is AMAZING at being on the wrong side

[Goldhedge]

From Sinclair

The Supremacy Of The US Dollar Is Behind Us
March 25, 2012, at 11:23 pm
by Jim Sinclair

Dear CIGAs,

Brazil, Russia, India China and South Africa are meeting next week because of the use of SWIFT as a weapon of war. Expect the formation of a competitive SWIFT system in three blocks. The dollar will test .7200 USDX and fail on the third tap.

There will be an audio interview on this development with Erik King of King World News tomorrow morning.

I have been doubted on many things, much of which has come to fruition. There was a time when $1650 in gold was considered the ludicrous dream of a madman.

2012 is the year that the US dollar will suffer from a significant drop in utilization as the international settlement currency. The utilization of the SWIFT system as a means of making war is the singular greatest mistake dollar managers have ever made.

Phil, that might have seemed logical to you, but you fail to focus on the consequences now in motion soon to isolate the dollar in a three currency block (Yuan/Euro/Dollar) losing at least 1/2 of its previous strength from the international settlement mechanism provided. It is too late now to rethink the use of the SWIFT system as a weapon of war. The cat is out of the bag and the damage is done.

As a product of acceleration of this process, the US dollar will test .7200 on the outdated USDX. The test will fail on the third tap.

Brics’ move to unseat US dollar as trade currency
2012-03-25 10:00
Thandeka Gqubule and Andile Ntingi

South Africa will this week take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.

Thus, the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.

This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.

The move is set to challenge the supremacy of the US dollar. This, experts say, is the latest salvo in the greatest worldwide currency war since the 1930s.

In the 30s, several nations competitively devalued their currencies to give their domestic economies an advantage over others.

And this led to a worldwide decline in overall trade volumes at the time.

The north will be pitted against the entire south in a historic competitive currency battle – whose terrain has moved to the Indian capital New Dehli – where the Brics (Brazil, Russia, India China and South Africa) nations will assemble next week.

China seeks to find new markets for its currency and to lobby to internationalise it throughout the Brics states.

http://www.citypress.co.za/Business/...rency-20120324

[EO 11110]

gold priced in dollars is retarded

it ought to be priced in a basket of goods

[jelly]

An excellent read on 321gold.com today:
http://www.321gold.com/editorials/sa...lle032812.html

After silver completes a parabolic rise that results in a weekly RSI of more than 80 and a Market Vane bullish percentage in the 90s (ideally, 95 or more), the correction low is typically put in place within 8 months of the peak but the overall correction tends to last a minimum of 15 months.

In other words, economic trends, or at least the general perception of the economy's trend, could push the starting points of the next major advances in the prices of gold, silver and the associated equities out to at least the final quarter of this year. In the interim there would be tradable rallies, but these rallies would end prematurely.

Summary of the article: We have likely already seen the bottom, but we should still be in correction/consolidation mode for several more months.

Traders should be playing the action here, while buy-and-hold people should be accumulating on the dips.

[jelly]

You know, after days like today it makes me wonder if the .gov IS trying to push the price down ala 1974...we'll see how this plays out.

[Chester-Copperpot]

I've been watching the prices closely, and I don't think we will see any major dips. My gut instinct tells me, they will keep gold above $1600, and silver above $30. If they drop silver, to say $27 I think the China's and India's would hoover up a ton of it. It's not like the Hunt brothers, these countries can corner the market, if they want too.

[prophet]

i dont think anymore......just let the mkt work it out.

[King Of Budz]

Looks like you were wrong. It amazing how people will try to come up with a story to validate their crystal ball predictions. CNBC is by far the worst offender, and sorry for picking on this thread but this is a perfect example of why fundamental analysis sucks. Always a day short, wrong 50% of the time.

Instead of looking for a story to validate your 'gut' feeling, admit that you don't have a ****ing clue what gold, oil, XYZ will do tomorrow (no one except insiders do), and learn about proper risk management, position sizing, portfolio selection, and come up with a workable trading system and stick to it. Trying to call tops and bottoms will eat your brokerage account faster than anything. I learned that lesson the hard way via losing boat loads of coin.

If you're going to piggyback on COT reports you better believe those commercial traders are doing quant. analysis, not scowering 321gold.com looking for correlations from 1974 charts.

</End Rant>

Now, let me have it I love a good debate

[jelly]

It's amazing how people will respond to a thread without actually reading what it said.

Budz, you need to reading comprehension 101. Notice the title of this thread, "Why I think gold has bottomed."

If you take the time to actually read my first post you will see:

After saying all that, could gold go down some more? Sure, after all we are still in correction/consolidation mode right now.

I was taking the time to contribute to this forum, using facts and justifications as to why gold could be putting in a bottom. Something you should try doing instead of just stomping other peoples posts without actually reading them.

Don't get your panties in a wad, bud. Instead of ranting, why don't you take the time to research why Gold could move up or down, and post it on the forums here? You know, make positive contributions and provide food for thought like everyone else does?

[Godswill]

I've yet to see this cat blow a call. Middle of April is bottom for gold, silver a week sooner. We shall see.

www.charlesnenner.com

[King Of Budz]

why don't you take the time to research why Gold could move up or down, and post it on the forums here?

Speculating on which way a market will move is a complete waste of time. That's the point I was trying to make there.

Saying gold should go up.. because XYZ and ABC is meaningless drivel.

People are always looking to find a reason for something. 100% of financial analysis is garbage. Especially from people who only concentrate on 1 or 2 markets like precious metals or gold stocks or financials or pork bellies or whatever.

It's amazing how people will respond to a thread without actually reading what it said.

I read what you said, and it's the same fundamental analysis bloomberg, CNBC, sinclair, hawkeye and the rest spew, and it's completely useless.

I don't make predictions anymore or try to find reasons for markets going up and down. I don't know which way gold/apple/oil/s&p500 will move tom., next year, 10 years. No one does. And anyone who tries to predict is spewing useless information.

So in short you are asking the wrong questions. Instead of looking for reasons why gold could go (or did go) up or down, come up with a trading thesis.

For example an over simplified example of a trading thesis might be something like if gold's weekly 20EMA crosses above it's 50EMA I will initiate 1 position (according to your risk management and position sizing rules) and when the 20EMA crosses below the 50EMA I will sell. Then you backtest that data over many markets and securities and come up with a workable trading system, and stick to your rules no matter what. That's a lot more boring than saying something like "If Helicopter Ben unleases QE3 it will undoubtedly be the time to buy. Also COT reports show decreasing short interest. Now is the time to be in gold." But it works much better. Takes all of the human error and emotion out of the equation.

[glockngold]

I've yet to see this cat blow a call. Middle of April is bottom for gold, silver a week sooner. We shall see.

www.charlesnenner.com

Skip to the last video:
Gold bottoms 2 weeks to 10 days
Long term target $2500.

[jelly]

Ok, King of Budz, so you are a die-hard TA guy. Now, I pose the same question. Instead of ranting about other peoples opinions and rambling on about why Fundamental analysis is wrong, why don't you take the time to post your analysis, and justfy it? This whole forum is for the discussion of price movement of precious metals equities using TA, FA, or any other analysis. It's easy to come out and simply say that everyone else is wrong. That's what cowards do.

And no, I don't think you read my post. It was proposing why gold would not fall nearly 50% like it did in the mid 70's. Come back and tell me I'm wrong when we get to $1,050 in gold. In the meantime, keep your emotions in check, ok?

[Gray]

I predict a 50/50 chance this thread will erupt in a post fight.

also, could be closed mid april or some period of time after

[King Of Budz]

Ok, King of Budz, so you are a die-hard TA guy. Now, I pose the same question. Instead of ranting about other peoples opinions and rambling on about why Fundamental analysis is wrong, why don't you take the time to post your analysis, and justfy it? This whole forum is for the discussion of price movement of precious metals equities using TA, FA, or any other analysis. It's easy to come out and simply say that everyone else is wrong. That's what cowards do.

And no, I don't think you read my post. It was proposing why gold would not fall nearly 50% like it did in the mid 70's. Come back and tell me I'm wrong when we get to $1,050 in gold. In the meantime, keep your emotions in check, ok?

Fair enough. I still don't think you get me though. There's no analysis to be done in my world. I don't care if gold drops 50% or goes up 50%, or the reason for said move. I will profit off of either. Could care less what the balance sheets of mining companies look like either or in using TA to justify FA like most do. Maybe I can start a thread on the development of trading systems complete with back testing results, and smack some sense into you guys.

[jelly]

I've yet to see this cat blow a call. Middle of April is bottom for gold, silver a week sooner. We shall see.

www.charlesnenner.com

Skip to the last video:
Gold bottoms 2 weeks to 10 days
Long term target $2500.

This is very interesting. He thinks it will bottom then, but he says wait for confirmation first.

[jelly]

Fair enough. I still don't think you get me though. There's no analysis to be done in my world. I don't care if gold drops 50% or goes up 50%, or the reason for said move. I will profit off of either. Could care less what the balance sheets of mining companies look like either or in using TA to justify FA like most do. Maybe I can start a thread on the development of trading systems complete with back testing results, and smack some sense into you guys.

This is actually an excellent idea. If you did, I would probly be your #1 contributor in an attempt to learn.

[jelly]

Nice bullish action in gold today. Just when everyone thinks gold is going to tank, it makes a nice V, ending almost $20 higher on the day. I'm surprised noone is cheering gold right now.

If we have indeed found the bottom, I think we should see gold to keep heading higher from here. However, with the stock market heading down I'm not going to keep my hopes up.

I'm holding a couple out of the money GLD calls from last week just in case this is the bottom. If it's not, then I won't be out much.

[jelly]

Like most of the other markets right now (US bonds, the indices, etc.), gold is trying to figure out which direction to go. Last week we started a nice rally in gold, but we failed to take out the last high set on April 2. If gold can make a higher high, then things are looking good my friends. Methinks we will find out soon which direction we are headed.

Keep in mind we are still in consolidation mode. If you look at previous corrections in gold and silver you will see that after finding a bottom, they only gradually moved up.