NCM 2.34% $33.26 newcrest mining limited

+ + gold: what is happening? + +

  1. 22,691 Posts.
    After the Hedge funds and others drove up the price of gold to $458, they could see that the USD was being supported at 81.0 Index and that would put an end to further progress.

    They withdrew, often shorting gold in the process till it hit $430. This was then followed by tax loss selling in Dec.

    So, all-up, gold has had a fair bashing but stood up quite well. It returned to $438 and at that point some prominent TA people gave the signal that it could retrace.

    Some big buyers would have been waiting for it to occur. I read an article which emphasized how quickly such advice travels around the world and even some Indians were caught out waiting for gold to go much lower than $430, last time.

    Meanwhile, I posted 10 reasons why it would be difficult to get a meaningfull fall of the gold price:
    http://www.hotcopper.com.au/post_thread.asp?fid=1&tid=157915#466083

    Sofar nothing has happened.

    I must stress there would have been a heavy intervention in the silver price which lost some 16% in a couple of days. Comments about intervention re Gold and the USD were made as well.

    So, summarizing, some buyers are waiting for the gold price to fall. It has been between $439 and $443 and it now $442. Trading wil be thin till Jan.

    So, Gold has had a very torrid time in the last few weeks: it is hanging out to dry and is consolidating. Sofar, Demand, US deficits and the war in Iraq as well as threats by Bin Laden has stopped a fall in the gold price.
    ________________________________________

    So, why should the Euro rise so much (1.35 at present) while the gold price is lagging behind? (The USD is a low 81.41):
    1. The waiting for the retracement, referred to earlier.
    2. The low oil price of $44.18
    3. Hedgefunds and traders may have jumped from gold into the Euro and they have already benefitted from a good rise. And they'll stay there till the action runs dead. So, there is no incentive to go into gold just now but they may do so later.

    4. The situation re the US intentions is confusing. Bush has made a statement on cutting back deficits. If he is sincere then gold may be affected somewhat. However, the issues are difficult particularly with OUTSOURCING becoming massive.

    5. The relationship of the FED and the foreign Central Banks (CB's) of the dollar bloc. There still is a possibility that they may shoulder the US deficits in an indirect manner by *fully* partaking in the US Bond issues if the private investor retreats. Provided BUSH will make a serious move shortly about the deficits and other matters, this remote possibility cannot be ignored.

    (There can be a agreement involving the universal backing of the USD below say 80-81 cents).

    To do so, will mean more inflation in those countries partaking in those Bond issues. Not to do so wil mean that the USD won't do too well ( monetizing of debt) and that will affect most countries anyway as they already are today.

    So, as far as GOLD is concerned, we are awaiting developments; the terrorist risk factor is always there and cannot be ignored.

    Gerry
    Readers, please do your own research and you decide if and when to buy, hold or sell any stocks. To visit archived posts, please use the Search button.

 
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