Gold

[Bobcat.]

I'm drawing a trendline from its low of 1180USD on 23rd Dec through 1200USD a week later, through 1222USD 10 days later (tonight). If it does rally off that trendline tonight, it's bullish short-term; if not, it's bearish and likely to soon retest 1180USD.

I'm confident of a rally tonight to the upside to test 1265USD next week (but I'm aware that this is the view of a contrarian swimming against what is now a very strong current of opinion that's travelling in the opposite direction).

BC

Discl: loaded, with 85% of my portfolio in precious metals.

[Bobcat.]

Corporate USA's 4th quarter earnings season begins soon, running to the end of January. Most analysts are expecting another outstanding quarter of corporate profits (driven by low interest rates). If correct, this will pump up again the Equities market later this month, but before that happens, IMO, we are likely to first witness :
1. an overdue Equities market correction
2. a corresponding lift in the price of gold to test the Bear's established downward trendline (at somewhere between 1265USD and 1275USD).

Meanwhile, there is increasing support for Gold at prices above 1200USD (confirmed earlier this morning with a bounce off 1220USD), and so I would only be getting nervous if it breaks 1220 to test 1200 again.

I'm trading short-term to a gradual lift over the next week or so.

BC

[Daytr]

Well there has been a nice bounce back in POG in late trade, now trading $1227. It looked pretty dismal only an hour ago.

I just posted this on HC so thought I may as well post here. I'd be interested in your thoughts.

The US is finally showing real signs of recovery. And so it should after having trillions of dollars of stimulus thrown at it & zero interest rates. The US has also been enjoying a discount on its energy price due to the gas & oil sands revolution in North America & the inability to export product. For argument's sake lets say the US economy does continue to improve.

Does the USD strengthen & if so at a quicker rate versus gold or the AUD?

One of the main factors of the US very slow recovery has been contributed to its cheap energy. There is now a lot of talk that the US will accelerate the ability to export energy & gas in particular. This should negatively impact the world gas price. Other countries such as Russia & Iran among others are also looking to ramp up gas exports & then there is Australia of course.

I was on the periphery of the funding deals for some of the massive gas projects being built in Australia & my fear was that supply globally was going to ramp up dramatically in the coming years & what did this mean for the economics of these projects.

Being mostly USD flow based projects perhaps the impact isn't so big on the AUD, however if any were mothballed it would certainly have an impact. Lower prices will also mean any of the Aussie based stake holders will have less retained earnings.

So back to the question. Where is the AUD from now & where is gold?

So where is AUD/Gold?

[blueswan]

There is good article in Bloomberg that the bigger Gold Cos ( Barrick, NEM and Goldcorp etc ) might be buying single project gold mining companies to improve their efficiencies. They have the funds now compared to previous year.

http://www.bloomberg.com/news/2014-0...ount-comm.html

[Daytr]

Thanks blueswan. Personally I think its a stretch & certainly would be against the trend of majors selling single assets to medium/junior producers. Its pretty rare a major can get the efficiencies of a junior on small producing mines. If anything I think we will see more mines being off-loaded by the majors to medium or junior producers at pretty damned good prices. We may see some very large M&A transactions & NCM has to be a target with their massive amount of reserves, but you also inherit $4Bln+ worth of debt.

[JBmurc]

From Scoops La

How Much Gold Does China's Government Hold Right Now?
By Matt Badiali, editor Badiali's Daily Resource Update
We all know it's going to happen. It's not a matter of 'if', but rather 'when'. China's currency, the yuan, will be backed by gold. And when that happens, it will likely push the US dollar off the top of the heap.
Europe and China already have a $57 billion deal set up so that they can do business together without resorting to US dollars. That's the largest deal of its kind for China. If China plans to back the yuan with gold, it certainly won't be the last.
The trouble is, China's official gold holding was just 1,054 metric tonnes in 2009. That's nowhere near enough gold to back its currency. The country spent the last five years importing tonnes (literally) of gold.
It imported about 645 tonnes from Hong Kong alone. China's domestic gold miners produced 3,072 tonnes of gold since 2004. That means the country has nearly 4,000 tonnes of gold for sure. But it's likely much higher.
According to Thomson Reuters, China is the buyer for all the gold sold from the giant exchange traded funds. In 2013, physical gold ETFs sold nearly 800 tonnes of gold. Swiss refiner Argor-Heraeus is one of the largest gold refiners. It converts the large 400-ounce bars of gold from the ETFs into one-kilogram bars. About 70% of those bars went to China.
This is a huge story. The question is when will China drop the curtain and show the world how much gold it actually acquired...

[Skol]

JB,

A classic goldbug story, all rumour and innuendo, but no facts, but let's not spoil a good fairytale with the truth.

[Bobcat.]

Trouble for Nth American recovery?

Overnight, we saw the following reported :

1. US average hourly earnings up only 0.1% (forecast: 0.2%)
2. US non-farm payrolls (excludes farmers) up only 74k (f: 196k)
3. US private non-farm payrolls (excludes farmers, govt workers and NPOs) up only 87k (f:195k)
4. Canadian new jobs down 50k (f: up 15k)
5. Canadian unemployment rate up to 7.2% (f: 7%)

Note that the US payroll figures are not good enough to support population growth, let alone economic growth!

The only glimmer of hope was US unemployment rate of 6.7% (f: 7%) but as Bernanke made clear last month, the Fed no longer feels bound to taper QE based on the unemployment rate alone.

This is all good for gold of course, which has lifted overnight from 1232USD to test 1249USD and now trade, as I write this, at 1246USD.

It spiked down sharply earlier this week from 1249USD. That has not happened today. Gold and Silver are finding good support. It will take some very impressive 4th quarter US Corporate earnings reporting to lift the S&P500, DJIA and NAZDAQ indicies well enough to turn around the momentum that's now building with precious metal stocks.

Currently in Toronto, OGC is up 4.5% and TRY 7%. Looking good for a lift in local PM stock prices Monday.

http://www.bloomberg.com/quote/OGC:CN

[Daytr]

BC, good night for gold & hopefully this week we can clear the key $1250-60 area.

Here is a graph of the US employment participation rate which displays that 4-5 million people have left the workforce sine 2008. Quite incredible.

[Daytr]

JB, personally I don't think China will link their currency to gold. I could be wrong, but I think in a way its irrelevant. The fact that China is willing to make gold a component of their reserves is enough. I believe the amount of gold they currently own is around 2% of their total reserves, could be wrong & no one really knows the true figure, but that's what I have seen bandied about. It appears China is willing to increase that level & more importantly are openly encouraging their own 1.3B people to buy & own gold. Ask yourself, why would China encourage its people to buy gold? It because the Chinese government think its an important asset class & they will continue to support it by buying it from the West & as such their own people who have bought gold will benefit.

I was in Perth a meeting with a major Japanese Corp about 18 months ago with a senior FX guy from the bank where I was working. I stated that I thought the Chinese were very likely to float their currency within 10 years & possibly 5. The FX guy laughed at me openly in front of the client which was not only unprofessional, however I considered naïve. The Japanese reps weren't laughing, they were nodding quite solemnly.