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GLD SPDR Gold Shares and GDX Market Vectors Gold Miners ETF


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GLD SPDR Gold Shares and GDX Market Vectors Gold Miners ETF

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GLD SPDR Gold Shares ETF and GDX Market Vectors Gold Miners ETF

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GLD vs GDX (green line panel 1)



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Source: Republicans Eye Return to Gold Standard* - US Business News - CNBC


Quoting 
The gold standard has returned to mainstream U.S. politics for the first time in 30 years, with a “gold commission” set to become part of official Republican party policy.

Drafts of the party platform, which it will adopt at a convention in Tampa Bay, Florida, next week, call for an audit of Federal Reserve monetary policy and a commission to look at restoring the link between the dollar and gold.

The move shows how five years of easy monetary policy — and the efforts of congressman Ron Paul — have made the once-fringe idea of returning to gold-as-money a legitimate part of Republican debate.

Marsha Blackburn, a Republican congresswoman from Tennessee and co-chair of the platform committee, said the issues were not adopted merely to placate Paul and the delegates that he picked up during his campaign for the party’s nomination.

“These were adopted because they are things that Republicans agree on,” Blackburn told the Financial Times. “The House recently passed a bill on this, and this is something that we think needs to be done.”

A Violent Downturn for Gold?World's Biggest Gold ReservesIs Gold a Safe Haven Once Again?
The proposal is reminiscent of the Gold Commission created by former president Ronald Reagan in 1981, 10 years after Richard Nixon broke the link between gold and the dollar during the 1971 oil crisis. That commission ultimately supported the status quo.

“There is a growing recognition within the Republican party and in America more generally that we’re not going to be able to print our way to prosperity,” said Sean Fieler, chairman of the American Principles Project, a conservative group that has pushed for a return to the gold standard.

A commission would have no power except to make recommendations, but Fieler said it would provide a chance to educate politicians and the public about the merits of a return to gold. “We’re not going to go from a standing start to the gold standard,” he said.

The Republican platform in 1980 referred to “restoration of a dependable monetary standard," while the 1984 platform said that “the gold standard may be a useful mechanism”. More recent platforms did not mention it.

Paulson Boosts Holdings of Gold ETFCrisis Rewards Safety-First StrategyInvestors Urged to Reconsider Gold Holdings
Any commission on a return to the gold standard would have to address a host of theoretical, empirical and practical issues.

Inflation has remained under control in recent years, despite claims that expansion of the Fed’s balance sheet would lead to runaway price rises, while gold has been highly volatile. The price of the metal is up by more than 500 per cent in dollar terms over the past decade.

A return to a fixed money supply would also remove the central bank’s ability to offset demand shocks by varying interest rates. That could mean a more volatile economy and higher average unemployment over time.

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Source: Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree | ZeroHedge


Quoting 
Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool. The only thing that matters from China's perspective is that "suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB." Now, what would happen if mutual and pension funds finally comprehend they are massively underinvested in the one asset which China is without a trace of doubt massively accumulating behind the scenes is nothing short of a worldwide scramble, not so much for paper, but every last ounce of physical gold...

From Wikileaks [15]:

3. CHINA'S GOLD RESERVES



"China increases its gold reserves in order to kill two birds with one stone"



"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Perhaps now is a good time to remind readers what will happen if and when America's always behind the curve mutual and pension fund managers finally comprehend that they are massively underinvested in the one best performing asset class.

From The Driver for Gold You’re Not Watching [16] (via Casey Research [17])

You already know the basic reasons for owning gold – currency protection, inflation hedge, store of value, calamity insurance – many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future.

All of these factors remain very bullish, in spite of gold’s 450% rise over the past 10 years. No, it’s not too late to buy, especially if you don’t own a meaningful amount; and yes, I’m convinced the price is headed much higher, regardless of the corrections we’ll inevitably see. Each of the aforementioned catalysts will force gold’s price higher and higher in the years ahead, especially the currency issues.

But there’s another driver of the price that escapes many gold watchers and certainly the mainstream media. And I’m convinced that once this sleeping giant wakes, it could ignite the gold market like nothing we’ve ever seen.

The fund management industry handles the bulk of the world’s wealth. These institutions include insurance companies, hedge funds, mutual funds, sovereign wealth funds, etc. But the elephant in the room is pension funds. These are institutions that provide retirement income, both public and private.

Global pension assets are estimated to be – drum roll, please – $31.1 trillion. No, that is not a misprint. It is more than twice the size of last year’s GDP in the U.S. ($14.7 trillion).

We know a few hedge fund managers have invested in gold, like John Paulson, David Einhorn, Jean-Marie Eveillard. There are close to twenty mutual funds devoted to gold and precious metals. Lots of gold and silver bugs have been buying.

So, what about pension funds?


According to estimates by Shayne McGuire in his new book, Hard Money; Taking Gold to a Higher Investment Level, the typical pension fund holds about 0.15% of its assets in gold. He estimates another 0.15% is devoted to gold mining stocks, giving us a total of 0.30% – that is, less than one third of one percent of assets committed to the gold sector.

Shayne is head of global research at the Teacher Retirement System of Texas. He bases his estimate on the fact that commodities represent about 3% of the total assets in the average pension fund. And of that 3%, about 5% is devoted to gold. It is, by any account, a negligible portion of a fund’s asset allocation.

Now here’s the fun part. Let’s say fund managers as a group realize that bonds, equities, and real estate have become poor or risky investments and so decide to increase their allocation to the gold market. If they doubled their exposure to gold and gold stocks – which would still represent only 0.6% of their total assets – it would amount to $93.3 billion in new purchases.

How much is that? The assets of GLD total $55.2 billion, so this amount of money is 1.7 times bigger than the largest gold ETF. SLV, the largest silver ETF, has net assets of $9.3 billion, a mere one-tenth of that extra allocation.

The market cap of the entire sector of gold stocks (producers only) is about $234 billion. The gold industry would see a 40% increase in new money to the sector. Its market cap would double if pension institutions allocated just 1.2% of their assets to it.

But what if currency issues spiral out of control? What if bonds wither and die? What if real estate takes ten years to recover? What if inflation becomes a rabid dog like it has every other time in history when governments have diluted their currency to this degree? If these funds allocate just 5% of their assets to gold – which would amount to $1.5 trillion – it would overwhelm the system and rocket prices skyward.

And let’s not forget that this is only one class of institution. Insurance companies have about $18.7 trillion in assets. Hedge funds manage approximately $1.7 trillion. Sovereign wealth funds control $3.8 trillion. Then there are mutual funds, ETFs, private equity funds, and private wealth funds. Throw in millions of retail investors like you and me and Joe Sixpack and Jiao Sixpack, and we’re looking in the rear view mirror at $100 trillion.

I don’t know if pension funds will devote that much money to this sector or not. What I do know is that sovereign debt risks are far from over, the U.S. dollar and other currencies will lose considerably more value against gold, interest rates will most certainly rise in the years ahead, and inflation is just getting started. These forces are in place and building, and if there’s a paradigm shift in how these managers view gold, look out!

I thought of titling this piece, “Why $5,000 Gold May Be Too Low.” Because once fund managers enter the gold market in mass, this tiny sector will light on fire with blazing speed.

My advice is to not just hope you can jump in once these drivers hit the gas, but to claim your seat during the relative calm of this month's level prices.

Mike

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Source: The US Money Markets And The Price Of Gold | ZeroHedge

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GLD weekly TLs



50% retracement of 2008 low is approx 125.92



More recent September 2011 high/January 2012 low, 50% retracement is 167.06



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Enjoying a nice bump with QE3 today





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Hello Everyone,


I've been trying to buy GDXJ whenever there's a 3 down day pattern. Given that the Chinese and Indian continue to increase their gold position, I do not think this uptrend is going to end anytime soon.

Just wondering if anyone here has access to any updated research on gold from a buy-side company. I always believe buy-side research reports are better because they feel the risks every day. Tudor used to have this but I can't find the link anymore.

Please share it here if you happen to see one. many thanks.

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Oct. 8 (Bloomberg) -- Tower Trading President Anthony Neglia talks about the price of gold and his investment strategy. BNY Mellon Asset Management's Chief Global Market Strategist Jack Malvey also speaks on Bloomberg Television's "Lunch Money." (Source: Bloomberg)


Bloomberg Video




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the 3 down day pattern is emerging. addx3..........

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https://www.twitter.com/bigmiketrading/status/257193293165756416





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Source: Bespoke Investment Group - Think BIG - Gold Trades at Most Oversold Levels onRecord


Quoting 
The price of gold is currently trading more than 4.5 standard deviations below its 50-day moving average, which clocks in at the most oversold reading since at least 1975. The chart below shows the daily overbought/oversold reading for gold based on the number of standard deviations it traded above or below its 50-day moving average. As shown, there have not been very many occurrences where the commodity traded more than 3.5 standard deviations below its 50-day moving average. In fact, there have only been ten.



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Source: US Mint Sells Record 63,500 Ounces Of Gold In One Day | Zero Hedge



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Gold Mining stocks look to be under heavy accumulation by smart money.

Anyone with familiarity with R. D. Wyckoff analysis will see a massive selling climax followed by massive accumulation.

Attached is a daily and weekly chart for Barrick Gold (ABX).

I follow about 1/2 of the stocks with penny priced options, they include 8 of the 10 largest gold miners. All 8 have price/volume patterns similar to this.

10's of billions of dollars are going into the gold mining stocks. Accumulation can take several months. Seasonally gold tends to make cyclical bottoms in the Apr - Aug time period.

It would not surprise me to see another down leg, the BTOs love to shake out early longs by running their stops and create false breaks to trigger bears short before taking prices up (in Wyckoff terms, it is called a spring).

GLD has a similar price/volume pattern.

IMO, putting on a small position in LEAP Calls on some of the gold miners is a reasonable speculation. I expect to see much higher prices a year or 2 from now.

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I do agree with your LEAP call positions for the reason that you noted, longer-term, GOLD is up. However, as you also mentioned, another down leg in gold is to be expected. Dan Norcini understands gold speculators to control this market, not the commercials. Why would anyone step in front of the HEDGIE train. Therefore, the continued and all time short selling will only take prices lower. Buyers are coming in at 1360 level bought by bullion banks and swap dealers, not speculators.

Another reason we are in for another likely downside move in GOLD is the $USD. It breached and held above its Fib 61.8 from its 2010-2011 hi/low. This is the second week for the USD to hold above that FIB. Naturally, it suggests further upside for the USD and its inverse corollary - gold downside.

This market is great for the INVESTOR but not good for the gold TRADER. Its not "how high she can fly" but "how low she can go."

Ken



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Gold Mining stocks look to be under heavy accumulation by smart money....Attached is a daily and weekly chart for Barrick Gold (ABX).

10's of billions of dollars are going into the gold mining stocks. Accumulation can take several months. Seasonally gold tends to make cyclical bottoms in the Apr - Aug time period.

It would not surprise me to see another down leg, the BTOs love to shake out early longs by running their stops and create false breaks to trigger bears short before taking prices up (in Wyckoff terms, it is called a spring).

GLD has a similar price/volume pattern.

IMO, putting on a small position in LEAP Calls on some of the gold miners is a reasonable speculation....


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