Why is Gold down today?

Posted by youngsequan on December 03, 2009 (11:42AM)

I see that gold is down.

Why is it down, and was there anyway of me knowing that before the market opened up?

Thanks in Advance

Posted by OldFart on December 03, 2009 (11:54AM)

Why is gold down, why is the wind blowing. Gold has been on a tear recently and it may need some rest. It is actually up a few cents right now. The futures trade 24 hrs, if you can monitor the futures - /YG this is a way to know before the US market open

Posted by youngsequan on December 03, 2009 (12:36PM)

Thanks OldFart,

What site do you use to monitor futures and what does -/YG mean?

Posted by datadave on December 03, 2009 (12:46PM)

Yeah, right Old F!!  Gold IMHO is the most Fiat of Fiat currencies out there. It's good for nothing but jewelry. But I am in it too with UGL (double leveraged) and it's been a money maker. But I have tight stops before and aft. Being ignorant of the options universe I've done a OCO (one sell Order Cancels other sell Order) with 3 percent below, 8 or more percent above current prices and only been stopped out at a profit once this month. I learned my lesson w/ Lead. Got creamed when it reversed 15 percent over night awhiles back and it's just getting close to my buy price. I've liked PGM a lot better than gold. Platinum. Again tight stops at least aft on that one. But it's going higher than gold and actually has pivotal industrial uses unlike gold. 
Bloomberg also has a fairly good futures market page too. An Ipod app too. 

Posted by YoungPunk on December 03, 2009 (12:59PM)

Its not really "down" when you look at the average trend line. Yes it was higher yesturday, but that was an outliar. Outside of major events or breaking headlines, stocks move in equilibriums. This means that they will randomly drift up and down from their current average price. An advantage of following particular stocks or commodities is that you'll start to get a feel for when there is a legitimate price shift, or when its just an artifact of random drift. In the case of a random drift without justifiable cause, you might expect there to be a correction within a a day or two back to the true price.

My take on gold, In august I remember it drifting below 1000 at some points, seeing it at 1200 right now is awesome. My gold mutual is doing decently, although I'm learning they made more conservative bets that aren't paying off as much as aggressive bets.

Lessons learned from my mutual fund: you'll see more risk but potentially higher gains from investing in gold mining companies rather than gold trading companies.

Posted by Income Trader on December 03, 2009 (01:51PM)

Gold is going higher although it is ahead of most analysts projections at the moment so a short term pullback would'nt be out of the question.

If you believe the dollar will get weaker over the next couple of years, you have to believe Gold will go higher just based on future speculation alone. With China, India and many other central banks buying up the metal, it will be tough to change course unless there is a significant change in the economic outlook.

I am not sure how much lower the dollar will drift but I certainly don't see dollar strength anytime soon.
 

This trade will obviously plateau at some point and the downside is a slippery slope...It always is with Gold but if you have tight stops I think there may be a lot of room left to the upside.

Gold doesn't trade based on its industrial applications. It trades at these levels because it is considered a safe haven and hedge for USD weakness and market instability. Whether that makes much sense is debatable, but it is what it is.

There are always two sides to a trade. Traditionally gold has been the most reliable pairing to dollar weakness, dollar down, gold up. So if you don't believe in the value of fiat (paper) currency what is your hedge if the dollar really sinks? Initially at least it will be gold... why? because that is the long standing, established hedge against currency weakness.

Posted by youngsequan on December 04, 2009 (11:22AM)

Thanks for the replies,

How do I monitor futures for things like Gold & Dollar?

Posted by OldFart on December 04, 2009 (07:32PM)

datadave mentioned Bloomberg. Here is a link to the commodities page, you can switch to currencies - http://www.bloomberg.com/markets/commodities/cfutures.html

Posted by datadave on December 04, 2009 (09:40PM)

Wow, got 'stopped out on Gold and Platinum bigtime today. Still kept some of the profits... and Tried to buy back in at a much lower cost. Ick, just missed it....got too greedy for a low price (14 percent lower..) If they act like Lead did a couple of monthes back when it declined 15 percent in a day then next week there will be an immediate 5-7 percent bounce back up.... but not more than that....they were as I.T. said, too big (price wise) for their britches.

Again, today's action (Friday) just shows the unreliability of Gold (and precicous metals ) as a hedge against uncertainty. Remember they suffered a big sell off with the rest of the market a year ago too. Not sure how high Gld etc will go but most likely up. (Time is important too as they're might be better trades in the meantime).

O.F., thanks for the link as I am only using bloomberg on my iphone and couldn't link it if I tried.

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