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CHART: Behavioural finance points to $1,050 gold price

Scorpio

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CHART: Behavioural finance points to $1,050 gold price
Frik Els | 3 days ago | 3,500 | 14


Image: The Scott
Frankfurt-based sentix, a leader in the emerging field of behavioural finance, has been compiling sentiment indices since 2001 by surveying more than 4,500 institutional and private investors.

The latest reading of the sentix index of economic expectations spells trouble for the gold price.

Capital Economics, a London-based researcher, in a research note points to this graph to provide support for its prediction that the gold price would be trading at $1,050 an ounce by the end of the year:

The recent rally in the price of gold appears to have been driven by safe-haven buying, as evident from the close relationship between the price of the yellow metal and the Japanese yen, another safe-haven asset. Heightened geopolitical tensions, the triggering of Article 50 in the UK and concerns about the rise of anti-EU parties in the euro-zone have boosted investor interest in gold.

We acknowledge that political tensions could periodically support the price of gold this year. However, we doubt that any gains can be sustained given the prospect of rising US interest rates and the associated appreciation of the dollar that we project. Indeed, we forecast that the price of gold will fall to $1,050 per ounce by end-2017. This appears consistent with market expectations for global economic activity.


Source: Capital Economics

In a blog post published last week sentix gold sentiment survey among 1,100 retail and institutional investors showed positive sentiment towards gold reaching its highest point for 2017, and the best level since July last year.

Sentix also ascribes the gold bullishness to safe haven buying, but warns that that "overheated" positive sentiment is a contrarian indicator and when greed tops fear in a market to this extent it leads to corrections or top-level forming.

The survey was conducted between 13 and 15 April when gold hit a five-month high within shouting distance of $1,300 an ounce. Late on Thursday, gold for delivery in June was exchanging hands for $1,265 an ounce, down slightly from Wednesday's close.



http://www.mining.com/chart-behavioural-finance-points-1050-gold-price/
 

Scorpio

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comments after the article:

  • Daniel Vermeersch3 days ago
    Look at CFTC commitments of traders. Producers are heavily short gold futures contracts whereas money managers are heavily long. This is the most bullish reliable indicator you can find. As prices start to move higher again, producers start to reduce their short, which will boost prices much further up.


    • Pat Woods
      2 days ago
      Facebook: P/E 43
      Chipolte: P/E 144
      Netflix: P/E 200
      Tesla: P/E n.a. (no earnings......)

      Got any Viceroy Tulip Bulbs...........?

      US Public Debt: +$20 Trillion and growing at 2.5% annually
      US GDP: $18.56 Trillion and growing at 0.7% annualized.

      Gold overvalued at $1,265 per ounce.....?

      What am I missing here.........?

      Extraordinary Popular Delusions and The Madness of The Crowds.........

      Nobody has ever fought a war over a social media posts, a burrito, fantasy of a world filed with electric cars, or an available on-demand TV show.

      At least not yet.............

    • minedoubt • 3 days ago
      I'm no gold bull but shouldn't market supply-demand factors also be considered in predicting gold price? Gaps between demand (particularly strong demand from India and China) and supply (mined + recycling) have been the major structural drivers of gold prices over the past 10+ years. What percentage of demand does "sentiment" account for, and how does this justify $1050 gold? Somewhat irresponsible article to publish.


    • Steve Canby
      minedoubt3 days ago
      Sensible analysts have written this.... Good to have access to such different opinions. What would SENTIX have to gain by lies?
      Often in the mining world we see somewhat ridiculous optimistic forecasts driven by those who will benefit from a positive change in the gold price.
      E.g. http://www.mining.com/ecuad...
      Why is this 'irresponsible', unless you don't WANT to hear this and your life depends on people not thinking like this?
      Sentiment accounts for a lot! Ask my wife! Good on SENTIX.


    • Pat Woods
      Steve Canby2 days ago
      They gleaned their data from polling results.

      ".....by surveying more than 4,500 institutional and private investors."

      Equity fund managers generally don't invest in the commodity / PM space, many of whom feel Tesla common is a bargain at current prices.........

      When the HURT comes (and it will, always does......) these guys are going to wish they owned gold (and gold miner stocks).
    • Anopheles minedoubt2 days ago
      You miss the point.

      Gold isn't like other commodities. The demand IS driven by sentiment and emotions. Industrial demand is only 10 percent of annual supply, 60 percent is jewelry. The rest is investment in various form.

      That means 90 percent of annual gold demand is discretionary. An emotional purchase of a luxury commodity, purchased with surplus income. Discretionary purchases are driven by emotions, not necessity.

    • Pat Woods
      Anopheles2 days ago
      If you were given the choice, today, of taking:
      a) $1mm worth of gold bullion......
      b) $1mm worth of Tesla common shares at today's prices.....
      What would you take......?
      Invest accordingly......


    • thecharttechnician • 2 days ago
      Here is the chart with the forecast as shown.

    • thecharttechnician • 2 days ago
      Tentative Bearish Price Objective for the Precious Metal as shown on the chart is at $1045.98.

      Further
      on Gold.



      wags1
      3 days ago
      I know of more than one investor who's lost their shirt when relying on charts. Charts may be interesting components, but aren't nearly enough to base decisions on.
 

<SLV>

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#3
Same range it has been in for years. It's getting a little boring.
 

Buck

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#4
"The recent rally in the price of gold appears to have been driven by..."

Manipulation and Bots