This is gold that you store yourself or at a trusted vaulting company. This is gold that you can actually hold in your hands. This is the gold that is demanded at record levels by central banks around the globe.
Do You have pretend gold.
This is the domain of the bullion banks. They offer futures contracts, unallocated accounts, and ETFs…all as an alternative to the real thing and as a way of increasing the total supply of “gold” in what amounts to modern-day alchemy.
The investment world allows a physical price to be determined through the trading of the pretend alternative.
There’s a demand for the real thing: physical gold.
One great story in 2019 was how the Polish central bank purchased—and then demanded immediate delivery of—about 100 metric tonnes of physical gold. The Poles are no dummies, and they apparently wanted no part of the unallocated promises from the London Bullion Market.
The Central bank demand for gold will exceed 670 metric tonnes in 2019. This follows what was a 50-year record demand of 641 metric tonnes in 2018. This from the World Gold Council at the end of 3rd Quarter 2019:
Price rose by 18% in 2019, a logical conclusion would be that this was due to strong physical demand. And that conclusion would be mostly correct.
Surging demand often leads to higher prices, price is not determined through the exchange of fiat currency for physical metal.
Price is determined through the trading of gold derivatives and futures contracts—pretend gold,
last year saw the global central banks demand delivery of 670 metric tonnes of physical gold, while at the same time, the global bullion banks oversaw an increase in the supply of 1024 metric tonnes of pretend gold.
Central Bank physical demand:21,500,000 ounces
Global physical mine supply:90,000,000 ounces
Bullion Bank pretend gold supply:78,616,600 ounces
With the price of gold rallying from $1280 to $1520 in 2019, a move of 18%, which factor had the largest impact?
Demand for physical gold or the supply of pretend gold?
all of these trends will continue in 2020, and as such, the price trends will continue, too.
Central bank demand for physical gold will continue unabated as foreign currency reserves are gradually shifted from fiat currency to sound money.
Institutional demand for physical gold will increase as fiat currencies are devalued and global interest rates trend lower.
Personal demand for physical gold will increase as investors increase the asset allocation to our under-utilized sector.
Bullion bank supply of pretends gold will increase as these banks defend their established and underwater short positions. (Keep in mind that these Bank shorts positions are not constrained by the same factors that face Spec longs. These Banks are deemed “too big to fail” and thus will always have access to enough cash to meet perceived margin requirements. Additionally, these Banks are rarely forced to actually deliver physical gold against their short positions, as the Spec longs rarely demand physical delivery.)
Expect gold (and silver) prices to continue rising. How far? The first levels to watch are $1650 for gold and $20 for silver. However, $1750 and $22 are not out of the question. This would place 2020’s gains on par with 2019, and that seems about right.
The bullion bank control over the pricing scheme grows more tenuous by the month. Each ounce of physical gold that is demanded globally removes it from the over-leveraged hands of the Banks. So keep the pressure on in 2020. Buy gold and demand immediate delivery. And then let’s see if we can finally begin to see prices reflect true physical gold demand and not fabricated pretend gold supply.
Please leave a comment or question and I will do my best to answer.
The following post is a glossary of forex trading indicators. So ofter we hear abbreviations and these can be misleading as so many abbreviations can stand for so many different things.
Price action is the movement of a security’s price plotted over time. Price action forms the basis for all technical analysis of a stock, commodity or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions.
Price action describes the characteristics of a security’s price movements. In simple terms, price action is a trading technique that allows a trader to read the market and make subjective trading decisions based on the recent and actual price movements, rather than relying solely on technical indicators
In simple terms, price action is a trading technique that allows a trader to read the market and make subjective trading decisions based on the recent and actual price movements, rather than relying solely on technical indicators.
Technical indicators are heuristic or mathematical calculations based on the price, volume, or open interest of a security or contract used by traders who follow technical analysis. … Examples of common technical indicators include the Relative Strength Index, Money Flow Index, Stochastic, MACD and Dillinger Bands
A heuristic technique, or a heuristic for short, is an approach to problem solving or self-discovery that employs a practical method that is not guaranteed to be optimal, perfect or rational, but which is nevertheless sufficient for reaching an immediate, short-term goal.
Indicators are the cornerstones of technical analysis and play an important role in giving and confirming entry and exit signals in stock trading systems.
Leading Indicators are indicators that lead to price movement. In other words, they indicate the probability of a trend reversal in advance.
Exponential Moving Average or EMA
A moving average is a technical analysis indicator. The EMA indicator is very popular in forex trading. The indicator was developed to counter the lagging weakness of the SMA indicator by weighting more recent prices more heavily. Its origins are unknown, but its use was designed to smooth out the effects of price volatility and create a clearer picture of changing price trends
Simple Moving Average or SMA
The SMA is a technical indicator for determining if an asset price will continue or reverse a bull or bear trend. The SMA is calculated as the arithmetic average of an asset’s price over some period. The SMA can be enhanced as an exponential moving average (EMA) that more heavily weights recent price action. The moving average is calculated by adding a stock’s prices over a certain period and dividing the sum by the total number of periods. For example, a trader wants to calculate the SMA for stock ABC by looking at the high of the day over five periods.
SMA and EMA are calculated differently. The calculation makes the EMA quicker to react to price changes and the SMA react slower. That is the main difference between the two. … Many shorter-term traders use EMAs because they want to be alerted as soon as the price is moving the other way
Hull Moving Average or HMA
Of all the moving averages the SMA lags price the most. The Exponential and Weighted Moving Averages were developed to address this lag by placing more emphasis on more recent data. The Hull Moving Average (HMA), developed by Alan Hull, is an extremely fast and smooth moving average.
Popular Momentum Indicators
Moving Average Convergence Divergence (MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA
Relative Strenght Index or RSI
The relative strength index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100
Volatility indicators are technical indicators. … Volatility indicators are a special form of technical indicators. They measure how far an asset strays from its mean directional value. This might sound complicated but it simple: When an asset has high volatility, it strays far from its average direction.
An oscillator is a technical analysis tool. A technical analyst bands an oscillator between two extreme values and then builds a trend indicator with the results. The analysts then use the trend indicator to discover short-term overbought or oversold conditions.
The SMA is a technical indicator for determining if an asset price will continue or reverse a bull or bear trend. The SMA is calculated as the arithmetic average of an asset’s price over some period. The SMA can be enhanced as an exponential moving average (EMA) that more heavily weights recent price action.
Rate of Change or ROC
ROC – indicator for MetaTrader 4 is a Metatrader 4 (MT4) indicator and the essence of the forex indicator is to transform the accumulated history data. ROC – indicator for MetaTrader 4 provides for an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Commodity Channel Index or CCI
The commodity channel index is an oscillator originally introduced by Donald Lambert in 1980. Since its introduction, the indicator has grown in popularity and is now a very common tool for traders in identifying cyclical trends not only in commodities but also equities and currencies
What are the best leading indicators?
The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. … The RSI is most typically used on a 14-day time frame, measured on a scale from 0 to 100, with high and low levels marked at 70 and 30, respectively.
Moving Average Convergence Divergence (MACD)
Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA
Parabolic Stop and Reverse (SAR)
parabolic SAR (parabolic stop and reverse) is a method devised by J. Welles Wilder, Jr., to find potential reversals in the market price direction of traded goods such as securities or currency exchanges such as forex. Stochastic.
Stochastic refers to a randomly determined process. The word first appeared in English to describe a mathematical object called a stochastic process, but now in mathematics, the terms stochastic process and random process are considered interchangeable.
Average Directional Index (ADX)
The average directional index (ADX) is a technical analysis indicator used by some traders to determine the strength of a trend. The trend can be either up or down, and this is shown by two accompanying indicators, the Negative Directional Indicator (-DI) and the Positive Directional Indicator (+DI)
The Ichimoku Cloud is a collection of technical indicators that show support and resistance levels, as well as momentum and trend direction. It does this by taking multiple averages and plotting them on the chart
Dillinger Bands is a technical analysis tool developed by John Dillinger. There are three lines that compose Dillinger Bands: A simple moving average (middle band) and an upper and lower band. The upper and lower bands are typically 2 standard deviations +/- from a 20-day simple moving average but can be modified
Whether you are a fundamental trader or a technical trader I hope that the information above helps to explain the different indicators available so that you can decide what type of trading you wish to follow.
Please comment or leave a question and I will do my best to answer