No Refund, No Exchange
Gold $424 Silver $6.66 Wednesday 19 January, 10pm Sydney
G'day. Another quiet one with a couple of dollar range in gold and a pretty quiet silver night as well. The Amex Gold Bugs Index (HUI) caught a few bids and we grabbed a few percentage point gains on most issues. More increases are required to repair some awful technical pictures at this stage.
I also read from one of my better market makers when I woke this morning, the Swedes announced that they sold some gold. The announcement was rather an insignificant amount of 60 tonnes over 5 years. 12 tonnes a year is a piddling amount in the scheme of things, although it does cause some unease as they haven't generally been discussed as a prospective seller and I don't recall the country ever selling reserves previously. They hold a total of about 200 tonnes of gold, so the total sale is about 30% of their gold. Silly Swedes! 5 years is a long time and my feeling is that they won't be selling the gold in the coming years as announced. At least they got a better deal than the Poms and basically any other central bank who sold reserves in the last 20 years, including the jokers in Australia. But what did they get for their gold? A heap of paper, that's all certainly not a store of wealth. History proves it.
The Germans are another bucket of prawns altogether. They've got a heap of gold. They have recently confirmed that they will sell 600 tonnes over the 5 years under the new Washington agreement. Their sales of 120 tonnes per annum should have Mr. Putin and a bunch of Chinese dudes pretty chirpy. I don't doubt that Russia, China and a few others will take as much as they can get their paws on, rather than throw 80 billion dollars a month into U.S. Government IOU's. Even Argentina could stick their hand up for a swag of gold, and maybe even Australia would swap its "dunny" paper for the gold it stupidly sold at $340 an ounce. Nah, we're just not that smart!
I see that the dollar is under some pressure in early Europe and that we have just picked up a few bucks in gold and are looking at the $425 hurdle. I will be much happier once we are back at $432 plus. There is plenty of support around $420 that may be required, as these bloody currencies are just wild and could easily reverse again, and again, and again. It could be a long year for currency traders and, by default, precious metals players.
I note the South African Rand, Aussie and Kiwi dollars are all up by better than a percent today, so maybe people are looking at the commodity currencies again, and by default, they may well be more favourably disposed to rising commodity prices? The Rand is sub 6 to the dollar when it was more than double that a couple of years back. This is South Africa we are talking about, not South Dakota! South Africa has some very serious problems to address before their economy or social situation improves much, and there's that little problem of HIV/Aids across the continent, amongst so many other issues such as a lunatic President (take your pick about which country I'm talking about there). Imagine where the Rand would be if South Africa was in good shape. Hmmm. I dunno and just thinking out loud.
Silver is pretty quiet but back nudging the $6.70 level in a very quiet attempt to gain some recently misplaced respectability. I much prefer a quiet, gradual ascent that doesn't scream out "look at me" as has been the case in previous sharp moves. The base metals are another area of interest lately with copper looking fair to me as well as nickel, but I'm no expert on them believe me, so stick that in the little round filing cabinet under your desk. The cleaners won't mind.
The HUI seemed to get a wriggle on and we saw some of the more savagely treated stocks of recent months, grab back a few percent on the day. A 3 or 4 % up day is nice, especially in the current environment, but they don't compare to a 10% down day from a LOT higher! Remember the old " up the stairs and down the elevator shaft" discussion back last year? Lots of stairs ahead of us, it seems.
The Goldcorp (GG) / Glamis Gold (GLG) mess is getting closer to resolution. We have to make our minds up by Feb 10 whether we accept or what. I think this game will go to OT and am waiting till the latest possible moment to throw my hand in either way. I hate that my favourite gold company won't be what it was and possibly won't be what it could have been. The jury is still out and I expect someone else to throw their hat in the ring to further confuse the issue.
Newmont (NEM) seems to have been getting slammed in the press recently regarding some business practices and some other legal issues that has probably contributed to their less than rosy performance this past quarter. I am keeping a close eye on the short sale increases in many issues. I noted that Bloomberg reported in December the major increases in short positions and that there were a handful of gold companies in the top 50. Hmmm. Keep an eye on that stuff.
I saw that Minyan Dean threw an email our way that included the 10 worst album covers of all time. They were pretty bad, no doubt. I think though it would be a better point of discussion as to who are the top 10 worst performers of all time (who actually got some sort of recognition as being something.) I haven't had much of a think about it, but first to come to mind was Journey, closely followed by Air Supply, REO Speedwagon, Lionel Ritchie and most any English '80's suck-rock crap like Depeche Mode. But do remember that as an Aussie, we probably didn't get the "worst of the worst" down here so maybe I won't know what you are all talking about. (Air Supply, I am ashamed to admit, are originally Aussies but I think we invoked the "no refund-no exchange" clause that stops entertainers returning to Australia once they produce nauseating rubbish, just like they did!). I note that Jet, AC-DC, The Living End and Powderfinger had no problems getting back in the country!
It's all a little hard at present, with the dollar being the main focus of most every market trading. My sentiments on the dollar are well documented and haven't changed a bit. Sorry, I lied. My view of the dollar is worse than it was a year ago, or 6 months ago, or a week ago. The dollar may take forever to keel over but I certainly don't doubt that it will. Holding ones view, and thus maintaining exposures during the coming volatility will take skill and luck for sure, but you are also gunna need a heap of ticker and maybe some deep pockets.
A daily letter that I receive points out that the 20th Jan 2005 is the 25th anniversary of the all-time high for gold. I wasn't aware of the exact date but certainly I am now. US $850 is a long way away at present, but $2000 is further away, which is what that $850 dollars would be worth today.
Enjoy your day .. I will, we've got a hot one coming.
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