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Deal or Die


Gold $426.50 Silver $6.84 Monday 24th January , 11.50pm Sydney

G'day. What a great day of footy! Thank goodness that Pittsburgh lost or else there would've been hell to pay here. I'm sure my neighbors are still wondering what was going on in our apartment today. Screaming, moaning and thumping walls during the Steeler game may well have been misinterpreted by some. Two Pennsylvania teams in the big one would probably have seen Lisa arrested sometime on Monday the 7th February! But a little more on that later.

That silver/gold ratio is something people better get a grip on. It's "Money for old boots", I reckon.

Friday was a pretty flash old session for the precious metals and not so stellar for the buck. Oil was pretty slick too. I'm still very happy to contend that oil will make a new high before Memorial Day, if it hasn't already by Valentine's Day. This Iraq stuff is getting nasty and winter doesn't end till baseball season starts! Sure, the DOE reckons there's plenty of refined product stocks around but I don't buy it, sorry. Something's fishy in the old oil markets and a good mate who knows lots and does lots in oil reckons $75 sometime this year. I'm not overly fussed whether it gets there or not but if it does, the old oil/gold swap at 9 puts gold WAY higher (Barrels of oil per ounce of gold). Keep in mind that the average oil/gold for the last 20 or 30 years is about 18. A very finite asset should be swapped for infinite wealth. Hmmm. Just sharing the greasy vibe.

Gold kicked a few bucks higher and held above $427 for the close based on some dollar weakness and some short covering. Again we saw some very serious physical demand appear on the dips into the high teens/low 20's. The Indians are soaking up heaps of metal as are the Japanese and Chinese. I note that Russia is again on the giddy-up and increasing their gold and currency reserves. They seem to be great savers these days, those Russians. It seems everyone but the Comex paper market wants to get their grubby little mitts on some physical gold and silver. As previously mentioned, I want to see $432 before getting too barred up. Looks like we may struggle around $430 before I'm checking my rear vision mirrors for $432.

The 200DMA for gold is still snoozing around $412 and doesn't look in much danger from where I sit. I'd love a chance to pick up some physical down there but don't think there's much chance of that. But thinking that there's not much chance of something happening doesn't mean you discount it completely. One should always be prepared for the scenario that could bite you on the butt, no matter how remote you see the chances of it happening. Remember LTCM?

I've kept an eye on the gold lease rates for the last 10 or so years and I see little to give me any cause for alarm at present except for the fact that some dopey Central Banks are lending gold out for a year at next to no interest. Why would anyone lend the only real money in the world out at a tenth of the cost of U.S. dollar cash? Doesn't anyone want to borrow it anymore? All those hedgers must be smiling as very cheap gold leasing will certainly help to offset their massively out of the money forward sales positions. What a nice little subsidy from the official market. We have previously discussed forward sales with a floating gold borrowing and the associated lease rate risk.

Silver went nuts as expected. I just didn't know what day it was gonna happen! Our levels were pretty sweet for entry, $6.45-55, although it appears that the best buying in silver is when you are questioning whether you actually have a grip on the little bugger. It is difficult to jump in front of the bus especially after having already copped a flock of uppercuts in the previous couple of weeks. The physical market told us where the line in the sand had been drawn but I would still prefer the "stealth" rally rather than these monster 5% up days, but will take whatever the market gods dish out. The 200DMA isn't far away and should continue to be a good canary in the mineshaft.

The Amex Gold Bugs Index (HUI) looks pretty good these days as long as we keep our heads above the 200 level (and I get to keep my strides on whilst we stay above 180). I see that Goldcorp (GG) reckon that they're better off going with Wheaton River (WHT) than Glamis Gold (GLG) with all this takeover / merger shenanigans. I don't want to be accused of pushing anyone's barrow but I will say that bigger is NOT necessarily better and that there have been some really good mid tier companies destroyed by biting off more than they could chew. I dunno where it's all gunna end up but I'm hanging on for the ride, at least 'till 10 Feb or so.

The footy was great fun today. As Lisa said, "the Eagles played like the Steelers of old and the Steelers played like her old girl scout troop". Whatever that means. The big play in the Steelers game, when they made the dodgy catch call and added the 15 yard penalty, capped it all off for the Pennsylvania native. If we were in a pub down at Garden Island (our naval base) the sailors would've been running for the doors upon hearing the language that came out of the little angel. She even agreed with the call after 93 replays, but it didn't matter much. The field goal taken by the Steelers in the 4th quarter instead of going for gold and hammering home their second half dominance should have the coach axed, IMO. Deal or die in games like that and you don't come back from 21 points down by being a nancy-boy. And I saw on Sportscenter that Cowher blamed the QB for 3 pickoffs. Mate, that sux! At least she will have a team to seriously get behind in the big one. Green and white won't be too hard for me to support either.

Vanessatheundressa ran a shocker in NZ late on Saturday. The jockey pulled her up in the straight as he thought she broke down. I didn't get a bet on due to having my Mum and brothers over for the weekend and we were all quietly demolishing a dozen bottles of chardonnay over the course of the day/night. Ouch. The vets and everyone went through her like corn through a goose and they found nothing wrong. I think she had a case of "pea-heart". Hmm. Looks like the Wellington Cup is a no-go and the shagging barn may be calling.

No news on the mare sale so I guess the metal equities will rally hard until something happens. Just my luck!

Enjoy the Monday football hangover and watch as these commodity markets start to fire up again. As always, not advice but a very strong opinion.

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position in gold, silver, oil, gg, lisa

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