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Metals With McGuirk: Short and Sharp


There has been a significant divergence from the historical correlation between gold and long-term U.S. interest rates.


Oct. 13th, 11pm Sydney - Gold $471 - Silver $7.70

G'day. Short and sharp today, sorry, got a heap of stuff flyin' around everywhere so will be a little scarce the next 48 hrs.

There appears a very resolute seller at $480ish in gold and continues to reject any pushes up through that level. Maybe we're in for the $20-25 cleanout that I have been half expecting, especially if we trade back sub $467.There must be some stale longs out there who are getting jittery at those levels, but the recent price action suggests that any dips are being met by deep pockets looking to accumulate on dips.

India is still a buyer at current levels, even with the Rupee looking about as attractive as the dog's dinner. I saw a report that their imports are up 42% for Q1 2005, versus same period last year. That's physical gold we are talking about, not paper.

All the talk on inflation in the WSJ today is interesting. If inflation is such an issue, why are the 10-year bonds on 4.4%?? There has been a significant divergence from the historical correlation between gold and long-term U.S. interest rates. Inflation concerns are why gold has risen according to many yet the bonds say there is none. I wouldn't buy a U.S. bond, even with your money! Hmm.

Silver looks vulnerable to a pullback to the mid 50's initially, especially if gold gets any wobbles. I love silver at 7.35 and even more at $6.85, but I don't see those levels being available anytime soon from my vantage point, at this juncture. Am watching Silver Standard Resources (SSRI) and Silver Wheaton (SLW) like a hawk - not advice.

The HUI looks tired and looks headed for 220 again. Interesting that HUI trades at 265 in Jan 04 with gold at $420, yet can't bust through 245 with gold at 17 year highs??! I had mentioned before who the culprits are and they are still the same. Golden Star Resources (GSS) has been a star underperformer and could well continue for another few quarters until it gets its operational issues sorted out and some investor confidence is regained. Its 3.8 million ounces of reserves haven't disappeared, but the share price has behaved like half the reserves have disappeared! I still haven't taken back the half of my position that I ditched at $3.47 but am warming around $2.80. Not advice. Hmm.



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