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The Emperor Has No Clothes



Gold $425 Silver $7.15 Friday 30 October, 8pm Sydney.

G'day all. Apologies for the absence this week as I am totally jammed here converting my "Augusta strategy" into a new commodity fund here. Will probably have me on the tightrope for the next few weeks so please understand that I will post as and when I can, depending on whatever hour of the day I get a second or two to catch my breath. It should only be a couple more weeks and then back to normal transmissions. Luckily this week has been a remarkably simple market. There is a cap at $430(unknown: probable central bank) and a floor at $422 (the physical markets of Asia and the Middle East).

So what do we know at present? India is buying and importing gold at current spot rates. The Rupee is strengthening versus the dollar and it's a traditional gold buying season at present. Tocom has seen more buying by the Japanese public and my local metal dealers here are as busy as they have ever been. Is there a chance that gold is showing itself to be anything but a "barbarous relic"? Why the demand for physical, especially at these prices, if people believe the mainstream press about how good everything is economically and financially? The Emperor has no clothes .... And a bunch of people have noticed. Not many, mind you, but I expect that this trickle of buyers will inevitably lead to a full-blown, A-Grade gold rush as people wake up to what's really going on in the world of money. I don't see this as an "if" rather than a case of "when". What's coming has happened before. It is in the history books for all to see. France, Germany, China ....Oops, sorry, I forgot, it's different this time! Just opinion as usual.

Gold looks to me to be preparing for a break to the upside where we may again hit $430ish and come back to $424 before the move up through $435 and basically then it's all just guess work. I guess we can get about $50 over physical so we may be talking close to $480 and I think there's a bloody good chance we see it before Christmas. A new high would alert more and more people to the dire economic state of the U.S. and the dollar's dreadful fundamentals. Today's close will be interesting as it will be a very high weekly and monthly close which could shake up a few technical types. I don't believe we will see gold print sub $400 again this year, which leads me to think we won't see it there again this decade. Just thinking out loud and hoping that I'm wrong and we get a silly dip to $380 'coz I wanna buy more physical metal.

Silver looks fine to me as long as we hold above $6.90-95 and I expect we will again be nudging $7.35-40 in a matter of days. Again, opinion only and I suspect we will see further violent 30cent days both ways. I would like to see silver come back into the 200DMA area around $6.75 so I can grab more metal to play Santa with. I wouldn't hold my breath waiting for it, though.

The Amex Gold Bugs Index (HUI) has had a fair week and we saw some great moves from the usual suspects. Up and down days of 5%+ in most cases providing great intraday trading opportunities for the nimble. I see Newmont (NEM:NYSE) is back nudging towards that magic $50 level and Coeur D'Alene Mines (CDE:NYS) clawed its way back to $5 having recently traded at about $3. I am still buying select gold and silver equities opportunistically.

I wrote last week about how I thought there was gonna be a huge "resource grab" by foreigners trying to diversify away from U.S. dollar paper assets into tangibles. We have recently seen Russia in South Africa via Harmony (HMY:NYSE) / Gold Fields (GFI:NYSE), China via Noranda (NRD:NYSE) in Canada, Xstrata via M.I.M in Australia amongst others. Now we have Western Mining Corp in play and Xstrata is the suitor. That some/ many of the world's largest diversified mining houses are being taken over is scary to me, when looking at our own. We don't have any left here. We used have a handful of big independent mining houses. All gone. I believe that the Australian Government should block this deal as a matter of "national interest". Same as we did to Shell when they tried to take over Woodside Petroleum to gain control of our North West shelf, the largest LNG field in the world.

There isn't anything left in this bloody country that isn't owned by foreigners. It is a national disgrace that our Reserve Bank has sold its gold reserves and the government lets any ar$eholes come in and take away our natural resources, for next to nothing. My kids won't have a pot to pee in if our Govt allows this sort of asset plundering to continue. Yep, I'm pretty pi$$ed off about it all!

Vouvray runs in the Mackinnon Stakes on Saturday in Melbourne for a cool Million bucks. She is 6 to 1 and I think she is just about a certainty. The Breeders Cup will be pretty huge in the U.S. and Ouija Board should win as should Roman Ruler. In the Classic, I'd back the mare at the odds.

Gotta fly, kids night here and Monsters Inc is on the tele.

Enjoy today and the weekend


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position in gold, silver, nem, hmy, gfi, nrd

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