The Ying and Yang of Life
Gold $418 Silver $7.05 Wednesday 6 October, 3am Sydney
"Either we get a rally in silver pretty quickly, or the equities must come off to reflect said metal price changes." - some clown from Oz - Minyanville Oct 5, 2004
G'day. Well, well, well. 24 hours is a long time these days. I didn't expect a 30c up day today when I wrote that. Yesterday was just a blip, apparently. I don't particularly feel comfortable with this price action and am a little perplexed as to the psyche of the market. These commodity markets either reek of death or smell of roses these days. There certainly isn't much middle ground. Stops were triggered in gold at $416 and silver around $6.85 and that was that. These days you are either very right or very wrong.
The Indian Rupee held ground against the dollar today and it appears they are still very keen importers of metal judging by the local premiums. There were many commentaries noting that there was good physical buying on yesterday's dip below $414 which should not be ignored. The physical price of gold and silver is very different from the paper price as we have mentioned ad nauseum.
I was watching silver like a hawk this morning, especially on my shorter term indicators and there was a number of different techs converging at around $6.81-82. Initially (fundamentally hard wired into my system), I wanted to be long but something didn't pass the smell test so I let it ride for a while looking for more clues. Don't bet scared money - especially in a market as unforgiving as silver. I expected a 10-15 cent move either way and, if truth be known having watched a few more attempts at the upside over a further 2 hours, I probably would have been short had I not held off for further confirmation from my indicators. Currencies were doing bugger all. European buying was noted but I am surprised that it caused such a nasty spike. Anyway, not losing is sometimes as nice as a win. Frustrating, but I learned something, and that's always a good thing. Note on a 15 minute chart the move from $6.80 to $7.05 was in 3 periods with no price overlap. That's a pretty strong move given the past 72 trading hours.
I suppose we should now be focusing on where / whether it's gonna stop and have a breather. The speculative open interest numbers are suggesting that we are nearing the same sort of exposure that we had with the last $50 brouhaha. I am of the view that we may see a new top put in, maybe even this week, but that we should certainly see another entry level closer to $400 than $420. Just opinion and don't blame me if the next stop is $450! Silver may test $7.25 on the topside although I am much more comfy with it around $6.70. We may well repeat the overbought condition of a few months back if we keep going at this rate! Caution required in silver for sure, in my opinion.
There is a very interesting view of the gold market that was presented to the LBMA in June, by a dude from the Russian Central Bank and I believe there is a link to it in Todd's Randoms. I will be interested in hearing what comes out of any discussions regarding some of their assertions although I suspect that it will be largely ignored and that some will hope that the story dies a quiet, quick death. Interestingly, Russia have been talking "reserve diversification" and they haven't shied away from gold in the past. I wonder if the Russians ever speak to the Chinese? 'Coz they got lotsa dollars to employ somewhere. Hmmmmm. My view of all this is irrelevant in the scheme of things, but this could affect the market and so we should be mindful of what MAY flow from here.
The Amex Gold Bugs Index (HUI) has reclaimed all of the recent retracement and looking for higher maybe. I see Golden Star Resources (GSS:AMEX) and Coeur D'Alene Mines (CDE:NYSE) are leading the charge higher today, as has been the norm recently. Support down near 210.
My little bloke, of cricket bat fame, immediately got what was coming to him. He woke up this morning covered in spots. Chickenpox. He's learning about the ying and yang of life.
I was enjoying a beautiful morning here in Sydney with my girl and it occurred to me that Monday Night Footy was on and so we did it "Sydney Style" for the first time. Kickoff is at 11am, just after I have had my 4 hour nap. We sorted out some beers (real ones, not that American lolly-water) and a bit of tucker and we kicked back on a perfect sunny day. The only thing missing was some Jets. I told her how this was not the "norm" and that as summer warms up we should be slurping a cheeky chardonnay while flipping prawns on the barby. All she has to do is build the barbeque.... Easy.
There is not enough beer in the universe for me to drink to make this kind of error - OUCH.
Looks like a solid close coming for the metals, all up near their highs so maybe we push this thing a little further this week.... Friday could be a seriously important day in the scheme of things for commodities in general,and am conscious of a violent dollar rally pre-election.
Enjoy the rest of your day.........
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