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Awaiting the Payroll Numbers



Gold $418 Silver $7.15 Friday 8th October, 4am Sydney.

G'day. And so the trading range continues to narrow in gold to a nice tight $3. There has been much talk of a "cap" at $420 these past couple of days. The price action supports such assertions. Furthermore, some deep-pocketed buyers have emerged and appear to have lifted their floor level little by little over the past week or so. There are very solid bids around $417 and they have been tested thoroughly the last 48 hours or so. Having a big buyer meeting a big seller in these circumstances should see a large sized move, depending on who blinks first. If it is a Central Bank selling, remember that they won't have a stoppy to force them to buy back their sales should we bust upwards (unlike a fund), so the momentum or break trade may not be the go this time around. A big IF, though.

India is a buyer still with gold here in the high teens. The Rupee sits around 45.85 at present. Furthermore, Japan has also seen some increased buying by the public, even with Yen-Gold at historic highs. Everyone I hear is talking about commodities and oil and gold blah blah blah. This is a very small little bandwagon and there appears to be a bunch of people jumping on from all directions. The wheels on said bandwagon could well fall off if it gets too crowded, too quick. The open interest numbers confirm that we are approaching similar exposure to the April debacle. We will know more in 24 hours I'm sure, after the payroll numbers tomorrow.

Speaking of open interest -

The gold market should be very quiet for the rest of the day. We may get a late burst to the upside trying to break out but it appears we will go into the numbers at about $418. For what it is worth I reckon we will see gold higher to $424ish then back to $417 before a crack at the title at $433 - then again the numbers could be something crazy and we could see gold $15 lower ($404) in quick time as gold longs chuck in their hands and we do some rather nasty technical damage. The market feels long and it won't take much to shake out the confidence, especially all the "Johnny-come-latelys".

Silver well supported just above $7.10 and seems well held at $7.25ish. Wait till tomorrow for anything to happen of note. Anticipate we see sub $7 again in next couple days. Briefly. Just opinion as usual.

The Amex Gold Bugs Index (HUI) is pretty quiet around 234 and we may see a little profit taking late in the day as some players may take some wedge off the table, pre-payrolls.

Some quiet reading-

I watched the Yankees scrape in against the Twins this morning. Good luck, not good management, IMO. I so want the Yankees to lose! (Sorry Todd.) Why? Appropriately, think PAYROLL and you're on the right track. With their player budget they could probably feed a small nation for a year. I don't care who wins as long as it isn't NYY...

Enjoy the rest of this quiet day cuz I reckon it's gonna be a wild one tonite.... even if nuthin comes out of the numbers and they are exactly as expected. This market wants a reason to move and if it doesn't get one, someone will try and force it. Not a good idea from where I sit.

Till tonite....


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position in gold & silver

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