G'day. It seems that one particular U.S. investment bank decided yesterday that they wanted to buy every bloody ounce of gold on Comex and so we got the pop up to $440 as mentioned. I wouldn't be surprised to see us back at 35ish before we head back to the mid-40's again but it will be a case of the quick or the dead, I reckon for those looking to get long on dips (not advice).
Silver disappointed somewhat yesterday although it seems to be building a good solid base between $6.60-80 for another possible run through $7 level again. The $7.48-7.20 gap on the charts looks ominous and I expect we may take a breather around $7.15 before we attempt to fill the gap. I was more comfortable yesterday than today, in expecting silver higher for some reason, call it gut feel or whatever but maybe we will see back to $6.65-70 beforehand.
India is consistently making new highs in its equity markets and the Rupee strength is only helping them accumulate more physical on this dip. There is a huge wealth effect rippling across the sub-continent and that can only help further demand for precious metals. China is not dissimilar. One thing that crossed my mind was that maybe the Indians will be suckered into "paper wealth" and that's why their stock markets are booming. It appears there are great amounts of foreign capital flowing into the country at present and it doesn't appear that demand for metals has slowed. Would a stock market shock of some description cause a serious run by wealthy Indians out of paper and stocks back to their traditional investment and store of wealth, precious metals? I think so, but we will have to wait and see, I s'pose.
The physical market is fine with gold up here at $438ish. That investors are happy to pay the paper price for physical suggests to me we have significant potential for a $20-30 run up, but it would surprise me if it's pre-2005. Just thinking aloud.
We saw a little life in the Amex Gold Bugs Index (HUI) with a near 2% jump, but the star of the day was Hecla (HL:NYSE) who shot up 7% or so. Apparently they got a mention in Barrons on the weekend. Whatever. They were so overdone on the downside that the move back was inevitable using almost any rational valuation method. Three rubber ducks (222) still beckons in the short-term and we may struggle for a while to get back to the recent 240 levels. Notwithstanding that, I'm looking for a new high in the first half of next year. Furthermore, I still reckon silver and their stocks will outperform gold because of the historic supply-deficit equation and lack of above ground stockpiles. Not by that much, mind you, and I wouldn't lose any sleep over it if you've only got gold stocks! Judicious selection of gold stocks, will, due to their leverage to the gold price, be the difference between a great investment return in this sector and an outrageous one. Just this lunatic's opinion.
Oil looks to me like it's ready for a few dollar jump, but when it comes to timing stuff, I suck, so let's just say, $44 by next weekend, not 3 days away. Just my best guess and anyone who takes it as advice should hang their head in shame! Remember, I said that $46 was cheap a week or so back!
Who are the people that are buying long term dollar denominated debt at 4.15% these days? I dunno what I'm missing in this instance, but every other country who has dug an economic hole even close to this deep, have had their currency destroyed and bonds smashed. Maybe there are different rules for different economies?
We had a great storm here in Sydney that shut the place down for an hour or so. My girl used to live in North Carolina and I remember about 18 months ago that there was some monster hurricane that was supposed to hit and destroy the whole east coast or something. I was in New York at the time and watched CNN as a million camera crews all got ready for the big one to hit. It never really turned up. By comparison, our little storm was spectacular, and quick. We were back swimming within the hour. The good old Southerly Buster is a spectacular weather phenomenon here in Sydney, at the end of a seriously hot day. We had another little one here about an hour ago.
I expect a pretty quiet one today, so that probably means it will go bonkers, either way.
Expected ranges next 24 hrs -11pm Sydney
Silver $6.70 - 7.12
Enjoy the day .....
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