No more hangin around The Accelerator, Laurie!
"One way or another, a lower dollar makes people who hold the U.S currency poorer. The surprise comes when, and how, they find out" - Bill Bonner at The Daily Reckoning,15 December.
G'day. Did anyone get the plate number of the beer truck that crashed into our gathering yesterday? It all started at 5pm Sydney and was just a quiet little re-union drink with my old Commodity derivatives team, at our former boss' place. It all started getting pretty sporting when the boy from Singapore turned up, un-announced. The Crown lagers were flying down fast without his assistance, but when the duty-free litres of Absolute Vodka appeared from nowhere, there was always gonna be trouble. Especially when you're playing with my good mate, Justin. But more on him a bit later.
Periodically, I checked the gold, silver and oil prices and smiled, safe in the knowledge that all was well in the world. Well, maybe not everywhere in the world, but my little world was looking and feeling pretty bloody good! Parallels with U.S. dollar holders may well be drawn. The piper is now being paid here, and someone should turn the volume of this keyboard down!
The biggest news affecting precious metals that I see out there, is coming from India. Their stock market is attracting massive foreign investment and is making new highs every other day, it seems. The premiums in the major centers are as high as they have ever been reported, confirming Indian metal appetite. This gives me much confidence that the downside for the metals, is severely limited. This could all get shot to pieces depending on whatever Beeks tells us is going on with inflation and jobs and stuff. Either way, the downside move, if any, will be very short in duration, IMO.
Minyan Suhas, an expat Indian, sends some thoughts my way which I want to share with you, so keep an eye on the mailbag a bit later. He gives first hand examples of what's going on over there. I note his examples of the massively increasing spending power of the general population. Remember the wealth effect that I mentioned earlier in the week? This is not a good development for short sellers of gold.
The rejection of the downdraft at around the $432 level was very comforting and, as expected, the resistance of old became the support of today. Technically looking robust following the move back above $440, I still reckon we won't poke below $432 again this year, but again, am always wary of Beeks chucking a spanner in the works. I think now, that it is better than evens that we see a new high for this move, before the new Year (not advice). The physical gold market won't have late year portfolio "window dressing" to worry about. The paper market won't affect the physical buyers in India and Asia. They don't take the holidays off, unlike the paper market. They want to buy gold. Lots of it. Hmmm.
Silver, IMO, has built a base and could potentially head through $7 and beyond (not advice). The base formed around $6.65 looks pretty solid to me at present, and I expect some resistance around the $7.15 area prior to filling the gap between $7.20-45 on the charts, but always looking over the shoulder at Beeks and the dollar.
The buck is just a comedy show lately. Bush and Snow don't seem to be on the same teleprompter page these days. They have a strong dollar policy one day and a "market sets the level" policy the next. In fact yesterday, they had both policies going at once. Tweedledum and Tweedledummer seems appropriate at this juncture. The least they could do is co-ordinate their attempt to stall the dollar's demise.
The Amex Gold Bugs Index (HUI) continues to disappoint and hitting the three rubber ducks (222) looks a hard shot a present. Don't doubt that they will get blown away in due course, and maybe a quick addition of 5% before the new year is in order. Just thinking aloud.
I note that the China-Noranda (NRD) (the Canadian base metals giant) deal has been reported to have fallen over. "No worries" said the Chinese ,"we'll just go find something as good or better, elsewhere". And so they lobbed into Melbourne and have apparently started up serious discussions with Western Mining Corp (or that's what I know them as, these big mining companies are always changing their bloody names!).
This is a freaking huge deal and I'm not only talking financially. The population doesn't realize or even comprehend what this could mean. I will post a separate opinion about what could be one of the most significant events in Australian history, in my opinion. Could this proposed deal, which on global financial scale is pretty insignificant and looks innocuous enough become known as "The day we sold the Farm to China". I don't give a toss about foreigners buying our banks or insurance companies and all the "paper economy", even manufacturing doesn't worry me, but this is a massive REAL, NATURAL asset. Pi$$ed off, you bet.
Oil back above $44 yesterday was hardly unexpected and should have been handsomely rewarded. Seriously, $40 oil is a gimme and there is not one rational argument that I have heard to suggest otherwise. The producers still want a bottle of Bollinger per barrel, remember.
My old mate Justin, swanned into the bar about 5.30pm. I warned Lisa immediately, "do not even think about trying to go drink for drink with this man". It was the first time he had met her, as he has been in Singapore a while, running a large oil trading business. But she'd heard of what we used to do when we were young and stupid. She saw it all first hand, and lived to talk about it, just. It all started quietly enough and the facilities at the Firehouse hotel , next door to the offices here, were pleasant enough. Leaving there at 2am wasn't the issue. It was ducking into the Metropolis, just down the street, for a "roadie" and a game of pool. Bad call.
He is known as "the Accelerator". Which is in fact not a true reflection of his beer consumption. He is just one paced. He doesn't slow down or speed up. I'm happy to go head to head for the first half dozen or so but then I start to slow down and by the time I'm around 10, Juzzy is on his 3rd "tweeny". A "tweeny" is a beer that you have in-between rounds. By then beer is looking tough to get through by volume, so you do the real smart thing and "switch to vodka" because vodka doesn't knock you around much. Yeah, right! Juzzy just keeps motoring along at the same pace. Lisa learned the hard way, and at one stage was seen dancing/wobbling around to a Journey song. Now, I can't tell you how drunk we all must've been for anyone to dance to such rubbish, let alone little miss speed-metal. No, she didn't get out of bed today.
Is this a good disclaimer Todd? "Minyanville endorses the responsible consumption of alcohol and in no way condones such behaviour." Yeah, Yeah.. Oh, to be a fly on the wall at the Festivus in New York ,on 22 Dec.
Following my "Gold versus Fiat currency" paper and discussion that Minyan Mark thankfully brought to the 'Ville's assorted soapboxes, I got a huge chuckle from the Coolmore Australia Newsletter. Lisa is calling me Nostradamus! What a joke that is. Coolmore are one of the finest and largest global thoroughbred breeding operations in the world. The timing is impeccable. Don't worry that you don't know horses, this is amazing that they call horses "global currency".. (I had nothing to do with writing this or have spoken to anyone at Coolmore in 3 months!).
And that's a nice way to wind up this mumbling.
Expected ranges next 24 hrs - notwithstanding Beeks- Midnite Sydney .(we haven't been too far off, lately but we're only one government figure release away from looking like a moron... again.)
Enjoy the day...
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter