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From Syndey with Love


Happy Valentine's Day, Laurie!


Gold $423 Silver $7.25 Valentine's Day, 5pm Sydney

G'day. A short, sharp one today as I have lots to do with it being Valentine's Day and all that. What a great commercial marketing job by the women of the world to extort a whole range of goodies from us overworked and underpaid males! This whole day is designed by greeting card manufacturers, florists, perfumiere's, restauranteurs and chocolatiere's to maximize their profits, all based off male guilt and machismo. But as the old saying goes - "you've got to give a little to get.... any". Relax... I'm kidding folks, well sort of.

Well Friday was another strong night for the metals and their associated equities. I would expect we should have a little breather for a day or two, all things being equal. Silver heading up 80 cents in two days is fairly flying and things don't go one way that hard without a few days rest, generally speaking. Silver should pause for breath around here, 7-25-35, I would expect and definitely not advice. I would look for a pullback into the low teens, as some wedge gets taken off the table (Profit takers and new shorts at a significant level, in my books anyway). But, as you've heard many times from me, a double digit silver price is easily justifiable tomorrow, based off the fundamentals of the physical market. It's just a case of what the "paper-boys" decide to throw at us. Maybe some will be spooked enough to cover more short sales, maybe others will "double up" and we see sub $7 again for a short while? Maybe someone is setting up to demand a big physical delivery through the Comex warehouse? Maybe, maybe, maybe..... Maybe's don't matter if you own physical silver. Finished.

Gold is just bubbling along at a much slower and therefore safer pace. The $418-20 level should be supportive again but who knows in the current socio-political-economic macro climate. India continues to be a buyer, more so after the Tsunami than many would've expected. Delays in delivery of physical gold are still being reported, so my man on the ground there tells me. My coin man down here in Sydney says the low Aussie gold price has brought out buyers whom he hadn't seen in a few years, which I thought interesting. The Aussie gold price around $525 is now some A$130 an ounce off its high of a few years back (When gold was U.S.$340 an ounce, mind you!)

I note the IMF gold sales were promptly pooh-poohed by a group of U.S. Senators who reckon it will hurt their "constituents" in "mining states". Whatever. Like I said before, China will take that 100 million ounces in the blink of an eye, IMO. This is just a lot of hot air from all parties concerned and only effects sentiment in the paper gold market, not the real physical one. Let's see the metal hit the market!

The Amex Gold Bugs Index (HUI) is looking pretty fair to me at 208ish and reckon the 200-220 range is where we will see coming action until gold breaks decisively, either way. By decisive, I reckon $435 or $405. Just my 2 cents worth.

Some asked why I won't and don't comment on smaller cap gold stocks. They are an entirely different game altogether and I don't think appropriate for Minyanville. I know the sector pretty well and have exposures there but, unlike some around town, won't discuss tiny producers, non-producers, explorers or "fantasies". I think the only non-producer I have ever mentioned is Silver Standard Resources (SSRI), but with a market cap bigger than U.S. $500 million in the tiny silver space, they are worthy of comment occasionally. Sorry, but I don't want any chance of anyone saying "Thom Calandra" to me.

My exchange with Minyan James the other day elicited a few mails, more so on the state of the economy / government down here, than the rights or wrongs of my call for our natural resources to be protected from foreign acquisition. James and I had started that thread 24 hours before it was posted at the 'Ville. I wonder if the Russians have been hacking into my computer. They're doing EXACTLY what I advocated we do here with regard Natural Resources.

People were surprised that I mention our health, education, transport etc. are in total disrepair and in need of massive funding. Today's paper(Sydney's Daily Telegraph) carries an article of a a few young kids around Australia. I will paraphrase, but they're reported in the "paper", not the internet version, as we wouldn't want the world to know what's really going on down here.

Headline "Boy's 12 month wait for tonsil operation". His tonsils are so big he hasn't been able to eat meat for 2 years. He is 5 years old and weighs over 100 pounds due to the steroids he is forced to take. He must live on fish and anti-biotics because he can't get into his local hospital. This is a major Sydney hospital we are talking about not some country outpost - Liverpool City Hospital. The story goes on to tell of 2 year waits for other "less urgent tonsillectomies". Pity the hip replacements and other "electives".

Another is of a kid who ran a temp of 42Celcius due to tonsillitis, and he is on the waiting list of 11,000 people in South Australia, all up. He was rushed to hospital, twice, but all he has received is 12 courses of Anti-biotics in the last 12 months, which has damaged his immune system. He has been on a "waiting list" for 18 months already and it is anticipated he could have to wait up to 3 years before he gets fixed up. This is just a minor incident. People are dying down here due to inadequate hospital facilities and funding. Yet ....

On the front page of the paper there is a story of over $400 million dollars in government handouts that are a freaking joke. There's funding for private "pet day care centers" and private businesses in "marginal electorates" amongst other notable "community " ventures. $400 million is a lot of healthcare down here but apparently not as important!

Serious priority problems abound down here and much is just vote buying in the extreme.

We have problems down here that no one in the world seems to know about, yet our dollar flies and I read today that the dollar went up along with gold. Doesn't anyone know that we don't own our goldmines, so what's the deal there? Sure we could get higher interest rates but with the debt situation here that is no good either. But it doesn't matter to the currency markets, it appears.

Or the equity markets.... How can we be half the value of Germany when we own none of our resources?

Lisa is out getting a pedicure or some girlie thing, so I have locked her out of the apartment for the next 3 hours. Preparation time is very important. I'm chief waiter, cook and bottle washer tonight. Prawn and avocado appetizer, fillet mignon on the Barbie and a nice bottle of Shiraz will be the fare of the evening. No flowers, cards, chockies or perfume - anyone can buy that. It's just a casual candle-lit meal on the verandah, overlooking Sydney Harbour. She will fall over when I open the door in full Black Tie dinner suit. I reckon I'm a big chance tonight!

Enjoy whatever you do on this Valentine's Day.


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Position in gold, silver, ssri

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