Coat of Arms
You ate what?
Gold $426 Silver $7.23 Thursday 17th February, 11pm Sydney
G'day. I've spent half of today reading Elmer's testimony before Congress or whatever this gobfest is in aid of. It was about as much fun as a shark attack. Does this guy intentionally try and bore me to sleep at midday? He did make a few points though, that helped me in where I see the "deflation / inflation" conundrum being resolved. But first, best we address the precious metals.
Gold doesn't look like it's headed much higher than $426-28 at present (not advice). I dunno what sort of catalyst will drive it through that level, as it has been rejected on numerous occasions in the last few months and it appears there is a seller of some size just sitting on the price. My best guess is that it is an "official" seller through the paper markets. Who? I dunno and don't really care at this stage of proceedings, they're just in the way at present. When it punches through whomever is there, it could be quite a vicious spike. Lease rates aren't offering any clues either, as yet.
I guess we will bounce around between $418-20 and $428 for the time being, although Elmer may add something to the mix when he fields a few questions from his adulators on the Hill today. Unless Ron Paul or a few of his ilk get a crack at the title, I don't expect anything of any importance to dribble from the Maestro. India took a day or two to cope with the quick 15 dollar spike but have settled back into importation mode. My coin guy confirmed today that I got some plain old ordinary sovereigns in at $530 Aussie an ounce and I will pick them up when ready. Happy to get that phone call.
Silver had a pretty wild old session in the overnight the other day, getting hammered from 7.30 to 7.15 in an hour or so of Comex Access. I sat and watched it in muted laughter and snipped some down near the low. I hear it was a Japanese player who ditched a big long position. Whatever. I guess if that's the way they trade it is no surprise that they have "officially" headed into their fourth recession in 14 years. Silly stuff.
The daily indicators still show some solid trend strength in silver so am not overly concerned that we have stalled a bit here around $7.25, for the moment anyway. The last serious selloffs have seen higher lows with $5.50, 5.80, 6.10,6.50. Maybe our next low level will be set somewhere around the 6.80-85 level. Still looking for north of $8 in the coming weeks but may have to just bide my time a little. Still, we must also prepare for a move back, maybe even a 30 cent cleanout, as we can't go one way this quickly. I have had people laugh when I suggest a double digit price this year but, no worries, I have been laughed at lots in the last five years by people apparently way smarter than me. Let's see what gives.
The Amex Gold Bugs Index (HUI) is stuck around 208. Time spent here is helping the technical picture and I think we are building some steam for a move up. 195-220 is the current range I think. What the catalyst will be, I dunno, but Newmont (NEM) report in the next week and maybe they can shake the equities from their snoozey little world. I note Goldman recommend NEM and Barrick Gold (ABX) in their latest research. Size must obviously matter a lot to those folk as I can't imagine why anyone would look at a company (ABX) that has 15 or so million ounces forward sold at levels that are close to $100 an ounce lower than current spot rates. I don't understand how anyone can recommend a company, with an uncapped 15 year unrealized liability of over a billion bucks and growing, as the price of their "product" rises. I know all the arguments about their reserve base being so large and that it is "insignificant" in the scheme of everything, but why play with fire when there are significant other gold exposures to enjoy. Their book is not transparent and management have not been forthcoming in recent years. I will be happy to look at them if the Board states that they will not hedge another ounce, ever. I wonder if they wound back any hedges on this last dip, like they said they would??? I would suggest not, given their most recent performance regarding their hedge book reductions when we last headed below $380.
I note that Elmer said that "apart from food and energy, inflation remains in check", or words to that effect. I have said many times that I reckon we are gonna have both Inflation and Deflation at the same time. I contend we will see deflation of what people want (fun stuff like boats and cars and horses and plasma tv's etc.) and inflation of what people need (real stuff- commodities, food, water, oil). I guess he just gave me some confidence in my assertions of the last few years. My old mate Sean Corrigan has a great piece that I thought worth sharing.
I introduced Lisa to the Australian Coat of Arms today.
It is a pretty good looking National emblem and I went through the significance of it all with her. Then we sat down and ate some of it. Yep, Kangaroo Steaks in a red currant glaze, all cooked here at the apartment and they were bloody good too. It's the leanest red meat available on the planet, seriously.
It's very gamey and you eat it rare. Yummy. It's even better if you shoot your own. Next up will be Emu pie. Does any other country in the world hunt and eat theirs? I bet not!
Enjoy the rest of the day ....
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