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Commodity Corner


Gold $400 Silver $6.15 1pm New York.

As Toddo intimated in his "random thoughts my "official"hours are now Noon NY - 9PM NY. That's a 4am kickoff here so please understand that occasionally I might be a bit grumpy for the first hour of the day. I hope it doesn't reflect in my writings!!

"Foreigners wanted the gold window kept open so they could cash in their dollars for gold at will. Hubris blocked the American leaders from taking drastic action until the very last moment. At the same time, the Europeans and Japanese feared a devaluation of the dollar because it would have been bad for their business and would have produced big losses for their citizens who had accumulated dollars and dollar denominated assets." - Peter L Bernstein from "The Power of Gold" in reference to the collapse of the London Gold Pool and the eventual default of the US Dollar in 1971.- Sound Familiar ???

"We have gold because we cannot trust governments"... Herbert Hoover, 1933.

The issues that the currency controllers are fighting with at the present juncture, are just a simple repetition of about 35 years ago, except this time there is no base to anyone's currency. Hoover's sentiments are apt in the current climate, from where I sit.

Gold .... Zzzzz'

Gold was very tightly traded today in the Far East and Europe. Indian premiums are still adequate for import with gold bang on $400. I think we stay range bound 397-404 till after the G7 shebang this weekend. The HUI up a couple on the day at this stage and should remain firm going into the weekend. Don't expect too much this week, trade should be choppy and it wouldn't surprise to see next to nothing get resolved over the weekend. I noted that some central bankers somewhere said they wanted more "verbal" intervention by the US with the dollar? What the hell is "verbal" intervention? Talk is cheap and it is what it is... hot air. Currencies will go where they are meant to, no matter what some guy has to say or how much you throw at it. Just see the Yen the past couple years.
It was interesting to hear Alex Davison of Barrick, the world's 2nd largest gold producer(and hedger)...(Dow Jones) Davidson noted that gold exploration companies easily raised money in 2003. "But putting it to work effectively is very different," and even if a discovery is made, "you're still looking at three, four, five, six years to production," he noted, adding that the industry has a big gap in supply coming over the next five years.
So there is a supply issue in gold but it is nothing in comparison to silver, although no one will talk about that one.

Sniffing around on Silver.

Looks like the physical market is taking control of the price in silver. The aggressive selloff has been deep for sure, but it appears that $6ish is a solid base for the metal. We should be monitoring the Comex open interest and Inventory and I am looking for more evidence of supply tightness. We know how tight it is in the real world, with long delays for physical delivery of even the smallest of bars from bullion dealers, and I'm looking for it to materialize in significantly larger form in the Comex.

Pretty quiet on the metals front ... especially in comparison to the last handful of trading sessions.


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Position in silver and gold.

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