That's some kinda superbowl party!
Gold $412 Silver $6.50 Tuesday 8th February, 11 pm Sydney
G'day, 'twas a seriously hot one in old Sydney town today with no respite in sight over the next couple of days. The pool will cop a serious workout and it looks like I had better touch up the suntan, following the Amex Gold Bugs Index (HUI) performance of late. 30 Celcius at 11pm is quite pleasant, depending on what you're doing, with whom and how cold the beer is.
The magnetic field that is the 200DMA has finally grabbed hold of the gold price, which I doubt surprised many observers or traders. Yeah, yeah, I know, gold and silver are non-ferrous and as such display no magnetic properties, but hey, that average has some pulling power in the metals, ferrousity or not! (Is that a word? I will claim it as a McGuirkism, if it isn't).
So much has occurred in the last 48 hours that I dunno where to begin. Firstly, we beat the spread on the Footy, but more on the Superbowl a little later. We also see that the seven dwarfs (G7 finance ministers) are all yabbering about selling, or at least revaluing, the IMF gold and there is some dissention in the ranks, notably from the U.S. I reckon Russia, who score an invite to the next little love-in, the G8, won't mind seeing some serious metal hit the market. Nor will China, or Japan or anyone else who wants to ditch a bunch of U.S. government IOU's that they can't afford to sell without killing themselves in the process, and stash away the only true money, as described under the U.S. Constitution. Whatever did happen to that nice little document, with all those funny Amendment thingys, and everything that it stands for? It just doesn't appear to count much in these "modern" times.
We found a new apartment and they are pretty sweet digs. Glamis Gold (GLG) has upped the ante with its hostile bid for Goldcorp (GG). HUI is 12 points away from dropping my strides. The Chinese New Year kicked off today. The regulation pyrotechnics down on the Harbour are gonna be a good show in a couple of hours. Didn't everyone get a red envelope with some coin in it? There's heaps happening everywhere.
Gold should do some hard work down here in the paper cashino, and we should snap back to the $416-18 level in quick time (not advice) although the $408 level may get a sniff of some action beforehand. The dollar is a sideshow, in my opinion, but perception is reality and the G7 fellas have given the market plenty to think about. I contend that the IMF metal will NEVER see the light of day, as it will just end up in Asian Central Banks who will jump at any opportunity to ditch some U.S. dollar paper assets. Countries used to go to war over gold and silver ownership / rights and an opportunity like this is a very peaceful way for the "have nots" to take their slice of the gold pie. This wedge that is so contentious and such a market overhang, is a tad over 100 million ounces- or about 40 Billion U.S. dollars (have I got the right number of zero's?). That is about 5% of the combined U.S. dollar paper reserves of China and Japan, currently not much short of a Trillion bucks. It's just about equal to a kids pi$$ in the harbour! But the market will do as it pleases and we may be in for a tough few months.
The physical markets of the world are very happy and appreciate the opportunity to grab a heap more metal at levels that I suggest will be seen in the history books as a "gimme". $380 or $420 won't make a lick of difference in a few years, I believe.
1974-81 was wild in gold, culminating in $850 an ounce, yet that will be seen as a little blot on the landscape in coming years. Four figure gold is a given, in my eyes, it's just a matter of when. Next month or next year or next decade. I don't mind when and I'm not gonna guess but I'm not selling my physical metals for love nor paper. Paper metal is a different game though. Gold dropped $160 bucks in a session during those heady days so a little $10 buck day these days is nothing to get too alarmed about. The geo-political environment is significantly worse these days, in my opinion. Physical gold is being sought out in volume down here.
I understand that the U.S. Constitution still says that money must be backed by gold and silver. You know, fair weights and measures and all that stuff. Did Roosevelt's Gold Confiscation Act of 1933 result in that "money law" being just words in an old-fashioned, irrelevant to today document? I'm no expert, let alone a novice, on U.S. Constitutional Law so maybe a fellow Minyan can help me out.
Silver has broken out of the 6 week range(6.55-85) and may be headed back down to $6.35. Whatever. Silver remains the most underpriced, underappreciated, underanalysed and misunderstood asset in the whole bloody universe, in my opinion (not advice). Physical silver will be pretty hard to come by in coming months, especially while prices remain below $6.50. My 5kg paperweights(silver bars) aren't heading anywhere fast.
The HUI is struggling bigtime. Now that the 200 level is in the rear view mirror, next stop could be 182 but I'm not feeling particularly vulnerable as far as the bet is concerned. 180 means sub $400 and maybe we do, maybe we don't. I kinda hope we do, not because of the bet, but because I want another crack at getting long, personally, some selected metal equities at these prices. All it will take is a firm bid on Jactris, my wonderful mare. Her half sister sold at auction in NZ last week for $280,000. How bloody long can it take to sell a horse, for goodness sake! There have been four prospective buyers out looking at her last week and a few more this week. The price is very fluid at present but my "reinvestment" is getting cheaper everyday, it appears.
The Goldcorp saga continues. Glamis upped its bid and I half expect it would wanna get to 1-1 to get over the line. I don't wish to influence anyone either way but I will tell you what I'm gonna do. I prefer the assets of the Wheaton / Goldcorp deal but like the technical skills of the Glamis people. I want the best assets at these prices, diverse in geographic location and don't give a toss if it stays in the ground. I'm personally voting against the Glamis deal. Why they don't all go the "ménage a trois" and build something really spectacular is beyond me. It would mean a few bruised egos, some stepping on toes and a few corporate types would be out of a job, but it looks a bloody good fit to me. Dream on, McGuirk, but keep an eye on what develops in coming months!
The general equity markets are looking very, very toppy and this is the time to be winding back leverage. Opinion only, but this isn't looking like a time to have all your cards on the table.
You all know how much I love my Rugby and the Wallabies are our national team. There's a lot we mob do to show our allegiance and support and I have made some stupid statements and bets in the past about rugby games amongst other things, but NEVER, EVER would I bet this. This guy must have the I.Q of a Wombat (look it up if unsure).
The Superbowl down here was lots of fun. Mountadam Chardonnay was the winner on the day. How gutsy is that T.O guy. The result was fair but Lisa is still getting over it. All I heard afterwards was "bloody McNab cost us the game", over and over and over. Poor girl, even with 30 seconds to go she was all fired for the last second heroics. Next year, baby. The first half was great and when the Iggles scored the first TD, Lisa did a lap of the lounge in her best green undies. You can't imagine how much I was looking forward to their second touchdown! Halftime barbequed marinated lamb skewers, "eagle chardonnay" and finally green midori shots all hit the spot. Anyway, I reckon it was the defensive coach of the Pats who won the game. He shut them down. Finished. The Eagles coaching was poor, unable to respond to what was put in front of them, in my uneducated opinion, and they need a new guy in charge, but what would I know - I can't believe they wear helmets and pads.
The spread bet was somewhat of an emotional hedge but try telling that to Lisa. She wanted the double whammy! Tough luck!
The Chinese New Year is great fun in Sydney as we have a great Chinatown and expat community. I'm not into stars or any of that but my little Jacqui told me all about the Chinese calendar and everything after school today. Anyway, I'm a Wood Snake, for what it's worth. What are you?
Enjoy the day and I suspect we are in for a few days of more pain looking at it from a bulls-eye viewpoint.
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