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View From Down Under

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Gold $406.50 Silver $6.33

"A man cannot be convinced against his own convictions, but he can be talked into a state of uncertainty and indecision, which is even worse, for that means that he cannot trade with confidence and comfort". Edwin Lefevre, 1923


Ho-Hum. The G7 gabfest was somewhat notable due to the lack of anything of substance emerging. Yes we all know the Japanese are intervening in the currency markets, the Yuan is too weak, Europe's recovery is threatened by a weak dollar and that everyone wants a lower currency. Interesting that Mr. Snow says the strong dollar policy is still all systems go. His boss, hoping for some good election news on jobs and exports must be reading a different page!

How does one make an irredeemable piece of paper worth anything more than a piece of paper?? The strong dollar policy has never been explained. What is it?

My old mate Voltaire said a few years back.. "Paper money will always return to its intrinsic value. Nothing." He'd have had a fair idea having just been through the French Fiat debacle.

Supporting Gold

The late week histrionics with gold under $400 was very short-lived. Friday was not for the feint hearted. People were getting set in a position and stopped out at the same time. The $403 resistance was blown out and although skinny volume, one could probably have sold some gold out at $409 if you were lucky and fast. Settled back at the resistance and it appears the world is again comfy with gold over $400.

Euro at 1.27 and gold at $406 doesn't stack up against the $420's we saw last time with the dollar down here. I expect we see gold higher in the coming sessions, notwithstanding any perceived short term dollar strength. (Remember Minyans, this is not advice). The HUI back at 233 is about 10% off its lows of last month with some exceptional moves in some components. Could well see more strength. High cost producers faring better than most.

Am hearing large physical purchases in Asia with gold at $400 and India still hoovering it up.


Silver For Starters

The fundamentals for silver are, in my opinion, the best of any of the base or precious metals (Again just my humble opinion not intended as advice). We see the violent impulsive moves occurring more frequently that suggest to me that all is not 100% fair dinkum with the white metal. As we draw closer to delivery notice day we should get a clearer picture. I expect this volatility to continue and in fact it could well be a prelude to future movements in size and strength. Chatted to my local bullion dealer here and they have a 6 week delay on 5kg silver bars... (supply is not keeping up with demand; hasn't for nearly 20 years). Base metals are well bid and the dollar holds the key going forward.



Laurie.

position euro, gold, silver

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