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Metals & Mardi Gras


Freedom & Tolerance!

Gold $441 Silver $7.40 Tuesday 15 March, 11pm Sydney

G'day. I dunno about anyone else but this gold price has either gotta go down to $410 again or else the shares have gotta go way up. The shares have been a strong leading indicator of the paper metal price itself. Current market action suggests that the gold price isn't headed anywhere in a hurry. Last night's action with the Amex Gold Bugs Index (HUI) down nearly some 2% with gold here at $440+ is a little disconcerting.

There is a major disconnect between all other commodities versus precious metals. I contend that the downside in gold is limited to around $428-30 at first glance with maybe a test back into the high teens but only on some short term, euphoria induced craziness in other markets.

Oil will, in my opinion, touch $70 before too long yet no one sees this as a serious problem. Goldman Sachs, amongst others a year or two back, suggested that $45 oil would be a major problem for the U.S. economy. Not so now. Why? The economy hasn't lost its dependence on energy. The producers of oil want the same bang for their barrel and they aren't getting it via U.S. dollar priced crude. Maybe people see that a dollar a few years ago is not worth what a dollar is now. Gold, as a barometer of such, isn't flashing too many warning lights. The oil/gold ratio is still way below 10. Not much longer, IMO.

Gold is being eagerly and comfortably imported to India and the Middle East, via Turkey, at current levels. Vietnam, Korea and Thailand are also confirmed as increasing volume buyers. I dunno much about South America and have little contact down there, but this Mexico thing about invoking a silver backed Peso could be explosive. The Canadian and U.S. Mints aren't doing huge runs of silver coins these days. It is nothing to do with demand and everything to do with their ability to source physical silver. The Silver User's Association will be concerned as well(show me another commodity consumer who has a "union" for their buying "protection").

My indicators in the short term for gold, silver, oil and some of the equity indices are turning down yet I think this could be a dummy move. Sideways price action doesn't always prophesize a sell-off and maybe there is a base being built. Silver, for instance has yet to make a new high for this recent run higher. Is drifting around the $7.40 level a bearish sign? I think not. I'm wrong a lot on short-term moves. The long-term (5year) silver chart looks pretty bloody good.

I'm still just getting back into the swing of things here and need to do a bunch more catching up on the last week or so and get the "vibe" back. Something smells a bit fishy in the precious metals at present and the paper market is the only place the "whiff" can come from. Physical metal, in your own possession, is the only safe investment in this sector. No one can alter that fact unless we revert to 1933 government tactics. For those "new" Minyans who dunno the significance of 1933 ... one of my favourite all-time thefts in the history of mankind....

I got a bunch of emails asking about the Mardi Gras here in Sydney and where I had been the past fortnight. I moved apartments on 1 March, and finally, after 5 visits (on different days) by different technicians from various government and private enterprises, I got cable access and internet communications. Then to get the joint all sorted with the wireless setup and all that took another few days. Seriously, this place, Sydney, is screwed when it comes to communications/ technology. I've just lived it.

(The following has all been pre-cleared by my bro' so don't worry about offending anyone)!

The Mardi Gras parade here in Sydney a week or so ago, was a huge event, one that Lisa and I won't forget in a hurry. The theme was Tolerance and Freedom, something very close to my heart. There was some very risqué political satire, some wonderful costumes, loud music and beautiful people parading in front of close to 500,000 people, lined along Oxford Street in Sydney.

My youngest brother, Greg, is a lead performer in the world famous Marching Flags group. Anyway, he very warily and quite sheepishly, asked me (and Lisa) to be the "support crew" for the event. I didn't know what to say. He explained that it involved running water bottles to the "flaggers" at breaks, keeping media photographers and television crews out of their way as they might lose an eye or bust a lens or worse, and picking up dropped flags along the route and getting them back to the person who lost it (in quick time). Not overly cerebral stuff. Surely I could deal with that sort of responsibility! But what if someone I knew saw me in the Mardi Gras Parade!!??

I haven't got an artistic/cultural bone in my body and I always played sports at serious levels. Greg, an architect and artist, was quite the opposite but always got dragged around to whatever games/training/ functions that I was selected for and so on. How bad that must have been for him, I can now, in hindsight, only imagine. Here was my chance to "pay back" 15 years of what must have been a pain in the arse for him. I gave his invitation about 2 seconds consideration and readily accepted. This was about supporting him in something important to him, something that I had never done, and he had never asked for in 25 years.

Anyways, Lisa and I went to their "practice" session the day before the parade (they had been practicing for months but this was our first involvement). It was not dissimilar to any rugby practice or other team sports I had played. This was precision marching/dancing whilst flinging this metre wide material above their heads and all around themselves. After an hour the wrists and arms must be screaming. This from a bunch of Flaggers working as hard as any team sport I had seen! Three hours later, having done their stuff in 35C heat in full kit, had me impressed.

On "the night" we met in the marshalling area about 6pm for a 8pm start. We got to see the parade from the inside as it kicked off. A few beers were handed around along with a lot of water to keep everyone hydrated. Female bikers traditionally lead off the parade and those 200 Harleys are pretty noisy. Many other floats went by and I got a great chuckle watching the John Howard/George Bush effigies going at it on Oxford St.

We were in the middle of the parade as per starters instructions, as the Flaggers are always a big hit with the crowd, with their loud groovy music, colours and energy. It was getting close to our turn to hit "the street". I didn't realize how serious this was. These very dedicated people were as focused and nervous and everything else that any sportsperson going into a big game would be. It was a huge eye opener for me.

Anyways, to cut a long story short, we were on the move for nearly 90 minutes. Off we went, up Liverpool St and into Oxford, then Flinders and finally to Moore Park Rd. The atmosphere was electric. The crowds were incredibly noisy (and touchy/feely). No one dropped a flag, everyone was hydrated and we (oops, sorry, I) only bashed one cameraman. Lisa was a big hit with lots of females in the crowd as she ran interference on the Northside and I am told she looks pretty hot in her wife-beater and cargo pants (according to the crowd). Me, I just did my job on the Southside, got 6 telephone numbers on business cards and an invitation to a resort in Queensland. The brand-spanking new "Chesty Bonds" wife-beater and my old North's rugby shorts are a good look, apparently. How easy was that!

We finished up near the Sydney Football Stadium around 10pm and everyone went on their way to their parties or whatever. Lisa and I went home (about 6 blocks) and kicked back with a nice bottle of bubbles and toasted an evening I never thought I would be involved in. Thanks for asking, Greg.

Sometimes the markets aren't that important.

Enjoy the rest of your day.

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position in gold, silver, oil

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