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Mining your markets


Those boots are quite a croc Laurie

I was saddened to read this morning about the Spain bombings, as we have a total communications blackout whilst on the annual fishing trip. Condolences to all affected by such outrageous violence.

A week fishing for trout in NZ is a great mind clearer although those bloody fish are more frustrating than trying to hit a golf ball straight. Between the four of us (all commodity traders/ex-bankers) we jagged about 30 trout, the biggest about 8lbs (we don't count anything under 4lbs). I have photos to prove it!!! The South Island is really something and any Minyans who get a chance should head down that way. They've even got gold mines!

So I'm trying to put the pieces together on the commodities markets and the most immediate reaction I have is that gold has gone up in basically ALL currencies since I was last logged on. Silver just rocks on and hit a new high for the move whilst I was tangling up fly lines.

Physical buying has waned somewhat in India this week with premiums reflecting a lack of buying. Dunno why and will have a dig around and see what comes up. There was an Indian family on our plane from Christchurch back to Sydney, probably 3 generations, possibly 4. The first thing I thought about was gold, for the first time in 6 days! My friend, who flew in from North Carolina for the fishing, remarked at the color of the gold jewelry that was so visible on the ladies (and there was no shortage of jewelry, believe me). It was the gold purity, I informed her. 22 Carat looks so much brighter than the usual 9-14 carat rubbish that gets passed as gold jewelry in our shops. I was astounded how many gold chains and earrings and bracelets and stuff these women were covered in and I smiled as I thought,"there's another 400 million Indian women who are after just the same stuff". Best I buy a few more little gold bars for the kids and stick 'em away. Just my opinion mates.

Physical gold is real. Paper gold is just that. The physical market seems well supported in the mid 390's with a couple of tests lower being met by resolute buying. Seems to me that there is someone sitting on the topside of gold just above $400. Maybe a Western central bank is dishing off some as they always seem to dish off reserves at precisely the wrong time? They've got form, you know.

Dr Kurt Richebacher, one of the economic guru's of the world, in his paper of 03/09/04 entitled "Pulling out the Rug" at (see DR archives section) gives a compelling number of arguments all pointing to a serious dollar rout. A must read for those serious about economic reality. Readers will note many similar threads to what our own Brian Sullivan espouses. Ignore Austrian school economics at your peril.

I note the CRB index is up about 2.5% since I last looked and Crude Oil is nudging $38. Any wonder we haven't seen any PPI numbers from the Bureau of Labor Stats for January or February. The massive moves in commodity and input costs (CRB up nearly 12% since 1 Jan 2004) cannot be ignored and any moron can see that the PPI will be up some 5% per month for this year. Industrial metals index up 60% in the last 12 months. Steel prices are busting out topside. Let's hope we don't get a big drought/flood/famine and compound this real asset inflation with a big agri-boom. Ouch, and I bet no-one is keen for that to be reported to the general populace. Remember, there's no inflation, just ask Chairman Greenspan. If there was inflation there'd be wage pressures wouldn't there? And increased welfare payments and all sorts of nasty things that can't possibly be afforded. Hmmm. I guess we'll just forget about CPI going forward, as you could imagine what sort of number would throw up if you add in education or medical....oops, sorry I forgot the hedonic deflators that make 10% pa inflation appear at 1.5%. Great work if ya can get it. I'm no economist or even close to one, but something appears to be out of whack somewhere.

I see on my return a record trade deficit for the US. Debt is still exploding and I read somewhere that some agency that tracks US Household bankruptcies reckons that 1 in 73 households in the USA have filed for bankruptcy. Now that's frightening especially as bankrupts generally don't go out wildly consuming, as Greenspan and Pals would like.

I see the HUI index(AMEX Gold BUGS Index) is off about 5% the past week. And about 20% off its highs of early January. Does this make sense after reading the previous paragraph? It's my contention that it does not.

Gonna take a day or two to get back in the swing of things here so will have something a little more substantial in a day or so. I won't go so far as to say that it's good to be back, I'd rather be fishing the LaFontaine or the Ahuriri, but I will say the next 12 months are gonna be wild for everyone. Hang on tight.
No positions in stocks mentioned.

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