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Aussie Commodity Corner


Gold $402 Silver $7.15 Oil $37.90 Euro/USD 1.2200

G'day... Well it appears that there has been some sort of disconnect between the gold and silver price and the dollar/euro. Recent dollar strength has not been reflected in weakness in the precious metals as has been the general condition. Gold in Euro, Aussie and other currencies are rising. U.S. Dollars included. This could be ominous for the bears in the near term. Gold going up versus everything tells us demand is strong. Maybe physical buying has started to take its toll on the paper players. India has been quiet as reflected in their major center import premiums.

Hearing that good bids in gold in Europe from funds has underpinned the price initially in New York although there was some attempt to take gold lower early in NY which failed. I am looking for a solid close although there still appears to be a resolute seller up here at 403ish (just my opinion).

Technically, the daily chart is starting to indicate a turn in the short term trend down from the high of about $430 early in Jan 2004. Holding support of the trendline anchored at the low of $320 in April 2003 will be crucial to the downside risk. I get that coming in at about $395 on the daily. It appears that we could well be pushing 411-12 in short time. Just an opinion and my interpretation of the chicken scratchings that are all over the walls here. Then again some tosser at some currency printing institution (read central bank) somewhere in the world could open their big piehole and blow it all to pieces, again.

Silver has been its quietest in months with a range the past 48 odd hours of only 10c or so. Unconcerned either way till we see 6.85 or 7.35 trade. Looks like we may trade a range for a while, within the greater uptrend.

Oil has been on a tear and looks set for a crack at the $40 dollar title... people should remember we had $40 oil a few years back when the Euro/US was at 0.90, so in Purchasing Parity terms, oil should be close to $50 TODAY for OPEC to get the same bang for their buck. That would suck bigtime for the global economy in general, but specifically the U.S. And let's not forget what that would do to the inflation numbers... What? Price oil in Euro's or gold.. wouldn't that be a novel idea. Someone should think about that. I hear it's been a little chilly in NY the last couple of days. Heating oils popped some. Not a late winter coming is there? Watch the crack spreads in heating and gasoline as I reckon there could be a nice play building there.(The crack spread is the refined product price minus the crude price... the refining margin in other words).

The HUI looks a little dodgy today. Down over 1% in the face of gold's solid performance today in spite of dollar strength. Go figure. There could be some very attractive entry levels in the metals equities for those that expect higher prices of gold/silver going forward. There is some serious leverage to the price for little risk in what I believe is a confirmed cyclical bull market in commodities that could last 10-15 years more. For those who say, this nice rally is all over, enjoy your couple of hundred percent gain of the past few years. If ya don't know, take some wedge ($) off the table or just enjoy the rally in your remaining holdings. I get concerned about a rout of gold stocks like we saw last July/August but I counter that with the knowledge of how small the market cap is of the industry versus the profligate Fed policies of inflation. Human nature will take its course at some stage. Not advice, just the sometime coherent ramblings of a mug aussie at 3.30am!
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position in gold, silver, aussie dollar

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