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'Roo in Headlights


Gold $411.50 Silver $7.35 Crude Oil $38.20 11 am NY

G'day... well that was a fun first 24hrs back in the Commodities markets and things went exactly according to plan for the first time in bloody ages. Must've been the fishing trip clearing the mind. Or just plain dumb old good luck?

The last hour of Comex was intriguing. Very solid fund buying finally got through the U.S. investment bank that was sitting on gold at 403.50 all day. (Someone's sitting on a big old reval loss this morning). The acceleration was impressive with the close on highs and further good volume bids in Access after the close above $407. Macquarie Bank in their daily roundup attributed the last 30 minute pop in gold to "Middle East and fund buying". Follow through buying in Asia took the yellow metal up another couple of bucks and London was basically quiet waiting to head into U.S. economic numbers.

The PPI numbers as published, just don't stack up versus pricing reality. If we don't get a +5% month in Feb then I'm stuffed as to what the hell the CRB index represents. Something doesn't add up for me, but then again I'm no rocket scientist. Think I'll just take the safe route and buy a little more gold and silver, just in case my inflation indicators work a little better than the clowns who expect me to believe there is no inflation. I'll back my hip pocket experience over some conjured up economic formula, anyday. Just my opinion but the numbers are a joke, buying gold isn't.

Gold acted like a roo caught in the headlights for the first 30 mins and then with a little help from a stronger Yen and some dollar weakness versus Euro and others, it popped and ran quickly to test the 412 level. This was a pivotal level on the way down and expect could be tough pushing through higher although as I type the dollar is being hit and gold is trying hard to bust through and run to 415-16 level. Good fund buying again noted.

This is developing into a titanic battle between gold and the dollar and in recent days gold has been the decided winner and it appears to me that gold is gonna go wherever it wants to, no matter what the Dollar or the Euro or Greenspan or Snow or my Mum has to say about it.

Silver pushing the top end of my range at 7.35 and we could well be looking at a double digit silver price in the next few months... just my opinion and I have been laughed at before by people way smarter than us so let's just see what happens.

I note on the Buzz that Prof Succo noted that there is some "weird stuff" happening in gold and that maybe there was some "manipulation" by someone. I have alluded to the trading via my Snakes and Ladders analogy a few weeks back. Prof. Fleck respectfully disagreed. (I can't contribute online at present due to tech constraints down here... our monkey on the treadmill can't generate enough power)...Good stuff talking about this and I'm firmly in the Succo camp on this one. Someone's screwing around in the PAPER gold market. The physical market is supply-demand driven. The paper market is easily manipulated and appears to be constantly. To disregard such is imprudent. Think about Sumitomo Copper a few years back and what they did and for how long. Everyday some Central Bank knob-head manipulates openly the value of a currency. People should have an open mind on this subject. Gold is the financial markets barometer, keeping it quiet in the face of stresses keeps markets calm. How about that strong dollar policy?

Back to gold and reckon we should take a breather here. Rising more than $12 in 24 hours would have old "Weimar Ben" Bernanke scratching his printing press in some concern.

Oil is back in the news. Not advice or anything but I wouldn't discount a 3 figure oil price in the coming few years. It's just dirt cheap and the producers will want more for their oil. A barrel of oil is 42 Gallons or about 160 litres.

Compare the following liquids priced in Aussie dollars: Is oil cheap???

Milk - $240
Beer - $1280
Scotch Whiskey - $4000
Gasoline - $160
Evian - $500
Crude Oil - $50

The HUI is on fire up about 5%. Golden Star Resources (GSS.NYSE) leading the charge up about 10% on the day. Love the green on the screen.

Just popping thru 413 here so maybe we do touch 415 before the close... dunno, but wouldn't feel too comfy being short. Silver touching 7.45... Yowser.

Have fun

position in gold, silver, aussie dollar, GSS

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