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Beach Party!


I need a Foster's!

Gold $412.50 Silver $7.50 Oil $37.95 March 19 (11am NY)

G'day ..... Sydney's late summer burst continues, the sun and the beach babes are hot and the beers are cold... oh, and gold and silver are up ... does a Friday get any better?

I keep reminding myself to pull my head in on days like this. The last couple of big down days in gold have occurred after London close on a Friday when volumes are pretty light. Sounding eerily familiar to me. The last hour could be fun for sure.

Indian premiums reflect a lack of enthusiasm for gold following the $10 spike. Expect the ratcheting up of physical buying from India to come as buyers become accustomed to higher prices again as per in January.

Gold appears to be building for another push higher. The Japanese noise about FX market intervention etc. could be a sign for further dollar weakness which could propel gold to new highs for the move. Of course, as I type we see gold off a few bucks and looking a little wobbly for the last couple hours of trade. Concerted selling could drive lower with no other market open in the world except Comex.

Silver shot out of the gates in NY, busting through the $7.50 level and briefly tangoed with the $7.70 level before copping the big stick and retreating to yesterday's closing levels, all in just a few minutes. Signs of stress in silver for sure. The round trip of near enough 50c per ounce (or 6%) gives some wonderful trading opportunities.

Silver equities disappointing performance in relation to current spot changes are frustrating but I think the shares led the commodity up, and we could well see the next leg take similar course. Currently, for example, Coeur d'Alene Mines(CDE:NYSE) shares trade at $7. They were only $1.40 in mid 2003(if you were real good, you could have snagged them at 0.70c at one stage). Wow, they've gone up some 500% and that's great. In 1996, when silver was $5 per ounce, CDE traded at $25 per share. Do your own analysis and see if 1996 was expensive or if 2004 cheap. Remember, what I have previously mentioned about when one wants leverage to a given commodity price, one should look for the highest cost/most stressed producer as they will provide the most leverage to the rise in the underlying. (I only use CDE as an example and could have used any of a number of companies, it's just that CDE is the biggest North American silver producer and as such many of you will have heard of them). Not advice - just food for thought.

Enjoy the weekend and I understand there is some sort of college basketball championship thing happening .... Is NC State in it? Go Wolfpack! (no need to know the reason for my affection for that school.... that's another story altogether)....


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positions in gold, silver, CDE

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