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Commodity Conversation

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Gold $418 Silver $7.63 Oil $37.75 11am NY 22 March 2004


"Fearful people act much differently than greedy people"... Professor John Succo, Minyanville Buzz and Banter, 22 March 2004

G'day ... Reckon we are gonna see a bunch of really scared people running around in the coming couple of years. I noted the other day that all these "experts" were on Bloomy TV and they all had all sorts of analysis over the past 10-15 years and they could justify bullish anything based off their "analysis". I contend that this is seriously flawed analysis. The sample period at issue is one secular 20 year bull market. These people have never seen a serious bear market let alone one like I fear we are in. Analysis must be at least since 1971 and preferably way, way longer to take in ALL market scenarios not just what suits your story at the time.

Capital preservation is a VERY different game than investment / speculation. Human nature is a marvelous thing. Fear, in matters of money, sends people down the risk curve. Physical gold is the only financial asset in the world that is not somebody else's liability. You either own it or you don't. That's about far enough down the risk curve for me. Watch and see what happens when a few others wake up and move. Then more. And more. So much paper and so little gold. Kaboom. (That's scientific speak for it goes up). IMO.

Well, a nice start to the week. After Friday's attempt to break down gold in the mid morning, the bulls absolutely rejected the bears advance and the close was pleasantly bullish. Those Friday moves can become a worry in light of past bear raids and their timing. All in all the weeks close in commodities was pretty impressive, so long as you are not short.

Gold rallied in EVERY currency except yen last week... who cares about the yen when it's so blatantly manipulated for essentially no effect!!! How many $ billion do these clowns intend to keep throwing at the dollar? At a current running rate of close to a trillion bucks per annum, they are certainly peeing into the wind. Silver rallied over 7% in the week. Oil is still pushing $40 a barrel, the CRB index up a couple percent as well.

The equity markets are copping a few uppercuts but nothing compared to what it deserves, from my perspective, but I've been waiting a year or so for the continuation of the bear market in stocks so I am used to plenty of false starts. This one may have some legs though with the economic fundamentals confirming that the excessive optimism inherent in the current equity markets, is exactly that, excessive optimism. It all comes down to timing. Just my opinion and I've been wrong lots before so do your own snooping and analysis. Don't rely on someone else's opinion when it comes to your money. You are just as capable of losing your money all by yourself, so why pay someone fees for the privilege! But I digress......

Gold was pretty hot straight outta the blocks today. Asia took us up a couple in thin trade and even some of the Aussie gold stocks finally got their skates on and had a little run up. They have been the forgotten gold stocks in the world with many well below (30-40%) off their highs of last year. Sure the Aussie dollar is up, but gold is gold, remember. Worth looking at for those who may want some ex-dollar exposure and in a go-to sector. Just my 2 bobs worth. London shuffled higher as well.

Gold broke higher on the Comex open and hasn't looked back since. Targeting another run at $422 and I would be disappointed if we don't see a new high for this move, all things being equal, but we know that as soon as you think you've got this little sucker all sorted out it turns around and bites your arse. Nothing would surprise me.

Silver ... how cool is silver?? Looking for a possible pullback to $ 6.90ish but wouldn't hold my breath waiting for it. Looking for consolidation in silver equities before re-launching the silver bullet. The regular suspects like Hecla Mining (HL:NYSE), Coeur D Alene Mines (CDE:NYSE), Silver Standard Resources (SSRI:NASD), Apex Silver (SIL:NYSE), Pan American Silver (PAAS:NASD) could start to rumble again soon, probably on a break through $8. Lots of people saying... "can't buy em, gone too far already" ..blah,blah,blah... expensive today could be way cheap tomorrow, who knows??? I certainly wouldn't want to be trying to get silver stocks back when this thing starts to shake up again. For me, it's just a matter of patience and observation. In this instance, I'd rather a case of premature speculation (getting long too early) than premature evacuation (shorting). I guess we will see over the next couple of months.

The HUI is again kicking it around again today. Up another couple percent with Goldcorp (GG:NYSE) and Golden Star Resources(GSS:NYSE) leading the way. GSS is up over 20% in the past 5 sessions. This is not a speculative 10 cent exploration stock but an emerging mid tier producer with market cap of nearly a billion bucks. Who's doing the valuations on these companies??? Examine this stock performance versus the gold price and one will note instances of disconnects between the stock and the gold price. I watch the short interest in this stock very closely.

Not advice, just some incoherent rambling from down under at 4am....

I saw the NC State Wolfpack basketball team play some other Uni team on ESPN this morning .... 11 points up with 3 minutes to go AND LOST???

"24 hours in a day, 24 cans of beer in a case.. Coincidence??? I think not!" -- unknown.

Cheers


Laurie

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