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Pedal to the Metals


Gold $420 Silver $7.70 Oil $37ish 1pm NY

G'day... a very narrow range in the metals today. Tight range throughout Tokyo and London and only the NY session giving the metals a little wriggle on. Interestingly India has been notably absent from the buying in this past move judging by the premiums in the major importing centers. So who's doing the buying?

From all accounts and looking at the increases in open interest in the commercials and specs it appears we are seeing the reemergence of some fund buying and continued buying from Asia in general. Maybe this rally has legs although the fast money can scoot when there is a "new" game in town to play.

My partner here at Endeavour, Scott Tracy, has been in NY and Europe the past couple of days talking with some of our investors and prospective investors and all anyone wants to talk about is commodities. There could be some significant "new money" looking at commodities and if so, we could well be on the way to significantly higher levels across the spectrum. Asset allocation changes, even very small, can have dramatic effect especially in markets as small as the base metals, softs and of course the precious metals. A 1% capital allocation shift to commodities in general could be massively explosive to commodity prices, especially with all of "Weimar Ben's" liquidity sloshing around the system.

Gold pushing through $420 at this minute and looks like it wants higher and maybe we do have a crack at a close above $432 which is the highest we have seen since about 1988. Don't worry about what the Fed tells you about inflation and how everything is just fine and dandy.... Gold is saying something very different. Back the honesty and integrity of gold over a printing press every time. But then again, I'm a dinosaur and don't understand the new economy and as for "what is money"... I'm living in the dark ages...oops, sorry!

I see General Motors made $3.2 billion last year. Only $400 million came from selling cars and trucks. The rest came from FINANCE. This is symptomatic of the whole US economy. Sooner or later this will all end in tears for someone. Let's see what happens when the old "underfunded pensions" chestnut comes back to haunt many companies. With a rallying equity market, this cesspool of deceit has been overlooked and dismissed as an issue, but I have a sneaking suspicion that we are gonna hear lots more about these issues going forward. I don't know that others will be able to debt fund their pension liabilities like GM have attempted to.

Silver close enough to $7.70 at the close is a little ominous. Tightness of supply is where I see the issue. The next delivery bottleneck is MAY... roll on double digit silver... but I still think we'll get another crack at sub $7, but you'll wanna be bloody quick.

Just my opinion as usual. Enjoy the rest of your day..... where is that cappuccino???... 5am and caffeine free is not a good look down here!


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Positions in gold, silver, nz dollar

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