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Commodity Corner



Gold $420 Silver $7.66 March 29, 2.00am Sydney

"Why does everything say MADE IN CHINA"??? .... Jacqui McGuirk, Age 5, March 27, 2004.

Out of the mouths of babes.... My little girl went to a birthday party for one of her mates on Saturday. You know the deal, 20 little people wired on too many lollies, cakes, soft drinks and stuff, running around madly, playing with their mates.... and then they throw up. Anyways, over here the party kid hands out a little bag of goodies when the party is over for their guest to take home. In Jacqui's take-out bag were some jelly babies, chockies and stuff and she also got a plastic flower "lei" to hang around her neck. She read on the tag that the "Lei" was made in China. She checked a few other little things and they were all made in China. When we got back home she went looking for something made in Australia or America. We found only a couple of things made here. She asked me, why? International trade and finance is a little much for her at present but she got the idea. She reckons the Chinese must be very nice to send all this stuff over here for us to have. Hmmmm, 5yo kids have such an innocent view of the world. (She also explained to a friend of hers what I do for work... "My Daddy goes to work to get the gold up and to get Mr. Greenspan in trouble". Obviously she's been listening to someone !!)

Gold went up in basically every currency again last week and briefly nudged the $425 level. Significant fund buying was seen and despite some attempts to break gold down we closed again above $420. Retest of the $432 level could be imminent but hey, it could test your nerve first. Silver hung in over $7.50 and looks set for higher (my opinion - not advice). Oil went down a little, for the time being. The CRB, the shopping basket of the world, was down a percent or so but is up about 10% so far this year. What inflation?

A small selloff of gold late in London to $418.75. Only very thin and don't think it has legs. Opportunity for someone to smash it down though. Let's see what gives in the next hour or so. There have been no currency moves to talk of that would affect the gold market with the Euro, Sterling, Cad and even the Aussie and Kiwi all pretty stable to up. The Yen... who cares? That was a rigged game that appears to be drawing to a conclusion. Billions thrown at a currency to achieve nothing. The bonds they bought over the last few months at 3.70% look a little dodgy as we push into 4%. Did they honestly believe that this could have any other outcome?

The big news for mine in the past few days has been the announcement by Norilsk Nickel that they have purchased a 20% stake in the world's fourth largest gold producer, Gold Fields Ltd (GFI:NYSE) of South Africa. Norilsk is Russia's biggest mining company. I find this very interesting when taken in conjunction with the fact that Russia has significantly increased its gold reserves and raised the proportion of gold held as Foreign Currency Reserves. I noted that Aeroflot will only accept Euro's for payment for tickets. The US dollar doesn't have the same appeal in Russia as it used to. I wonder why? Maybe Fed Governor Ben Bernanke can shed some light on that one. Telling the world that you will run the printing presses to get out of financial strife is not conducive to confidence in a currency. I think this is a very telling move in the grand scheme of things. Japan have intimated they are assessing their reserve allocations and who knows where gold goes if they up the proportion in their reserves. My guessis it doesn't head south! Just my opinion as usual. Note the Rand rose some 2.5% versus the dollar today. Maybe they had to buy Rand to pay out Anglo? I wouldn't think they'd be silly enough to have not done their currency trades before announcing the deal. I'm not a fan of the Rand at these levels but someone else obviously is. Oh well, I've been wrong before, let's see on this one.

I see Citigroup just put out their latest gold pontifications and Tech analysis. Note the long term projections for Newmont are still in place and target $150 per share. Crikey, that would put a smile on my dial if/when that comes to fruition!

Gold stocks look a little anemic today although I still think we are yet to see some explosive moves in most smaller producer/explorers as the "big boys" go looking for reserve replacement. Volatility is pretty scary in some of these stocks but patience can be very rewarding. I note one of my little puppies shot up 20% this morning. Keep an eye on the corporate activity and watch who the "big boys" are taking strategic positions in and their location. It's always good to know who "the neighbors" are and what they are doing.

I guess the college basketball thingy is nearly over so everyone can concentrate on the Maple Leafs winning the Stanley Cup this year... I know they're chokers, but I get a bit antsy when people compare them to the Red Sox... Gimme a break, we're 50 years ahead of them!

Enjoy the rest of the day...


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Positions in nem, gold, silver, crude oil, euro

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