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Immigration Frustration


Good luck Laurie!

Gold $427 Silver $7.06 Tuesday 19th April, 11.45pm Sydney

G'day. The Amex Gold Bugs Index (HUI) bounced somewhat off that 180 level and I get to keep my strides up for another day or so. I note we slipped about 3% higher last night but this is still some 40% off last year's highs and, quite frankly, the world is fundamentally more gold friendly today than it was then. So what gives? Much of the lack of support or follow through in any rally is that many see a U.S.$450 gold price as about as good as it gets. Equity analysts have plugged in their numbers (and none are far above that magical figure) to derive their financial projections for different mining companies.

Again, if looking at investing in gold stocks, I look for high cost reserves and production as they give the biggest bang for the buck, when looking at increased margin and return on investment. High convertability of resource to reserve at higher prices gives great optionality. Watch recent dilution and any debt. No commodity price hedging. Management. Sovereign Risk. Currency Risk. Not that big a checklist.

With HUI, we need a little bit of any of the following, and not all at once, either. We need a big sentiment shift (which is a great intangible) away from the paper economy. Maybe the IMF Gold talk being pooh-poohed by Germany will die, although I doubt we've heard the last of that little golden stockpile! Perception rather than reality, will be key to U.S. paper asset performance. There are so many markets at serious crossroads at present, we don't need a "seismic shock" of any kind. A bond market blowout due to people gagging on U.S. Government debt, a hedge fund - leveraged bet blow-up, a property market decline, terrorism, civil unrest at mines, climate extremes affecting crops and other seasonals. Elmer gets crook. There's heaps of risk that is not being fully appreciated. .

News (both positive and negative) from China and its economic performance should be at the forefront of people's radar system. That is one big bugger of an economy and it's churning through base metals and every other commodity like we'd do free beer at The Occidental. Metals sell-offs like this are GREAT buying opportunities, IMO, especially for physical buyers (not advice). There's also a lot of mouths to feed up there in China. Soft commodities should perform fantastically over the coming handful of years. India.. see above.

I think metal stocks need some fear in other markets to get people re-focussed. The whole precious metals world is so small that an insignificant 1% re-allocation of funds under management towards this sector would be explosive. I expect such asset allocation shifts to increase in coming months/years. Maybe that's what we've witnessed these last few months... a re-allocation away from the "hot" sector.

I am disturbed by the recent metal share action, definitely wary of a further push lower and prepared for such an event, but I am mindful of the last 5 or so years of analysis that I have done and the conclusions that I have reached following said analysis, and this is not the time to second guess myself. I have pored over my stuff and can't find a chink in the armour of my fundamental case and where it leads me. Maybe I'm missing something, maybe I'm not. Either way, nothing has altered my opinion of where we are heading for the shiny metals and their associated equities. You all know - way higher than where we are currently, but when, I dunno.

The gold price has been trading in a very tight range of recent weeks and there appears little on the horizon that will jolt it from its lethargy. $422-428 spot has been very solid and I think the risk is skewed to a breakout on the upside, maybe to $434 and quickly to $442? (Not advice.) It has been my experience that many times when people don't think there is much of a chance of something occurring, that's what goes ahead and happens. It would need the "big seller" of recent months to step aside and "reload". We'll just keep an eye on the physical market for more signs, either way.

Maybe, just maybe, some others are noting the apparent disconnect between the dollar, oil and the metals as well as the disgraceful performance of the HUI, of late. Combined with the fact that the physical market has remained so defiant in the face of heavy "paper" sales maybe we're seeing a good solid bottom being placed in here at $420ish, even for paper gold? Sure it provides little consolation but we're looking for the next large move and it all points north, IMO. The downside is very limited. But the fact remains, most everyone in Precious Metals is having a pretty tough old time of it at present. That's just "tough tonka", but I expect this to reverse with some ferocity, but maybe not till later in Summer of the Northern Hemisphere. I don't believe we will be sub 200 HUI for very much longer, in fact would be surprised if we weren't back there by Friday. Maybe I'm being a premature speculator by jumping into some gold-stocks down here, but hey, premature for who? Sure, we should wait for some confirmation, some consolidation over some time, you know all the arguments.... I don't like catching falling knives but there are times that the knife may as well be cold sausage, 'coz it's got about as much chance of cutting you. Some equities are at these types of levels at present, IMO. What gold price are YOU plugging in as a realized sale price for your valuations? Just thinking out loud and never advice.

Silver continues to consolidate around the $7 level for the time being. I suspect we re-test $7.22-25 in the near term with the $6.85 level looming large as a big support area.

Watching the COT reports for any clues in both metals as well.

Oil sub $50 is cheap, IMO, and I'm targeting a $48.70 level to start building a long position, fwiw.

I went down to the local coin man here in Sydney looking for a particular version of an Australian Sovereign for a present for a mate. I need a 1905 edition. He didn't have one. We talked a lot about the current state of the market and he says that there is a distinct increase in people asking questions about gold coins but more so of people who are first time buyers, actually buying. His margin was about 4% over spot and now is closer to 10%. Supply and demand in action again.

Minyan John asked me, as a good Jesuit educated, Irish Catholic, son of an ex-Brigidine Nun , whether I was going to pen a eulogy for the Pope. Nah, sorry mate, that's not my gig but I did note that the current Aussie Cardinal, George Pell, is about 66-1 to be the New Pope. I read a nice horsey description in the SMH a week or so back when just this was the topic du jour. What's wrong with betting on the Papacy??? Anyway, it was about who to look for when having a bet on who would be the next Pope - it will be something along the lines of - "young gelding , by Inquisition - out of Opus Dei". I thought that was hysterical.

I have had enough of this whole immigration thing. Seriously. Everything has to be in duplicate, triplicate or worse. Apparently my passport isn't good enough proof of my citizenship! I need an original notarized copy of my birth certificate. I'm no lawyer, but a valid passport is as good as it gets, isn't it? The Office of Births, Deaths and Marriages is first port of call tomorrow. And that's just one of the "little" things that have arisen, so far, that we need to fix before Friday. Friday is a long way away from where I currently sit.

I've got Stephen Roach on Bloomberg TV. He's bloody good. How can so many not see what he does?

Enjoy the day...

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