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Gold Rush



Gold $419 Silver $8.10 April 2, 3am Sydney

"I guess I picked the wrong week to quit drinking"... Lloyd Bridges in Flying High.

Pass the Vodka! What a long day and it's only 3am... 4.30am can't come quick enough for this little black duck. What a great couple of days in the metals markets. Both camps had ample opportunity to make a few bucks. The bulls chuckled most of the week until 8.27am NY time today when the employment numbers came out (for some) and then the black hole appeared below gold and silver. Wide spreads, combined with funds scrambling to bail out no matter what the price, created a good old fashioned shakeout. I felt the old peanut inside the head rattling myself.

The major issue we focus on here when managing money is managing the drawdowns. Investors don't want big ones or consistent ones. It seems crazy sometimes, having to exit a trade in a given instrument when it flies in the face of your fundamental view. All I know is that whenever I "stop out" whatever it is that I'm trading, it will go straight back and make me look like a goose. Tough, but it's called risk management. At least we had enough in the kitty to still stay positive but not by much.

Did anyone see the number come out on Bloomberg TV? I seriously thought the girl presenter was gonna pee herself with excitement. You wouldn't see that sort of cheerleading at a footy game let alone on a serious financial program. I noted that Professor Succo has dissected the numbers and he surmises that they are nowhere near as flash as the cheerleaders would have us believe. Professor Reamer spells the sentiment out nicely in the Buzz.

Sorry, but I don't believe any of the stats any more BUT the market acts on them so we've at least gotta listen and ACT as though they are real. Am I too cynical because I live a billion miles away? Or is it just the innate Aussie lack of respect for, and distrust of, anyone in authority??

Enough bitching, let's just get on with it..... Gold traded back to about $418 value spot which was just on $11 lower than today's high. There have been now 4 selloffs of greater than $10 in the last couple of months yet no days up of more than $7. I have previously mentioned that gold climbs the steps on the way up, yet falls down the elevator shaft. Weak-handed longs bailed out with a little help from those who desire gold lower. As more people wake up to the inflation mess and start questioning where their pay packet is going, gold will become more in focus. I'm still...

Indian premiums are just on or below legal import level with gold at $427. The fall through $420 just now, could well have been stopped by physical buyers waiting for exactly this event. Those fathers of the brides about to fork out a stack of Rupee, just got an opportunity to save a buck or two. The strength of the Rupee is somewhat offsetting the rise of gold and the Indian stockmarket has been on fire lately. Watching closely the events in India.

As mentioned in the Buzz, some producers seen selling low delta put options on this pullback. Seems like they want to be made to buy hedges back at lower levels if it gets there. They pocket some shrapnel for the premium, as well.(Shrapnel here refers to small change/coins). They must see gold higher for longer by doing these trades. My guess would be Barrick Gold (ABX:NYSE) and Placer Dome (PDG:NYSE) as likely suspects but I'm just having an educated guess.

The HUI was belted some and I was surprised to see no gold stocks on Professor Tuttle's leader board. I guess somewhere else is on the nose worse than gold today but we aren't finished yet and the pattern is for metal stocks to get hammered after Comex closes. The last hour of Comex on a Friday has been diabolical for gold in the past when things are looking shakey. We could see a few more bucks come off late today when everyone else in the world is either at the pub (Asia) or at dinner (Europe)...just my opinion.

Silver has just been a fiasco today. Yesterday's 60c trading range is nuthin' on today. Opening around $8.10, then up to $8.45, back to $7.95 and up to $8.22again. We are currently $8.07. My maths aren't real flash but I get about $1.27 for the day..... or nearly 20% on the day, and it ain't over. That's bloody crazy.

This bond selloff, and believe me I'm no bond specialist, must be costing the Japanese a stack and it can only strengthen the position of anyone at the MOF or BOJ looking at asset allocation and alternatives to Dollars and its associated debt instruments. Gold anyone?

For what it's worth, I'm treating this pullback as a buying opportunity in selected metals equities and even in the physical (not advice just sharing the process).... Looks like Jacqui is gonna score some more of Mr Greenspan's nemesis.

Have a great weekend everyone and I hope your beer is cold and your team does the right thing. I know the Leafs are bound to disappoint me again so I'm not even gonna look at ESPN this weekend.

Ciao till Monday.....

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position in gold, silver

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