Gold $395 Silver $6.50 April 22 , 2am Sydney
And so the rout continued in silver throughout Asia. My optimistic hope for a crack at 6.55 was granted just after my head hit the pillow today. By the time I had my wits about me, we were another 15 cents lower. Sometimes taking a shower to wake up is a good thing. Either way, the fundamentals in silver are unchanged. Sentiment has, though. It will reverse again, at some point in the near future (pure opinion, not advice), but you can't just sit there and shout that "they're wrong". Guess closer to next delivery dates coming for Comex Futures will be the next focus.
For what it's worth, I have a mate here who has been ragging me out for the past few months about missing out on buying some physical silver. He bought a fair chunk today. He didn't expect to get another shot sub 6.50. The daily chart has a nice channel with base of 5.95ish so maybe we can go all the way back there. I dunno but whoever is selling is very aggressive and may shake us down there. The timing of the selloff is good, as my son turns two tomorrow, and he's a big fan of 1000 oz silver bars! It's a pity there is such a wait for delivery.
I'm listening to Greenspan talking about household wealth. I think he's lost the plot. Seriously. Especially after having just listened to him blabber on about the lack of inflation anywhere in the economy.
Still seeing HUGE physical buying emanating from Asia and the Mid East. Very solid support here and a break of $387ish would be cause for concern on technicals. Indian premiums are way high and suggest that Mr. and Mrs. Singh are loading up down here.
The AMEX Gold Bugs (HUI) has been belted harder than one would expect based off underlying metal prices. For example, in Dec 2003, Coeur D' Alene Mines (CDE:NYSE) traded at its current price of about $5. The underlying silver price was $5.50ish... Is CDE now undervalued because the underlying is a dollar higher (20%), or was it overvalued in Dec last year? Sentiment is part of the equation. You can find many similar examples. CDE also lodged filings to issue more stock. I don't like the opportunistic management, and although they may not necessarily issue more stock, it is some concern. Dilution sucks, but not as much as hedging or taking on debt!
When assessing the metal equities one should be looking at what kind of exposure you want. Gold companies aren't equal and their risk is significantly varied. Leverage is found in high cost/stressed producers and companies with reserves/resources that are economic at higher prices. That's part of the optionality I mentioned yesterday. Security is found in low cost/high reserve companies and should form a core of one's metal equity portfolio. It all depends on your risk appetite and situation. I see lots of opportunities for those that have a good dig around.
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