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A Day at the Races


Thanks Laurie!


Gold $424 Silver $7.06 Wednesday 6th April, 11.45pm Sydney

G'day. Thanks to so many members of the 'Ville for their good wishes for my Dad, much appreciated. A few even had some experience either personally or through relatives, which were most comforting. That was very much appreciated, thank you.

Gold was pretty quiet again this past NY session and that didn't change much throughout the Asian and European shift. Gold looks stuck in a tight $428-422 range at present, with very limited downside, IMO. It was noteworthy that silver again held above the $6.90 level and has returned to the plus side of $7. I think we will see resistance between $7.17-22 as we prepare for our next assault on the major resistance around $7.45-55.

The Asians have been busy little buyers of physical gold down here (not that they stopped when we were trading above $440). I mentioned a few weeks ago that Singapore, Hong Kong, Thailand, Philippines, Korea and Vietnam were heavy buyers based off what my people on the ground were seeing, hearing and feeling and now Reuters reports Malaysia has also joined the party. India never left the punchbowl. Why would these people want to buy gold when it appears every other "sophisticated economy" wants to ditch the stuff? Maybe the 1996-9 Asian Currency Contagion is still fresh in their minds. Koreans still recall their Government passing the hat around asking people for their gold trinkets and wedding rings to "save" their economy.

Lisa just walked in from her Gemology Institute of Australia course and just got her first written assignment back. She only scored 24 ¾ out of 25.You should see how happy she is, she reckons it's the closest she's ever been to perfect. I disagree. I've got metals, she knows rocks, a nasty combination. This had better not end up in a jewelry business! I hear a red wine cork being pulled. Hmmm.

The on again - off again IMF gold revaluation/sales continue to make waves in the press. Who gives a toss? The demand for physical, especially by those looking to extricate themselves from their massive dollar denominated asset holdings, will suck it up in minutes if the metal ever actually sees the light of day. Vested interest talk, politics, conjecture and uncertainty can affect sentiment, so we should still be mindful of the "overhang" that IMO doesn't exist. The fear of pain is often more hurtful that the pain itself. An old mentor of mine always said "don't worry about it, it's not worth it". He expanded on this one day and said "95% of things that people worry about don't happen. The other 5% you can't do anything about, so don't worry, it won't change the result."

The Amex Gold Bugs Index (HUI) didn't grab back that 5 point loss from Monday, as I had expected. I did like the little 4% jump in Golden Star Resources (GSS), though. It appears that GSS has a little trouble at the $3.20-30 level so keep an eye on that level if/when we get back up there, for anyone interested. It seems someone, a private fund, is pretty bullish, though. A new 4 year funding at Libor plus 275bps(ish) or equity at $4.50. Hmmm. I don't like dilution any more than anyone else, but if the financing is at fair levels and the dilution occurs at a 50% premium to today's stock price, I can't argue too much. Those fresh funds had better be put to good use and results will be very, very important.

I expect we will see somewhere closer to $5 over the next few quarters as they iron out their production difficulties, notwithstanding a gold price down near $350. Anyways, they'd better clean up their act and deliver the goods over the next little while or else they'll be sin-binned. Opinion only as usual.

The big strikes in South Africa are an uncertainty that hasn't been fully appreciated, either in the spot market, where a significant proportion of global production may be lost, or the equity market for certain stocks. Just keep in mind that lost production doesn't hurt a company as long as they can service any debt or other financial commitments during such downtime. The gold is still in the ground and therefore shouldn't affect the company's stock price, which is only a reflection of reserves minus commitments, plus some optionality. Harmony (HMY), Anglo (AU) and Durban Deeps (DROOY) are my favoured exposures at present, all for different reasons and risk profiles. Never advice and things change so we don't get married to a position.

There were a few good things on the weekend down here before Sunday night. Lisa and I took the kids to Royal Randwick for the big raceday. We had the picnic blanket all sorted and had a great day out on the lawn. My little Jacqui, 6 years old, knows all the jockeys and they know her, as she always gives the jockey of any of our nags a kiss before they get legged aboard. Her favourite jockey is the rider of Grand Armee and she was bold enough to tell him to "let Vouvray win", as she is the little sister of our own Jactris - so named after Jacqui and our mare's dad - Sir Tristram, the greatest ever in the Southern hemisphere.

We had a great day with the kids hitting the jumping castles, pony rides, ice cream vendors, bookies and more, all in 30 degree heat and with a crowd of 30,000 people. It was pretty easy on the eye as well, with lots of ladies all dressed up for the day! Jacqui has decided she wants to be a jockey! I think the genes may preclude such a vocation.

Did I just hear Greenspan say what I thought he said about Fannie (FNM) and Freddie (FRE)??? Hmmm.

Enjoy the day.

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position in gold, silver, gss, hmy, au, drooy

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