Gold $417 Silver $6.95 Monday 23rd May, 10pm Sydney
G'day. I thought it was very interesting reading Professor Reamer's analysis in "The Whopper" on Friday. He looked at the performance of the Federal Reserve regarding price "stability" of the US Dollar over the last 90 years. He used one 1913 dollar and multiplied it by the "official" CPI over the period. It grew to $19.66 and he deduced that the dollar had lost just under 95% of its value over the period. That's not a real flash advertisement for the Fed's ability to maintain "stability or value". I would contend that this is a "best case" scenario, as anyone believing the official data over the last 20 years must have rocks in their heads. All those "hedonic deflators" seriously understate inflation, IMO.
I got the idea that maybe we could use some "real or tangible" things to do a similar analysis and see what it coughed up. Back in 1970, an ounce of gold cost US $35. Today it costs $420. The same ounce of gold and the same pieces of paper. You don't have to be a rocket scientist to work out that the dollar has not been "stable" and that Governor Kohn's remarks the other day regarding Central Banks and their "good work" are disingenuous, at best.
The US dollar rally is the talk of the town these days. Fair enough too and I dunno how much more it can rally, but nothing would surprise me. We do know, however, that the physical gold market is enjoying this sub $420 period. Maybe we head back to the '05 low of $410, and there's plenty betting we head south of $400. I'm just watching what's happening in the physical market and it's as strong as a mallee bull. Gold has been very stable in currencies other than the US dollar, in fact, a quick look at gold in Rupee terms will show why India is soaking up a heap of metal at present.
Silver copped a drubbing late last week and I acknowledge that there is a risk we see it trade back into the mid $6's. Again, the physical market suggests its not heading very far south in a hurry, but paper silver is a funny old beast and we can't discount anything. I do think that we'll get some more chances to pick up some cheaper silver than $7, but I don't think it will be too long down there. There is just too much demand for real silver.
South African gold stocks are catching some bids and I note that Harmony (HMY) is up near enough to 13% in Jo'burg today. I expect this will soon be replicated across the whole sector which has been slaughtered in the last 12 months or so, but I'm not gonna hold my breath waiting.
Comex opening has been uneventful, to say the least.
Tomorrow at 9.05am, our latest thoroughbred "hopeful" hits the track in an official barrier trial at Rosehill Gardens. A very powerfully built bay filly that we bred ourselves. She is the last foal of Kirkstall Lane, our very first horse. It's just a "trial" but we will find out whether she can run any good. Australia's best trainer, John Hawkes, puts the polish on Maitrise, and hopefully he has a smile on his dial afterwards. I just hope she can beat the ambulance. (Every race in Australia has an ambulance driving about 200 yards behind the field, in case of fall). An old mate of mine who knows his horses said to me one day... "No one would ever commit suicide when they own an unraced 2 year old. There's just too much upside if they're any good". High hopes but not expectations are more my thinking, as 2 year olds are just babies, still growing in many cases, and I want her to run as a 3-4 year old so I'm in no rush to get her on the racetrack. But, if she goes well tomorrow, she may head to Brisbane for a big race in 4 weeks time. Like I said, high hopes with no expectations! The Preakness winner at the weekend was exceptional and let's hope Maitrise has half as much ability.... Dream on, McGuirk.
It's gonna be a long week.... Enjoy the day.
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