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Metal Derby

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Gold $393 Silver $6.15 Wednesday 5 May 2004, 2am Sydney


G' day. A long weekend for most of us across the globe yesterday and things were relatively quiet in gold although Silver copped a quick 20c selloff in thin US trade, but these losses were quietly and impressively reversed late in the day.

With much of Asia on holiday, there was little action until Europe turned up and sent gold and silver higher. Most discussion centers on the weaker dollar, which is certainly a fair observation. Of interest to me were the reports emerging in the last few days across the wires, of gold imports into countries such as India, Vietnam, Turkey and Pakistan. All are on the increase, some by factors of 3 and 4. This is real, physical gold, which will have to rise significantly in price before these buyers think of selling it back into the market.

Silver looks to have broken its downtrend channel on the daily chart and some consolidation above $6 is expected over the next few days with some big upside gaps on the charts to fill going forward. I see the silver equities today have kicked higher with a 5% gain or thereabouts registered across most that I watch. Gold shares also have had a 3-4% rise with the Amex Gold Bugs Index (HUI) up about the same. I note that some of the stocks that have been hardest hit have also just dropped through the $5 level, which makes margining a problem for some holders. Maybe some forced selling has amplified the move down in some of those stocks.

Don't forget oil price rises ARE very inflationary for the U.S. economy across many varied sectors. Even Sir Alan mentioned it the other day.

Seems like not a great deal happening till Sir Alan and his Fed funsters decide whether "patience" is still required on interest rates later today. Who gives a toss anyway? Rates are going up one way or the other. Either the market will do it through a steeper yield curve or the Fed can do it officially by driving up short term rates...The bonds have already started. Make no mistake, debt is gonna cost lots more shortly in my opinion.


Enjoy the rest of the day ....

I see the Leafs are doing their annual early May collapse ...as forewarned by one who is used to it.... And... What's the story with the Derby??... running in mud and slush... where is the turf??? Horses run in paddocks, not in the desert (or the mud flats). The third horse was the best run of the lot of them....




Laurie
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position in gold, silver

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