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Metal Yabber


Gold $380 Silver $5.80 May 8th, 2004 2am Sydney

G'day. Gold had a very quiet day throughout Asia and early Europe hanging around $386 all day. Silver gave up 15c again in Asia but Chinese bids emerged in London just below $5.80. Then the employment numbers came out and the TV cheerleaders were off to the races. Sure the number looks good at face value but I prefer to let the dust settle and get into the breakdown. I did note that a majority of the gains came in the service sector, which is somewhat expected, but I still query the value of the "production" of this increase.

Gold got hit hard along with all the currencies, and traded down to $382 and after a little resistance tried for a new low below $378 but just missed, at this juncture. The Aussie dollar, Rand, Yen and Kiwi are the major losers. The Aussie was $0.7320 this time yesterday and currently trades below $.7100 and looks like may test the next technical support level that I see at about $0.7070 and then .6945.

Silver again moves lower and looking at $5.60, a level mentioned in yesterdays blurb, and there has been much two-way trade done down here. Seems like very solid support here. This is about a 33% retracement from the highs. Silver should not be so affected by the dollar, but it appears that it is all one way traffic in this market at present. Sentiment is against it moving higher at present, as are most technicals. Only a brave contrarian would step in front of this bus, although it should be noted that the bus has slowed down significantly. Time will tell, but my statement yesterday that we shouldn't see many more 40c days, was a little premature.... and maybe just plain wrong!

I see that the recently reported Bin Laden bounty that is being offered as a reward for some anti-U.S./U.N. actions is denominated in gold. That it is not offered in U.S. dollars or other un-backed currency gives an insight into the mind of the people of the region. Why not dollars or euros?

The Amex Gold Bugs Index (HUI) copped another 3-4% drubbing with all 15 members in the red. This is getting repetitious. I am looking at the numbers for increases in short positions in some of these issues, especially those who have been hardest hit.

I see that the main silver equity issues are lower again across the board, but interestingly we see that Silver Standard Resources, Inc.(SSRI) has dropped from $12 on the open on Wednesday to current level about $9.60. It has risen from $6 in Jan 2003 and topped at $17+ in early April this year. I have previously mentioned the optionality of metals equities and it appears to me that this issue qualifies. Are reserves/resources in the ground valued correctly? I dunno but am certainly kicking the tires and checking under the hood of this issue.

Our old mates at Pan American Silver (PAAS) have not fared anywhere near as poorly, and with much justification. Do some digging, you might just learn something. I did.

The selling appears to have lost some bite and the two metals look a little more comfortable at these levels although there is still a couple of hours to go and we know from previous experience that Friday arvo can be very messy in the metals and their associated equities.

Have a great weekend .... Good luck Minyan Mark.... a Flyers supporter living in Tampa! Now that is a fine emotional hedge, if ever I've seen one... either your team wins and goes to the big one, or you drink free beer at your local for the next couple of weeks. Good deal.


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Positions in gold, silver, paas, ssr, aud

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