Surry Hills Festival
Gold $424.50 Silver $6.90 Monday 9th May, 9pm Sydney
G'day. So much for the $428 level holding solid! That gold cops a $6 belting while the dollar doesn't do much, all on the back of some dodgy employment numbers suggests to me that we are headed straight back to the $428-30 level. Maybe we touch $422 first, but it won't be down there long, IMO. The physical buyers of the world got a nice little bargain today and have, from all accounts, jumped in head first and I expect that any length of time spent down here will see a huge amount of physical change hands. Paper might beat rock in the schoolyard, but it will never beat Gold in the real world of money. Official sales are the only source of gold filling the demand of the usual suspects, IMO, like last week's announced ECB sale. Why any Central Bank would be selling their only "non-paper, non-dollar asset" is beyond my comprehension. I'm pleased that my metal shares held up well, following my physical sale the other day, and note that we have had a $8 fall, yet the Amex Gold Bugs Index (HUI) is actually some 10 points higher. Yep, I'm scratching my head too.
I saw that Prof Succo made mention of the birth-death rate that the BLS decided was appropriate for the month. He is correct in his observations, IMO. Farcical. Who can take seriously any of these numbers that are being announced as "economic fact"? And what about the many commentators who are saying just how good the current economic situation is?? No one is talking about the debt situation or the property bubble or the bond bubble or the massive dollar liquidity that is only delaying the inevitable day of reckoning. I thought Ford (F), General Motors (GM), Fannie (FNM), the Airline industry, blah blah blah, etc. etc. were a part of this "super" economy? It's got me buggered. I must be watching a different game. Enough of that boring stuff.
Silver looks fine to me at these levels and I still see a break of $6.65 to the downside, as somewhat disconcerting, without being terminal. A bust below the $6.35 longterm trend-line would probably be! I don't see it myself, due to the physical market strength and refinery tightness, but hey, I was the one who ran Walker St. naked last week. Unexpected things happen all the time, improbable ones are less common, and then you get a result like we saw over the weekend at the Kentucky Derby. What a quinella!! I see Silver at sub-$6.35 as a similar chance of result, but I'm not gonna bet baring my white old ar$e again. I will at $5.85, though, if anyone wants to take the other side at, say, $8.25, with the bet maturing in 12 months time.
The metal stocks held up well in the face of the spot price mini-capitulation on Friday, notwithstanding the absolute hammering they've taken in the past few months. I note that the South Africans are really getting smoked with Harmony (HMY) at a 4 year low. Gold must head higher or we are gonna see a widening of the supply/demand deficit, as currently there are many, many producers who are just "wasting" their reserves at these prices. Seriously, some companies would do better to stop mining than to exploit their resource for no money, or worse. Supply from Official sales will only need to increase, unless the price rises enough to allow sustainable, economic resource exploitation. That price is not in the $400's, IMO. But which CB would even contemplate it in the current environment, especially having seen the Bank of England's disgraceful reval losses, amongst a few notable contemporaries like Australia, Netherlands, Portugal, Canada et al?
Low cost producers have been hit just as hard as the high cost fellas. Goldcorp (GG) is dragging the shiny stuff out of the ground at, let's be conservative, U.S.$75 an ounce, yet they're still 30% off their highs of last year. Sentiment affects the whole sector, no matter the rationale. Do some homework 'coz there's plenty of fat old targets out there.
The annual Surry Hills street festival took place this past weekend. We wandered up to Crown Street on Saturday as "festival virgins" (following a 6am'er on Friday night, but that's another story again) and we had a great day. It's a pretty trendy/arty/bohemian area and all sorts were out in force. There were about 4 stages with different bands and DJ's and they block off about 4 city blocks for it. Stallholders, food, music and lots of good lookin' people...There are no less than 10 pubs within the festival "boundaries" and it all started to get pretty lively about 6pm. Due to the previous night's shenanigans, we thought discretion was the better part of valour, and headed back towards the apartment which lay one block outside the "boundary." We decided to stop off at the Porterhouse, just for ONE quick beer on the way home. One thing led to another, and another, and another venue, and another and we got home about 2am, I understand. Does that happen everywhere or is it just an Australian phenomena? Mother's Day was a very sedate affair!
Enjoy the day....
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter