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Endurance Races

By

Best wishes for your Mum, Laurie!

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Gold $416.50 Silver $7.30 Wednesday 1 June, 10pm Sydney


G'day. Got lots on the plate down here at the moment on the family front, most of it not all that good, and will be a little scarce in the coming week or two... That probably means that metals will go nuts, both ways, until I get back! ... but... 'twas a wild old night in the precious metals yesterday and I believe we will see more of this volatility in coming weeks. More on silver than gold today 'coz that is where I see more juice. Gold could trade $411-18 for a while and any break down should be very short-lived as India and the gang load up with real metal.

The French "non" vote is no big deal to what I see and I guess the Dutch will also vote to the negative. So what? The Euro is just a piece of paper valued against nothing else than another (very dodgy) piece of paper, the US Dollar. The gold move lower, in dollar terms, hasn't been bad for European gold holders, or Aussies, or most anyone else. My ounce of gold is still an ounce of gold, as is theirs, no matter what anyone votes or says. It will be so in another 100 years as well. I bet a dollar or a Euro won't be.

What we are currently seeing is a bunch of big bets against the dollar being unwound. The pain became too much for some to bear. There is no pain holding physical metal, as long as you hold it for the right reason.

I wouldn't be surprised if we have a very violent short covering rally in Gold in the coming few sessions, maybe back though to $426. That being said, one can't discount a move back below $400 to that $393 level. Lots of physical will be lost to Asia should we see such a decline,, though I believe it would be temporary (not advice).That silver rocketed from $7.12 to $7.45 in an hour yesterday shouldn't have been too surprising for anyone watching the physical market.

The lease rates in silver are significantly higher than for gold. Why? 'Coz there isn't much real silver around for "physical delivery." Why should silver borrowing cost be over 10 TIMES what gold is for a year? 'Coz there isn't much silver around. There is more above ground gold than there is silver, at present. Official stockpiles just don't exist like they used to. From 1989 till 2003, silver never averaged higher than $5.50 for a year. The US Government stockpile was erased in that period and used by industry. Yep, that was over 1.5 billion ounces of silver, gone. No wonder the price was comatose. But that's gone now and we will soon see what happens when a supply deficit of many millions of ounces per annum must be corrected. Hmmmm.

Most of Comex's 105 million ounces are NOT available for delivery. For what is available, it won't take long for someone with the will and the dollars, to take it all! I think it was last Wednesday that I said "The dollar has nuthin' to do with silver." I will repeat, for those who may have missed it, but with a little twist. "Silver has nuthin' to do with the dollar." The answers to what's happening in silver are hidden in the small physical market.

Sure, we're gonna see days where the paper price gets hammered, but there is no way production of real silver can be ramped up to fill the rising demand. Paper silver is easy to create but hard to deliver! Silver is basically a by-product of Lead, Zinc and Copper mines. The stuff just comes out as part of the process of base metals extraction. Pure silver mines, ones that can seriously affect the market, will only come on stream in a few years when we see $10++ silver prices, in my opinion. Mexico and some other South American countries are where all the action will be.

Pan American Silver (PAAS) and Silver Standard Resources (SSRI) are the "must haves" in my view, and of course that's not advice, just sharing my thought process. Coeur D'Alene (CDE) and Hecla (HL) are also worth a look but I only use them as speculative plays, not core silver holdings. CDE management has pi$$ed me off too many times in the past to ever regain my trust, and Hecla is just not my cuppa tea for the long term.

Copper may be in for a bit of a caning as well as a few of the other base metals. Oil is still sitting north of $50, so it just got heaps more expensive for the Europeans. Hmmm.

You know how I said the other day that it never rains but it pours! Well, to illustrate - Lisa and I have the Department of Immigration Interview tomorrow at 10 a.m. I think all our ducks are lined up but we are taking four concertina files of paperwork and "evidence" along with us - "just in case." My Mum is headed to hospital for double by-pass surgery (of the femoral arteries). I just learned that my 2 kids are heading to Queensland to live with their mother (1000 miles away). My Dad's company is involved in a big legal stoush with a client that could go either way. The wrong way will wind up the company he built over the last 40 years. Like I said earlier, there's a lot of balls in the air that are being juggled down here at present and I will contribute as and when time allows. My job is hard enough with a clear mind, let alone all this, so have had to cut back my commitments a little, everywhere. My apologies to the Minyanship but I expect to be back on deck in no time.

Meanwhile, my other little brother invited me to come and watch him race his "Kart" in a leg of the Australian Pro-Kart series the other week. They do endurance races of between 6 and 24 hours. It was pretty exciting to watch and I was itching to have a go. He came second in Australia last season. They do about 100 mph and are about an inch off the ground. It looked pretty easy to me. Anyway, after watching him do a stint on the track, I pointed out to him that he "could've taken XYZ if he had done something a little differently." The reply was swift. "What the faark would you know? You've never even sat behind the wheel of one of these things." I said straight back to him, "Yeah, well I've never been a girl either, but I know a good sort when I see one!" Anyway, his team is racing in a big 24 hour race on the Queens Birthday long weekend in two weeks, and "big mouth, big brother" is in the team! Maybe Mum better book a double room at her hospital!

Enjoy the day


Laurie

Position in gold, silver, PAAS, SSRI

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