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The Golden Jersey



Gold $385 Silver $5.72 Thursday 17 June, 4.30am Sydney time.

G'day. It's a low bio-rhythm day for me today. It has nothing to do with metals or markets. Today's QF7 to LA had my girl on it. I suppose there will be some good come of it, the 'Ville should get more input from down under than in the past 5 months she has been here, as there's now no real reason to go home. Ok, enough bitching, let's get rolling.

Gold was again stable all day throughout Asia. Europe took gold and silver a bit lower on currency moves and the market continued in similar vein once New York opened. The dollar retraced nearly all of yesterday's move. These choppy markets can really hurt. It appears that as soon as you feel comfy with a given position, it snaps back and bites your arse. It is amazing how many times a market will just take out your stop-loss level, before swinging exactly to where you were positioned for. The currencies certainly have. Tactics for trading ranging markets are substantially different than those for trending markets. But what happens when you get ranges inside a longer term trend? People get chopped up, over and over again. Time horizons must be shortened significantly and risk must be contained.

India is still active based off the premiums in the major centers although the jump in gold price yesterday has applied some pressure. Let's see tomorrow with gold back at $385ish. I note that the World Gold Council has given the thumbs up to a new promotion concerning Dubai and Gold. (What the WGC has to say is irrelevant to the market - it is a useless organization that has done 2/5ths of buggar all in the last 10 years I have watched them. This is just my very considered opinion and am happy to debate anyone, anywhere on this one. I will let them in on a secret, "Gold is money"... but you wouldn't know it listening to such pontificators.)

On top of already acknowledged large increases in physical demand, it looks like there will be even greater demand in the coming months. We're talking Real gold, not paper gold. Dubai is fast making a name as "THE" center to buy gold and jewelry. See article

"World Gold Council Managing Director, Middle East, Turkey and Pakistan, Mr. Moaz Barakat added: 'This promotion comes on the back of a booming year for the industry in Dubai that saw retail gold sales increase by over 41 per cent in the first quarter of 2004 compared to the corresponding quarter last year.'

'The World Gold Council is totally committed to the UAE market place and we are delighted to be working in partnership with the Gold and Jewellery Group Dubai to offer both local residents and summer visitors a fantastic promotional offer to add to the range and quality of the gold and jewelry on display,' Mr. Barakat stressed.

The 41% yoy increase in the first quarter retail gold sales occurred whilst gold only spent about 15 trading days below $400. What will Q2 look like????? My guess is it isn't gunna be a drop in demand! I hear much the same from many of my contacts in the retail side here in Oz as well as anecdotal evidence from abroad.

Silver was again well supported at the low to mid $5.60's and there looks to be strength to the buying down there. The buyers don't appear to chase it up and are happy being filled at their levels. A big Swiss bank was the swooper who took it back to $5.725 paid in the OTC market. I like seeing the Europeans buying the metals, it gives me the warm and fuzzies.

I note that Silver Standard Rseources (SSRI:NASD) has been slapped a bit the past few days. I guess someone else noted that the previous test of $5.60 had them at sub$9. Last Wednesday, off the same spot rates, SSRI was $11.00. Looks like they've split the difference and decided $10 was fair. Whatever. This illustrates how valuations are so subjective and completely non-linear. Does that mean if we get back to $8.50 spot silver, that they will trade higher than their last peak at $17plus? Sentiment, whilst intangible, has real ramifications. Coeur D' Alene Mines (CDE:NYSE) has been back to the $3.80 low. No surprise at all. I reckon they were a very good trading stock until they got caught up in that corporate crapshoot. The management at CDE has, in my opinion, some very poor form. If they were a horse they'd have been gelded and canned by now. I think back to their ill fated foray into Gasgoyne Goldmines here in Oz about 7 or 8 years ago. What a shocker! But they are fortunate in that there aren't many silver alternatives. (Mum always said "if ya can't say something nice....." but then again everyone's mum said the same thing, I'm sure. But doesn't it scare the crap out of you when you hear yourself say the same stuff to your own kids!!!!)

Never will I give advice, but for your own info and in the interests of total disclosure and transparency, in my personal retirement fund I own Pan American Silver (PAAS:NASD), SSRI and Helca Minining (HL:NYSE). I trade CDE for short term moves in other accounts, but I do not have them in my retirement portfolio. Make of that whatever you like.

The Pistons... how cool is that. I even have my old corduroy cap with the "old" Pistons logo on today. The old "Champion team versus a team of Champions" chestnut strikes again. They don't razzle-dazzle or capture the glory like the Lakers, but when the going gets tough, they dig in and are indestructible. Parallel this with Gold. Which team is Gold? Put it this way, the yellow jersey ain't Gold!!

Enjoy the rest of your day ......


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position in gold, silver, ssri, paas, hl, cde

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