The Golden Years
Gold $387 Silver $5.80 Friday 18 June, 3am Sydney
I just want to say that I miss you
and I've felt pitiful since you've been gone
I'm just trying to say I need something I can lean against
So I'm going to steady myself on a reliable friend
There's a truth begging to be told
as the blues grab and take a hold
And I just can't believe when i wake up that you could be gone
-Powderfinger - taken from "Since you've been gone" off their Vulture Street album.
G'day. Music sucks sometimes. More so, when it's from possibly the best album ever released by an Australian band. (and that's saying something coming from someone who scammed into a Midnight Oil pub concert at age 14). My girl arrived back in North Carolina safely. Ok, enough of that, so what's been cooking in the precious metals today?
Gold ambled out of the starting gates at $384 as the sun came up over Sydney Harbour. Watching that each morning is one of the small joys of sitting up all freaking night (one would usually only see it through Fosters' Goggles). It steadily climbed to the $386.50 level throughout Asia and early Europe and hung around waiting for the PPI. PPI comes in higher than expected and we popped for a few minutes up to $388. It then dawned on some gold market players that higher than expected inflation and consistent rises in inflation is BAD news for gold. Bop... back to $385. Inflation is bad for gold!!! But only in this current instance, because it has NEVER been the case in any other period of man's existence on this planet. It's got me stuffed that the inflation is being so casually disregarded as an issue. It is THE issue. Currency debasement hits everyone, hard.
I was watching Bloomies and they had a guest, some Fed dude called Braddus or something. I only gave a cursory glance at the screen so didn't fully get his name. Interviews with Fed officials make my eyes glaze over and I feel like throttling somebody, so I kinda just tuned out... (although the lovely Monica is always reason to keep an eye on the tube). Then I heard something that got my attention. The Fed dude said something like..." we remember the pain and ??? of the late 70's and what that did to us... We don't want to go there". (paraphrased to the best of my sloppy memory). I thought to myself "and what the @#*% are you guys doing to avert the same thing??". Not a bloody cracker, just pouring petrol on the flames. Everything that I see parallels that period from the geo-political to the financial, except this time it's on steroids. Bigger, badder and meaner.
I talked to my Dad about it all and he said it was horrendous. I wasn't really old enough to grasp the severity of it all. He sees it coming, fast. He's a 64yr old architect, self employed, married but with the kids all out of the way. He's taking the appropriate action. Wealth preservation, not creation is his go. Older people are the most at risk. They can't work another 35 years to "get it back" like we can. That's why I listen to old people these days, people who have been there, seen it and lived it. I guess that 75% of financial market personnel are under 50 years of age. That's a lot of people who haven't seen the @#&% hit the fan. (and I don't mean to imply that 64 is real old, sorry Boss.). What are the "old dudes" of the market saying? Buffett, Rogers, Soros, Gross, Templeton .... Yep, they lived it too.
Anyway, gold caught some bids around the $385 and then everyone just turned to the currencies for guidance. Looks like we are now in a $382-392 range for the time being. There appears plenty of selling above, yet all attempts to break it lower have found robust support. A nice battle is developing, with pressure building all the time. It will pop like a zit at some stage. Gold is a currency all of its own and it is my contention that we will see a flight to the only true money and it will rise versus EVERY piece of unbacked paper, no matter how pretty the paper looks. The Euro is under pressure testing 1.20, why, I couldn't give one logical reason, but it is and that's what we must deal with. I reckon 1.23 is closer than 1.1925, FWIW and never advice.
Talk of the Gold ETF in NY, is resurfacing. Will watch closely as this could ignite more demand from "the people", as they can get an exposure at fair prices. Pity that it is still just more paper gold, as it is a claim on gold that someone else's performance determines if you will ever get it in your grubby little mitts. Physical gold ownership in bar, coin or jewelry, in your own possession is the only default free holding you can have.
I spoke to a mate who works in a large brokerage and it still amazes me that he can't buy a bar of gold in Manhattan. You'd think that the World Gold Council, HQ'd on Madison Ave, would sell gold bars. Now isn't that a novel idea? Lifting gold's profile and investment advantages / characteristics is their charter. Producers actually pay a percentage per ounce of gold they produce to the WGC. Dunno who is the bigger goose. Those that pay the fees or those that take them. I suggest the former.
Silver is very skittish. The old stairs and elevator scenario still haunts it. Consistent and steady climbing in price then boom, down a lot. The selling seems to gain serious momentum yet the buying just grinds away. Still expect the $5.92 level as previously noted. Well, just to make a fool of me, the silver price just went up to 5.92 in a few minutes. We were at 5.73 early in NY. Big short covering in a skinny market. My shorterm signals are all blaring "overdone" here. That's very short term. One particular US investment bank went hunting stoppies and got them, without firing many bullets. Big bids on the floor scared away the sellers. Its been a while since we had a 3.5% up day in any metal! The Poms are all watching the soccer so maybe they haven't seen the move. Let's see what happens at halftime. I only support two international teams... Australia, and anyone who's playing England! Go Switzerland.
The Amex Gold Bugs Index (HUI) is clawing back some of the last weeks 10% downdraft. There seems to be solid support around the 170-175 level. Fibo's come into play a little lower. The volatility of some issues is astounding. A 60c hi-lo range on a $10 stock is great trading if you get it right. I think there are some very serious opportunities out there in metal equity land for people who do a bit of digging and find their diamond in the rough. Believe me, there are plenty of "fools gold" companies out there. You'd think the move in silver wudda flowed through the equities but they are up less than the actual metal. Stain & Silver Resources (SSRI:NASD) is up 2.75%, Pan American Silver (PAAS:NASD) 2.5%, Hecla Mining (HL:NYSE) 1.75% and Coeur D'Alene Mines (CDE:NYSE) 2%. Silver, the actual metal, is up 3.5%... so much for leverage to the price. Go figure.
Gold is dragging the chain today ... silver is on fire... why today? More questions than answers, sorry.
Gotta fly, have call from North Carolina to take......
Enjoy the rest of the day... mine's getting a little better... metals higher ... and a phone call, dunno what makes me smile more.
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