Gold $395 Silver $6.00 Saturday 19 June, 3am Sydney
G'day. What's all this then? Gold is rising against every currency today. Hmmm. The expected resistance at $392 was brushed aside by funds piling in on the long side. There appears plenty more buying down at similar levels. Maybe the funds world is waking up to the real inflation story?? The dollar copped a pizzling today, especially against the Antipodean dollars. I still think 1.23 before 1.1925 versus the Euro, as mentioned yesterday. The Yen is a little difficult to get a handle on due to market manipulation, oops, I meant "official intervention" by the BOJ.
Gold had an almighty struggle trying to bust through the $396 level in spot gold. For those that care the EFP (exchange for physical) is running at about 45cents for the liquid August Comex gold contract. Many attempts to push through were thwarted by resolute selling both on the floor and through the OTC market. The converging moving averages at around this level should see good two-way flows. I suspect some late weakness in gold at the close with Europe out and no market open till Monday. Anyone who wants to have a good crack to the downside has another hour left to get stuck in. Friday arvo always has me wary of unusually large, late moves, generally down. (I went into the last hour short, and finished it long.. no way would I go home short gold over any weekend!) FWIW - not advice.
Silver didn't hesitate going through my first target at $5.92 but ran into a wall of offers just above $6. Take these guys out, and I reckon we're back testing $6.20 again. Just remember how quick we came off that level a couple weeks back.
I note Silver Standard Resources (SSRI:NASD) is trading at the same level, call it $11 for ease of reference, that it was when silver was $5.65 a week ago. They are a difficult one to value compared to many other silver exposures, as they don't produce 'till higher prices. Resources are not Reserves. What sort of conversion will eventually occur? Therefore what is the value of the optionality? There are plenty of other intangibles associated with this stock so be careful in any assessment. Unlike someone like Goldcorp (GG:NYSE). If you can count to 10 you should be able to value Goldcorp pretty easily. No debt, no hedging, proven and probable reserves, cash at bank, operating costs known..... hard to value is exploration potential, management and optionality. Have fun.
The Amex Gold Bugs Index (HUI) is taking on some more gains and we are back above 190, having tested 175 on Monday. I think the equities move has lagged the metal move in the last couple of days, especially in silver stocks. The sentiment is still poor so I don't expect anything dramatic happening to the upside, until there is some sort of change in sentiment. That can take a long time depending on the circumstances. It can also happen overnight.
Have a great weekend, everyone. I will be. I have tickets to tomorrow's Rugby International between Australia and Scotland. Drinks start at 4pm, the match at 8pm. That's just about the right sort of warm up for a big match!!! Exceed and Excel, the gun horse from Oz that is across in England for the July Gold Cup, was officially recognized today as our champion 3year old colt. He topped the classifications on the strength of racing and beating the best in the land, no matter what age or sex, but only sprint distances. His contemporaries only raced against their own age at best. Choisir, a good sprinting horse from Oz who went over and won the big sprints in Europe last year, isn't in the same zipcode as far as E&E for ability! Choisir was only rated 5th best 3yr old sprinter in his year group!! Roll on July.
Monday...I have the big Offspring concert here in Sydney so will arrive a little late and a little deaf, I guess.
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