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Don't Stop Believin'



Gold $395 Silver $5.85 Wednesday 23 June, 3am Sydney

"The taxpayer is not here to fund the US Government. The Government is here to serve the US people."... Ronnie Reagan, 1981.

"Big government only looks good in the rear vision mirror as you drive away from it".. Ronnie again in 1982.

G'day. My hearing is a lot better today. I even caught a doco on Reagan on the history channel from which I scribbled the above quotes as best I could remember them. It's only 20 years ago that he said this. Look at what has happened to the size of the government and its agencies, all funded by taxes and foreign debt. What ever happened?

Gold was tightly range-bound today although a little spike late in Asia on some short covering, pushed it back above $395 for a brief period. The AM fix in London was set at $394.60. Obviously there is interest in physical gold at current levels. Silver popped a little to $5.87 in Asia and gave it back in early Europe. New York will again provide the tone for the next 24 hours. Silver back at $5.90 makes a little more sense and not unexpected after yesterday's drive lower in such spectacular fashion. Someone should be really pi$$ed off with the execution, although we will explore that a little later in today's blitherings. Back now at $5.85 at noon, NYC.

India has pulled their heads in with gold up here but silver is still a goer for them. As mentioned yesterday, it appears a big gold sale in Rand terms was effected around 9:30am NY. Three very different sources have intimated such although no concrete details have been forthcoming. ...anyway ... I would not want to be owning anyone hedging gold, in any currency. It destroys the very substance of why one owns a gold equity or exposure to a goldmine. The optionality is eliminated. Clowns!

I see Canada's CPI came in at 0.9% increase for May. That was 50% higher than expectations of 0.6%. Annualised, that's 10%+ inflation. It's just another country with crazy inflation rates that are beginning to appear, no matter what the measure. The clock is ticking now for some fearsome interest rate hikes by central bankers everywhere, just to "prove their vigilance". Rate hikes won't kill inflation quickly, it can't, not when nearly $200 billion has been spewed forth in the past few weeks, with no sign from Sir Alan of turning off the taps. Rate rises will be much faster killing the recovery, the consumer, the property bubble, equities blah, blah, blah ..... need we go on?

Heard an interesting take, from an OTC counterparty of mine, on yesterday's apparent slaughtering of the silver price, by a given floor broker (Emerald Green is a fair hint). One colleague suggested that many funds are now being offered guaranteed stop-loss fills. In other words, if it trades at a given level, they are done in all their volume at that price. This sounds nice for the fund, as stop-loss orders are no good to us when you get gapped through. But what a temptation there must be for the floor dealers. Tripping stoppies will become an artform if this is the case. No wonder we have such gaps in the charts and why we see such severe moves, both ways. It's just conjecture on our part, but.... Keep an eye on the specs in the COT/OI numbers as this could presage the next gap, i.e are funds long or short. If this guaranteed stoppies thingy has any legs, it will make the market even wilder at given junctures. Hmmmm. To the COTOI numbers in question.....

The CFTC data showed a net spec long of 7.81 Mm ozs, while UBS have proffered in their daily ... "calculate that around 2 million ounces of net long positions have been added since last Tuesday; the lack of large changes in total Comex open interest since last Tuesday is probably due to shorts covering and new longs netting out in terms of
total contacts. To conclude, Comex net long positions are probably around 10 million ounces, off the lows but still less than half the record net long position seen in April..."

It would surprise to see significant further long liquidation. There seems plenty of room for "new" longs to join the fray, if April is to be a guide.

The Amex Gold Bugs Index (HUI) is rather lethargic. There is little excitement about the metals shares, even from the true believers. Timing is always crucial and it appears that this relatively lackluster period is providing some great entry levels in selected issues,especially should the anticipated resumption to the upside materialize in the near term. A $10 move up should see issues up about 15-20%.The sentiment will certainly change when we move above $400 and all further strength should encourage further participation in the sector.

Gold is still bumping its head on that 200dma. I would be surprised if we can't crash through in the next few sessions. Downside is still limited in my opinion but nothing would surprise these days. At midday NYC, gold has been capped again at that $396-7 level. It seems very resolutely defended and I will be keen to see the COT again to suss out how many bullets have been fired here, and from whose gun!

Silver struggles just above the $5.90 level again and looks a little tired. Maybe back to $5.75 before the next assault on $6.02. Not likely today, though. Things may get quieter in prep for next week's releases and action.

Can you tell it's pretty quiet around here yet??? Nothing to do with markets but....

Toddo reckons Journey's greatest hits is a worthwhile listen. Pardon me while I puke. Surely he jests?? There is a show on the comedy channel down here called.... "Behind the music that sucks".... A caustic yet funny animated skit that rips into people who, in the opinion of the creators, make music that seriously sucks. Journey would need a mini-series! Right up there with REO Speedwagon and Air Supply. Gimme a break, Toddo, the other day we were talking Hendrix etc etc... Now this tripe??? Interestingly, one of my good mates, who works in 520 Madison, reckons they're good too???(But he's from Perth, Western Australia... so that might explain it. What's Toddo's excuse??? )

I thought the Poms were gonna get rolled in the soccer yesterday by Croatia. Oh well, England won. Fair enough too, they played well and have some fine players, but it is always more amusing to see the "Barmy Army" (English team supporters), after they lose in the final rather than in the early rounds. It's a bonus if it's by that heartbreaking penalty shot deal that decides the tied matches. Why do they have that in sissy-ball? Surely they should just keep playing 'till someone scores. (Players are certainly very skilful and aerobically fit, but what a bunch of Nancies. ... Most couldn't cope with getting tackled by my 5 year old daughter!!! Soccer would be a great game if rugby tackling was allowed!!!)

Our local press updates on the Aussie horse over in England.... Maybe the Breeders Cup Sprint is also on his agenda.... Hmmm.. it'd better be on Turf.

Plus some small articles from the racing website ...

Exceed And Excel on track for July Cup

Rosehill trainer Tim Martin was back in town on the weekend to check on his Rosehill stables, but he'll be back on a flight to England tomorrow.

Martin is keen to get back to Exceed And Excel as the horse prepares for the Group I July Cup on July 8.

Exceed And Excel was scratched from the Golden Jubilee Stakes, run yesterday, due to a virus but now he's back on track.

"He's had more blood counts done this week and the last one shows he is 100%."

"All I want to do now is get back there and get him stuck right into his work for the July Cup."

"The main thing now is to get him fit for the race now his health is good."

"I've spoken to Sheik Mohammed and I've told him if the horse isn't fit enough he won't be running, if I think he's right he will be out there to win."

Exceed And Excel may head to America

Exceed And Excel may not head straight to stud afterall when the July Cup concludes next month. The Group I winning sprinter is still in the care of Rosehill trainer Tim Martin, but is now owned by Darley Stud.

"He might not go straight to stud after the July Cup," said Martin this afternoon.

"I have recommended to the Sheik that he takes him to America for the Breeder's Cup.

"I think he would go remarkably well over there.

"But having said that if he wins the July Cup he won't have anything to prove so I guess they'll have a think about that afterwards".

Enjoy the rest of your day .... Journey-less, I hope.


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