Gold $400 Silver $5.93 Tuesday June 19, 2am Sydney
G'day. Hope everyone had a good weekend. The metals were very quiet on Friday so we didn't miss much whilst conducting my babysitting duties. Gold has given back its gains of today following a brief touch of $405, despite the Euro trading through the 1.22 level again. Silver is still holding the $6.10 level, but appears lethargic after the big moves last week.
Gold is now trading below $402 and silver is back at $6.02. Some are blaming currency moves but it doesn't sit that well with me. The Euro is still pushing 1.2190 and the Yen sub 108. I expect the $401 level to be solid support as it has been for the past couple sessions. Looks like resolute selling at and around the $405 level, so a break to the up could see us at $412 pretty quickly. I am still wary of another move back to the mid-$380's especially if anything comes out of leftfield with interest rates or currencies. I think that would be a low risk opportunity to add to current positions or initiate fresh longs, but I wouldn't be counting on it. Nice if it happens but it may not eventuate. Just my opinion and sharing the process....
Silver has broken down through the $6 support level on solid consistent selling by funds all day. Support at $6 was flimsy at best. Dunno too much more at this stage and would expect some support around $5.88-92 with very serious support sub $5.70. A move below $5.50 would surprise and would certainly do serious damage on a technical basis.
It appears that there is still some hedging unwinds occurring with Durban Deeps (DROOY) announcing they would be closing out their only remaining hedges on the back of low Rand-gold prices. Fair call.
The continued strength of the Rand could be problematic for physical supply in the coming years. The Rand price of gold is currently about 2500 per ounce. It topped out at 3700ish in Dec 2001. This move puts pressure on high cost producers who have ongoing costs denominated in Rand. This could effect physical supply if it forces shaft or mine closures because South Africa is the biggest gold producing country, and these closures could affect millions of ounces of production. Just something to be mindful of going forward.
The Indian market is gradually coming to grips with higher prices, although the premiums suggest they are still on the sidelines. Similar moves have taken a few days, and even weeks, before they become comfortable with the price and imports resume. Asia has seen much physical demand and there appears to be a shortage of bars available to purchasers, judging by premiums being charged in the region.
The Amex Gold Bugs Index (HUI) is again stalling in front of the 200 level and is back at 192 which is levels seen in late May. Interestingly, gold was about $395 yet the HUI was about 203. Sentiment, don't forget its importance.
The poor old English have certainly had a hard time with their sports teams in the past few days. I did get a giggle out of the soccer match against Portugal. 5 days has passed since then and for me to have a dig at this late stage isn't anywhere near as much fun. Talk about swings in emotion for their poor old supporters. Extra time and then penalties is a cruel way to go out, but then again I may have alluded to such in one of last week's postings. At least the winner of the soccer will be someone who hasn't won in a long time... a Portugal-Croatia final would be fitting. ...... The World Champion English rugby team played Australia in Brisbane on Saturday night. They had been smashed by New Zealand (72-20 in two matches) in the previous couple of weeks but most expected a very tough and close match against our Wallabies. It was a procession. England 15 - Australia 51 was the final score. The scoring system is very similar to the US NFL, so many of you would understand that it was a smashing of the highest order. The amazing statistic on the night was that England had the ball for 70% of the game!
Someone asked me why we have this "love-hate" thing with the English. Most forget that the original "Aussies" were sent here as criminals and were "ruled" by the English. Hence the Australian innate lack of respect for authority and a fiercely ingrained desire to beat the "mothership" at anything. Not Ireland, Scotland or Wales... just England. Ireland is our 2nd team in general, as many of us are of Irish descent. We're a weird mob down here, sorry.
For anyone who is interested, one of my horses will be having his first official trial on Friday. His name is Danihilate, he is a rising 3 year old and we bred him ourselves. It is only a trial but one should get a gauge as to his ability(or lack thereof) and so lots of owners hopes get dashed, quickly. We have no idea, so will be an interesting morning. An old saying down here with regards racehorses... "No one could ever commit suicide when they have an unraced 2yo... after the trials, that's different". Another one of mine, Ski Lodge, will have her first race back from a 6 month holiday this Saturday. She has only won 1 race out of 20,2 x seconds and 2 x third and has run fourth 10 times (prizemony for 4th isn't much!!).... Best we find out if she is worth racing for another year, or whether to send her to stud in September.
Metals look distinctly soggy at this point, with an hour or so to go in Comex.
Enjoy the rest of your day .....
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