That was fun!
Gold $392 Silver $5.82 Wednesday 30 June, 3am Sydney
G'day. Gold is trading over $10 off its high of yesterday morning NY time. What's changed? The dollar is 50 points stronger versus the Euro and a Yen better in Japanese terms. Insignificant moves, in the greater scheme of things. Consumer confidence beats expectation? So what. The dollar would be way stronger if it was relevant. Iraq? I don't think so. Gold is down 2.25% with no major currency except Sterling (-1.25%), moving by more than 0.50% either way. Hmmm, just outright selling from somewhere. Dollar bullish hedge funds is my best guess.
The very strong resistance at $397 lately, was ineffective support on the way back down. The break of $396.50 saw some hedge fund stop losses triggered and we traded as low as $394. There appears to be some solid buying interest around these levels. Maybe India is back importing, following the sharp price reversal? The trading around the $394 level here at about 11:30am NY gives the impression of someone seriously attempting to drive the price lower. That just took 3 mins and we're at $391. Fund selling is the word around the traps, from every source. No kidding. I guess we are back to the stairs and elevator shaft scenario, again. Suppose the mid $380's is the targeted level for next support although a lot of work was done around $388-90 and this area could well find good support. One of my sources in the physical market tells me physical buying is appearing sub $392 although one would expect that tomorrow will see the re-emergence of those physical players who didn't chase the price up. BOE suggest that inflation is somewhat of an issue. Hmmm.
Silver is lower again and trading around the $5.80 level. This appears to be in the lower end of the recent new "range" of $6.20-5.70... still have some concern about retesting the $5.50 low of a month or so back. Don't discount such a move too readily.
I note the Couer D' Alene (CDE:NYSE) / Wheaton River Mineral (WHT:NYSE) corporate activity has seen the stakes lifted somewhat. The raising of the bid by CDE makes little sense to me and I note the market has marked their stock price down some 5% today. These things tend to get messy and I would be surprised if we have heard the last of this. I see that the other silver equities haven't been so badly burned on this trip down the elevator shaft. I suspect that there are tighter hands holding stock with longer time horizons than the next 5% move. There will always be the "fast" money affecting the market in the very short term, but with the illiquidity of the silver equity market, shorts could get seriously caught on a well timed squeeze.
The market cap of the main silver issues is only about US$3.5Billion. Think about that. You can buy all of Pan American Silver (PAAS:NASD), Standard Silver Resources (SSRI:NASD), Hecla Mining (HL:NYSE), Apex Silver Mines (SIL:NYSE) and CDE , pretty much the guts of the silver producers, for less than the market cap of Novellus (NVLS:NASD), some sort of tech company that supplies stuff used in the fabrication of integrated circuits. You may guess that technology is totally foreign to me. Silver is used in so many real, practical instances yet there are so few producers. How many people do what NVLS do, I guess they have a few competitors? The silver producers don't. Someone will wake up to this at some stage, I guess.
I got chipped regarding the Euro soccer by Minyan Martin, over there in England. Apparently I said Croatia and Portugal would be a good final. I was quite correctly informed that Croatia isn't left in the tournament and that maybe I should stick to the horses. Touche, Martin. Czechoslovakia(is that correct or should it be Czech Republic) are in it though! Hey, both start with C and end in IA. Same as our Olympic skiers are all thought to be Austrian! Apologies, but it illustrates how little we give a toss about the sport down here when we don't even know who's playing.
Exceed and Excel is still a doubt for the big July Gold Cup next week in England. Note that it is a GOLD cup, not a paper dollar cup. The latest reports suggest we will know next Tuesday whether he races or not. I would be astounded if he doesn't race.
Enjoy the rest of your day .....
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