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Stair Climbing



Gold $389 Silver $5.75 Saturday 5 June, 2am Sydney

G'day. Very quiet day in the metals until the market went a little crazy after Beeks dropped off the envelope. Gold went $388 bid, then $386 offered was the next price. The Euro traded at 1.2250 initially, then dropped a full big figure in seconds, and then went way higher again to 1.2275ish. When the dust settled, Euro was 1.2225, which is exactly where it was when I headed home yesterday. Yawn. Obviously these numbers were not convincing enough for a big dollar move, either way.

India is again a buyer of gold, even though it is not their buying "season". Premiums in India's major centres comfortably accommodate gold imports into the world's largest consumer. With the current political situation and the financial market turmoil seen in the last few weeks over there, we could well see some sort of asset allocation shift away from other investment classes, such as the local equity market, which has been all over the shop lately. It is nice to see them back in the gold game, especially out of "season".

It seems that gold, which was well supported around $390, is now having difficulty breaking back up through that same level. Support on the way down invariably becomes resistance on the way back up. Dunno how tough it will be to crack the $390, although it looks like we may be firing up for a charge at it just now. I'd be very surprised if we close below $388 today but it is a Friday and we know the risks associated there.

Silver was well supported by consumer / fabricator buying below $5.70 on that very quick dip after the numbers were released. I am comforted somewhat by the fact that we are seeing solid buying from entities that actually use the stuff, rather than just more people playing paper games.

The Amex Gold Bugs Index (HUI) is up a couple of percent but this doesn't even get us back to yesterday's starting point. The high seen in Dec '03, is some 35% above current levels and looks in no danger of being retested very soon. It took only a month to fall from 238 to sub 180 but the climb from 180 to 240 on the way up, took nearly 5 months. Up the stairs and down the elevator shaft. Patience will be required, it appears, in buckets!

FWIW ... I am enjoying the great hockey finals series and I guess that the Belmont stakes will be a procession, due to lack of opposition. I mentioned previously that I am not convinced that this horse is anything super-special. But then again, you can only beat whoever your competition is, and he has certainly done that. I question the times he has run and the quality of his opposition, though.

Enjoy the rest of the day....


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position in gold, silver

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