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Driving out of Sydney


Happy B-day Laurie!


Gold $426 Silver $7.10 Tuesday 12th July, 7pm Sydney

G'day. It's been a while since my last jottings and gold has taken a couple on the chin and traded back to that $422 level that has been so supportive in recent months, give or take a few spikes lower. I expect $422-418 to be very tough to break down through, given the physical markets response to this price dip.

Asia is still buying the real metal, no matter what the paper price is doing. The wealth effect in India is alive and well with their stock market continually making new highs. Terrorism did little for gold last week (and it is definitely not how I want to see gold's price rise). But the fact remains that gold did little in response to the London attacks, well, not in the professional paper market but the physical market has certainly seen more buying.

I suspect, though, that we will struggle to break through $430, initially, notwithstanding that I suspect that we'll be looking at closer to $440 later next week or so. But everything could be voided by whatever data releases are due. Inflation is not 3 or 4% as the CPI might indicate - our wallets tell us that.

Gold should just be range-bound $422-$434 until the physical markets force the price higher, as is inevitable in my view, a la the London Gold Pool in the late 60's.

Silver had a nasty couple of days and touched that old $6.80 area where there is very serious support. The wide range is $6.80-7.45 and we may bounce around this for a few months yet. But when it goes, it should be pretty swift to the upside.

The Amex Gold Bugs Index (HUI) is stuck around 200 but looks to have gathered a little strength recently and I think we are primed for a move back to the 220 level over the next quarter, even with gold still at $430. Some select silver equities look pretty attractive at present.

Thanks to all who sent notes regarding my Mum's surgery. She was released from hospital on the weekend and all is as well as could be expected. A few more weeks recovery and they'll do the other one.

I am about 2 hours away from driving out of Sydney to a place up the coast called Grafton. It is my 40th birthday on July 14, and the Grafton Cup is on the agenda. I will be back next Tuesday, possibly a little worse for wear but definitely back on deck.

Enjoy the day...


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