Mare For Sale
Happy Birthday Laurie!
Gold $402 Silver $6.35 Wednesday 14th July, 4am Sydney
G'day. Happy Bastille day to all and happy birthday to me. My mum always said that it was an appropriate day for me to enter the world. Why, I don't know.
The gold market ran out of puff up near $408 and selling through Tocom saw Europe open with gold off a few bucks and trading below $405. Tokyo was not at all impressed with the rally and plenty of long liquidation was noted. Maybe more Yen strength expectations has a bit to do with it. Premiums for gold bars in Tokyo are still north of 50c, indicating that physical buying is still buoyant. India is a buyer with gold in the low $400's as reflected by the premiums. Maybe they are getting comfortable again with the 4 handle on gold.
Silver retreated all day and played a bit of catch up with a few of the base metals who have been a little soft in the last session or two. Zinc, lead, ally, platinum, palladium, silver and gold all fell by over 1% today with silver taking the honours for the biggest drop of over 2.25%. Oil also came off a little, yet we still sit near enough to $40 a barrel. The oil curve is flattening. Interestingly, Nat Gas and Heating oil are up today. Watch for widening crack spreads.
The trade deficit numbers were much better than anticipated by the market. The dollar got a boost, and gold and other currencies took a tumble. Fair enough and on the surface the number was pretty good. I had a look at some historical monthly deficit numbers and note that in Jan 1999 it was about $15 bln, Jan 2000 was about $25 bln and it bumbled along around there for a few years. In Jan 2002 it was $27 bln, rising to Jan 03 at $42 bln and today we are about $46bln. These numbers are bloody awful. No matter how you cut it, the deficit is out of control. Sure, this month was the first improvement but it appears to be against a very strong trend. Exports certainly helped although big ticket stuff like aircraft were prominent.
No currency got hit harder than gold on the day. The Yen was up about 1% and Euro off close to the same. Gold fell by twice that percentage. I hear that there is good Chinese buying of Euro around the 1.2310 level. Reserve diversification, maybe??
The inflation numbers to come later in the week will be crucial to the fortunes of the dollar and precious metals. Sure there are retail sales and jobs and others, but inflation will certainly be my focus. That the inflation numbers could be anything but confirming increased inflation is unlikely, in my opinion. All anecdotal evidence as well as the purest form of evidence, the damage to the hip pocket, indicates rising prices and cost of living. But then again, nothing would surprise in the published numbers these days.
Gold held remarkably well above $400 as there appeared to be a good chance that we could have broken down towards the $395 level. I expect we will see some buying emerge today in Asia and we may push back up to the $404 level, although with so much data hitting the wires this week, potential buyers may well sit on the sideline till next week.
Silver has bounced nicely off the $6.25 low, adding about 2% and currently around $6.37. We may well see a few cents added to the price in Asia and I would be watching Copper for some clues once the LME gets going.
The Amex Gold Bugs Index (HUI) is down some 2% today and I note that Silver Standard Resources (SSRI:NASD) lost a buck from yesterday's open and was down over 5% at one stage(not a HUI component). The fastest to rise should give back the most, I s'pose. Kinross Gold Corp (KGC:NYSE) is off about 5% and is today's loser of the larger cap gold stocks. I mentioned a stock down here in Oz, a few weeks back, Lihir Gold (LHG.ASX) that was worth investigation. It was trading around 90c a share and currently sits at $1.17 on rumoured takeover and the higher gold price. I don't particularly care why it is now in favour, but 30% in a few weeks is fine with me. In the interest of transparency and disclosure, I don't have them in my retirement portfolio although they are a nice trading stock for short term gold plays in this timezone.
I am contemplating selling my mare that just had its ¾ sister win the Oaks down here. I have been asked for a selling price by one of the biggest breeders down here. I don't deal that way, sorry, so am awaiting a firm bid. This is no time for sentimentality or emotion. I know what price I will hit and so I just sit and wait. Converting horseflesh to gold is what I'm attempting. The price I will sell at is fixed - in ounces of gold.... This could be some fun.
Critical levels I'm watching are gold at $412 and $396 and silver $6.20 and $6.60 ... fwiw.
Enjoy the rest of your day while I enjoy my birthday rack of lamb and a nice bottle of red........
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