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Money In Its Purest State



Gold $405 Silver $6.55 Thursday 15 July, 2.30am Sydney

G'day. It is fun having a birthday that lasts 38 hours! The lamb was perfect and the red wasn't bad either. Gold and silver behaved as expected throughout the Asian timezone with little of significance to report. This is gonna be a short one by the looks of it.

Gold could be pushing $410+ in my opinion. The recent economic releases and currency movements should have been more positive for gold, certainly more than is currently being displayed, in my opinion. There appears to be some doubt as to the veracity of the current move above $400. The inflation numbers will set the table for the next $10 move. If the inflation releases reflect reality, that inflation is rampant, then we could well be pushing $420 and $7 in silver, in the next week or so. Just thinking out loud and certainly not advice.... I reckon that last sentence could come back and bite me as I have this nasty gut feel that the inflation numbers are somehow going to be ok to fair! Buggared if I know how they could be.... but stranger things have happened.

Silver had a nice round trip from $6.50 to $6.25 and back again. What was all that about yesterday? Hearing Producer selling in reasonable size above $6.50 but I am skeptical that it is very significant in the scheme of things. The wait till the inflation data release should keep prices tight for the next 18 hours.

Even the Amex Gold Bugs Index (HUI) is having a snoozy day with only Agnico Eagle (AEM:NYSE) up more than 2%. Pan American Silver (PAAS:NASD) and Silver Standard Resources Inc (SSRI:NASD) are the best performed of the silvers.... As usual. Ho-Hum.....

I was re-reading a very good book the other day, "Greed" by Chris Ryan. He has written a number of fictitious novels based on his experiences in the British Special Air Service. His first book, "The One That Got Away" is his own firsthand account of his SAS patrol behind enemy lines in Iraq War 1 that went horribly wrong. It is one of the most incredible stories of human endurance and resilience one could ever read. Anyway, he is a soldier, with no training in economics or anything else for that matter apart from killing people, very well. I noted a paragraph in the book that initially sat well with me... "That's the real beauty of gold and diamonds, thought Matt. Not the way they sparkled and glittered, but the fact that both commodities were completely untraceable. Nobody cared where they came from. They were money in its purest state." ... Not a bad observation for a soldier.

I agree fully with the statement when applied to gold, but definitely not diamonds. Diamonds are not money. Sure, they are liquid (kind of), transportable and limited in supply (very debatable). Diamonds are not fungible i.e can they be altered/divided without changing the value or characteristics of the diamond? A bar of gold can be divided into 10 pieces and distributed. Those same 10 pieces can then be made into the same original bar, without any change at all. A 10th of an ounce is worth a tenth of an ounce. Try doing that with a diamond.

I listened to some government knobs talking about regulation of hedge funds and all that. How about they go look at the GSE's like Prof Succo suggests. That's real systemic risk!

I guess things will be pretty quiet till we get into the real stuff of inflation numbers in the next 18-36 hours. Typically , I made arrangements months ago to be in Wellington, New Zealand on Friday to catch the Wallabies/All Blacks Rugby test match on Saturday. I won't be here for the CPI number unfortunately, and therefore will miss posting on the day. I return on Monday so will try put something together for the open on Monday N.Y.

Thanks to all the Minyans who sent a happy birthday wish... much appreciated. I can't believe how many of you wanted to know what red wines to chase from down here.

Here's a list of some good wines and their retail price here in Sydney. If you can find any of these in your travels grab 'em. I found a wine merchant in Raleigh, N.C that sold one of my faves for less than we can buy it here! Go figure.

Just for starters.... And these are in no way "the best" from down here but some really nice, reasonably priced wines...(many need 7-10 years cellaring or more but they still go pretty good, green!)

Lakes Folly Cabernet (Hunter Valley, NSW) A$40
Rockford Basket Press Shiraz (Barossa Valley, SA) A$45
Lindemans St George Cab Sauv (Coonawarra SA) A$35
Tyrells Vat 9 Hunter Shiraz (Hunter Valley NSW) A$35
Parker Coonawarra First Growth (Coonawarra SA) A$70
Henschke Hill Of Grace (Coonawarra SA) A$150
Penfolds Magill Estate Shiraz (Coonawarra SA) A$65
Penfolds Bin 707 Cab Sauv (Coonawarra SA) A$85
Wynns Coonawarra Cab Sauv (Coonawarra SA) A$25
Petaluma Coonawarra $35

Enjoy the rest of your day .......


position in gold, silver, ssri, paas, aem

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