G'day. I was a little slow out of the gates today following the weekend rugby tour to Wellington, NZ. A great time was enjoyed by all, irrespective of the awful weather conditions and that the Kiwis won the rugby.
I wondered aloud, late last week in a short conversation with Professor Succo, what odds that gold would be unchanged when I got back today. We never actually came to a conclusion but precisely that transpired. I note the numbers that were published and that there was certainly a rush to the Thesaurus by economists everywhere for appropriate synonyms for benign. Descriptions of current CPI Inflation that have passed my eyes this morning include "innocuous", "soft", "inconsequential", "impotent" ... any which way it is said, inflation is not a problem, "Officially"..... As Prof Fleck wrote today in his first paragraph ... "Use your own eyes".
I note that bond yields are lower and the dollar weaker on the lower than expected CPI number as Minyan Neal suggested. Gold moved a couple bucks higher...Happy to buy the beer. There seems to be an attitude of indifference to gold. That someone is selling heaps around the $407 level is obvious. Let's see what the next move is.
Silver has been a little more exciting and I note we touched the $6.75 level briefly before retreating. I am hearing that there is plenty of producer hedging being done with spot silver up around these levels and one of my dealers made an interesting point to me today that it is "remarkable how different this move is (thus far) with respect to silver hedging done by producers". Making sure they don't miss the boat this time, I expect.
I note that the AMEX Gold Bugs Index (HUI) has had a tough time losing about 5% since I turned my Bloomberg terminal off late last week. Maybe Professor Reamer has nailed the selloff through his Fibonacci analysis as discussed the other week? There have been some notable revaluations, especially the South Africans who are being roughed up by the strength of the Rand. There are some unique issues facing South Africa and this should limit the ability of the Rand to strengthen significantly more although we should remember that markets can and do move further for longer than most expect. I marvel that a company valuation can alter by 10% in 3 days, with no change in the value of its underlying future revenue stream.
I was a little late to get moving today after the weekend festivities. The city of Wellington was a lot of fun. The town evolved into a cross between New Orleans Mardi Gras and SuperBowl weekend, in weather that Scott of the Antarctic wouldn't have sent a dog into. The weather conditions for the match were as bad as I have seen. The ball was like soap and the wind chill must've had some players borderline hypothermia. That anyone scored any points was a miracle in itself. Interestingly, some of the locals we spoke with afterwards reckoned the weather "wasn't that bad".
There are many amusing anecdotes that arise out of such a weekend and one of the best things we did was go on this "Reverse Bungee" in the middle of the city. Basically they have this steel framed sphere, actually about 4 pieces of steel that creates a frame, with 3 seats attached to it. You get strapped in and the dude hits the trigger and you get flung upwards with initial acceleration of 4.2 G's. The thing goes probably about 70 meters in the air. It doesn't look that bad from the pub across the road. We watched a few turns and decided that we should have a go, after lunch. The beers and burgers at the Hogs Breath Cafe were great and so we wandered across for our go. We paid the guy and we started to get seated and strapped in. The harness was a 4 point racing car thing and it fit very snugly. I made sure the dude in charge did mine up. A four point harness that isn't done up properly isn't much good to anyone! Then we just were sitting there having a laugh with the operator about the rugby, waiting for the ride to get loaded. This young Kiwi guy then looked at us like there was something wrong and asked us to all point out feet as far forward as possible. Now, try and touch your toes, he said. We thought it must've been a safety thing and so we did what he said.
As we three reached forward, he hit the button. You wouldn't believe the language. We weren't over water or anything, in fact it was the equivalent of doing it over Times Square or similar. By making us put our weight forward, we unbalanced the sphere and it spun backwards as we got shot up. Shooting skywards, feet first was pretty weird. Heading back down towards the street was wild. Unexpected, but way cool. We had watched a few others do it and this didn't happen to them! If I had seen that part, I would have been somewhat more reluctant. I can honestly say that it was one of the best things I've ever done and am sure that the beer intake of the previous 2 days made the initial decision easier. If you get a chance, do it... before lunch.
Enjoy the rest of your day ..... I'm still short a bunch of ZZZZZ's and am playing catch-up. Tonight/tomorrow should see us a little more cerebral.
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