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Metals Before Elmer


Gold $400 Silver $6.50 Wednesday 21 July , 3am Sydney

G'day. Short and sharp today, sorry. A little busy down here at present. I guess that someone wasn't happy to have Sir Alan head off to Congress with gold above $400. The move today is about twice that of any other currency versus the U.S. Dollar. Again. Solid support in a thin market has held the $400ish level for the time being although it would surprise if we didn't have another push lower. Thin markets can crack easily. Physical buyers will be happy, everywhere.

The gold price continues to respond aggressively to any dollar strength and basically ignores much of any weakness. It seems like there is a magnetic attraction to the 200DMA.(Gold is not magnetic, nor is silver). I have $395 flashing on the radar screen as a first up level, but everything goes out the window as soon as Greenspan starts his spiel. Maybe we will get a small bounce back to $403 before the close but wouldn't count on it.

I couldn't imagine there being anything "gold friendly" mentioned in Elmer's report but you never know, someone may actually ask him a smart question that he can't bob and weave around. I wouldn't hold my breath on that one. Maybe the "transitory" inflation could be explained, or what Oil at $42 means and how long does it have to stay at $40+ before it moves from "transitory" to "full-blown" inflation? I suspect it will be more of the mutual admiration society that we have become so accustomed to over the years and we get a dollar rally and lower gold. Just opinion not advice.

Silver continued to flop backwards after its brief surge to $6.75 and it looks like we may well test the $6.25-30 level again. My hourly indicators have support around the $6.38 level and I guess we'll get a typical overshoot, which could provide a nice entry level. We must be cognizant of the possibility for there to be a significant move lower, back below $6. Interestingly, Platinum and Palladium rose today as did Tin and Nickel.

The Amex Gold Bugs Index (HUI) is off a percent again today and it certainly looks like Prof Reamer and his Fibo analysis timed this move nicely. The South African producers have been a little better loved today although they are still very heavily discounted due in part to sovereign risk issues and rising costs due to the Rand. Not a pleasant few days for metal equities in general, at all.

Let's see what today's testimony before Congress delivers. Anything we suggest here now will, in all likelihood, be irrelevant in a couple of hours. Keep tight stops and risk only what you can afford to lose.... Especially when bankers are out jawboning politicians.

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

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