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Wary of a Snapper


Gold $395 Silver $6.40 Friday 24th July, 5am Sydney

G'day. No rest for the wicked it appears. Gold was seen well bid in early Asia and stayed flat all day around $397 till Europe woke up and we dipped to $395. Physical buyers were happy with the prices. Indian premiums are very accommodative of imports and it appears that they are notwithstanding most all other influences being against it (seasonality, weak currency etc). One note, from a smart Aussie gold guy, alluded to the fact that there may be plenty of "inventory" at hand in India and that we may see a decline in the "buying" months. Fair comment too.

Gold was pretty lethargic all day until the last 30 mins or so when some nice window dressing shoved it below $395 for the close. Looks like we are now in a pretty tight $398-394 range and we need a decisive break out to get the game going again. There are conflicting signals across timeframes and until it gets a little clearer it's all just a guess. I am very wary of a serious snapper which takes us back to $408, yet the longer term indicators are all pointing south at present. I am not too worried on the downside until $390 gives way (an overshoot of $392). Just thinking out loud and not ever advice.

Silver is hanging in well above the $6.30 level, although I am somewhat looking over the shoulder at $6. Interestingly, the silver equities have hardly raised a whimper after yesterday's late beating.

The AMEX Gold Bugs Index (HUI) has been awful of late and Prof. Reamer's Fibonacci analysis certainly looks good on its initial foray. One thing worth remembering is the effect that the strong Rand has had on the index. The index composition is by weighting. Three (3) South African miners make up over 25% of the total Index. Gold Fields Limited (GFI:NYSE) is the largest at nearly 14%. Since June 1 GFI is down about 15%ish. The others, Harmony Gold Mining (HMY:NYSE) and Randgold Resources (GOLD:NASD) haven't fared much better. Coeur D'Alene Mines (CDE:NYSE) is also in the index(4.25% weighting) and we know what they've done to themselves. Newmont Mining (NEM:NYSE), the largest weighted stock is basically unchanged. Keep an eye on the Rand as things move along.

Seen oil today? Even after the OPEC cartel attempted to pull the rug out from underneath it. The cracks are getting wider. Winter could get wild in the energy sector for sure.

Gotta fly... enjoy the rest of your day ......

position in gold, silver, gfi, hmy, nem

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