Metal and Currency Round-up
Gold $387 Silver $6.22 Wednesday 28th July, 4am Sydney
G'day. Busy, busy, busy down here today with the interest rate driven currency moves creating most excitement. The carry-currencies copped a few uppercuts today with the Aussie, Kiwi and Pound all off versus the dollar by greater than 1-1.5%. Gold held pretty well compared to yesterday's close although it should be noted that we had snaffled back a few bucks during the day, and so the high profile US-centric selloff was in the order of 2%. All the excitement was on the back of some consumer confidence numbers and new home sale strength. Whoopee!
That the currency markets move so drastically when we all know there are gonna be rises in interest rates in the near term, surprises me somewhat. What was even more amazing was that gold didn't get pole-axed as the dollar rose a little, as usual. With the Yen above 111 and Euro testing 1.20, I thought we'd probably have a crack at the $380 level. It appears some serious buyers have entered the market just above $385 and they appear to have some deep pockets. The $385 level in gold held nicely, although I feel that there is more pressure building on the topside and we may see a short, sharp dip down to $380-2.
My daily gold indicator is turning noticeably south, although the shorter time frames are recovering nicely due to the solid support around $386-7. I loathe to mention that there is a very real chance we trade sub $380 in the next week or so, but that's what the signs are suggesting.
India is importing with gold down at these levels. Premiums indicate there is strong demand. Tokyo dealers are charging about 75c above London. Last week Hong Kong was trading at a discount of 10-20c to London yet today was at a 20c premium. Shanghai Exchange still has higher than normal premiums. There appears to be solid demand for physical on pullbacks in price.
The Amex Gold Bugs Index (HUI) has basically given back the whole of the rally from early May to mid-July. The low made on May 7, 2004 at 168 may be only a day away, the way things are playing out. The HUI's previous last trade at 168was in August 2003, and it was on its way to 260. Gold was $350 an ounce in August 2003. Sentiment. Hmmm.
Silver was hit early and traded at the $6.15 level again. Silver equities were smashed early with Standard Silver Resources (SSRI:NASD), Pan American Silver (PAAS:NASD), Coeur D'Alene Mines (CDE:NYSE) and Hecla Mining (HL:NYSE) all taking their licks early, but have rebounded somewhat following silver's resilience in the face of the dollar strength. The silver equities certainly are a rough ride at present and this will probably continue as sentiment fluctuates with the dollar, economic data and other geopolitical events. Keep risk at manageable levels.
Nickel got hit in London for nearly 4% , Copper is also nearly 2% lower, yet Lead is up nearly 3%. Crude is still nudging $42 in the spot month and I note that the futures curve doesn't dip back below $40 a barrel until after Christmas. How's Sir Alan's "transitory" energy price inflation looking? Does he know something that the whole world oil markets don't?? Gold and oil moving in opposite directions should make for some interesting commentary at some stage. Check the oil for gold swap. Finite asset sales for infinite wealth, a great deal.
I have fielded a few enquiries about acquiring physical metal and in what form. I will attempt to address some of those issues overnight and post something tomorrow (if I ever get out of here).
The last 10 minutes will be telling in the metals. A firm close would be very heartening, considering the dollar move. I suspect dollar bulls may well take gold down late, with gold they don't own or are ever likely to.
Enjoy the rest of the day.....
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter