Back in Action
Welcome back Laurie!
Editor's Note: We can't tell you how excited we are that Laurie will be making the trip all the way from the land of Oz to join us out in Ojai at MIM2. If you are on the fence about going, that should knock you off. After all, if it's good enough for Professor McGuirk to hop a 12+-hour flight, it's gonna be real good!
Gold $422 Silver $7.00 Wednesday 27th July, 9pm Sydney
G'day. We are just getting re-adjusted back to city life after the week up the coast for my 40th, which was one of the nicer breaks in my recent memory. That I then had to travel across the country to the West Australian Supreme Court on Monday, did take the gloss off a very nice break, but that's a whole other story.
There seems to have been a whole lotta stuff happening in the financial markets, but with little effect from what I see. Nothing' much has changed give or take a big figure on a few currencies. The Amex Gold Bugs Index (HUI) is 3 points lower. Gold was 425 when I left and silver was $7. Sure, some dips to 418 have been seen as some funds have liquidated some stale longs but, with the ignorant bliss of not having been involved or seeing the action, it looks bloody good buying down at 418 and I don't know that we'll see that $385 that some have been calling for recently (not advice). The physical markets are well and truly enjoying dips below 420.
I know that having no phone or email for nearly two weeks means I am flying somewhat blindly, but the fact that gold has held its recent ranges gives me some comfort that we aren't heading much lower than that $420-18 level that has been so supportive the past few months. It doesn't look all that likely that we're gonna bust out topside either! There is certainly some serious selling around the 426-8 level and so we just bump around inside the ranges while we wait either for the market to wake from the annual "summer slumber" or for the next "big thing" to get it moving. What that will be is anyone's guess.
I did see that the Chinese made a token gesture and cut the currency peg to the dollar... by 2% or some such insignificant rubbish. It makes no difference in the great scheme of things from where I sit. When it gets re-set by 10% or 25% or so, then I might get a little more interested. Has anyone else thought that this is the first "official" confirmation of the beginning of the end for the US Dollar as the reserve currency of the world? I'm doing a bit of catch-up reading and everyone's got a view about China and its currency. I am surprised that such a small move in the exchange rate has got everyone all jiggy. Sure, more revels are inevitable, but it is my contention that it won't make a lick of difference to where the dollar is ultimately headed. When does "Printing Press Ben" take over from Sir Al?
I read an article on Reuters that was talking about India and Gold. It appears to me from the article that much of the talk I'd been hearing of declining Indian demand, due to alternative investment options, is wildly premature and dangerously misinformed. India, the population (rather than their official channels) buys about 600 tonnes a year (more than the Washington Accord allows European Central Banks to sell in a year). The wealth effect in India suggests to me that we will see increased demand for the metal especially as the fiat system increasingly struggles under the weight of this most outrageous debt bubble. I read that the US requires about 10% of its GDP to pay the interest on its 36 trillion dollars of total debt (not including all the un-funded future government and corporate obligations, which makes $36 trillion look positively anorexic)!
I've been chatting with my people around the region earlier today and they are unanimous in their declaration that there has been no slackening in demand for gold in Vietnam, Thailand, Malaysia, the Philippines, Hong Kong or Singapore. In fact, Hong Kong Long tells me he is finding it difficult to get his hands on some of the good stuff in honor of the birth of his daughter a few weeks back. In Sydney, I have been waiting now for about six months for my "coin man" to find me a few 1905 Australian gold sovereigns. I only want the gold value and don't care for numismatic value or collectibility so wasn't fussed what "type" they were. This was the same guy who was recently cleaned out of every sovereign he had, by one cash buyer. Anyways, he finally found me one and it is not a "tight" year, specially marked or minted or anything. People just aren't selling, he tells me. Lotsa buyers and no sellers tells me something about a market! Anyway, I now have my good mate Matt's wedding present all sorted out. I reckon something minted 100 years before a given event is a perfect gift, especially something made of gold! Hong Kong Long likes the thinking too.
I'm still getting the head back in the game after such a nice break so won't waffle on about stuff I dunno about. I can tell you though, that I did back the winner of the $250,000 Grafton Cup on 14 July. What was even better was the fact that I was betting with "their" money.
The Grafton Cup carnival first day had a big sprint race as its feature and so we headed to the track full of beans (but a little tired after the 7 hour drive up there on the morning of the 13th). It was declared a local public holiday, so everyone and their dog were out at the track. There were 8 races on the card and I had a little bet in each race. By the end of the day I had 10 bucks left in my pocket for the cab ride back to our friend's house. I don't believe that any horse I bet on actually got out of the gates. Seriously, I don't think I even managed a 6th place and there were still two more days to go!
Anyway, a few convivial lagers and a good night's sleep had us up and rarin' to go on the 14th, my 40th birthday. We got to the track early as our friends owned a horse that was racing in the third race. It was trained locally, by our friend's dad. It was a good thing, they all reckoned. We had to get set. I missed the first race getting beers or something and I had a bet on the second race. My nag duly won at 8 to 1. That's more like it, I thought. Our mates' horse was in the next race.... Better let my winnings ride on the nose I thought. The bookies framed their market and Talking Blue was 9-1 with some but I saw some bloke with 15-1 and I had the lot with him. We sat to watch the race, the gates pinged back, and our pony jumped perfectly and got an easy run behind the leaders. The home turn posed no problem and our horse raced away to win by 3 or 4 lengths and never looked like getting beat. Don't ya just love it when everything falls into place?!
Lisa and I enjoyed the rest of the carnival, eating too much, drinking too much and betting a little crazily, all with someone else's cash. Now that's a bloody good 40th! We all backed the Cup winner and finished off with 6 of 8 winners on the last day of the carnival. Our friends up in Grafton really looked after us and definitely pointed us in the right direction when it came to the local horses. In fact, I don't recall my mate Bryan ever holding a losing ticket! Now that's the type of mate you want with you when out at the track. July 2006 seems a long way away, but the calendar has been marked already!
I suppose we will just have to wait for this 418-428 range to give way. I do have a funny feeling that we'll test lower before higher though. Silver is doing zip these days but don't be lulled into any false sense of security. When it moves, it moves and I expect we'll be back bustin' 7.25 again pretty soon but maybe dip to 6.80-85 beforehand. The ranges are still the ranges and attractive at both extremities at present.
Enjoy the day
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