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Pumping Iron


Gold $402 Silver $6.10 Thursday 8th July, 3am Sydney

"I hope he's done enough (trackwork) but I certainly wouldn't be having my last dollar on him".... Tim Martin, trainer of Exceed and Excel in today's Daily Telegraph.

G'day. Isn't it interesting what 24 hours will do for a market. The inexplicable move down in gold yesterday has been totally unwound throughout the course of the day, prior to Comex re-opening. I suspect that the physical market had much to do with this because the currency moves didn't matter yesterday, so why would they today? Oil is down today, gold is up. The opposite applied yesterday. There isn't a logical explanation for yesterday's price action when one compares today. The London fixes, from which most physical deals are priced, completely missed out on the buying opportunity provided yesterday.

The Dollar is lower versus just about everything, not dissimilar to yesterday, yet gold is now some $14 above yesterday's low and looking pretty strong. The buying volume this morning in Comex was pretty healthy with funds buying in 1000 contract lots. So who is doing the selling to satisfy the buyers?? No idea, but they must have deep pockets and a desire to ensure that they don't get as high a price as possible for their sales. Two U.S. investment banks have been the sellers of note on the floor.

Gold attempted a few breaks through the $403-4 level and failed each time. There appears to be some sellers in size that thwart any breakthrough efforts. Going into the close, I think gold should be well supported at $401 and probably held at $404. With the currencies where they are and taking into account recent data and market moves, I would have expected to see gold pushing the $410-15 levels. Again just my opinion and I am still a little flummoxed as to what is dragging the noble metal back.

The market in Asia was well supported by buyers from the Middle East and India. Indian premiums suggest that India is certainly an importer in the mid $390's, notwithstanding the season. My local physical dealer said she was as busy as ever this morning with people buying everything from 1 ounce bars and coins thru to 100 ounce bars. I think I should spend a day in their offices and have a chat with a few of her customers to suss out what/who is pushing their buttons to buy metal, and furthermore, why did they take any notice? That would be an interesting exercise although I'm trying to work out where my sleep would fit into the mix.

The metals equities are running hard today with the Amex Gold Bugs Index (HUI) up about 4% on the day and pushing into the 200 level. We are still a long way off the 260+ high of 6 months ago. Newmont Mining Corp (NEM:NYSE) and Freeport McMoran Copper & Gold Inc (FCX:NYSE) are the best contributors. Goldcorp (GG:NYSE) is well up today, which surprises me somewhat. One would expect the higher leveraged plays to lead the way and Goldcorp is hardly in that camp. Maybe people are just loading up with the bluechips and doing the usual gold company investment error of going for the lowest cost producers rather than the highest. Its all about leverage to the price.

I note that Silver Standard Resources (SSRI:NASD) and Pan American Silver (PAAS:NASD) have lead the charge in the silvers recently. SSRI was trading sub $11 with silver at $6 a few weeks back, now it's $13.75 off similar silver price. Maybe some downdrafts to come on any serious silver weakness? I was asked my opinion of Apex Silver (SIL:AMEX) as a silver exposure, the other day. I don't have one. They are a base metals producer with about only 30% revenues from Silver. If I want an exposure like that there are plenty other polymetallic exposures to chose from. Don't be misled by the name of the company. They should, in my humble opinion, carve out their silver properties into a new company and separate the base from the precious. Coeur D'Alene Mines (CDE:NYSE) is trading awfully. It's down 1% today, with its peers up over 5%. The corporate activity is a mess and management has plenty of form when it comes to screwing up this sort of stuff. As I mentioned previously, it WAS a good silver trading stock until it entered this crapshoot. I won't touch them till the smoke clears and there is some semblance of normality return to its price action. Even then, only short term tactical trades. I will leave them to the arb traders at present. Just my opinion, as usual.

I went to a gym yesterday morning for the first time in nearly 15 years. I now remember why it's been that long. The aim is put back 15 of the 25 kilo's I have lost in the past 3 years, but that's not important right now. Anyway, it opens at 5.30am and it is in our building so I have no excuse. I couldn't believe how many people were there. Haven't these people got beds to sleep in? If I was working "normal" hours, you couldn't get me out of bed on a winter's morning at 5am for a shag, let alone a gym visit.

I note that Exceed and Excel has accepted and is a certain starter for the July Gold Cup tomorrow at Newmarket in England. Minyan Martin reporting from only 3 miles from the track, says that it is pouring rain and the track may be severely affected. As I have said from day 1, if it is dry, he wins. If it's wet, all bets are off. It's a pity I have already got my bet on! Oh well, it gave us something apart from metals to talk about!

I didn't mention the Greeks victory in the soccer yesterday. How fitting it was that the Olympic hosts got a chance to "practice partying" before the big games in a few weeks. If the partying we did here in Sydney a few years back is anything to go by, there may be a serious global shortage of Ouzo on the way. ( and they can have it!)...

Enjoy the rest of your day .....


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position in gold, silver, gg, nem, ssri, paas

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