It Never Rains But it Pours
Gold $408 Silver $6.70 Thursday 1 September , 1am Sydney
G'day. It never rains but it pours. Mum got the all clear on the tumour biopsy today, after my Dad gets some weird chest pains yesterday and is admitted to the hospital down the road. Just some sort of "heart murmurs" that they reckon they can control with some drugs... what a fun week or so we've had down here! At least the markets have behaved such that it hasn't made much of a difference to the P and L or the outlook in the near term.
Gold appears set in a $398-412 range and will probably sit here till we get the jobs data out on Friday night. I think we'll be lucky to see sub $400 unless Friday's numbers are way out of expectations and even then I would expect any pullbacks to be steep yet short. In other words, the pullback could be deeper than expected but don't think it will stay low (sub $400) for long... a couple of days maybe, till the physical market takes control again. I note that the moving averages are all converging just above $400.
I noted that there was a big kerfuffle about the appointment of administrators to Sons of Gwalia, one of the few Australian gold producers of any size that hasn't been raided by offshore buyers. Some problems with reserves and their hedge book are the main issues quoted. Unfortunately, as I had a professional relationship with this company in a previous life, I can't and won't talk about them. Similarly, I won't deal in the stock of any company I used to deal with. Whatever happens going forward with SGW, I wouldn't expect there to be ANY impact in the physical or paper gold markets of note(that hasn't already occurred).
It seems that the physical market is mopping up all gold on any dips. The Indians are still buying above $405, and their buying season isn't in full swing yet. Dubai is seeing heavy demand in 22 carat jewellery. Japan is paying up for physical metal as well. The gold price below $400 will see much physical gold head for Asia, and there's plenty headed that way even as we speak.
Silver, I haven't quite got my head around right now. It looks a little dodgy on my charts at present and wouldn't surprise to see a pullback to $6.55ish before attempting a push back to $6.90.... gimme 24hrs or so to get the game back under control....
The Amex Gold Bugs Index (HUI) looks like it has consolidated a little above the 200 level. I am keeping an eye on the South Africans with the rand issues and looking to add to long positions of selected stocks at given levels. These may seem at odds with my view on the actual metal price but that hasn't mattered in the past when the market is valuing metal equities. Looking to buy them when others are selling, especially at irrational prices, from where I sit.
Had a great trip up to the Hunter Valley wineries and stud farms on last weekend. Was good to get away from everything. Saw some magnificent stallions like Fusaichi Pegasus, Rock of Gibraltar, Johannesburg, Hawk Wing, Giants Causeway, High Yield, Octagonal, Lonhro, Quest for Fame etc. etc. The wild one was "Spinning World"... he had a face guard/muzzle on like "Hannibal Lechter" so he wouldn't bite us and his handler carried a baseball bat to keep him in line. He has a little bit of attitude, that one. The stallion parade at Coolmore was nice, with just under U.S.$400 Million bucks worth of horse flesh being presented. I just want one that can win a race at Royal Randwick. The wineries provided a good source of refreshment for the women's gold medal basketball match... the Aussie girls went very close and appeared to choke in the last period. Next time.
I never sold my topline mare ... she was "too small" for the interested buyer. Fair enough... (have bigger stallions shag her, would be one solution!). She had a little baby today, a Bay Colt. Typical of first foals, he is smaller than average. More disturbing is that his front legs are a little turned-in (pidgeon toed) and this may hinder him in coming years but they generally straighten themselves out. There are plenty of champion racehorses that had less than stellar legs. Whichever way you put it, I got dudded! I wanted a filly, larger than usual with straight legs. The mare will get 20 days off and then be shagged by Desert Prince (IRE) on 20 September. "The Prince" was crowned World Champion Miler in 1998 and his first kids are now racing and doing fantastically well. Another 12 months 'till we see what pops out this time.
Enjoy the rest of the day ............
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