Gold $405 Silver $6.25 Thursday 16 September, 3.45am Sydney
G'day. The CPI is today not yesterday (Sydney time) as I had erroneously announced in yesterday's note. This timezone / date thing still stuffs me up occasionally. I was all set to go for the CPI when I realized that I was a moron who didn't know what day it was. I even messed up my brother's birthday because of it. That must inspire confidence, hey!
Something else happened instead, related to inventories and stuff. Nothing earth shattering but someone got a sniff that the dollar should be higher and away fell the Euro, Yen, Sterling, Aussie and basically every currency by a percent or more... except gold and silver (and the Rupee but that's a bigger story). Those two babies have held up very well today and the very recent strength of the Rupee may well be the answer as to why.
The Rupee is at its high for the last few months as things settle down after the elections and confidence returns to their economy. Further strength in the Rupee will effectively give the world's largest physical buyer a lovely discount just in time for the serious metal buying season (post monsoon). This could be HUGE in the scheme of things. The move from $46.40 to $45.85 in the last 24 hours isn't that remarkable although it is the first break of $46 since mid July. They were trading at $43.50 in April and any reversion back there with little US$ priced gold move could see India getting an effective $20 or so discount in U.S. dollar equivalent. Watch the Rupee very closely as its strength is way bullish for gold.
2.30am and gold is sitting nicely above $404 and silver is enjoying a rather quiet range, for silver. Silver feels like it is straining against whatever is holding it back. Feels like we may be in for another one of those 20-25c days very shortly and my best guess is that it's not down. The CPI could kill all that in a blink so I am keeping the risk tight. The apparent rejection of the attempt to bust down through $6 appears to have put in a bottom for the white lightning. 10% down in 3 sessions was just silly and should have flushed out all stale or weak-handed longs. There may be some short sellers looking a little anxiously over their shoulders if we can get back up through $6.32-5 on the way to resistance around $45-50. But anything penned today may be irrelevant in 20 hours time with the CPI.
Gold should be relatively quiet the rest of today and into Asia as traders wait for 10.30pm CPI. India may not care a damn and just get after it in the physical market, especially if the Rupee can maintain and increase strength. Watch the London AM fix tomorrow for clues and it would surprise if we trade below $404 prior to the CPI, all things being equal in currencies and geo-politics.
Shares are pretty docile today and I note Golden Star Resources (GSS:NYSE) has filed a $600million shelf registration for "future stuff". I hate dilution, especially for little or no reason. I also don't like companies raising cash with nothing to spend it on as there is a tendency to do silly stuff with it and piss it away. I am watching developments very closely and this may explain some of its lackluster recent performance. Haven't altered my shareholding in this company and don't envisage doing so, just a little wary as to the "why" of this deal. The Amex Gold Bugs Index (HUI) still happy and looks like is gonna have another crack at the 210-12 level.
Minyan Mike sent the following link regarding central bank sales according to our friends at UBS which many may not have seen;
The following article brought back lots of great memories of "the good old days" when the world was a real place-
The Roseville Public School sports carnival was a great day and little Jacqui ran second in the 30 yard kindergarten dash. Heat number 4 of 10! Everyone got a ribbon no matter first or last and no finals or all that. I was amazed at how many parents were there and even more amazed at how well behaved the kids were. The highlight of the day was the "Mums" race. Unfortunately, an old rugby injury put me out of the "Dads" race (or so I told Jacqui).... I haven't run for a bus in 2 years, let alone 75 yards flat out - the old hammies are nothing like what they used to be and the 10 lungbusters a day wouldn't help either!
I like the way gold went out in the futures almost on its high for the session.... Silver still lags but looks to me to be building pressure and may just pop like Belushi in Animal House.- just opinion as always.
Enjoy the rest of your day and today is Thursday, all day... see, I know what day it is.
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