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The Greenback Bath


Gold $411 Silver $6.40 Friday 24th September, 3am Sydney

G'day. The dollar has taken a bath in recent days and more of the same today with the Euro through 1.23 and gold getting a wriggle on and briefly flirted with the $412 resistance that we have discussed recently. The jobs numbers were right on expectations so we won't find any answers there. Metals equities went nuts early in the session as well.

Gold was pretty quiet all day in Asia and the first signs of life was reasonably early in Europe before the action heated up going into comex open and we saw a fairly sharp rally of 3 or 4 bucks and we have seen consistent buying throughout the session. Even the OIL SPR announcement didn't shake out many longs and I am astounded that anyone thinks that this will make any difference in the scheme of things, apart from a misplaced short term sentiment spike. Politics only, in my opinion.

Reckon we will continue testing the upside in both the metals for a few days yet and at present don't want to try and get too cute with them by trying to juice up returns. Check the last gold bull and you will note that most of the money was made in less than 30% of the timeframe and that if one is not "in" during those moves then it won't matter a lick how much you "juice" up the original position. The big moves are what we need to be positioned for. ... I call $20 since Sept 8 as a move we don't want to miss. All my indicators are positive for the first time in a few weeks.

The Rupee was pretty quiet today and this spike in gold may well temper their enthusiastic demand for gold, for a brief period. The Aussie dollar, Kiwi and Rand all had big days against the dollar as the commodity and high yield currencies continue to attract bids. Look out for Snapper.

Silver ran into a wall of selling around the $6.42-44 spot level and it appears there are some determined sellers ahead of the 200DMA. I wouldn't expect too deep a pullback on weakness, maybe to $6.30-25, before a serious tilt at the $6.50 level. I am a little wary of one of those 20c massacres that we have come to know and love so much recently. Still have no reason to be anything but optimistic on the silver price outlook from a fundamental basis. Technically there is still work to be done. All indicators are positive at present.

The metal shares have all caught fire recently with the Amex Gold Bugs Index (HUI) making a charge at 220 again, not seen since the April debacle. Bema Gold (BGO:AMEX), Golden Star Resources (GSS:AMEX), Silver Standard Resources (SSRI:NASD) and Coeur D'Alene Mines (CDE:NYSE) are the leaders of today's pack. In the interest of full disclosure, I sold some of my personal holdings this morning in a few metal companies that have run pretty hard and am sticking the cash in physical gold/silver. I will reverse the trade if and when things move as I expect. Note, the exposure is always to the metal price, one way or the other.

Gotta fly sorry.... Enjoy the rest of your day ....

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position in gold, silver, gss, ssri, bgo

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