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More Shenanigans


Gold $413 Silver $6.66 Thursday 30th September, 3am Sydney

G'day. Gold and silver appear to have picked up a few followers who must have some depth to their pockets and, more importantly, a little bit of ticker (guts/heart). There certainly seems to be a definite shift in sentiment towards the metals with more and more discussion / debate / acceptance that this precious metals bull market is the real deal. It is my contention that it is still in its infancy and that the time frame we are looking at is years, not days.

Goldman Sachs and now JP Morgan have released rather bullish statements / analysis of the precious metals and their associated equity indexes in the last 48 hours. I don't like it when everyone starts jumping on the one bandwagon.

Gold was comatose again in Asia and the U.S. GDP numbers etc. took us back to the top end of the recent range and we banged our head into the apparent glass ceiling of $414ish spot. I suspect we may get a pop through this resistance level, maybe to $417spot, and then retrace back to the $410 level. I'm just thinking out loud and not advice.

The Indian Rupee was pretty quiet at 46 to the dollar and it appears that India is still importing at these levels, but the premiums suggest not as aggressively. Watching.

Currency markets are jumpy and that has presented some great opportunities in the metals for those who are very quick. Those down spikes can look a little nasty at the time and it always looks like the best time to enter a trade is when it looks the worst. It may appear to be a little like trying to catch the falling knife, but I reckon with some educated guessing, applied logic and a bit of historical data, an oversold or overbought condition in the very short term (intraday), should be pretty clear to most. The metals are taking less direction from the currencies than one may have expected and we are always looking for more days where we see gold rise in terms of all fiat currencies.

China has announced that it has bought out Noranda - Canada's largest mining company. This makes sense when one can't access enough raw materials from the market- just buy the source! I suspect there will be way more of this happening as Asia works out that they can swap all that crappy paper they get each month, for real mines and assets. Zinc is up about 10% in the last 6 days, Nickel is back up thru $15,000 and Copper is pushing $1.40 a pound. Russia recently grabbed a chunk of Harmony Gold (HMY:NYSE) in South Africa. Which real asset company is next?

There is plenty of chatter about Central Bank sales and prospective purchases over the wires and cyberspace. I believe it is exactly that - just chatter trying to talk their book. No Central Bank is gonna be moronic enough go out and tell to the market what they are gonna sell/buy and when and at a sub market rate - therefore ensuring that the price runs away from them, generating the least possible proceeds from the sale. Pardon me, I forgot, there were Central Bank morons who did exactly that, may I introduce the Bank of England. Idiots. And don't get me started on the "Auction" system that they used which guaranteed sub-optimal performance. Some say it was a fraud against the British taxpayer, others just a show of official incompetence and then others suggest more nefarious goings on. All I know is that it smells fishy and I haven't heard one reasonable explanation of those shenanigans that occurred with gold sub $300.

I note there was a BOE Gov talking the currencies around today - watch out, these BOE guys have form on the board for moronic monetary movements.

I note that Silver has tested the low $6.70's and we may push for a nudge at $6.75-80 and even $7.25, before I would consider that we are getting too far ahead of our moving averages, like we did on our previous run through this level. Silver is still not on anyone's radar like it was earlier in the year. That suggests more available support to pile in on further moves that start to create some attention. We could easily slip back below the $6.50 level and I am looking to add to physical positions should we test back to the $6.25level.

The Amex Gold Bugs Index (HUI) is looking ok but am wary of a sharp clean out. Why? Habit. Coeur D'Alene Mines (CDE:NYSE) is still clawing back a small vestige of price respectability, but is a long ways from earlier in the year. I am looking at warrants and ETO's for some low delta leveraged bets over the new year in the metals equities. There are a few bargains if you dig around enough.

In the interest of disclosure, I have sold half of my metal equities in my personal trading account (in last 48 hrs) and am repatriating the funds. I am selling U.S. listed metal equities and buying local and Canadian listed ones. Jim Rogers is no dummy and I concur fully with his words in Randoms today - sovereign risk is risk, no matter how you dress it up. The U.S. is being re-rated (by the market at least, why not Moody's) and the results aren't nice. I have been asked why Australian and Canadian listed miners and I say because they're Commonwealth countries and there are 800 odd years of Common Law property rights and precedent to follow. The Law in the U.S. is as good as your money can buy. (I suppose that will get me in trouble but I just call it how I see it!)

All the good horse races are coming up and we do have a few vested interests running around the globe. Don't ya just love the springtime.

Enjoy the rest of the day...

position in gold, silver, hmy, euro

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