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Drop Dead Metals



Gold $400 Silver $6.30 Wednesday 8 September, 3am Sydney

G'day. How predictable. Jobs numbers on the face of it look ok and everyone wants dollars again and metals copped a hiding in sympathy. Silver is down some 10% since on large scale paper silver liquidation. I'm buying REAL BARS down here, thanks for the price discount, whoever the paper silver sellers are. Physical silver is still sought in volume and premiums reflect such. Don't be fooled by the price of "paper" metal versus REAL METAL. Real metal is being soaked up throughout Asia and the Middle East. The price will not stay down low for long as too much physical gold and silver will change hands at these prices. Just my humble opinion.

Gold has traded very much as expected with initial support at $402 and then $398. I am comfortable long gold around here and expect we won't see south of $392 (but we never say never) and there could be a sharp spike down to $385 (but again the timeframe for action should be shortlived). No matter how deep this pullback, I expect we will see a new high for gold before the start of the new year. Never advice, just sharing the thought process.

Silver back through $6.25 is fantastic news for physical metal buyers and I expect that we will not see prices down much lower for very long at all. Just my opinion and wrong lots, but when I buy physical metals, I don't really care what it costs as long as it is close to the spot price as quoted in the market. That is getting very difficult to achieve especially when we get silly price action like we are currently experiencing. I expect we will be back above $6.45 before the week's close and I would be more than surprised if we traded below $6.

The Amex Gold Bugs Index (HUI) is hanging tough at the 200 level and I think it may test 190 again on a clean out before resuming its perch back north of 200.The silvers like Silver Standard Resources (SSRI:NASD) and Coeur D'Alene (CDE:NYSE) have been hit hard today but when taken at face value the moves have been very tame. Silver is down 10% yet their associated equities are off not much more. The leverage to the silver price works both ways and I would've expected more downside on the equities based off the metal price move.

I see that Barrick Gold (ABX:NYSE) has come out with some rather bullish gold comments by the CFO. There is mention of high $400's gold this year. If this comes to fruition, what sort of mark to market loss are they gonna have on their 13 million ounces of hedging? The Sons of Gwalia hedge book debacle could well have a bunch of bank credit officers feeling some heat, and maybe they will take more than just notice of an additional billion dollar credit exposure to the sector via ABX. Will they ( bankers) be moved to act to limit their exposure? If ABX is so bullish, then they should well be able to cover their hedge book on this weakness and absorb all this "liquidation". A natural fit... maybe. No way.

I got asked a quick question as to who I think would be better as President and all that. I watched a little of these "convention" things over there in the USA. Is this stuff for real? Where is Martin Sheen from the West Wing???

It appears that all members of the family down here have something wrong with them. The latest "victim" was my horse Ski Lodge, who raced on Saturday and mid way through the race she stopped racing and the jockey pulled her up. She suffered a heart condition .. the newspaper reported as follows..."Trainer Bob Thomsen has decided to retire Ski Lodge after the mare ran disappointingly in the Tattersalls Plate (2400m) and was also displaying cardiac arrhythmia.".... She is due to get "served"(read shagged) next week at Coolmore by the stallion - High Yield. Hope she doesn't drop dead in the breeding barn.

We had a massive hail storm here in Sydney on Sunday arvo. Golf ball sized hailstones hammered away for about 15 minutes and blanketed Sydney. My kids loved it and ran around in it with their bike helmets on... they still got bruised on the arms and all but that's life (hailstones hurt as they found out the hard way). We don't get snow so this was as close as it gets. See the attached photo of a guy snowboarding on the hill running down onto Bondi Beach.... Wild.

Enjoy the rest of your day...........


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position in gold, silver, ssri

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