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Been There, Done That, Got the T-shirt...



Gold $399 Silver $6.10 Friday 10 September, 3am Sydney

G'day. Another day, another terrorist bombing. This time in Jakarta and apparently directed against the Australian Embassy. Timing couldn't have been better for our incumbent administration and "fear " will be the major card played during our current election campaign, as it will in USA and UK. The Aussie buck got hit lots but that doesn't worry those of us who own gold. Gold in Aussie terms is doing just fine thanks.

Gold followed the dollar all day. Up a bit, down a bit ... zzzzz. PPI tomorrow may help some but it appears nothing happens in the metals without a dollar move preceeding. Suspect we are $397-402 till 8.30am tomorrow. Silver should stay $6.10-20 but you never know with this little puppy. Gut feel says we're closing gold at the week's high tomorrow but we could also as easily see $392 if we get a left field trade number or something. Again my take is that the downside is negligible in comparison to the upside potential. The longer term risk is skewed all one way, in my opinion.

People are asking me about timing their entry to the metals markets. This is nearly impossible lately. The time to buy has been when every alarm is ringing and signaling "danger" while the time to sell has been while the market is in a buoyant mood. In other words it has been very much a contrarian trade. I look at it a little this way.... Whether you buy gold at $400 or $390 in the next month, will it matter with gold at $500 in a year or two? If you try and bottom pick and hang out for those last few ticks, will you be chasing it higher for the next bunch of dollars? An old mentor of mine always said .."Don't try and pick bottoms. Picking bottoms will leave you with smelly fingers." Smaller positions with larger stoppies could well help overcome the violent whipsawing that many managers are experiencing recently.

The Amex Gold Bugs Index (HUI) still nudging the 200 level and I would expect a close above that level today with the midday Euro rally and small metals bounce. The shares have been resilient in the face of the metal weakness lately. Take for example Hecla Mining (HL:NYSE). With silver at $6.10 on 28/7, Hecla was trading $5.25 yet today with silver the same price the stock is $6.... WHY? There are other examples of such interesting valuations and we just have to suss out which one was/is wrong.

I got an email from a Minyan asking me if I had revealed to the world that I stored my gold under my swimming pool. Not a chance. Just giving you all some ideas where to hide your metal. Remember that a million bucks of gold would fit in a briefcase so don't get too concerned about "size" of storage facility. Structural steel is a great help when hiding metal. Steel roof beams or trusses are good to place bars or coins on. A 100 ounce bar of silver, covered in the same material as your window curtains, makes a great doorstop that no thief would look twice at. Use your imagination but don't outsmart yourself and hide it in such a great place that you can't find it when you want it. Been there, done that, got the T-shirt. ....

Real asset prices are rising everywhere in the economy.

I see that the NFL footy is starting back up again and that the Jets are bound to suck again this year. Best get the whipping post out again already. What limb is that young QB gonna break this year? I see that there are two Aussie guys lining up against each other this weekend in the Dallas-Minnesota game .... Pity it takes 4 hours to play 45 minutes of football.

Until tomorrow and the PPI and Trade Balance.... Wooo-hooo.


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position in gold, silver, euro, hl

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