It was the action down at the Funny Farm and in particular the US dollar movements, that dominated everything over the past week. Finally, on Friday the US dollar rallied and this really upset the traders in the gold and silver markets after a stunning couple of weeks, the likes of which we haven’t seen for some years. So - are we now going to have a worthwhile correction? I think it is likely and wouldn’t surprise me to see gold back to $1950 and silver around $24. We can think about it again then.
But regardless of any relatively short-term caution on gold, I do want to stress that longer term I still believe we are going to see much higher prices in gold. This correction should go a long way towards giving us a better picture on this long-term potential.
With the weakness in the US Dollar, we have had compensating strength in our dollar which has affected sentiment here in our gold stocks so that our gold index did not exceed the levels set just a couple of weeks ago. In line with this, very few of our leaders or mid-line golds could get above their recent peaks with most of the excitement restricted to the bottom end of the market. EVN, which I have always seen as a bit of an indicator for our gold stocks, on Friday was below where it was the first week of June. When pure speculative money takes over, then the ground underneath can become very unstable. I think I will get the opportunity to review XGD around 8500 – currently 9353.
A few weeks ago I mentioned that there were some signs of life in the LME Metals. Since then copper hasn’t done a great deal but both nickel and zinc have made some good progress but in line with a number of markets, they all turned down at the end of last week.
My Gift That Keeps Giving – steaming coal - got to a new low for this move this week before rallying on Friday. It has already halved over the past year or so to reach my first target but I believe it will halve again. Fortunately for Australia the price of iron ore has been quite strong which has helped our mining section hold its head high. Still can’t say that about our banks that continue to drag their heels along the bottom of my charts.
After some disappointment in the tech stocks, buyers focused on some of the sections of the New York market that had been lagging over recent months with the S&P achieving a new high for this advance. Even the Trannies have been back in focus. Less than a hundred days to the US election now so we are likely to see desperate moves to keep the show on the road. My Geniuses are still sitting at 95% invested although it would seem that a major part of the buying is from new accounts dealing in fractions. If this isn’t the height of speculation, I do not know what is. It will not end well!
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