asia and the metals

Good morning, good people and a very happy friday to you and yours,

Well, things seem to have turned around a bit yesterday for the better,
although a lot of the early gains were given back late in the session.
That's OK - it was positive and that's what counts.

Asia is being reported on the news as being off today and that's
incorrect. Japan was down -1.11%. However, Korea was up 1.85%, HongKong
was up .08%, China was up 1.04% and India was up .66%. Only Taiwan
joined Japan on the down side losing -.53%. Hardly a down day in asia.

In the metals arena, most of them had very decent gains yesterday
(coming off the lows of earlier this week), but in early morning
trading, have given most of these gains back. Yesterday morning, gold
was 550, silver 953, platinum 1058 and palladium 296. This morning as I
write, gold is at 558.00 -6.80, silver at 9.54 -.08, platinum 1056 +2
and palladium 292 -7. So you can see what kind of huge gains that were
made yesterday only to result in all of them being flat to up overall.
Closing XAU yesterday reflects some of this being 143.05 +2.25.

And there are some who think that this current correction is not over
and we need to retest the 537 area, or even drop down to 520 or so,
before it shakes out the loose hands. I really don't know.

And as I mentioned elsewhere, for investors in this sector,
particularly those that weren't around in the late 70's, get used to
this sort of volatility because it is only going to get worse . . .
MUCH worse. Should this bull market continue (as some of us believe),
the time will come when we'll see daily swings of $30-40-50 or more -
in both directions. So this recent $20 drop is nothing. Once gold gets
past $600, you'll start seeing more and more speculation in the field
and this will increase the volatility. And once we get past $600, I
don't see much in the way of taking out the old highs of $850.

Geez, when you listen to the gold bugs, based upon historical
correlations between gold and the SPX or DOW, they see equilibrium with
gold at $2000 on up. Will this come to pass? Probably. When? Who knows?

And so it goes,

Let's all have a great day and a better weekend.

peace,

rono

Re: asia and the metals

"rono" <> wrote

> Geez, when you listen to the gold bugs, based upon historical
> correlations between gold and the SPX or DOW, they see equilibrium with
> gold at $2000 on up. Will this come to pass? Probably. When? Who knows?

Just a guess, the year 3047 :-)

Re: asia and the metals

"rono" <> wrote in message
news:
> Good morning, good people and a very happy friday to you and yours,
>
> Well, things seem to have turned around a bit yesterday for the better,
> although a lot of the early gains were given back late in the session.
> That's OK - it was positive and that's what counts.
>
> Asia is being reported on the news as being off today and that's
> incorrect. Japan was down -1.11%. However, Korea was up 1.85%, HongKong
> was up .08%, China was up 1.04% and India was up .66%. Only Taiwan
> joined Japan on the down side losing -.53%. Hardly a down day in asia.
>
> In the metals arena, most of them had very decent gains yesterday
> (coming off the lows of earlier this week), but in early morning
> trading, have given most of these gains back. Yesterday morning, gold
> was 550, silver 953, platinum 1058 and palladium 296. This morning as I
> write, gold is at 558.00 -6.80, silver at 9.54 -.08, platinum 1056 +2
> and palladium 292 -7. So you can see what kind of huge gains that were
> made yesterday only to result in all of them being flat to up overall.
> Closing XAU yesterday reflects some of this being 143.05 +2.25.
>
> And there are some who think that this current correction is not over
> and we need to retest the 537 area, or even drop down to 520 or so,
> before it shakes out the loose hands. I really don't know.
>
> And as I mentioned elsewhere, for investors in this sector,
> particularly those that weren't around in the late 70's, get used to
> this sort of volatility because it is only going to get worse . . .
> MUCH worse. Should this bull market continue (as some of us believe),
> the time will come when we'll see daily swings of $30-40-50 or more -
> in both directions. So this recent $20 drop is nothing. Once gold gets
> past $600, you'll start seeing more and more speculation in the field
> and this will increase the volatility. And once we get past $600, I
> don't see much in the way of taking out the old highs of $850.
>
> Geez, when you listen to the gold bugs, based upon historical
> correlations between gold and the SPX or DOW, they see equilibrium with
> gold at $2000 on up. Will this come to pass? Probably. When? Who knows?

Hey Rono:

Always a pleasure reading your enthusiastic posts.

From what I read this recent "correction" was caused by profit taking and
was made rather temporary and mild by new interest from mutual funds. I
have to wonder if we have reached the point where the smart money is exiting
and the chump money, chasing last year's winners, is about to be left
holding the empty bag, again.

-herb

Re: asia and the metals

"Herb" <> wrote

> From what I read this recent "correction" was caused by profit taking and
> was made rather temporary and mild by new interest from mutual funds. I
> have to wonder if we have reached the point where the smart money is
> exiting
> and the chump money, chasing last year's winners, is about to be left
> holding the empty bag, again.

If that's what happens, you'll be #1 chump.

Re: asia and the metals

Herb <> wrote:
> have to wonder if we have reached the point where the smart money is exiting
> and the chump money, chasing last year's winners, is about to be left
> holding the empty bag, again.

I think this depends on your approach to investing. If you're in it for the
long haul then gold will definitely be on it's way up. But every secular
bull market has corrections and cyclical bears. It wouldn't be at all
surprising to find gold in a cyclical bear which shakes off a lot of
the "new money" before starting another run up to higher values.

Re: asia and the metals

Hi all,

Sanjay has it pegged,


Herb <> wrote:
> have to wonder if we have reached the point where the smart money is exiting
> and the chump money, chasing last year's winners, is about to be left
> holding the empty bag, again.


"I think this depends on your approach to investing. If you're in it
for the
long haul then gold will definitely be on it's way up. But every
secular
bull market has corrections and cyclical bears. It wouldn't be at all
surprising to find gold in a cyclical bear which shakes off a lot of
the "new money" before starting another run up to higher values."

There will be a lot of opps for taking profits on the short side, if
you are very quick and nimble and have a trading vehicle that allows
you to move fast. For old sluggards like me, I just ignore this static
and plan to stay long unless some of the major support levels are taken
out.

peace,

rono

Re: asia and the metals

HI Herb,

"Hey Rono:

Always a pleasure reading your enthusiastic posts.


>From what I read this recent "correction" was caused by profit taking
and
was made rather temporary and mild by new interest from mutual funds.
I
have to wonder if we have reached the point where the smart money is
exiting
and the chump money, chasing last year's winners, is about to be left
holding the empty bag, again.


-herb "

Thanks for the kind words. I agree that there's been a lot of demand
from the gold etf and the silver etf should do the same in that market.
However, this demand driven bull market has major drivers from all
over that are huge. For two years now, it's been legal to own gold in
china . . . and they don't have any social security or retirement
systems that count. This encourages them to follow the Indian model
which for momma, granny, and little sister's dowry is BLING. Same/same
for the nouveau riche in China who want to start consuming on the
Western model - and allows them to kill two birds with one stone with
BLING. India has a lot of new earned wealth and what to buy momma?
BLING. Then we can move to the middle east where there are petro $
stacked like hot cakes in tents all over the place. Well, after a
while, when you have dozens and dozens of tents filled with greenbacks,
the utility curve for them flattens out relative to most anything else
of real or perceived value and often this means GOLD. And let's not
forget many of the central banks around the world, particularly those
that are exporting lots and lots of stuff to us and holding gobs and
gobs of $. They are starting to buy gold for CB RESERVES in parallel
with the petro $. These central banks include Russia, China, some
emerging mkts, etc. I've even heard the Bank of England is starting to
buy gold for reserves (note - they sold at $280 so if you want to talk
about being whipsawed . . . ). This cb action is effectively making
gold into a 5th currency. Hell, Mexico is still talking about going
back to a silver standard currency.

So, for the bears and correctionists, enjoy, but rono is staying long.

peace,

rono

Re: asia and the metals

"rono" <> wrote in message
news:
> HI Herb,
>
> "Hey Rono:
>
> Always a pleasure reading your enthusiastic posts.
>
>
> >From what I read this recent "correction" was caused by profit taking
> and
> was made rather temporary and mild by new interest from mutual funds.
> I
> have to wonder if we have reached the point where the smart money is
> exiting
> and the chump money, chasing last year's winners, is about to be left
> holding the empty bag, again.
>
>
> -herb "
>
> Thanks for the kind words. I agree that there's been a lot of demand
> from the gold etf and the silver etf should do the same in that market.
> However, this demand driven bull market has major drivers from all
> over that are huge. For two years now, it's been legal to own gold in
> china . . . and they don't have any social security or retirement
> systems that count. This encourages them to follow the Indian model
> which for momma, granny, and little sister's dowry is BLING. Same/same
> for the nouveau riche in China who want to start consuming on the
> Western model - and allows them to kill two birds with one stone with
> BLING. India has a lot of new earned wealth and what to buy momma?
> BLING. Then we can move to the middle east where there are petro $
> stacked like hot cakes in tents all over the place. Well, after a
> while, when you have dozens and dozens of tents filled with greenbacks,
> the utility curve for them flattens out relative to most anything else
> of real or perceived value and often this means GOLD. And let's not
> forget many of the central banks around the world, particularly those
> that are exporting lots and lots of stuff to us and holding gobs and
> gobs of $. They are starting to buy gold for CB RESERVES in parallel
> with the petro $. These central banks include Russia, China, some
> emerging mkts, etc. I've even heard the Bank of England is starting to
> buy gold for reserves (note - they sold at $280 so if you want to talk
> about being whipsawed . . . ). This cb action is effectively making
> gold into a 5th currency. Hell, Mexico is still talking about going
> back to a silver standard currency.
>
> So, for the bears and correctionists, enjoy, but rono is staying long.

Rono:

I don't claim to know much about it but I would be surprised if a
"communist" state like China has no provisions for retirement. Still, a
billion or so people with rising incomes and a new ability to own gold would
have to be bullish, IMHO. Does anyone have numbers on how much gold this
involves?

From what I have read here, it seems that no one is sure what CBs are doing
with their gold. If it is true that they have been selling secretly into
the recent rally (as some contend) it would, indeed, be very bullish when
they stop. I can think of no reason why a central bank, least of all BOE,
would want to hold gold, unless they thought the world currency system was
on the brink of collapse.

Petro dollars are not stacked up in tents; they are repatriated in exchange
for investment securities. Still, all of the pressure caused by the war on
terrorism must be stimulating demand for more traditional gold based savings
among sketchy Arab entities (If I were Bin Laden I would be storing my
wealth as gold, right now).

I too, am in for the long-haul as I believe any investment portfolio should
include gold.

-herb

Re: asia and the metals

"Herb" <> wrote
> Arab entities (If I were Bin Laden I would be storing my
> wealth as gold, right now).

He doesn't need it, he lives in a hole.

Re: asia and the metals

Herb <> wrote:
> Rono:
> I don't claim to know much about it but I would be surprised if a
> "communist" state like China has no provisions for retirement. Still, a

No provisions for retirement. That's why they have such a high savings
rate (at least one of the reasons).

China's central bank fears deflation (they struggled with it in 1997 for
5yrs) and feels they have only temporarily escaped deflation because of
the boom in housing in China over the last few years.

I've heard that they may expand into more public services for the people
to keep their economy going in the coming years. So maybe something like
social security isn't too far off the horizon for them.

Re: asia and the metals

"Sanjay" <> wrote in message
news:C65If.155970$
> Herb <> wrote:
> > Rono:
> > I don't claim to know much about it but I would be surprised if a
> > "communist" state like China has no provisions for retirement. Still, a
>
> No provisions for retirement. That's why they have such a high savings
> rate (at least one of the reasons).
>
> China's central bank fears deflation (they struggled with it in 1997 for
> 5yrs) and feels they have only temporarily escaped deflation because of
> the boom in housing in China over the last few years.
>
> I've heard that they may expand into more public services for the people
> to keep their economy going in the coming years. So maybe something like
> social security isn't too far off the horizon for them.

Well, so much for the "worker's paradise." I'm sure Marx would be appalled.

-herb
>

Re: asia and the metals

Herb <> wrote:
>
> Well, so much for the "worker's paradise." I'm sure Marx would be appalled.
>

Yeah. Iraq under Sadaam was also socialist. I get the feeling the people weren't
too free and happy there either.

-Sanjay

ps, not looking for a big flame war on the rightness/wrongness of Iraq

Re: asia and the metals

"Sanjay" <> wrote in message
news:KQ7If.79888$
> Herb <> wrote:
> >
> > Well, so much for the "worker's paradise." I'm sure Marx would be
appalled.
> >
>
> Yeah. Iraq under Sadaam was also socialist. I get the feeling the people
weren't
> too free and happy there either.

Who said anything about free and happy, just free stuff for old people?

It sounds like you are saying neither country is socialist.

-herb

Re: asia and the metals

Hi Herb/all,

Sanjay responded about china.

" can think of no reason why a central bank, least of all BOE,
would want to hold gold, unless they thought the world currency system
was
on the brink of collapse. "

Not really fears of collapse, just as an alternative to the other
choices. How many $ or US treasuries do you want to own, you want
Euro's, yen, marks? What seems to be happening at some CB's,
particularly those that export to us, is that they want to diversify
their holdings. Think of it as simple rebalancing - US stuff has
gotten overweighted and they want to get things back in alignment.

"Petro dollars are not stacked up in tents; they are repatriated in
exchange
for investment securities. Still, all of the pressure caused by the
war on
terrorism must be stimulating demand for more traditional gold based
savings
among sketchy Arab entities (If I were Bin Laden I would be storing my
wealth as gold, right now). "

US$ or US Treasuries - does it really matter which? The bottom line is
again, think of them as your basic mutual fund asset allocator whose
portfolio has gotten overweighted in US stuff - time to rebalance.
Well, what with? Choices are not that exhaustive and gold happens to
be one of them.

peace,

rono

Re: asia and the metals

"rono" <> wrote in message
news:
> Hi Herb/all,
>
> Sanjay responded about china.
>
> " can think of no reason why a central bank, least of all BOE,
> would want to hold gold, unless they thought the world currency system
> was
> on the brink of collapse. "
>
> Not really fears of collapse, just as an alternative to the other
> choices. How many $ or US treasuries do you want to own, you want
> Euro's, yen, marks? What seems to be happening at some CB's,
> particularly those that export to us, is that they want to diversify
> their holdings. Think of it as simple rebalancing - US stuff has
> gotten overweighted and they want to get things back in alignment.
>
> "Petro dollars are not stacked up in tents; they are repatriated in
> exchange
> for investment securities. Still, all of the pressure caused by the
> war on
> terrorism must be stimulating demand for more traditional gold based
> savings
> among sketchy Arab entities (If I were Bin Laden I would be storing my
> wealth as gold, right now). "
>
> US$ or US Treasuries - does it really matter which? The bottom line is
> again, think of them as your basic mutual fund asset allocator whose
> portfolio has gotten overweighted in US stuff - time to rebalance.
> Well, what with? Choices are not that exhaustive and gold happens to
> be one of them.
>

Hey rono:

I think it does matter which you are in. It seems to me that those
trillions of dollars that slosh around the world currency markets want to be
parked in something bearing interest come nightfall. I don't see how gold
does this, unless you are gambling on a price rise. If the BOE gambles, it
doesn't seem that they do it very effectively. With treasuries, you know
what you are going to get and when. Gold is another matter.

Still, with long rates so close to short rates, I guess the difference
between "cash" and treasuries is not so important. But, as long as our
interest rates are higher than in Europe and Japan, I don't see many players
wanting to "diversify" their portfolios.

-herb

PS: In a somewhat related vein, we have all been waiting for the
"inevitable" rise in US interest rates for years now. I read in this week's
USNews that the 10-year treasury is yielding half a percent less than when
the Moron-in-chief took office. That is hard to understand given what has
gone on in the federal budget and in the trade accounts.