Thursday, September 3, 2009
Gold Breaks $980, Barrick Soars
It is 5:44 AM and the coffee is ready! What a great move in gold yesterday and it appears to have a little steam left today. The yeller stuff broke $980 and spot silver passed $15.80 shortly after lunch London time. Those were my two Labor Day bets so the readers owe the Colonel two beers (The Colonel's Beer Derby, what's this?). The score so far this year for 13 bets is 8 beers for the Colonel, 2 for the readers and 3 open - Yee-ha! Silver has retreated at bit from the highs but there should be more legs to this precious metal rally. The gold miners also took off with Barrick (ABX) jumping an amazing 8% in a single day. (Mid morning UPDATE: Barrick breaks $39 at 12.22 PM EDT, a triple play gives the Colonel one more beer; 13 bets - 9 wins, 2 losses, 2 open)
How do I fell about the rest of my gold predictions for the year? I'll stand by $1050 before Christmas but a drop to $880 before Thanksgiving is probably out of the cards. I made the latter bet earlier this year when gold appeared soft and headed for a correction - hey, you can't win'em all! If we do have any pullbacks, the Colonel would be a buyer somewhere below $950.
Gold is a wonderful way to diversify and a traditional hedge against inflation but I am not a "goldbug". Dennis Gartman, the "Commodity King", suggests 2-3% is a sensible proportion for an individual's liquid assets and I agree. In his words, "...you can't eat the stuff!" I try not to chase rallies and buy on the dips. To hedge my gold position I have been buying the dollar through the UUP Exchange Traded Fund (ETF) since they historically move in opposite directions. I believe the dollar is headed for a rough ride next year but it wouldn't surprise me to see a dollar rally this Fall if the markets head south. Just some food for thought.
If you are a "goldbug" and there's nothing wrong with that, you may find this article interesting:
China pushes silver and gold investment to the masses
(Lawrenece Williams, Mineweb, 09/03/09)
Apparently, the Chinese government is now encouraging its citizens to invest in gold via television ads. Whoa, these folks are sounding more like us everyday. I take this news with a grain of salt; if everybody in the world is rushing to gold, it might be time to check where the doors are in the theater. The ole Colonel doesn't believe this to be the case.
For now, let's be happy we live in gold country and celebrate the rally! The Duke and the boys went prospectin' out by the Eldorado yesterday and haven't been heard from since. Looks like we've got another good day for the miners.
Enough talk, let's walk the walk:
CAUTION: 4-WD ON, Off-Road Market Conditions Ahead
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what is this?)
Oil is up $0.15 in early trading to $68.20 (October contract); Gold is up $3.8 to $982.3 (8:26 AM update, December contract, most active); Silver is up $0.325 to $15.690 (December contract); Copper is up $0.0345 to $2.8355 (December contract); Molybdenum holds at $17.00.
The DOW is down 2.87 points to 9277.80; the S&P 500, down 0.27 points to 994.48. The miners are happy campers:
Barrick (ABX) $38.52 up 1.66%
Newmont (NEM) $43.78 up 1.51%
General Moly (Eureka Moly, LLC) (GMO) $2.70 up 1.12%
Freeport McMoran (FCX) $63.07 up 2.06% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are happy too, (a "tell" for General Moly):
Nucor (NUE) $43.41 up 0.16% - domestic steel manufacturing
ArcelorMittal (MT) $34.83 up 2.38% - global steel producer
POSCO (PKX) $91.49 up 1.18% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up 1.09% to $1,05,711.16 (what is this?).
Headline Photograph by Mariana Titus