Leonard Kaplan likes the gold action
GENERAL COMMENTS:
Today the precious metals markets saw a whole raft of bad news, but they remained relatively unchanged. We saw a USD
that was nicely higher, we saw equities markets that were nicely higher, and the South African Rand hit new all time lows
(no surprise in that, of course) while the Australian Dollar was lower as well. And yet, the gold market took that all in
stride and closed down only about $1.30 on the day. Silver was just fractionally lower while platinum and palladium were
a bit higher. But, all in all, it was a rather quiet day. Prices could have gone a lot lower on the basis of the news, and yet,
it didn't happen.
Silver made fresh 8 year lows but was very unconvincing at its attempts to plumb new prices. Yes, I know that there are
many analysts and traders who see silver going much lower, but I remain fairly positive that the current levels, more or
less, will hold. The highly aggressive actions by the Federal Reserve Board in the USA, considering the half point drop in
interest rates that the market expects tomorrow, will do more than most think over the course of time. Yes, the money
supply is rising extremely rapidly and interest rates are going to be the lowest they have been in about 40 years. In
historical terms, this has led to inflation, and I agree with this supposition. But, it will take time. The Fed is much more
concerned with economic growth at this time and will harbor more than a bit of inflation news as their goal is to resurrect
the economy. Gold and silver has given up all their "irrational exuberance" as safe havens, and now look to have
"irrational complacency". These levels look cheap.
The white metals, platinum and palladium have been buoyed by superb vehicle sales in the USA, the news that Norilsk is
curtailing sales, and the fact that the Japanese public is fairly heavily short the market. This newsletter has been bearish
the PGM's for what seems like eternity, but now, I am looking to buy dips as we have seen significant and lengthy
declines. It would appear the time has come for a bit of a counter-trend rally. |
