Hi Papaya Master!
How has the surf been? Lucky!!!!!
D.A. posts at Kitco from time to time....I find his posts interesting.....here is a sample of stuff I saved:
Date: Wed Apr 28 1999 22:03
D.A. (why this time its different) ID#7579:
Copyright c 1999 D.A./Kitco Inc. All rights reserved
Donald:
The big difference is that this time metals markets across the board markets are in full gear, except, as measured in the currencies of two of the biggest producers, Canada and Australia. This is the flip side of the metals market death spiral which we saw off the Asian contagion ( sounds like a good name for a Korean boxer ) . With the strength in the $AD and the $CD, there is no way for producers to sell forward, because the local price of metals is not going anywhere. Gold is within 1% of its multiyear A$ low of A$ 427/ounce. We are now in the virtuous metals cycle. The producer currencies are rising with the dollar price of the metals, keeping the local price down thus inhibiting supply growth ( forward sales ) , even as the world is chewing up more and more metal as economies recover. This train has left the station and ain't stopping for passengers.
In US$ terms zinc, tin and aluminum all made new highs today, with nickel and lead just a breath away. This could become a very familiar refrain over the next year or two. The only spike down I see coming is when the US equities markets take an 87 style drubbing. The knee jerk reaction will be to sell the metals on the recession fears, but once again the Fed will just jam up the printing presses producing a replay of 88 - 89, except this time the long end of the yield curve will take less time to give up its crash gains.
The sequence goes like this. The metals keep running ( hiho silver ) . The bonds tank. The stocks crumble. The Fed to the rescue ( again ) . The economy doesn't miss a beat. Inflation is palpable and palatable. The investing public finds gold is a very underappreciated asset.
My guess is that the first upspike in gold takes place before the equities drubbing and that happens very, very soon.
Date: Wed Apr 28 1999 22:11
D.A. (texas tea ) ID#7579:
EB and squishy avacado friend:
You're hunting the wrong animal. There's nothing that's going to get in the way of economic healing unless its an equity thud due to higher rates. Buy the stuff or short the financials. Get the wind in y'er sails mate.
Get a chart of base metals, $AD, $CD and look at them on top of a bond chart. The picture will be very clear. Consider also that G7 M1 is now growing at a better than 8% annualized rate with nominal GDP somewhere around 3.5%. If they print it, it will come.
Large billowing puffs to you and walter ego.
Date: Wed Apr 28 1999 22:05
Date: Thu Apr 15 1999 14:35
D.A. (the.attack) ID#7579:
Copyright c 1999 D.A./Kitco Inc. All rights reserved
Gollum:
It may not be the shorts who are preparing for attack. In the silver game, when the longs get serious about a big run, the first thing they do is borrow in a large load of physical and put it under the rug. In this way when the price runs, the physical market is tight, and strong backwardation sets in. If the front months are flying and the back months are lagging, then opportunistic mining co's are unable to do any hedging. They can only sit back and drool.
The real story is once again in the cyclicals. Copper just made a new high for the recovery and is over $0.67 on the May. If the macro forces are pushing on the metals, and the Goldman's of the world are on the loose, the funds short silver are going to get smashed.
All this rising base metal and oil stuff is happening in the context of a very strong dollar ( new high against the swiss today yippee!! ) . Soon the bonds will crumble, the S&P will tumble and the dollar will reverse course. Then watch the metals fly.
The deflation that never was, is fading rapidly in the rear view mirror.
Date: Tue Apr 13 1999 20:55
D.A. (gold.silver.bonds.S&P) ID#7579:
Copyright c 1999 D.A./Kitco Inc. All rights reserved
All:
The forces of global recovery are becoming more and more synchonous. Korean imports are growing strongly, indicating that a profound healing is taking place in South East Asia. As the world's economy heals, central banks are loosening the monetary spigots like there is no tomorrow. Alice Rivlen of the US Fed has even opined about a new 'paradigm', contrary to every tenet of classical economics, wherein low unemployment drives low inflation. In short, the fix is in.
Governments around the world are in love with the fact that they have deluded the populace into buying government paper at absurd prices. Short term paper in Euroland is now under 3 percent. In Switzerland as in Japan, short rates are under 1%. The deflation story is now paramount, and any increases in visible ( read non controlled ) price indicies are regarded as one off events with no meaning. Oil runs from $12 dollars a barrel to $17, and no one seems to care, even though its decline to $12 dollars from a similar price, was viewed as evidence that the great deflationary tidal wave was about to swamp the world.
The deep cyclical stocks have been very strong of late. Oil, paper, copper, aluminum, and chemical stocks have been outperformers. While the dollar has continued to surge, dollar based commodity indicies have held up well. Viewed through the prism of virtually all other world currencies, commodity prices are advancing smartly. In reaction, bond markets are slowly succumbing to the inevitable. Yesterday's decline in the long bond off 'good' inflation numbers was typical of a bear market. Good news, bad price action. The stock market is engaged in a classic last gasp, where the laggards finally have their run, even as the market leaders have trouble making new highs. This is the way all bull markets have ended since WWII. A break below 120 on the June bond will get me on the short side of the S&P's.
The gold and silver markets are now firmly setup. The technical funds are loaded up on the short side and the sharks are circling the water. It is unclear what the trigger will be, or what the target will be but the game is about to be played one more time.
The physical silver market is much tighter than the lending rates imply. In addition, a very few players appear to control a substantial amount of the potentially mobile comex inventories. Vols are coming in on the options and complacency abounds. My own pet theory is that the longs are accumulating and waiting for the Swiss vote over the weekend. If the vote is as expected and the government gets permission to sell gold look for an attempt to drive both gold and silver lower on the heels of large press coverage of the 'death of gold'. If it happens, this will be where the longs fill up the tanks before takin' her out for a spin. I can't imagine what would happen if the vote was No - they'd probably demand a recount.
I own silver for the first time in a while and will be a scale down buyer of more should the opportunity present itself.
In Pamplona there is a yearly tradition of the 'running of the bulls'. At Goldman, there is the quarterly tradition of the 'running of the funds'. Let the games begin. |
