http://www.kitco.com/charts/livegold.html

cheers GF.

This should be rebound time

Yes, but didn't expect it to bounce this much.

November 2010

43 Years of Stockmarket Experience writes...

Gold is at $1404 oz. Silver is at $27.90. The NAV of your fund has raced ahead in 62 weeks from 100p to 181.1206p and we hope that the best is yet to come, the fundamentals driving Golds rally are as strong as ever.

Gold is pushing upwards, and we believe that due to operational gearing the Fund will continue to do so too! Last week we saw 'Obamanomics' at its finest. After a trouncing in the Mid Terms, which will see Obamas flagship legislature unpicked by the Red House of Reps, and a now two year long period of bureaucratic stalemate, the Fed announced on Wednesday the clearing of the route for a second bout of Quantitative Easing. So the dollar will be devalued rapidly. And we believe that this is a process that has a couple of years to run. But no trading nation can afford its currency to be uncompetitive and so the G20 squabbles like ferrets in a sack as the great nations of the world engage in competitive devaluation.

The pickle that the US finds itself in will eventually lead to the demise of the Dollar as the World's currency. In the meantime it'll see Gold, and Silver for that fact, whiz further ahead. By some measures US unemployment has reached circa 20%, and the real scale of the debt that the US faces is yet to be realised by most Americans. In the next decade the US HAS to completely refinance itself to stay afloat. The state of the economy is that as of the moment, America's second largest Creditor is China, with the Treasury in the top spot. After America's continued attempts at currency devaluation, the US is, needless to say no longer in the PRCs good books.

At some point in the future the Chinese will decline to further the funding of their main Currency competitor. The World however is currently not yet ready to trust the Renminbi. Until the time that it does we will continue to see Investors fly from Cash and cash denominated investments to hard Asset classes, i.e. Gold, Silver, etcetera. We are even seeing Oil creep closer to $100 barrel.

The reason for the flight to safe haven asset classes is that the US, plus the majority of the Western World (including Japan), are so heavily indebted that there is no other feasible option but to maintain miniscule interest rates while devaluing paper currency to whittle away at the 'real' value of their debts. To draw upon the words of John Maynard Keynes 'Belligerent Governments, unable, or too timid or short-sighted to secure from loans or taxes the resources they require, print notes for the balance'. The US has exhausted its tax policies, and almost its debt capabilities, and instead of tightly reigning in decadent spending and promoting pro-business legislature (like for example China has), the US has decided to electronically credit its account with Dollars. The result is 'monetary dilution'. Put simply, in these untoward circumstances the Dollar in the pocket today will be worth less tomorrow ( to misquote Harold Wilson). The fundament al reason for this is that as more currency finds itself in circulation, Inflation ensues. Inflation has, until recently, not been taken seriously. We have recently identified that numerous wholesale commodity prices are increasingly on the way up. For example, Agricultural Raw Materials are up 24%, Coffee 45%, Barley 32%, Beef 23% and Sugar 24%. For the naysayers of Inflation, how long will it be before we see these increases at wholesale level trickle down to the more familiar retail prices? On a trivial level Next is set to put its clothes prices up by 8% as of next year.

More seriously, the argument for Gold has never been so compelling. Accordingly, this month we have taken part in the placing of a new investment vehicle with a mandate to invest in Gold stocks (more on that later). Tom is at the helm of the astutely selected stock portfolio. We reckon Gold and Silver will continue to push on higher. Your Fund is the top performing Unit Trust in its class with a year to date increase of 73.4%, dramatically outperforming Golds year to date increase of 26.9%. Since launch the Fund is is up by 81.12%. Of course past performance is not a reliable indicator of future results and we would like to draw your attention the important risk warning at the end of this message. In light of this our investment strategy remains in tact and stable. We are not deviating; we continue to add to our attractively priced holdings as and when we feel it appropriate. This month we have been nibbling at and compounding our positions in, amongst others, Ariana, Ovoca, Norseman, and Angel Mining.

You may say ''but we are in a frenzy''. Having seen many frenzies during a 43 year stockmarket career I can say for sure that we are not. In terms of gold we are still 30% below the real all time high price. When a frenzy starts gold will shoot ahead in a straight line gaining $50 in a session. And then the next. And then the next. The climax of any upswing is always that dramatic. What we see now is a $20 gain one day and then a $10 retreat. The trend is up but it is not straight line. It is not climactic. And in terms of equities: where is the bid frenzy that marks the top of any rally? Where are the quite ludicrous movements on the basis of mere rumour? Has your postman told you to buy gold stocks yet? Yes there is enthusiasm for the sector but not madness. Not even signs of it. We are still in the foothills of a major movement.

Robert Sutherland-Smith

The price of silver has also perked up significantly.It is now much more in tune with its historic ratio to gold of about 55 times.

Defies logic, imo. Up today for no apparent reason, when most other stocks (including gold miners) were down at the open!

merely a bounce off the 50(?) dma .... i'm out of these for now

Worth watching though as sub 900p would be a good entry point, imo.

I don't think that will happen,Harry.The way that I see it,after 8 consecutive days of falls,the most in 22 months(Jan 09) a bounce is on the cards. Especially with the price of gold having fallen by about $100 in the last little while.

This is getting creepy.......sold mine this morning cyners, made small profit but that will do, was hoping to see the 17 around xmas........not going to happen.,.

do the sirens call?
gold has now got to $1400 and POG sp has just peeked through 200 dma ..... a reasonable punt, or will it yet again prove to be a false dawn to be rudely shattered by yet another duff announcement or downgrade from the management

RIO, is not a true gold play, though it tends to react with the bullion price, and makes another interesting possibility

of the second-liners, i still happily hold CEY even though i top-sliced there the other day

there are of course a zillion "joke" stocks for the lemmings to bat around - a few will make a good profit (if they remember to bank it) while others will buy at the the top and stand goggle-eyed when they crash again

Damn. Missed the boat again! Was so busy watching other stocks, that this one has got away. Not a false dawn, imo.
Surely RRS is a better tracker of the gold price, though a very expensive stock? There are so many factors affecting RIO, as they are miners of just about everything, that I don't think that gold is a good guide. In fact, gold is a by product of their copper mining activities, as is sulphuric acid, molybdenum, silver and some borates.
Will be interesting to see the next production figures from POG.

H2SO4 is dirt cheap to produce, so worth diddlysquat, and for reasons with which i shan't bore you all, difficult to transport ..... i also thought it was used in the processing rather than being a by-product of the actual mining.

RRS
an interesting suggestion, though it is not a stock i have ever followed ..... however, i note sp dipped to touch the (starting to rise) 25 dma, so this could make a profitable trading opportunity

As usual sold at the wrong time....wish I held my batch at 911 now.,.

Russia gaining the World Cup can only be a plus for POG

as an aside - i wonder if FIFA is actually as corrupt as the european parliament .... the latter is totally undemocratic and answerable to no one ...... this allows all those aboard this truffle-laden gravy train to live like minor african dictators and their entourage - or perhaps rooting pigs would be more apposite

Perhaps The Ruskies were able to make it worthwhile for the FIFA officials to vote for them! It is certainly a possibility.

even very likely .... ditto the qataris

Heading for support at c1000p.

The market is flagging some poor numbers on the 27th, but it may now already be in the price, any thoughts?
Shares which zig-zag side-ways make me a little aprehensive?

i ought to lose patience with POG but on this one i am obstinate and continue to hold though the signals say SELL