Wednesday, October 29, 2008

Embry on Gold

I'm sure many of you have seen this already but someone preaching a little hope for the gold market is good for morale in times like this.

There is much speculation about the Dec contracts for both Gold and Silver, I personally don't see an actual default in silver because of the monthly delivery limits but it should be noted that Comex stocks have shrunk by a couple of million ounces recently and probably at least half of the silver they claim to hold is not deliverable. This means the magic number is not 130 million ounces but more like 65 million. If the November contracts can lower stocks by another couple million ounce than December could be that make or break month for silver. If December, which is a normal delivery month has more demand for delivery than the COMEX monthly cap then we could see panic and a run up in paper prices. Let's hope!

Apparently the Canadian mint has added a new product to the silver mix, an 800 oz plus or minus rough poured bar that is small enough to meet standard U.S. Postal shipping requirements. I don't know who else has these bars but they are available from CMI Gold and Silver, read about them here. I can't tell from the CMI site if they ship to Canada or why we've not heard about this new Canadian mint product available in Canada. Anybody heard of these locally?

I've been asked what I've been doing and it amounts to drinking, cursing and waiting. I don't have much liquidity left so I cannot take a contract, I can't find product or at least not as a reasonable premium, (10 oz bars for $200 Canadian)and I'm not desperate enough to mug people for jewelry... yet ;)

I have been averaging down on some cheap juniors including, Golden Tag, Silver Corp, Great Panther, Olympus Pacific, and New Guinea Gold, all because they are producing something or are on the verge.

I have to admit that anybody 2 years or more away from production are quite likely going to go bust or get bought out for pennies on the dollar. It sucks but it's highly likely that the majors with liquidity are going to go on a discount feeding frenzy.

With all this bailout money flying around why the hell can't governments put together an agency and offer financing to the juniors based on merit of the resources. At some point bags of Asian reserves are going to steal all the potential resources from the Americas if the majors don't do it first. The holders of good exploration company stocks will get bent over the bottom bunk like some bad prison movie.

My last market play was in the HBP Gold Bull, which is supposed give you a 2x multiple up or down with the price of GOLD. I believe we are in the gold bottom, (way over sold) and I think we are very near U.S. dollar top. Anyone who thinks a country who just raised it's debt obligations by 1.5 trillion in recent months is a safe haven is an imbecile striving to reach idiocy. U.S. interest payments will soon approach a point of default and even the mighty IMF will not be able to intervene leaving the printing press the last resort.

I think it's time for the people of western nations to go home, hug their kids and explain Santa is not coming this year, and perhaps never again.


Anonymous said...

Do you think silver price is in its bottom too?

Anonymous said...

hell yes, it's many dollars below the physical selling price, it's at or below the production price for some mines. Some zinc, copper, lead mines that get silver as a byproduct are one the verge of closing due to commodity prices, cutting supply.

If I had enough $ for a contract I would buy several.

Anonymous said...

Well, I picked up a gold maple today (That's all scotia has apart from good delivery bars...) and another gun.

This weekend is a big grocery shop and I'll be that much more ready for whatever comes.

Anonymous said...

Been looking at the HGU here as well... it was $6 this morning... Looks like the bulk of deleveraging is done; I'm actually seeing some green on the screen these days.

Question: If there is a default on gold on the COMEX, what are the implications for holders of HBU? Any idea?

Anonymous said...

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