An interesting divergence of opinion from two of the more notable Gold analysts. Clive Maud is very strongly bullish at the moment (though his opinion is a bit qualified) and believes that the breakout has already started. In his February 12 piece, provocatively titled "HUI Set to Advance To 700 - 900..." Maud writes that "gold’s next uptrend isn’t a matter of conjecture or about to begin - it has already begun."
Jim Sinclair, on the other hand, has expressed a rare note of caution due to the divergence between the price of Gold and the Gold mining shares, noting also on February 12 that "Gold breaks above a key level, but not gold shares in general. I find that disquieting. There are always exceptions, we both know that. I am speaking of market phases, not of trends. Within a major bullish gold price uptrend there are bear phases. If a short can cover at a profit it is a bear phase within a bull market."
Frankly, that's about as bearish as I have ever heard big Jim. Good to know that he at least still calls it the other way occasionally.
The thing that I will be looking for over the next few days is whether we see some leverage reappearing in the mining shares relative to Gold. That's been a long time coming and without it, I don't see this move going all that much further (though it could potentially go as high as $680). So far, I'm not seeing that. Gold is about as high as it was on Friday, but we're still 4 HUI points below the Friday HUI peak. But we'll see, the day is still young.
2. In the meantime, the trade deficit for 2006 set a new record of $763.6 billion. This was the fifth consecutive annual record, and a 6.5 percent increase from the previous record of $716.7 billion set in 2005.
3. Coming back to Kimber Resources, that snake-bitten company, since Kimber's AMEX IPO occurred fairly recently, it's difficult to determine what would be an appropriate level of support for the current down trend and offer a pretty decent entry point (or reentry point). We have to look to the chart the Kimber shares trading on the Toronto Stock Exchange to see how low it might fall. Looking at that chart, I think a price of about US$1.20 (Canadian $1.40) seems like it should be support eventually. Then the long road back up. [I will have to post the chart of KBX.TO later, as there seems to be a technical difficulty in doing so at the moment.]
4. My friend Sandra forwarded to me a piece from the WSJ about the rising popularity of palladium in jewelry. The article notes that palladium is starting to look attractive not only as a platinum substitute but also as a substitute for white gold (which is gold alloyed with another metal, like nickel), because it is now much less expensive and because it weighs relatively little compared to the dense platinum. Interestingly, the article noted that "about 80% of sales of palladium jewelry come from China". I guess the newly rich over there aren't quite rich enough to afford Gold and Platinum. Interestingly, as far as I am aware, the obsession with using platinum in bridal jewelry is fairly unique to the U.S. In most other countries I have been to, the preferred metal setting for bridal ornaments is gold. If you know of a country other than the U.S. in which a metal other than Gold is preferred for bridal jewelry, let me know.
5. In a development that is bearish for Gold, North Korea agreed to terms in the 6 party talks relating to the nuclear issue. North Korea has been nothing short of a disaster for gold investors in the last year. Empty threats and blather and malfunctioning missiles and now this. [Edit: I was subsequently reminded by my friend Christine that I should probably be looking at the bigger picture as far as this issue is concerned, rather than just from the point of view of an investor. After all, I live in Seoul and I can't make any profit if I am dead. Food for thought...]
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