ALOHA !!

This is yet another DIP ... Translated that means an opportunity to "BUY". All during this gold sell off lease rates have been favorable for POG supression. I see by Kitco for the first time since this sell off began that all lease rates are UP across the board from 1 month to 1 year. That tells you the central banks and IMF(latest gold supply source after ECB)want a higher premium so the risk factor for bullion banks goes up. This is just one sign this sell off is coming to an end or has ended. Usually in the past those short POG use Fridays to take down the POG and since tomorrrow is Friday this may go til then but watch out next week and don't count on more weakness.

In terms of buying juniors and the HUI components the best time was the first big drop in the HUI which was in the one day 25 point sell off range. So far today it isn't near that and I doubt it will. The Gold/HUI ratio on that drop was over 2 points now it is back in the 1.93 range. That tells me the weak hands sold off prior weeks. My portfolio tells me the same since one of my core positions ECU SilverECU.V/US ADR ECUXF(a producer) I was able to buy at $2.21(ECUXF) and the price has never been that low since and is currently nowhere close to that.

In other words I am buying today since it is still a good day to buy and I term this a definite "DIP". Buying Canadian Maple Leaf gold one ounces and silver rounds. Its a better day to buy physical since I already bought my core shares prior and last week at lower lows.

Geopolitics and the US deficits do not bode well for a strong US dollar or US economy as Bill has pointed out. In such times gold flourishes. POG would have to tank below $600 and HUI below 300 to move the stronger hands out and I don't see it. The lease rates tell me they(Goldman and JP) are out of ammo for now! Anyone knows POG and HUI are already a tightly coiled spring so when the ammo is used up the only direction is up. Up it is!

"First of the Month Time- Aside from being the start of hurricane season, today is also the first day of the month. We again want to highlight the strength the markets have had on the first day of each month during the current bull market. Since October 2002, the cumulative return on the first day of the month has been 23.51%. This accounts for nearly 60% of the gains during this bull market."

http://tickersense.typepad.com/ticker_sense/2006/06/first_of_the_mo.html

Not wanting to 'look a gift horse in the mouth'... making some adjustments to further reduce my equity exposure.

The energy complex reported today...surprise...surprise.
Lots of crude oil gasoline distillates and nat gas around.
Bulls to the slaughterhouse!
Its going to be a while to work off the damage to
commodities me thinks.

Sell in May and go away.

Still holding my core positions in gold and silver.
We might have to wait till Fall to see new highs
in commodities. Unless the war hots up.

Kaimu,

Can you explain lease rates to me, and how you find and interpret that data? Thanks.

Never mind, I think this explains what I was asking about:

http://www.financialsense.com/fsu/editorials/2006/0119.html

Very interesting stuff. I had no idea about any of this.

Looks like gold tested the 620 area overnight in HK then rallied to 630. No matter. It triple bottomed at 640 and that didn't hold.

The open interest in gold has dropped dramatically. All technical indicators are oversold here on a ST basis although more intermediate work can be done.

For those establishing miner positions, yesterday's action was very encouraging. It looks like 600 gold is necessary to get through the 135 XAU floor.

A lot of talk out there that gold is going to return to the 575 area. You'd start to hear "the gold bull is dead" stories then! I would view that as a heck of a buying opportunity.

So let's see if $USD strengthens today. Friday's have been used for taking off positions before the weekend.

C.Note, I hope you are doing well. Yes, I am lurking out here but I try to jump in when something is amiss with gold, the market or the blog.

So far, all my miner positions are "safe", having taken them near XAU=133. It's a partial position and I'll add either on weakness (say 121) or if they happen to start rallying and close above the 145-150 level for 3 days. I'll keep building but my intention is to have a position on by end of summer at the latest and quite possibly earlier than that. "Plan your trade. Trade your plan".

I think this is just a little oversold rally in the markets. What would change my opinion is eveidence of reflation. We got a little of that from BoJ but the markets would need the Fed to pause in order to rally. I am looking for some real schizoid action. Up, down, up, down, before it moves decisively DOWN again.

You see Bill clipping off gains and stockman talking about reducing exposure? I think that is very wise.

Good trading all.

Keeping powder dry in these choppy waters ;)

Let them come to you .. never forget.