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November 30, 2006

Jobs, inflation data pushes gold higher, Thurs., Nov. 30, 2006, 8:48 AM

Along with recent softness in payroll data, the U.S. Labor Dept today posted jobless benefit claims data showing the highest in more than a year.

Tied to a shockingly low GDP number for Canada, released this morning, it may be apparent that despite modest increases in U.S. inflation that also were reported this morning, central bankers may have to cut rates sooner than later.

Gold traders are taking this data, plus the falling $USD, into their decision to bid up Gold. $GOLD jumped $8.50 to $650.30. Spot is now up to $644.10 after hitting a high of $645.90 minutes ago.


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Posted by Posted by Bill Cara on November 30, 2006 08:48:14 AM | Category: Economics , Gold

Discourse

Bill:


I live in Portugal, Europe and I've bought a fund that invest in gold miners (Societe General gold miners F). The fund is priced in US dollars (not Euro hedged).
The fund invest primarily in Canadian stocks (65% of the total value of the fund is priced in Canadian dolars ). As that, the fund is VERY dependent of the EURCAD exchange rate.
Since 24 of October, the CAD has lost 7% (!!!) against the EUR.
What outlook should be expected for the EURCAD exchange rate?
I your opinion, will the share apreciation outprerform the currency depreciation?

thank you.

Posted by: Bullion [TypeKey Profile Page] at November 30, 2006 11:11 AM [link]

Bullion,

With this morning's release of 3Q06 GDP data for Canada, which was a lousy number, the Cdn Dollar tanked -- now trading 87.57. I was thinking that as Gold breaks to the upside as it is today (+12.00 near Futures), we'd have a much stronger CAD. The recent action by the govt of Canada to tax Cdn Business Trusts, which flew against their stated policy, while probably needed for fiscal reasons, was a shocker to foreigners -- which pusshed the CAD down. This low GDP is another hit.

I still believe that Canada is in terrific shape business and govt budget wise, so within a year I expect the CAD to be trading up to perhaps 92.

So hang in.

Posted by: Bill Cara [TypeKey Profile Page] at November 30, 2006 11:31 AM [link]

Bill,

Looking at how quickly gold and the miners have moved and wonder what you think now. For example Agnico-Eagle (AEM) now has RSI-7's all above 70 which is typically the signal to start taking profits. It seems hard to sell so soon, but it always does when things are going so well and it might be the prudent thing to do. Any thought?

Posted by: bb [TypeKey Profile Page] at November 30, 2006 2:47 PM [link]

bb I am in a similar situation with GFI since establishing a position week ago Monday, does not the weekly RSI-7 need to be above 70 as well? I almost took profits yesterday but realized the weekly here is in the mid-fifties; it went to the moon today so I suppose I better go back and check the weekly again.


Posted by: Rick45 [TypeKey Profile Page] at November 30, 2006 2:53 PM [link]

For AEM, the daily, weekly and monthly RSI-7's are all above 70 and the daily is close to 90. Perhaps a strategy would be to take profit in AEM and move to one which hasn't moved yet.

Posted by: bb [TypeKey Profile Page] at November 30, 2006 2:58 PM [link]

Bill now with the wage numbers released I suppose Mr. Malpass would like to retract his call for a rate hike per Q1 2007 as stated on bublevision yesterday afternoon :)

By the way, are there ever ANY exceptions to your daily/weekly RSI rule? Note you made a call on ABB recently, however none of us are getting any younger waiting for a pullback noting it's chart has defied gravity!

Posted by: Rick45 [TypeKey Profile Page] at November 30, 2006 3:01 PM [link]

One month to go and only one gold forecaster anywhere near. Ross Norman of Bullion Desk looking a clear winner.

http://www.lbma.org.uk/publications/forecast%202006/forecast2006_gold.htm

And here's a bit of what he had to say:-
"2006: arguably the toughest gold price forecast to make in a generation. Disconcertingly the market appears to have migrated from something that one could readily measure and weigh according to a reliable set of supply/demand statistics. External factors are likely to remain positive for gold: US dollar weakness, inflation, geopolitical tension (Iran), fewer US rate-"

http://www.lbma.org.uk/publications/forecast%202006/forecast2006Norman.htm

Posted by: karzy [TypeKey Profile Page] at November 30, 2006 3:13 PM [link]

Hey Bullion - My daughter is living and studying in portugal. Todos na minha familia falamos portugues. I'd love to talk with you about the country.

Posted by: Jock [TypeKey Profile Page] at December 1, 2006 10:39 AM [link]

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