Gold! Gold! Gold! Gold!

Silver and its Large Short Position
BY MOGAMBO GURU - 23/09/2009

Everybody knows that I can always be counted on to go ballistic about silver being such a Screaming Freaking Bargain (SFB) because of (according to the most recent Official Mogambo Count (OMC)) more than a dozen very good reasons, which is a lot of reasons, and that at $17- and-change per ounce, silver is loudly saying, “Buy me! Buy me!” although obviously not in the literal sense, nor (perhaps less obviously) in the “voices in my head” sense, which shows I am responding to therapy and why everybody is so pleased with me.

One of the reasons for my bullishness and bullheadedness about silver is the large short position, which is the number of ounces already sold (opening the short position) but which have not been bought yet (closing out the position), which means these shorts are going to get clobbered if they have to cover their short position by buying silver at a higher price than they sold it.

So I was very interested when Ed Steer’s Gold and Silver Daily reports says that the commodity futures market report shows that bullion banks’ “silver net short position now stands at 213.6 million ounces…about a third of world silver mining production…all held by ‘four or less’ bullion banks.”

He characterizes this as “grotesque beyond description”, which I guess it is, since it is hard to even imagine such a thing, which implies that these “four or less” banks are so stupid that they would be short silver when the fundamentals are so compelling that my throat is bloody and raw from screaming, “The fundamentals of silver are compelling!”

And this is even ignoring the headline “Gold & Silver Market Alert - Buy before the Breakout!” from Julian Phillips at Goldforescaster.com, which reflects my sentiments exactly.

In gold, the situation is similar, in that Mr. Steer says, “The bullion banks’ net short position now stands at 211,342 contracts… 21.1 million ounces. This is well over 25% of world gold production. This is also grotesque beyond description”.

Suddenly I see an opportunity to hide my rising excitement and get a quick laugh! So I said, “This means it is NOT ‘beyond description’ when it is perfectly described by silver, which is also ‘grotesque beyond description’ and which can be described as ‘like gold’! Hahahaha!”

Well, I am laughing at my own joke and having a wonderful time when I looked around and noticed that nobody else appreciated my little joke about circular reasoning, which, upon reflection, I admit is pretty bad, and I am pretty embarrassed about it.

I don’t know why I thought it was funny, except for maybe it’s these new pills that are supposed to keep me from screaming my guts out in fear about the coming collapse of the dollar and the attendant horrific rise in consumer prices that destroys America and plunges us into a post-Apocalyptic nightmare. And, parenthetically, they work pretty well, too, except for the catatonia and the, you know, drooling.

Mr. Steer sees my embarrassment and starts talking about how many of the owners of futures contracts in gold and silver said, “We want our metals!”

People with inquiring minds want to know, “How much gold and silver was delivered so that we can maybe see if the Mogambo Who Thinks He’s So Hot (MWTHSH) is actually turning out to be right about gold and silver going so much higher in price because the despicable Federal Reserve is creating so much money and credit that inflation in consumer prices is guaranteed, which would be indicated by a rising price for silver!”

Well, it turn out that “The final totals for August are as follows… gold 5,728 contracts [572,800 ounces] and silver 91 contracts [455,000 ounces]“, which doesn’t seem like a lot, but what in the hell do I know?

So, I report these things without knowing what they mean because I am pretty stupid and I am just in it for the money, so all I can ever see is the obvious, especially when it is pointed out to me, which he apparently does when he says it means, “August was a big month for gold deliveries…but not for silver. September is a big month for silver deliveries…but not for gold.”

I still don’t know what it means, but a big buying of gold and silver every other month is plenty enough to keep their prices rising and demand growing, which is Another Good Reason (AGR) to buy gold and silver beyond the obvious good reason that they always soar in value and price when the government is acting so irresponsibly, or when the Federal Reserve is acting so irresponsibly, but especially when both of them are acting irresponsibly, like now!

It’s enough to make you squeal with delight, “Whee! This investing stuff is easy!”

Disclaimer: I’m a silver bug and hold silver.

This is a must read article if you are a gold bull or sceptic…

Gold bull still has a long way to run

By Adam Hamilton & Scott Wright | 21.09.2009

One-thousand Federal Reserve Notes per troy ounce! This past week gold edged over $1000 to close at its highest levels ever witnessed. This much-maligned investment has nearly quadrupled since its secular bull’s humble beginnings in April 2001, a fantastic 297% gain compared to the S&P 500’s pathetic 7% loss over this 8+ year span.

With gold being the best-performing major asset of this decade, and now surpassing the once-unthinkable $1000 mark, many investors are growing wary of its future prospects. Is gold too high today? Are $1000+ levels unsustainable? Is gold’s secular bull nearing its end after this metal’s epic run? These first tentative steps over $1000 are really fanning the flames of doubt.

Read article

The only way is up … for gold
Colin Jacoby
Monday, 21 September 2009

THE gold bulls are out in force today at the Excellence in Mining and Exploration 2009 conference with an analyst tipping the precious metal to hit $US1300 an ounce by the end of the year and $2000/oz in 2010.

In the first session of the conference this morning, Martin Place Securities managing director Barry Dawes told delegates that the outlook gold was bullish with prices expected to be strong into the foreseeable future.

You will have to take out a subscription to miningnews.net if you want to see the full story… and no I don’t get a commission…

http://goldprice.org/gold-price-australia.html

I’m trying to get my head around this while factoring in the AUD:USD

Can someone clever explain it to me (please).

I’ve been in Giralia for several years. They have enormous upside and have made steady gains for me so far (337%).

They have a lovely range of projects and have fingers in lots of pies.

It has been a bit of a mystery as to why the market hasn’t supported them better….

Note the list of spin offs… On the lower right of the image. These by and large are robust plays.

The image below shows some of the more recent JVs.

There is a simple method for Australia to keep its’ hold on oour resources or at least some of them…

It is good to see this being explored again

Explorers need incentives, Roche

11 September 2009 | by Michael Mills

Queensland Resources Council (QRC) chief executive Michael Roche has called on the Federal Government to introduce tax incentives for junior minerals explorers, such as a flow through share (FTS) scheme.

Reports from Australian Bureau of Statistics indicate that mineral exploration activity in Queensland fell by 38% during the 2008-09 financial year.

Over the same period, greenfield exploration investments across the state collapsed 61% to just $16.5 million, the lowest quarterly total since the 2007 March quarter.

According to Roche, the global financial crisis has increased the shortfall in new exploration activity in Queensland.

“Exploration is essential if the governments are serious about replacing a number of world-class mining operations in Queensland that are nearing their end of their commercial lives,” he said in a statement.

“Analysts agree that the supply of new investment capital is not going to improve quickly, it is urgent that exploration is stimulated through the tax system.”

Under existing taxation arrangements, junior exploration companies with little or no taxable income are unable to deduct exploration expenses immediately.

The vast majority of junior explorers do not have an alternative income stream, so their costs are pushed higher.

This results in lower levels of activity and fewer substantive new discoveries and projects.

According to Roche, a FTS scheme would allow unusable corporate tax deductions to be transferred through to a junior company’s Australian shareholders

“Eligible shareholders would then be entitled to use ‘exploration tax credits’ to offset their tax liabilities, thereby maintaining investment momentum,” he said.

“This has been demonstrated successfully in Canada for more than a decade.

In May, the QRC and nine other resource sector bodies presented the Federal Government with an economic study forecasting that 4000 new exploration jobs would be created in Queensland and Western Australia if an FTS scheme was introduced.

The report provided strong evidence that a scheme would result in increased exploration expenditure by 10 to 30%.

“The Queensland Government’s election commitment to become the greenfield exploration capital of Australia by 2020 will stay under a cloud as long as this comparatively modest form of economic stimulus is kept under covers at the Federal Treasury,” Roche said.

Gold’s mate Silver is looking very strong and could be on the way back to $20 USD.

The Silver 2010 future contracts have been given a strong trade triangle signal by marketclub…..Have a look at their analysis just enter Silver to look at all their silver analysis or put in SI.F10.E for the Siver 2010 futures…..

The image below shows the spot silver price over the last 2/12