Another week of rumour and denial as investigative reporters dig into the financial health of our well established institutions. Bankers are in the frame, the good, the bad and the ugly.
Put your hand into the hat and pull out a name and there you have it, this weeks target for the media. Ask the target for a comment regarding a rumour about their insolvency and they will deny it. Bank denies insolvency rumour is your headline. Its so reminiscent of a school trip to the pantomime, he's behind you! Who? The monster? No, the fresh faced reporter with a microphone!
This Monday morning will be one filed with trepidation for many bank employees heading to the office. Just what are these derivatives that everyone mentions, we are a bank, we made a profit, we had the accounts audited by Mega Accountants Limited, so why all the fuss?
The fuss is because we do not trust the banks, the accounts or the auditors, which brings us back to a safe haven for what little wealth we still have, hence the rise of gold. It is bad enough that governments everywhere are attempting to wall paper over fundamental problems by printing money as though it doesn't really matter, but to have the pillars of the financial world shaking like a palm tree in a hurricane is a serious double whammy. It is midnight in London and already our mail box is filling up with rumours about this bank and that bank. As we see it, it is now up to the banks to mount a campaign which clearly explains why they are a sound and solid commercial enterprise. If a bank could come out on the attack stressing its benefits, safeguards, compliance procedures etc., it might go some way to taking the heat out the situation. To remain quiet, waiting to react to the next rumour is a little defensive and suggests weakness, so bankers pick up the bat and go for it. We wont hold our breath, but just in case we will hold our position in SKF and watch as this week unfolds.
As we write gold is trading in Sydney at $928.50, down $2.50. The pull back that snapped a few necks last week could still have a little more to go. But that does not excuse you from your home work or due diligence as some call it. Put the effort in now, narrow down your list of possible purchases to something that you can manage and decide on your price entry levels. It will pay off, not just yet, but by the end of this year gold and their associated mining stocks will be trading at a whole new level.
We will continue to watch, research and chart in an attempt to pin point an undervalued jewel and take advantage of the coming buying opportunities.
Smile you're a gold bug.
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