Thai Guru's Gold und Silber ... (Informationen und Vermutungen)

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September 17 - Gold $405.60 up $1.10 – Silver $6.23 down 3 cents

Do You Know What Kind Of Day It Was?

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GROUNDHOG DAY!

Zitat

We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades....Leonard Read

GO GATA

It was a day like so many others we have seen over the years until late in the trading session. Gold caught a bid early, moving up nearly $1. Then it was capped (in GROUNDHOG DAY-like fashion) by the cabal and sent $1.50 lower from last night’s close, before it made it all the way back and closed on its highs. The floor said if gold was open another hour, it would have taken off. As a result, they are looking for a very positive day on Monday.

All I had to write last night was that silver was explosive for it to be hit hard early this morning. It was hit for a dime before recovering to right below the unchanged area.

I received a phone call from a very knowledgeable precious metals man who queried me on my London silver premium information. He said there is unallocated silver in New York and he couldn’t see the tightness my sources reported. He also mentioned there was nothing going on with the lease rates. My response covered the following:

*Our London source is a real pro and veteran silver dealer.

*The last time silver made its big move to $8.46, this is the kind of information I received. The same sort of ambiguity was seen back then too. In advance of that move, Café sources reported incredible tightness, especially in Europe. Other sources said they saw none at all. Silver rallied $3, then crashed. A hard market to figure.

*The lease rates didn’t do anything the last time silver made its big move either.

*The Comex inventories could be the key here. They have come down around 10% to a little below 110 million ounces. If they go below 100 million ounces, it would tend to support the notion silver is becoming very tight all around.

For the week both gold and silver moved higher and look fine technically:

December gold

http://futures.tradingcharts.com/chart/GD/C4

December silver

http://futures.tradingcharts.com/chart/SV/94

Houston’s Dan Norcini:

Hey Bill:

Just wanted to make a quick comment about the Open Interest and Commitments of Traders as it relates specifically to Silver.

We are approaching levels in the net fund long category where for the last year Silver has put in a bottom before moving up. I would actually prefer to see more of this whittling down of open interest totals as we have been seeing taking place these last three weeks or so. The perfect scenario to me would be for silver to chop around at these levels for another week or so and slowly bleed off another 2,000-3,000 contracts on that fund net long position. If however what your sources are telling you about difficulty in obtaining silver in quantity is true, we may not get down that low. It does seem to have uncovered buying on its breaks this week.

I know a lot of silver bulls would prefer to see it head straight north to Alaska from right here, but I think we would be better served by the former scenario. That would lull the complacent shorts into carelessness and might even induce a few more of them to move over to the short side providing more fuel for the fire when it does ignite.

Still, we have really whittled down that net fund long position from the recent peak last month and that is significant. It has almost been cut in half. Furthermore, it is WAY, WAY DOWN from the peak made at the beginning of April this year.

Here's looking forward to next week.

Dan

Gold is used as a monetary reserve by many countries. None more so than the US. This certainly qualifies gold be labeled as a currency. With this understanding, it will be very easy to understand how and why the gold price is constantly manipulated after you read the following:

Bill,

I don’t know if GATA has covered this before. When people like Gartman say the Fed doesn’t intervene in markets, this is proof to the contrary. Here are Fed Minutes from February 2000 giving Greenspan authority to intervene in the currency markets. What is interesting to me is this is proof Greenspan speaks with a forked tongue. He continually claims in public that the dollar is the Treasury’s responsibility; yet, for some reason he needed authority to intervene in these markets. All gold traders can routinely watch gold break out and moments later the Euro get bombed. Obviously, Gold breaking out on the charts can be interpreted as a disorderly market condition if it is counter to Fed Policy.

http://www.federalreserve.gov/fomc/minutes/20000202.htm

FOREIGN CURRENCY DIRECTIVE

System operations in foreign currencies shall generally be directed at countering disorderly market conditions, provided that market exchange rates for the U.S. dollar reflect actions and behavior consistent with the IMF Article IV, Section 1.

To achieve this end the System shall:

A. Undertake spot and forward purchases and sales of foreign exchange.

B. Maintain reciprocal currency ("swap") arrangements with selected foreign central banks.

C. Cooperate in other respects with central banks of other countries and with international monetary institutions.

Transactions may also be undertaken:

A. To adjust System balances in light of probable future needs for currencies.

B. To provide means for meeting System and Treasury commitments in particular currencies and to facilitate operations of the Exchange Stabilization Fund.

C. For such other purposes as may be expressly authorized by the Committee.

System foreign currency operations shall be conducted:

A. In close and continuous consultation and cooperation with the United States Treasury;

B. In cooperation, as appropriate, with foreign monetary authorities; and

C. In a manner consistent with the obligations of the United States in the International Monetary Fund regarding exchange arrangements under the IMF Article IV.

Mr. Broaddus dissented in the votes on the Authorization and the Directive because they provide the foundation for foreign exchange market intervention. He continued to believe that the Federal Reserve's participation in foreign exchange market intervention compromises its ability to conduct monetary policy effectively. Because sterilized intervention cannot have sustained effects in the absence of conforming monetary policy actions, Federal Reserve participation in foreign exchange operations in his view risks one of two undesirable outcomes. First, the independence of monetary policy is jeopardized if the System adjusts its policy actions to support short-term foreign exchange objectives set by the U.S. Treasury. Alternatively, the credibility of monetary policy is damaged if the System does not follow interventions with compatible policy actions, the interventions consequently fail to achieve their objectives, and the System is associated in the mind of the public with the failed operations.

***

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The John Brimelow Report

some new commentaries

Friday, September 17, 2004

Indian ex-duty premiums: AM $7.34, PM $6.61, with world gold at $404.10 and $404.80. Very high; lavish for legal imports.

Apparently the currency weakened this afternoon on concerns about the Trade balance. Indian exports today were reported today to be up 26% FY to date; Imports were up 30%. This is quite irrelevant of course to a country with such a pronounced ability to attract funds via foreign portfolio investment, or indeed via repatriation from overseas Indians. India is likely to continue to support world gold at these prices.

TOCOM is fast asleep. Volume fell 3.4% to the equivalent of 9,496 Comex lots; open interest slipped the equivalent of 312 Comex; the active contact was down 5 yen and world gold was unchanged. (Yesterday Comex traded 31,553 lots; open interest fell 1,634 contacts.)

Gold seems to have no momentum either way at present. One wonders if, in a situation where the Muslim buyer is so much more important than a few years ago, the run up to the weekend might not be more sluggish than in previous years.

Chet Currier, a Bloomberg columnist, has written a piece discussing gold’s unresponsiveness this year to rising inflation expectations. (See Appendix)

Since it is rare to see any consciousness of gold on Bloomberg, the metal’s friends will see this as gratifying.

JB

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CARTEL CAPITULTATION WATCH

Crude oil seems to be the only market with any kind of serious volatility. Course, that is the one market the PPT has a hard time influencing. October closed at $45.59 per barrel, up $1.71.

The long bonds fell 17/32, giving back around half of yesterday’s surge. The dollar rose .11 to 89.10, while the euro lost .06 to 121.76. No matter how bad the news is the DOW just keeps on creeping higher. It rose 40 to 10,284 and the DOG gained 6 to 1910.

Bottom line:

GROUNDHOG DAY! Seems like lockdown/prop up mode is the name of the game these days. The US stock market continues to grind higher with very little going for it except the PPT and the roar of the repos. Long rates slowly keep coming down with constant, but brief, corrections. Yet, the Fed has been raising rates and most market participants expect them to do so again next week. The dollar has been held in a vice-like trading range and, while the price of gold should be soaring, it is continually capped by The Gold Cartel.

None of the US economic news is upbeat. The effects of low short-term interest rates, tax cuts and government fiscal stimulus have run their course and it is showing.

Semi equipment book/bill ratio 1.00 in August vs StreetAccount consensus of 1.01

The July ratio of 1.05 was revised to 1.04. The three month moving average of bookings fell (4.5%) to $1.515B vs a $1.56B consensus; billings fell (1.2%) to $1.509B vs a $1.54B consensus.
* * * * *

09:48 Univ. of Michigan confidence reported 95.8 vs. consensus 96.7
August final reading was 95.9.
* * * * *

What does make a lot of sense is there is much more inflation in the US economic system (can it be any more obvious) than Wall Street and Washington are admitting to. Thus the behind the eight ball Fed is raising rates. However, the real economy is on the wane, which the long-bond seems to be reflecting. Meanwhile the consumer debt levels remain staggering as are all the various US deficits.

One can liken the present economic situation to a Pro Football team which traded its future top draft picks to another team for a bunch of quality aging veterans in order to try and win the Super Bowl. In this case it is the coming elections in November. Perhaps the trades (low rates, tax cuts, government stimulus and efforts by the PPT) will do the trick and lead to a win this Presidential Election Super Bowl. Time will tell. However, these veterans have had their day. They won’t be around next year and there is little talent coming up to take their place. My bet is the US economic scenario will be a dreadful one next year and will wreak havoc on US financial markets.

GATA’s Mike Bolser:

Hi Bill:

The Federal Reserve added $5.25 Billion in temporary repurchase agreements today September 17th 2004, an action that pushed the repo pool up to $65.614 Billion, yet another high for the series. The pool's pattern is in a parabolic upward trajectory and is far from its 30-day moving average.

Yesterday's huge add of $26.05 Billion including a $.8 Billion permanent open market operation, was done for a "monetary policy" reason and we can say the DOW wasn't the main target or else it would have responded upward instead of laying there like a limp fish. All of this trading guess work would be easy if the government managed transparent markets...but they don't so we keep guessing how their strategic commodities plan is faring. With $43 oil, it isn't going well at all and the government's oil derivative shorting efforts are having tough sledding.

Oil prices up on new storm fears

http://www.news.bbc.co.uk/2/hi/business/3661424.stm

Hurricane Ivan has forced the closure of several US refineries Oil prices rose on Thursday on worries over production shut by Hurricane Ivan and a new storm that may delay imports from entering the Gulf of Mexico.

Ivan shut eight refineries, or about 13% of US capacity, and only half restarted during the day.

Oil companies said they would not know if platforms had sustained damage until aircraft could fly over the structures.

END
++++++++++++++++++++++

I focus on oil as well as gold because it is more visible than gold as a strategic commodity and there are far less available storage stocks. The BIS derivatives position is even more clouded than gold. For example, the BIS keeps the petroleum data in a bin marked "other" so as to keep from presenting the blatant truth of a massive derivatives game with the word "Oil" written at the page header. The total was over $450 Billion last report. One might generate a useful trading metric by gauging only the velocity of petroleum derivatives growth if you had access to real-time derivatives summary data from the ISDA (International Swaps and Derivatives Assn.)

On the other hand, hanging on OPEC's every public word about "increased production" isn't healthy either if you expect tradable information. Here's another example:

Traders Unmoved by OPEC Gesture

By Justin Blum, Washington Post, Thu, Sep 16, 2004
http://www.washingtonpost.com/wp...Sep15.html

VIENNA, Sept. 15 -- OPEC ministers on Wednesday agreed to increase their ceiling for oil production to help bring down stubbornly high prices in a decision that traders and analysts dismissed as symbolic because the cartel already is pumping more than its new target.

In a meeting at its headquarters here, the Organization of the Petroleum Exporting Countries set a ceiling of 27 million barrels a day effective in November, an increase of 1 million barrels.

The decision will not affect how many barrels of oil the cartel's member countries actually produce. OPEC's 11 members are pumping about 30 million barrels a day in an effort to keep prices down, officials said.

OPEC's president, Purnomo Yusgiantoro, said he hoped that increasing the ceiling would have a psychological impact on the market, helping calm worries about supply. "What we would like to see is the prices down," Yusgiantoro, the minister of energy and mineral resources for Indonesia, said at a news conference after the meeting. END
+++++++++++++++++++++++++++++++

Special Note: October 4th and the Washington Agreement

One of my precious metals metrics points to a convergence of the WA date of Oct 4th and its former peak value on July 2nd 2004. I don't like coincidences in today's gold war. We have a bit more than two weeks of trading and as we get closer to Friday the 1rst of October I will re-assess this apparent convergence to see if it still exists. If it does, I may recommend folks step aside on Oct 1 and wait out the WA formal decision, avoiding any planned surprises.
+++++++++++++++++++++++++++++++++++

One of the central goals of China is to invade the EU with Wall Marts just as they did in the US. This is why the Chinese have steadfastly refused to raise the Yuan's valuation. They see the dollar falling and the Yaun getting even more competitive in the EU. The Chinese are even getting a head start in Russia:

Friday, September 17, 2004.

Report: Wal-Mart to Open in St. Pete in '05

By Simon Ostrovsky Staff Writer Moscow Times

Wal-Mart, the world's largest company, may open a store in St. Petersburg next year, a city official said Thursday, Interfax reported.

"I have such information, but I'm not ready to talk more in detail about the opening of Wal-Mart," the chairman of St. Petersburg's economic development committee, Vladimir Blank, was quoted as saying.

++++++++++++++++++++++++++++++++++++++++++

The current DIVG trend is up and this should hold for at least two weeks however, as mentioned previously, Fridays bring an added data set and I may have more comments later on in the day. Looking only at the unrefined data the MCDI seems up along with the PM Fix so the trend looks OK at this hour (10AM).

Mike

Chuck checks in:

We might as well go to a movie for the rest of the day. The capping came early and a $2 reversal should do it on a typical Friday where the stock market is trying to fill the gap from the other day. Third straight gap down on Newmont (positive) The ratio between Au and Ag expanding (positive.) I just wonder if we might not have a decent day in the stocks vs. the metal, but I'm not expecting anything very much. "free markets" in America. Chuck

There are more reasons for featuring our Groundhog buddy, Punxy, for the day! Seems we can’t get through a 24-hour period without one of the cabal members being chastised/ penalized in some part of the world and without being confronted with some sort of conspiracy scandal….

Japan FSA orders Citibank to suspend private banking

By Lisa Twaronite 9/17/2004 12:07:00 PM

http://www.investors.com/break…?journalid=23142237&brk=1

TOKYO (CBS.MW) - Japan's Financial Services Agency on Friday ordered Citibank Japan to suspend business operations at four branches that deal with private banking, essentially discontinuing the bank's private banking business here, after the bank was found to have breached securities regulations.

The regulator said in a statement that the Japanese arm of the financial services giant Citigroup (C) must suspend operations at its branches in Marunouchi branch in Tokyo, and its Nagoya, Osaka and Fukuoka branches for one year beginning September 29.

The FSA said that after the suspension ends, it would revoke the approvals issued to those branches, essentially terminating the bank's private banking business.

-END-

Citigroup, a defendant in Reg Howe’s lawsuit against The Gold Cartel in Boston Federal Court, was recently vilified for its European bond trading, and now for its fine work in Japan.

A Café member has a point:

Bill,

We should get similar laws passed before the Cabal is found out by the general public.

Dan C

Chinese bankers executed for fraud

September 16, 2004

China's government executed three officials from state-owned lenders China Construction Bank and Bank of China for fraud resulting in losses of $15 million (R97 million), the Xinhua news agency reported.

Liang Shihan, an official at the Bank of China, was executed after he faked letters of credit, causing the bank to lose $10.3 million, according to the state news agency.

-END-

Report: Former Boeing manager agrees to plead guilty in conspiracy case

Friday September 17, 2004

LOS ANGELES (AP) A former Boeing Co. manager has reportedly agreed to plead guilty to charges related to the theft of sensitive documents from rival Lockheed Martin Corp. during a competition for a $1.88 billion satellite launching contract.

No documents have been filed in a Los Angeles federal district court but sources told the Wall Street Journal that an agreement has been reached between prosecutors and the former executive, Kenneth Branch. The plea bargain could strengthen the government's position in negotiating a corporate settlement with Boeing, the newspaper reported in its Friday editions.

Calls to the U.S. attorney's office in Los Angeles and Boeing headquarters in Chicago seeking comment were not immediately returned.

Branch is scheduled to go on trial in less than a month for allegedly conspiring to steal and pass sensitive documents to help Boeing win a multibillion-dollar competition for the U.S. Air Force's rocket-launch business in the fall of 1998.

-END-

Perhaps the most disheartening news of the day news was the National Intelligence news on Iraq. Putting politics aside, to hear President Bush and the Republicans extol what they have done in Iraq, while it is going to go down as the biggest blunder in our nation’s history, is sickening – mostly because 7,000 brave US soldiers have died, been maimed or are wounded. For what?

WASHINGTON (CNN) -- The Bush administration has sought to downplay the significance of a U.S. intelligence forecast painting a pessimistic picture for the future of Iraq, insisting that predictions of difficulties ahead -- including the possibility of civil war -- were not a surprise.

Sources have confirmed to CNN that a National Intelligence Estimate was sent to the White House in July with a classified warning predicting the best case for Iraq was "tenuous stability" and the worst case was civil war.

The Bush administration, however, continues to argue publicly the U.S. is making good progress in Iraq, with the President saying Thursday that "freedom is on the march" in Iraq, citing scheduled elections in January next year.

But the intelligence report raises serious questions about Iraq's ability to achieve political solutions in the next year or two, noting the country's "limited experience with representative government" and "history of violence".

U.N. Secretary-General Kofi Annan, in a report to the U.N. Security Council last week, said the persistent violence in Iraq would make it difficult to hold elections in January.

"I think that anybody that thinks that you can hold elections in the Sunni Triangle by the end of January is really smoking something," military historian Frank Fukuyama said…

-END-

This is what has gone so wrong with Wall Street and Washington, Democrats and Republicans. The American people get spin after spin, lies after lies. What a disaster our country has ahead of us when there is no other choice except to pay the piper.

A little more fodder for our view of the way the US markets are working these days:

Bill,

I just finished reading an article in the WSJ page A2 titled, "Fed Says Straight Talk on Rates Helped the U.S. Avert Deflation." What caught my eye was a paragraph discussing a study by the infamous Ben Bernanke which states, "The study also concluded that the Fed could purchase Treasury bonds specifically to drive down long-term interest rates."

Well there you have it! Let’s make sure that every doubter of Government/Fed intervention in markets gets this "stamped" across the forehead!

Regards,
Wistar

The major gold companies seem to be all having their troubles these days. The gold prices are just way too low.

RENO (Mineweb.com) -- Even as Barrick president and CEO, Greg Wilkins, was extolling his company's "A"-rated balance sheet and its ability to self-finance its projects to a Toronto mining conference on Thursday, Moody's Investors Service said that it is reviewing the company's debt ratings for possible downgrade.

Moody's said its review "is prompted by the fact that the company is embarking on a major mining development program to add production and to lower costs from a platform that currently has higher costs and lower production than was historically the case." Barrick's plans to develop five new mines while reducing its hedging position have prompted lively discussion among investors and analysts. –END-

JOHANNESBURG (Mineweb.com) -- Uncertainties over near-term trends in the rand:dollar exchange rate and the effects of the South African currency’s recent strength on rand-denominated gold revenues have persuaded Fitch Ratings to cut its outlook rating of AngloGold Ashanti (AGA) to negative from stable.

The decline reflects the deteriorating income stream of the past four quarters and takes into account the benefit of AngloGold’s merger with the Ghanaian Ashanti. –END-

Missed this one – guess it is a coincidence that trading will most likely begin after the Presidential election.

ETFZone.com

Gold ETF Confirmed by SEC

Monday September 13, 4:47 pm ET

By ETFzone Staff

Despite lengthy delay, the SEC recently confirmed that a gold ETF is on its way. Expected to be sold under the streetTracks ETF line from State Street, it appears likely to begin trading before year's end. ETF investors shouldsoon decide whether gold belongs in their portfolio.

-END-

From Brother Tim, the technician:

Hey Bill, Another frustrating week for gold, given the bullish fundamentals, but the technical picture remains strong. Gold broke out of a weekly head and shoulders formation last month and tested the neckline last week. Now it looks poised to move higher again with the upside objective still at $455.

Swiss America is offering a free DVD called "The Citizen's Guide To Counter Terrorism". It covers many methods of terrorism - from chemical to biological to financial. From the standpoint of financial terrorism, gold is discussed as a form of protection. The DVD is 30 minutes long, well worth the viewing effort and is available to any of your readers who just need to contact me.

Let's hope gold continues higher next week, as it should.

Brother Tim

Swiss America
1-800-289-2646 ext 1019
trmurphy@swissamerica.com

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CARTEL CAPITULTATION WATCH

This effort by Garic probably should have been a stand-alone. Lot of meat here:

Bill,

While GATA has done a great job on exposing gold price manipulation, I would like to see you work harder on educating the gold bulls on how to stop getting burned by the crooks. After trading other commodities and stocks for the past 20 years I have had to re educate myself on how to trade and invest in the gold market. This necessity to re educate myself on one particular market is all the proof I need to know the Gold market is rigged. Being around the markets for a long time I am fully aware that all Wall Street bogus creations come to an end sooner or later. Worldcom, Enron etc. Therefore, I eagerly await the demise of J.P. Morgan when this one comes to an end. I am also eagerly awaiting the Comptroller’s 2nd quarter derivative report which is conveniently delayed to see how much J.P. Morgan had to short to keep the 430 break out from occurring. http://www.occ.treas.gov/deriv/deriv.htm . I am also hopeful that my home town judge in New Orleans will take it to them in Blanchard vs J.P. Morgan.

Here is what I have learned:

Do not buy breakouts. Someone is monitoring the markets and breakouts are generally met with a quick reversal in the currency markets. http://www.federalreserve.gov/fomc/minutes/20000202.htm

FOREIGN CURRENCY DIRECTIVE

System operations in foreign currencies shall generally be directed at countering disorderly market conditions, provided that market exchange rates for the U.S. dollar reflect actions and behavior consistent with the IMF Article IV, Section 1.

Traders who are used to buying break outs need to know that this is exactly what the manipulators are looking to get rid of is the momentum traders. If one feels he must buy a break out you need to be able to withstand a forced liquidation below the moving averages. Unfortunately, if you are a true believer you can’t sell breakouts either. One of the breakouts is going to be the big one and if anybody is smart enough to figure out which one it is they are better than me.

The Cartel likes to paint the opening for stocks; therefore, they generally have gold for sale between 4 A.M. and 10 A.M. E.S.T. The best time to accumulate gold is between 9:30 and 10 A.M. because they are always trying to paint the opening for stocks.

The cartel always tries to glorify the government statistics and especially Alan Greenspan speeches. For example, after every government report gold will be sold aggressively by someone. Generally on news they let the traders buy and then between 5 and 30 minutes after the report they will sell gold aggressively. They will back off and attempt to come again. Give it time they are relentless. If Double Bubble Al is speaking expect gold to be sold from 1 hour before the speech up until 24 hours after the speech. The great wizard of Oz has spoken there is no inflation you better believe it.

Dan Norcini’s recent article did a good job on showing how they are manipulating the moving average funds.

The goal is to make sure you can keep your position. The key is not getting over leveraged and not having obvious stops that you are going to get knocked out of on one of there bombing raids. If you must keep tight stops your position is probably too large.

Let’s learn from the Citicorp trading exposure. They love bombing the market running stops forcing the moving average traders out and buying back slowly at lower levels. Stops below recent lows will be taken out and the profits will be put in their pockets.

For me I am going to be long until Real Interest Rates are restored to a level where I can save for my retirement and my children’s education .This real rate will be determined by my costs of tuition, health care, housing, grocery and energy bills not what Double Bubble Al tells me they are.

In the end the real way to make sure they can’t get you is to take physical delivery of U.S. Gold Eagles. That is a vote against the U.S. Treasury. They will hear it loud and clear because they don’t have enough to pay everyone. They have broken the constitution and as a Free Person you have the right to cash in your paper.

If you must trade the futures which I do you don’t trade on the news but accumulate when they bomb the market and run the stops and the moving averages. If you carry a fully margined position there goal will be to take your money and make you a believer that the market is smarter than you. Do your research if you believe that Gold is worth $710 to $2800 them buy and hold with enough room to withstand their raids.

Garic Moran
Atlanta, Ga.

The gold shares continue to meander with the XAU losing .86 to 92.31 and the HUI dropping 1.16 to 204.97. Much of the loss in each index was due to Newmont taking a hit for its troubles in Peru.

The fundamentals for both gold and silver remain outstanding. So do the technicals. The physical gold market is robust and we are hearing the same for silver, at least as far as Europe is concerned. The base in gold is an expanded one and can support a move to much higher levels. Seems to me we need a $3 higher gap opening with demand kicking in enough around the world to send The Gold Cartel into a backpedaling retreat. Could happen any day.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

GATA couldn’t have asked for a better article than this Bloomberg one to point out a major motive of The Gold Cartel. PRICE ACTION MAKES MARKET COMMENTARY. Thanks Chet Currier. Course this writer, who knows nothing about gold, wouldn’t even think to mention that perhaps gold isn’t acting like it used to because the price is being manipulated. A Bloomberg gold reporter still on the beat was introduced to myself and GATA at a luncheon in New York in June 1999. To this day GATA has never been mentioned by Bloomberg, not ONCE!

Have Gold Traders Stopped Watching Inflation?: Chet Currier

Sept. 17 (Bloomberg) -- There must be a lawsuit in this somewhere -- breach of promise, or false advertising, or maybe dereliction of duty.

Gold, long touted as investors' ultimate guard against inflation, has wandered away from its post and can no longer be counted on to fulfill that high obligation.

Its performance of these duties has been problematic for some time. Market action in early September only confirmed our worst suspicions.

``Gold prices in New York rose as an unexpected decline in U.S. producer prices helped send the dollar lower,'' a Bloomberg News story reported on Friday, Sept. 10.

Let's take this step-by-step. The government reported that producer prices excluding food and energy dropped 0.1 percent in August. That's good inflation news, by any reasonable standard. Since the price of gold traditionally rises and falls with inflation, it ought to have declined.

Not this time. Seems that a better-than-expected signal on inflation caused traders to scale back expectations of how much the Federal Reserve might raise interest rates. Lower U.S. interest rates imply less international demand for dollar- denominated bonds. So the dollar declined in value against other currencies such as the euro.

Forex Foray

This tells us where gold has gone -- the foreign exchange markets, where it has taken up the role of the anti-dollar. Dollar weak, gold strong, and vice versa.

Some will say this isn't a complete departure. Inflation, after all, is a problem that afflicts currencies, attacking their purchasing power -- so gold is still hanging out in the same neighborhood.

Something has changed, though, and that something is a basic relationship most investors once assumed to be permanent. Gold has now put us on notice not to take it for granted as a simple inflation hedge.

Consider that sector mutual funds specializing in precious metals have fallen 17.1 percent for 2004 to date through the middle of this week, even as inflation expectations have risen. In Bloomberg News's monthly survey of more than 50 economists, the average estimate for the increase in the consumer price index this year is now 2.8 percent, up from 1.8 percent the first week of January.

All Shook Up

This is unsettling because one of gold's supposed selling points is its solidity. So much about it, from its namesake color to its place at No. 79 in the periodic table of elements, never varies. Well, its financial properties don't appear so immutable.

To compound the offense, if this can happen to gold no other simple relationships in markets are trustworthy either. Whatever a rise in interest rates used to mean for stocks, say, the old formula might not apply now.

While the current economic cycle may resemble previous ones in many particulars, what interest rates did at this point last time might not happen this time.

Without such anchors, the poor investor is left adrift. The reassuring news is, maybe this is not such a bad thing.

Clearer Picture

It's good to be reminded to resist two-dimensional thinking in a three (or more)-dimensional environment. If I can't use simplistic rules to time the market, maybe I'll stop trying, and save myself a lot of trouble.

As a substitute, maybe I'll look to risk-managing methods such as diversification -- which has characteristics that are trustworthy. One of these: The smaller a percentage of my money I allocate to a given class of assets, the less it can hurt me if things go wrong.

A fresh look at gold also encourages perspective. If we thought we knew a lot in the past, and have since been proved wrong on at least some points, how smart is it to think we can see everything clearly now?

For investment purposes, a lesson in humility like this might be worth its weight in gold.

To contact the writer of this column:

Chet Currier in New York ccurrier@bloomberg.net.

To contact the editor responsible for this column:

Bill Ahearn at bahearn@bloomberg.net.

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COT Gold Report - September 17, 2004

http://news.goldseek.com/COT/1095453467.php

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COT Silver Report - September 17, 2004

http://news.silverseek.com/COT/1095450062.php

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Daily list of issuers and stoppers in copper, silver, gold, and aluminum contracts.

http://www.nymex.com/media/delivery.pdf

Dieser heutige Bericht des FED Primary Dealers und Nachfolgers der Rothschild Bank als Gold Preis "Fixing" Members der LBMA in London, *HSBC* (Hongkong and Schanghai Banking Corporation) schlägt ja wohl alles an Falschinformation, und Manipulationsversuchen, was ich in den letzten Jahren lesen durfte. Selbst Reuters könnte sich da noch ein Stück davon abschneiden.

Trotzdem wird in diesem "Beitrag" der HSBC ein steigender Gold Preis erwartet.

414.- 2004 und 436.- Dollar 2005.

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http://www.timesofmalta.com/core/article.php?id=164819

Sunday, September 19, 2004 - Updated 09:20 (CET)

Currency Outlook

Currency considerations dominate bullion market
HSBC Bank Malta plc

Having rallied to a 15-year high of US$430/oz last January and again in March, following the Madrid bombings, gold prices have spent much of the past months in consolidation mode. Prices have generally traded in a $385-415/oz range. The lack of a clear direction in prices has mirrored that in the currency markets.

While the euro rallied to a record high against the dollar in February, rising US interest rates and worries over the impact of the strengthening currency on economic activity in Europe led to a sell-off in the currency markets. The euro fell to a recent low of 1.176 against the dollar before recovery to current levels.

Currency considerations will continue to dominate activity in the bullion market over the coming months. Although the easy gains for both gold and the euro have undoubtedly been made, our economists believe the trend for both should still be higher. The Fed is now in the process of adjusting interest rates back to a long-term neutral level, and conventional wisdom has it that this should be good for the dollar and bad for gold. However, the statistical evidence for these relationships is weak at best.

Higher interest rates will only boost the dollar if the spread between US and overseas bonds widens significantly. Our economists doubt this will happen, as they expect US economic growth to stall throughout 2005, eventually forcing the Fed to cut rates.

Moreover, the continued structural problems facing the US economy should put pressure on the dollar. Their forecast of 1.35 for the euro next year is the main driver behind their continued bullish outlook for gold.

Any currency-driven gains will be made against the headwinds of a continued surplus in the physical market.

Last year, the gold market was in oversupply by 600t, and they expect a further surplus of more than 300t this year.

Gold demand has been falling steadily since peaking in 1997.

Although the industry would like to think this is largely a result of the high and volatile prices, the reality is that consumption was also falling in periods of low and stable prices.

As yet, there is little evidence that campaigns to stimulate demand are having a material effect.

On the supply side, despite the clarion calls over recent years that mine output was set to enter a period of continued decline, aggregate mine production has changed little in recent years.

However, producers continue to unwind hedge positions and the renewal of the Central Bank Gold agreement will boost sentiment towards gold. Although gold prices in US dollars are up by almost 60 per cent from the April 2001 lows, with much of the rally reflecting the weakness in the US dollar, the performance of bullion in other currencies has been much more sanguine, if not disappointing.

While the performance of gold in local currencies has undoubtedly been a disappointment for South African, Australian and Canadian producers, the same cannot be said for the prices received by the 'new' producers. Prices received by producers in China, Russia and Peru, all of whom produce more gold now than Canada, have matched the increase in US prices, while prices in Indonesian rupiah have lagged somewhat.

In part this reflects the fact that many of the new producer currencies are either pegged directly to the US dollar or are managed to minimise currency fluctuations.

When our economists took producer prices for the 15 largest gold producing countries (excluding Uzbekistan) which together amount to 83 per cent of global output, it results that when prices in all producer currencies are taken into account, gold prices are still some 43 per cent above their 2001 lows.

High domestic inflation in a number of producing countries will diminish the real gain of the rise in prices, but nevertheless, most producers will have enjoyed a significant real gain in recent years.

That gold prices for consumers have moved broadly in line with dollar-denominated prices - except for European and Japanese consumers - partly explains why fabrication demand has been so weak in the past two years, as price-sensitive demand has been choked off by the hike in prices. Conventional wisdom has long had it that a weak dollar is good for commodity prices. Over the longer term, the relationship between foreign exchange movements and commodity prices is through changes in the underlying supply/demand balance - a weakening US dollar puts pressure on marginal non-US producers to cut back on output, while at the same time stimulating price sensitive consumption.

Increasing demand and falling supply should put upward pressure on US dollar-denominated prices. Unfortunately, trends in supply and demand change only slowly over time.

However, the funds, knowing of the long-term relationship, will buy as the dollar weakens, and as a result prices move simultaneously with currency movements. That is to say the principal short-term influence on prices remains the actions of the speculative community.

In a presentation at last year's LBMA conference in Lisbon, Steve Matthews, the commodities strategist at Tudor Investments was explicit in describing how his hedge fund views gold.

He noted that the fundamentals of the market were "super bad for trading" and that there was the "possibility that fundamental analysis is inappropriate".

Over the past two years, it has been the movement in the US dollar/euro exchange rate that has denominated movements in the gold price. At first glance, this may seem strange, given that European gold output amounts to only 20tpa and much of this is as a by-product of base metals production.

However, the funds have taken positions in the gold market based on changes in the US$/euro exchange rate, ensuring bullion price movements have mirrored forex changes.

Our end-2004 forecast for the dollar of 1.28 against the euro is consistent with a gold price of c$414/oz, while our end-2005 forecast of 1.35 for the dollar is consistent with a gold price of c$436/oz.

If, as our economists expect, 2005 proves to be a year of slowing global economic growth, this positive price outlook is likely to be supported by renewed investor interest in alternative asset classes, of which gold will definitely feature.

This report has been compiled by HSBC Bank Malta plc on the basis of economic research carried out by HSBC International Bank's team of economists and financial analysts.

Warum regt sich eigentlich niemand in der Schweiz, und anderswo darüber auf, dass Banken an ihre Kunden andauernd Gold auf dem Papier verkaufen, dass sie gar nicht physisch besitzen?

Gruss

ThaiGuru

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http://news.bbc.co.uk/1/hi/scotland/3665622.stm

Gold bar scam companies wound up

Two Edinburgh-registered firms which claimed to sell gold ingots in a get-rich-quick scam have been wound up by the Department of Trade and Industry.

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The DTI fears that Prime Goldbank and Prime Bank fleeced thousands of customers in the UK.

Both companies are registered in Great King Street and Palmerston Place in the Scottish capital.

Customers were told they could recoup 60% of their original investment by introducing six new customers.

The businesses promoted a website selling gold ingots of varying sizes and claimed gold could be bought at its branches in Scotland.

But a DTI investigation found there was no gold, the Edinburgh offices were virtual, calls were re-routed and mail was forwarded to Dubai.

It is unclear how many people were duped into buying the non-existent gold, but the company claimed to have almost six million customers worldwide and 16,000 in the UK.

Wohl nach dem Motto:

Was interessiert mich mein Geschwätz von gestern!

Anscheinend unbeeindruckt von seinen nicht eingetretenen früheren Prognosen zum Gold Preis, heute eine Neuauflage unseres fast immerwährend gold, und silberpestimistischen Gold-, und Silber-Bullion- Banken Interessenvertreters!

Beachtlich jedoch, dass der Wolfgang erstmalig die Fakten bezüglich ZB Goldverkäufen, insbesondere das Ausscheren von Italien aus der "Verkaufswilligenliste" nicht mehr einfach ignorieren kann, und eigentlich, seinem Couleur nach, bereits schon fast Gold Bullish wirkt.

Vor zwei Wochen hat er bekannterweise noch von einer langanhaltenden Durststrecke für Gold Bugs, und Preisen die weit unter 400.- Dollar fallen würden gesprochen.

Beim Silber Preisschreibt er nun in einer 180 Grad Kehrtwendung, ich kann es kaum fassen:

"von günstigen Silber Preisen"

Gruss

ThaiGuru

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http://www.ftd.de/bm/ma/1095597899639.html?nv=hpm

Aus der FTD vom 20.9.2004

Edelmetalle:

Gold stößt nach erfolgreichen Wochen auf harte Widerstände

Von Wolfgang Wrzesniok-Roßbach

Für das Gold wird die Luft langsam dünn. Das gelbe Metall scheiterte zuletzt am charttechnischen Widerstand bei 406 $ je Unze.

Da es sich um eine ansteigende Trendlinie handelt, werden inzwischen Notierungen von über 408 $ benötigt, bevor von einer Fortsetzung des Aufwärtstrends der vergangenen 14 Tage gesprochen werde könnte. Auf der unteren Seite gibt es aber Unterstützung bei 402,75 $, bei 394,50 $ und schließlich - falls das Metall wider Erwarten unter das letztgenannte Niveau fallen sollte - bei 384,50 $.

Die Entwicklung der vergangenen Woche wurde von Händlern trotz des Scheiterns an der genannten Chartmarke überwiegend positiv beurteilt. Immerhin konnte sich das gelbe Metall nach dem Erreichen eines Tiefs bei 398,75 $ am Montag bis zum Wochenende wieder um zwei Prozent befestigen. Ein positiver Faktor, so Goldhändler, sei das Anziehen der physischen Nachfrage aus der Industrie. Dazu kommt, dass die Atompolitik des Iran und die Frage, wie die USA oder auch Israel darauf reagieren werden, zusehends Aufmerksamkeit findet.

Eine Eskalation im Iran dürfte das Gold positiv beeinflussen.

Das Augenmerk der Goldhändler richtet sich zudem auf das Inkrafttreten des zweiten Goldabkommens der Zentralbanken Ende dieses Monats. Marktbeobachter rechnen in diesem Halbjahr mit einem Rückgang der Zentralbankverkäufe.

Zu der Unsicherheit auf dem Markt trägt vor allem die italienische Notenbank bei, die ursprünglich neben der Bundesbank und der Banque de France als bedeutender Verkäufer von Gold angesehen wurde, nun aber vor einer Kehrtwende steht. Eine nicht mehr auszuschließende, endgültige italienische Absage an Verkäufe würde sich positiv auf den Goldpreis auswirken.

Silber legte in den vergangenen Tagen zu. Mit maximal 6,31 $ je Unze blieb es aber weit von seinen Höchstständen der jüngeren Vergangenheit entfernt.

Die physische Nachfrage, die nach dem Ende der Ferienzeit in den wichtigen Märkten angezogen hat, verstärkte sich angesichts der immer noch günstigen Preise.

Wolfgang Wrezsniok-Roßbach ist Produktmanager Edelmetalle und Rohstoffe bei Dresdner Kleinwort Wasserstein in Frankfurt.

© 2004 Financial Times Deutschland