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

http://194.97.1.200/analysen/d…p?sub=5&AnalysenID=511358

18.11.2004, 10:27 Uhr
Gold, erneute Einstiegsmöglichkeit
Saxo Bank

Nach Ansicht der Handelsexperten von der Saxo Bank lohnt sich weiterhin der Blick auf das Gold.

Das gelbe Edelmetall zeige weiterhin Stärke und laufe den vierten Tag in Folge nach oben. Silber dagegen habe lediglich leichte Gewinne zu verbuchen. Long-Positionen in Gold wären gegenwärtig noch zu halten, doch sollten Gewinnmitnahmen erwogen werden. Um den 443,00er Level sollten dann erneut Long-Positionen eröffnet werden.

Ein Bruch der Chartmarke bei 441,00 würde auf den wichtigen Support bei 436 als nächstes Ziel hinweisen.

http://www.handelsblatt.com/ps…ildhbi/artpage/0/cn/GoArt!200007,203855,821691/SH/0/depot/0/

Euro und Gold geben zum Handelsschluss nach

"Dollar-Schwäche noch lange nicht zu Ende"


Euro und Gold haben am Donnerstag ihren Höhenflug fortgesetzt, zum Handelsschluss dann aber wieder etwas nachgegeben. Der Goldpreis erreichte zwischenzeitlich zum fünften Mal in Folge ein neues 16-Jahre-Hoch, parallel markierte der Eurokurs ein neues Rekordhoch.

HB LONDON/FRANKFURT. Der Euro ist am Donnerstag bis auf 1,3075 Dollar gestiegen und anschließend knapp unter 1,30 Dollar zurückgefallen. Händler begründen dies mit Gewinnmitnahmen. Insgesamt sei die Dollar-Schwäche aber noch lange nicht zu Ende. Zwar habe US-Finanzminister Snow erneut die "Strong Dollar Policy" bekräftigt, aber gleichzeitig betont, dass er international abgestimmte Interventionsmaßnahmen für wirkungslos halte, gibt ein Teilnehmer zu bedenken.

Der Händler erwartet nun, dass der Markt die Schmerzgrenze der Europäischen Zentralbank (EZB) mit aller Macht nach oben austesten wird. In den kommenden Handelstagen könne es zum Test der 1,3080 Dollar kommen, eventuell gefolgt von einem Anstieg auf 1,3150 Dollar.

Auslöser für das erneute Rekordhoch des Euro sei die Nachricht gewesen, Russland wolle im kommenden Jahr die Dollar-Anbindung des Rubel aufgeben, sagte Devisenanalyst Carsten Fritsch von der Commerzbank. Russland wolle zu einem Währungskorb übergehen, in dem der Euro bis zu 70 % Gewicht haben werde. Als weiteren Grund für den teuren Euro nannten Händler die Dollar-Abwertung in Asien. Dort rutschte der Greenback gegenüber dem japanischen Yen auf ein Siebenmonatstief. Dadurch sei der Dollar auch gegenüber dem Euro abgewertet worden.

Experten rieten der Europäischen Zentralbank (EZB) von einem Eingriff auf dem Devisenmarkt ab, obwohl der teure Euro die Konjunkturerholung in den zwölf Euroländern bedroht. „Die EZB ist nicht das Vollkaskoinstitut für europäische Exporteure, die ihre Hausaufgaben nicht gemacht haben“, sagte der Chefanalyst der Bremer Landesbank, Folker Hellmeyer. Die Unternehmen hätten alle Chancen gehabt, sich rechtzeitig Kursen gegen Wechselkursschwankungen abzusichern.

Ohne Wirkung blieben Äußerungen von Bundesfinanzminister Hans Eichel, der den Höhenflug des Euro als „brutale Entwicklung“ bezeichnete. Er schloss sich damit praktisch wörtlich dem EZB- Präsidenten Jean-Claude Trichet an, der die Wechselkursschwankungen vergangene Woche als „brutal“ bezeichnet hatte.

Parallel ist die Rally der Anleger in das gelbe Metall abermals dem einbrechenden Dollar zuzuschreiben, der die Bedeutung des Goldes als alternative Investmentform unterstreiche, sagten Händler. Den neuen Höchststand erreichte Gold im europäischen Handel bei 445,90 Dollar je Feinunze. Danach verlor es parallel zur leichten Erholung der US-Devise wieder und notierte gegen Handelsschluss bei 440,35/441,10 Dollar nach 444,25/445,00 Dollar am Vortag. Das Londoner Fixing erfolgte am Nachmittag bei 442,00 Dollar und am Vormittag bei 444,30 Dollar. Am Dienstagnachmittag war Gold mit 443,45 Dollar gefixt worden.

Nach Aussage von Händler könnte Gold in absehbarer Zeit die Marke von 450 Dollar knacken, da die USA nach einhelliger Marktmeinung ihr enormes Doppeldefizit zumindest teilweise über eine weitere Dollarabwertung finanzieren würden. Vom bevorstehenden Treffen der Finanzminister und Notenbankchefs der wichtigsten 20 Industrieländer (G-20) am Freitag in Berlin werden keine Aktionen oder Impulse erwartet. Im Vorfeld bezeichnete US-Finanzminister John Snow Devisenmarktintervention als „bestenfalls nicht lohnend“.

Während der beiden Ölpreis-Schocks 1973 und 1979 war Gold in Folge des Dollar-Verfalls bis auf 850 Dollar im Januar 1980 gestiegen. Eine Schweizer Grossbank gab den Gold-Kilopreis mit 16 433/16 683 (Vorabend 16 519/16 769) sfr an.

'# All,

Die Finanzwelt zum Spielcasino,

Nach Angaben der BIZ ist das tägeliche Volumen des Devisenhandels mit US$ auf inzwischen 1.900 Bio. US$ gestiegen; es entspricht damit alle zwei Wochen dem Äquuivalent des weltweiten Brutoinlandsprodukts.Im Derivatenhandel hat das Volumen täglich 1.2 Bio US$ erreicht.

Mit Abstand größter Player von Derivaten ist JP Morgen Chase mit offenen Kontrakten on immensen 39,6 Bio US$ - Ende März 2004- mehr als dem Dreifachen des US- Brutoinlandsprodukts!!!

gruß hpoth

November 18 – Gold $442.10 down $2.30– Silver $7.53 down 10 cents

Gold Cartel’s Organized Assault Hits Brick Wall, Gold Holds Like The Rock of Gibraltar

It takes a lot of courage to release the familiar and seemingly secure, to embrace the new. But there is no real security in what is no longer meaningful. There is more security in the adventurous and exciting, for in movement there is life, and in change there is power...Alan Cohen

GO GATA!!!

Cap, cap, cap and then pounce on gold when the euro turns. Gold rallied another $1+ in Asian trading, but turned south when the dollar poked its head up. This is what The Gold Cartel had in mind as it continued to sell ad nauseam on the latest run-up in gold and fall in the dollar.

The slight turn in the dollar coincided with talk on the floor that the gold price would turn lower on the day when the World Gold Council’s ETF commenced trading, which it did today.

Why did the dollar turn for no apparent reason? Ah here it is, the usual floated rumor drivel MIDAS has reported on so many times over the years. Whenever The Gold Cartel is desperate, they come up with the following crap. In every case gold has briefly been trashed. From a fellow Café member:

Well friends,
We now know why the dollar "reversed" this morning:
The euro fell to $1.30 in recent trading, as the currency market used an unsubstantiated rumor of Osama bin Laden's capture to buy back the battered dollar, said analysts at Action Economics.

Spezialreport über das Thema "China Secret Silver Solution" von David Morgan zum Downloaden:

http://www.gold-eagle.com/editorials_04/morgan111804.html

All of these rumors have been debunked so far over the years.

Aside from the silly and overused rumor, the dollar is very oversold. It is only natural there would be some covering going into this weekend’s G-20 meeting. By day’s end it closed at 83.72, up .38, with the euro losing .77 to 129.62.

Gold filled the gap it left yesterday in the early going, checked those levels a couple of times and held. For the second time in a week Deutsche Bank showed up as a significant buyer.

The London AM Fix was $444.30, indicating strong demand for physical gold this morning, even at these relatively elevated levels.

Once again the key to the gold market is how the cash market holds up. So far so good. As JB has pointed out so often, normally gold rallies $20 to $30 after it dries up. This has not occurred during this entire bull move as buyers continue to PAY UP because of international competition for limited supplies. When you consider the incredible spec build-up and weakness in the euro, The Gold Cartel’s efforts to bury gold were not impressive.

Our STALKER source reports brisk domestic demand (for platinum and palladium too). One 70-year old client cashed out a million dollars in bond holdings and bought $200,000 worth of bullion.

That leads to today’s price action which was strikingly unusual. Each time the bums had gold on the ropes and it looked like it might tank, gold LURCHED back, rallying a couple of bucks at a pop. Over and over, it SNAPPED back. Gold traded that way the entire session. By the close short locals were shaking their heads and scurrying to cover.

Bottom line:

*Not only did gold successfully fill the gap it left yesterday, it checked its breakout over its trending channel and turned right around.

*After seeing this extraordinary gold performance today, under the most severe of pressures, the shorts have to be talking to themselves.

The gold open interest rose 911 contracts to 363,247. The DEC lost 3783 to 243,149. There was an enormous amount of switching done today, which must occur as we go into first notice day. What we need to watch is how many DEC longs are left after the Black Box funds rollover.

The silver open interest rose a sizeable 2258 contracts to 126,530. The DEC only fell 514 contracts to 82,378. Not much else to say on silver. It has no oomph, however, dips are well supported.

Got a smile when Mahendra called today from Santa Barbara (see his latest commentary below) with gold down $4.20. Naturally, was my usual irritated self with the shares doing so poorly. He has the most fun, relaxing laugh. Kiddingly he told me to calm down, that in the next week or two, I would be a "ten horn" bull, instead of the usual two horn one. Says gold will take out $448 and then head for $478. My friend has been on a roll. Got his clients long coffee before the recent HUGE price rise.

On that note, this email from Mahendra just arrived after my writing the above:

Dear Member's
Yesterday my alert I said that gold will trade weak for few hours. Thats what happen today and now not much time left to move up again. THOSE WHO SOLD, THEY CAN START BUYING NOW IN SMALL QUANTITY.
Just now I told my friend Bill that he is going to have ten horns on his head next week - I think he will explain better way so read on his site. http://www.lemetropolecafe.com
THANKS & GOD BLESS
MAHENDRA
http://www.mahendraprophecy.com/

Pet peeve:

The gold market commentators always identify the Comex buyers and why they are doing so. For example, it is the specs going long to make money, or filling orders for the new ETF vehicles. However, when we see massive selling to stop price rallies, they never say who is selling and why – especially the reasons they would be so aggressive.

One gripe about my gold market analysis over the past year(s) has been my talking about a gold price explosion, or gold derivatives neutron bomb going off, after certain price points have been breached to the upside. The latest query on this subject from a fellow Café member:

I have been hearing for months that gold will really take off when the massive shorts try to cover. I thought this was going to happen at $400, then $428 and then $440. It has passed those milestones, but no short covering. Will you please explain in your next Midas report.
Thanks.
Stan Seeb

My retort:

*Not only have we not had an explosion, the reverse has occurred. The market is being managed more tightly than ever. Any veteran trader can see this by observing the manner in which gold trades to the upside. It NEVER explodes. This is how I came up with the $6 Rule years ago. Go back and look at the $193 price advance from the second bottom in the $250 area and you will find only one up day of price rise significance – more than $8 over the last three years. You will not find one other bull market in history which traded like gold has.

Of course, the exception (before the second bottom above $250) was after the Washington Agreement in 1999 when gold rallied $84 in less than two weeks. The European bankers who signed the agreement did not appreciate the extent of the gold loans and options written by the cabal and other bullion dealers to keep the price down. The surprise announcement set off a chain reaction to the upside, which fed on itself due to increase option volatilities and caused massive margin calls. This led to the BOE’s Eddie George to state they were "looking into the abyss." The Fed then mobilized the central banks to bomb the market and bring the price back down again.

*If you go back to the analyses of the bullion-banking world and their price predictions of the past few years, gold HAS EXPLODED. We are up 70%. This is nothing to apologize for. Few to none on Wall Street predicted what has occurred price-wise, not even remotely close. GATA was right. THEY were wrong. Gold has just has not done so with any oomph. It has been a steady stealth bull market. One of the main objectives of The Gold Cartel has been to minimize any serious excitement over gold and they have succeeded to-date.

*After the abyss banking nightmare, a number of my colleagues surmise that most of the gold loans will be allowed to go to cash settlement and the dealers will not have to cover shorts by delivering bullion back to the central banks. Of course, this means some central banks will have to fess up they sold their country’s gold - that it is gone.

*Still, some percentage of this gold will have to be paid back. Or, it will cause some serious short-covering at certain levels from those who cannot stand the heat any longer. This could come from credit committees or gold producers who feel obliged (or forced) to cover.

*Just because the gold derivatives neutron bomb has not gone off yet does not mean it won’t in the future as The Gold Cartel loses complete control of their scam. To-date the outside markets have not pressured them. Interest rates are low and the stock market has held up. Gold is a tiny market, yet may be the most important barometer of financial market health. The cabal knows this. Therefore, they are going all out to minimize the impact of its price rise.

*One day the bomb will go off. Yes, at far higher levels than I envisioned years ago, but it will go off when The Gold Cartel loses control. It could come from outside market pressure, or from such enormous demand for physical gold around the world that they cannot meet the delivery demands.

*For those who need instant gratification on analysis, I refer you to one of the best calls of all-time. The man was vilified for that call made in the late 1990’s. Remember how Warren Buffet, one of the great American investors in history, predicted the Nasdaq was a giant bubble and publicly stated he wouldn’t touch it with a ten foot pole. He under-performed most managers for some time, then blew them out of the water with his performance, while keeping his investors out of trouble. Buffet was right. Just early.

The John Brimelow Report

Encouragement from India and Bridgewater

Thursday, November 18, 2004

Indian ex-duty premiums: AM $7.65, PM $7.19, with world gold at $444.85 and $444.30. Ample for legal imports. This was true of all the cities Reuters reports. Very impressive, particularly considering the Reserve Bank succeeded in forcing the rupee below yesterday’s close. Reuters carried an unusually long version of the usual story of Indian importers complaining about slow demand and heavy domestic scrap supply, but the numbers clearly indicate these factors, while probably true, are not severe enough yet to cut off imports.

This means on any small pullback, strong support from India is to be expected. The story itself adds:

"Gold demand would pick up if prices fell to around $435 an ounce, traders said…"

Somewhat surprisingly, Japan turned a buyer today. On volume equal to 17,350 Comex lots (+6%) open interest rose the equivalent of 1,371 Comex lots. Mitsubishi’s data implies the public long rose 4.45 tonnes (1431 Comex lots). World gold rose $1.15 above the NY close; the active contract was down 8 yen. Mitsubishi, unusually, reports US dealer selling of spot gold as the force establishing the low in Tokyo trading. (NY traded 61,741 lots yesterday; open interest rose 1,042 contracts to 363,378, a new record.)

Although Shanghai and Hong Kong report significant discounts to world gold, several Asian currencies are achieving quite significant highs against the dollar, and it is possible that this is stimulating demand. A report from Korea today makes clear that the transshipment or "round tripping" business has reappeared in strength (this is the practice of flying gold in and out of the country

to secure tax benefits). But imports of $3.25 billion in the first 9 months of this year, and exports of $2.84 billion (up 119.3% and 237.8% respectively) still leaves $410 Mm of net imports, perhaps 31 tonnes, which seems substantial.

Massive forces are obviously at work in gold. Furthermore, the NYSE ETF has the potential to at least alter trading patterns in ways as yet unclear.

In the mean time, gold’s friends can be confident that the world price is underpinned by the world’s largest buyer of physical, and enjoy Bridgewater Associates apocalyptical remarks about the dollar in their Daily Observations today:

"The Dollar Unraveling: As you know, we believe that the US is moving toward a balance-of-payments/debt crisis. It is likely that the crisis period may now be starting, and that we have entered a new leg in the dollar decline. This leg of the dollar collapse will not be over until we have seen global central banks abandon their misguided attempt to stop the dollar decline. The big collapse in the dollar is likely close, and speculators are starting to see the blood in the water….The fair market value of the dollar is probably at least 30% below its current levels. The dollar downtrend has paused in 2004, but this pause has only served to increase the imbalances that necessitate the downtrend…the pressure on the dollar is now probably as great as it’s been at any point during the downtrend."

JB

CARTEL CAPITULATION WATCH

The DOW continues its run higher, closing at 10,573, up 23. The DOG was no slouch either, gaining 6 to 2104.

US economic news:

08:30 Jobless claims for w/e 11/13 reported 334K vs. consensus 330K
Prior week revised to 337K from 333K.
* * * * *
10:00 Oct. LEI reported (0.3%) vs. consensus (0.1%)
Prior reading revised to (0.3%) from (0.1%).
* * * * *

WASHINGTON, Nov 18 (Reuters) - A key forecasting gauge of future U.S. economic activity fell for a fifth straight month in October, a private research firm said on Thursday.

The Conference Board said its index of leading indicators fell 0.3 percent in October to 115.1, a fifth straight monthly decline. The index fell by a matching 0.3 percent in both September and August. The September figure was downwardly revised from a previously reported drop of 0.1 percent.

"A fifth straight decline in the leading indicators is a clear signal that the economy is losing steam, and may start off 2005 with a relatively weak pace of economic activity," Conference Board economist Ken Goldstein said in a statement.

Wall Street economists surveyed by Reuters had expected a more modest decline in October of 0.1 percent.

-END-

12:00 Philadelphia Fed index reported 20.7 vs. consensus 23.1
Prior reading 28.5.
* * * * *

12:01 Follow-up: Philadelphia Fed prices paid 53.9 vs. 57.1 in Oct.
New orders index 22.1 vs. Oct 24.6.
* * * * *

Dissecting the US economy – the real scoop on some key details:

The King Report
M. Ramsey King Securities, Inc.
Thursday Nov. 18, 2004 – Issue 3041 "Independent View of the News"

Contrary to the Bubblevision ‘expert’ that just parrots his sources; Wednesday’s market did not get jiggy early because of the hurricane-generated industrial production number. The hurricane influence is in the 1.6% jump in the production of wood products. Home electronics soared 4.9%. Petroleum & coal production increased 1.8%. The other big jump is the 2.3% hike in motor vehicles & parts. Construction supplies increased 1%...Manufacturing employment continues to fall and aggregate hours worked are unchanged to down a tad…Production of defense and space equipment is +5.2% y/y.

Total products increased to $2.8911 trillion in October from September’s $2.8671 trillion or 0.8%. PPI increased double that amount in October. There is an inflation component involved in the increase in industrial production. $10.6B of the $23.4 increase is in automotive products. But auto unit volume fell to 4.06m (annualized) from September’s 4.32m. Auto products by dollar amount increased $10.6B or 3.38%, but unit volume vehicle production increased only 2.3%. The difference is knows as inflation…Trucks increased 500k, with light trucks increasing 510k. We warned in yesterday’s missive that any serious analyst or investor must differentiate unit volume and dollar volume growth is these inflationary, and understated at that, times… Much of the industrial production increase is in light trucks, inflationary plays like coal, metals, wood and petroleum.

Of course the increase in capacity utilization is mostly in the inflation and hurricane beneficiaries.

Wednesday’s action was a currency play, specifically a reaction to the declining dollar and US Treasury Sec Snow’s implicit assent to a falling dollar. US Treasury Sec Snow, in Europe, told the Old World that they have to change the way they do business. Snow said the US favors a strong dollar, which everyone knows is BS, and said the US would not join with others to intervene in the dollar - "The history of efforts to impose non-market valuations on currencies is at best unrewarding and checkered." Naturally the dollar tanked to new lows.

Reuters: "U.S. manufacturers brushed off European complaints on Wednesday about the weak U.S. dollar and argued that the greenback actually was still too strong."

Presently, the market believes the US benefits by a cascading dollar. That’s precisely what drove that big summer rally in 1987. Eventually, the consequences of ‘beggar thy neighbor’ competitive currency devaluations will be manifest in economic & financial disturbances. And if someone does a Jim Baker III, screaming fire in the cascading dollar and dollar market, (Snow’s comments yesterday are a start.) matters and markets will worsen far more than people can imagine…Everything is on course.

You know that housing starts ‘boom’ in October (+6.4% to a 2.027m annualized) that the fin media crowed about yesterday? Single family units FELL 0.1% m/m; multi-family home starts soared 20.3%. Single-family home permits are DOWN 11.6% y/y; starts are -0.2%; under construction is +12.3% y/y. This is not the sign of economic strength or builder confidence. This is a boom stalling out on inventory, including houses (probably most spec) under construction…Even multi-family homes statistics are turning south – permits are down 5.4% y/y. Northeast multi-family starts are up 18.6% y/y; under construction is up 14.1% y/y. Northeast single-family home permits are DOWN 20.8%.

Right from the lips of the BLS: "During the first ten months of 2004, the CPI-U rose at a 3.9 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 1.9 percent for all of 2003." http://www.bls.gov/news.release/cpi.nr0.htm Energy and healthcare costs are still grossly understated.

Last week Fed officials stated that their fed funds policy is nearing ‘neutral’. Well, the BLS CPI shows that the Fed needs to double fed funds to get to neutral.
And that’s still below real CPI…Fed policy is in concert with the administration’s policy of a softer dollar.

What we have here, is stagflation. Current market psychology, fueled by easy money and bullish seasonality, dictates the buying of anything, except the dollar.

The markets are back to ‘buy everything, except sell the dollar’ mode…Stocks and bonds are rallying now, because both respective investor groups are bullish.

Of course when the psychology changes, both bond and stock investors will each see negatives germane to their group.

-END-

Here is a perfect example why the gold and silver fraud on the Comex has not been exposed. The foxes in Washington and New York are guarding the chicken coops:

AMEX AXES WATCHDOG
By PAUL THARP
NY Post

November 18, 2004 -- The chief watchdog for trading scams at the American Stock Exchange has been relieved of his job after being targeted in a federal probe of suspicious options trading.

The American Stock Exchange said yesterday that Glen Barrentine was replaced as its chief regulator after the Securities and Exchange Commission informed Barrentine he's a subject of the sweeping probe.

He's the fourth top official of the exchange including its CEO Sal Sodano to be targeted in the investigation.

The nature of the SEC investigation against Barrentine wasn't disclosed.

-END-

Ian with "Home thoughts from abroad" last night:

Good evening Bill
I thought I would update the multiyear $gold chart showing the two teacup and handle formations I emailed you a couple of weeks ago.

As you can see from the chart we have decisively broken out of the second handle. I have added text to the chart so readers don't have to keep flipping between the chart and your commentary.

The point I would like to emphasize is that this chart formation with such symmetry is rare; and is extremely reliable in forecasting a move and its target price.

Listening to the Snowman on his, and presumably the US administration's, view of the dollar and deficits in London today made me cringe. To summarize -

Currency deflation is not the way to prosperity,

Euroland is as responsible for the US (trade) deficit as the US is itself, and

Euroland should do much more to fix its own economy and get it on the road to prosperity.

With an upcoming meeting for the new G20 countries, a clear message was sent to them that the $ problem isn't the US's and it isn't going to fix it.

But that isn't whole problem. The US depends on the rest of the world to finance its trade and current account deficits to the extent of nearly $2 billion per day. Snowman has given the dollar a push down the stairs, which could well lead to US creditors curtailing their enthusiasm for US paper. When that happens US interest rates will rise and the US consumer (i.e. the US economy) will come to a dead stop. Financing these huge deficits then will become the biggest business in the US.

In the meantime listen out for a lot of rhetoric from overblown finance ministers and central bank governors, who don't know "S" from shinola, trying to talk down their currencies.

Gold can only be a beneficiary from this, and its starting to show in the price. The London am fix of $444.50, a 16 year high, even made CNBC's news alert!

[http://stockcharts.com/def/ser…tv05.ServletDriver?chart=$GOLD,uu[g,a]daclyyay[d19951117,20041117][pb50!b200][vc60][iub14!la12,26,9][J39666056,Y]

Best wishes
Ian

have been asked for years why the Gold Cartel rigs the price of gold. There are many reasons. There are many. Today’s technical gold analysis by UBS lays out one of them. Sometimes the most simplistic explanations are the rightest ones. The cabal forces know a flight to gold will lead to a flight out of the US stock market, just what the bullion dealer/investment houses (like Goldman Sachs and JP Morgan Chase) do not want to see happen:

From Technical Research – UBS – November 18, 2004

It has been almost two years since our first Technical Take outlining our bullish forecast for gold. Within that report we outlined the historical precedent set during the last 100+ years in our American history regarding the commodity and its correlation with the U.S. stock market. The simple, but compelling, observation was and remains that gold has a negative secular correlation to the stock market. This implies that when the S&P or DJIA transition from secular (long-term) bull market to secular bear, gold becomes a new staple asset or haven to which investment dollars flow. Likewise, when the stock market has finished unwinding the excesses and overvaluation via a secular bear market or trading range and transitions into the next secular bull, gold has been seen to revert back into a long bear market, as money flows out of the commodity and back into equities.

Those that are familiar with our work know that we certainly feel we are currently within the confines of a large secular trading range / bear market in stocks. History has shown us that these secular cycles can last anywhere from 10 to 20 years, built by smaller cyclical bull and bear trends whose purpose is to shake out weaker hands and build a base from which to launch the next long-term bull market. During a period such as this, the typical buy and hold strategy may frustrate market participants, as stocks readily give back hard earned gains once overhead resistance is met. In such a situation, it is our opinion that diversification away from an overweighting in domestic equities may be appropriate for some. Gold then becomes an obvious choice as an alternative asset class during this secular cycle, though it may not be a completely smooth ride throughout the journey. For this reason, we have included both long-term chart analysis for investors, as well as shorter-term analysis for those more trading oriented. We hope this sheds some light on where we see the commodity headed in the days, weeks, and even years ahead…..

-END-

Chuck checked in with some fun stuff:

Just read a missive from Prechter about the NO Conference where he poked fun at the oil bulls. Like he is mister correct. Had to send him a note about his call on gold-again.

It is also good to see that Handy Andy is still growling. Let me know when he has turned bullish. Always at correction time. But I still can't get over that we are at a 16 year high and no one is convinced that we are in a secular bull move. I think we are at a critical share point. I think that the ETF introduction will bring in some selling or the squeeze. Should be a very interesting day tomorrow, one way or the other. I'll be in touch….

I think a lot of the "traders" were looking to dump on the ETF inauguration today. Also, we might be seeing the beginning of the dollar bounce but I am not convinced. All in all, so far, given the obligatory gap down, we're not doing too badly. I am always more comfortable seeing reactions like these since it means that the personality of gold hasn't changed. Let's see what transpires if the dollar continues to lift.

Here's an article that I came across today. Might be of interest to you. Chuck

http://www.boston.com/business…advice_from_a_bear_panic/

Sound perspective on what is transpiring in the gold market:

Hi Bill,
A couple of observations.

First, re. the price of gold. I have been watching the open interest climb steadily and watched successive ineffective attempts to bring the price of gold down. I think that what has occurred is that the nature of the gold market has changed without those opposed to gold understanding the transition which was taking place.

My sense is that, day by day, over the past few months the market has evolved. In the past it has been a market dominated by traders many of whom frequently close-out their trading positions to net profits and cover losses. The evolution which has occurred is that, while the price-cappers were confidently playing the market [relying on being able to open the gates so the uninformed gold traders could rush-in then the price cappers would dump supply on the market to create panic to drive the uninformed traders out of their positions thereby driving the price of gold down further (picking their pockets as they went out the door)], a new player has arrived quietly on the scene.

The new players who have quietly shown-up at the souq are not traders but buyers. They hold their positions because they understand the US dollar fundamentals and its tremendous downside. The market manipulators should have taken drastic action on several occasions to bring the open interest down but they were not successful and on each occasion, they backed-off assuming that they could create a run on another day. Well it has not happened because the buyers who showed-up, on each occasion, stopped any of the runs by buying the volume of gold offered – and we now have a massive open interest with continued support from buyers (not traders) underpinning gold. With the backstop of the December notice day approaching, the price manipulators with their huge short positions are now in serious trouble if they cannot start the run needed to drive the price of gold down. We may now have a run to the upside as they (and other shorts) rush to cover their short positions and limit their losses. This will be interesting to watch.

My second point is with regard to the US bond. Pimco’s Bill Gross has been commenting for over a year now with regard to how the bond market has been decoupled from the reality of the US economic situation. With a net debt of some $35 Trillion (Federal, State, commercial and private) and unfunded future liabilities (Medicare, Social Security, etc.) of some $45 Trillion, the US should not be able to obtain 4% financing on its 10 year notes. What Bill has pointed out is that it is only because of purchases of US bonds by Japan and China, with their central banks’ huge USD holdings, that the bond has been supported given that the US is for all intents and purposes bankrupt (see his paper "Where Are the Vigilantes"). The decoupling of the bond market from the US fiscal reality (and artificially low interest rates) will only continue for as long as it suits the purposes of the Japanese and the Chinese who benefit by having US demand drive their export economies. After that, and it cannot continue forever, watch out below.

Your daily commentary is extremely valuable and I thank you for the insights.
Sincerely,
Dave.

A positive take on the new ETFs from a hedge fund manager:

There is no doubt in my mind that this is an awesome product for non-taxable retirement and pension funds. There is already a movement towards non traditional investments by big money. Which would you rather own the Euro (which has structural unemployment problems, rising inflation, rising budget deficits and a negative real yield on their currency) or Gold. The ETF is a conservative product compared to Gold stocks or Gold Futures. You don’t have to worry about margin calls in futures. You don’t have to worry about event and currency risks in Gold Stocks. It’s ease of purchase versus physical is incredible. This has the potential to expand the demand for Gold exponentially. If some of the institutional money that wants dollar alternatives would move from the Euro or the Yen to this then the break out by Gold in all currencies would be imminent.

Think about it if this were not massively bullish for the price of Gold why did the SEC wait so long to approve it. Why did they wait until after the election to let the Gold ETF to trade? The Fed’s whole goal in manipulating Gold downward is to keep the financial markets clueless about the real levels of inflation. This product has the potential to tighten the physical market significantly.
Garic

Gold ETF approaches 4 mln shares traded

By John Spence, CBS MarketWatch.com
Last Update: 12:26 PM ET Nov. 18, 2004

BOSTON (CBS.MW) - By lunchtime on its first day of trading, StreetTracks Gold Shares (GLD: news, chart, profile) traded over 3.7 million shares, well over the 2.3 million underwritten shares that were priced in the initial public offering.

After a long wait and much anticipation, the first exchange-traded fund that invests directly in gold bullion began trading on the New York Stock Exchange Thursday.

"This one is going to go gangbusters," said Jim Wiandt, editor of IndexUniverse.com.

"It opens up a new asset class to investors," he added. "And arguably, this could completely tilt the gold market and have macro-economic consequences."

The World Gold Council is the fund's sponsor and Boston-based State Street is the marketing agent.

Blocks of 100,000 shares are redeemable into gold bullion, and shares should be priced at about 10 percent of the price of a troy ounce of gold.

Earlier this week gold reached a 16-year high and some observers are calling for it to hit $450 before the end of the year. The new gold ETF could open a floodgate of new cash into gold as it will make investing in bullion easier for investors and many analysts said anticipation of the gold ETF was pushing gold higher before the launch.

"The introduction of the StreetTracks Gold ETF represents a major step forward for the ETF industry and investors by allowing individuals and small institutions an easy and cost-efficient vehicle to invest in gold as an asset class," said Jim Pacetti, head of consulting firm ETF International. "Previously, one had to use either the physical gold with the associated storage and insurance costs and wide spreads or use derivatives."

The World Gold Council first filed the prospectus with the SEC in May 2003 and managed to beat ETF giant Barclays Global Investors to the punch by being first to market.

BGI has filed a gold ETF with the SEC to be called iShares COMEX Gold Trust, which is slated to list on the American Stock Exchange.

Together, these products could gather $2 billion in assets in the next six months, Pacetti believes.

"There is certainly retail demand, but one interesting aspect of this story is that many institutional players had before been restricted from either holding gold directly or holding futures on gold," added Wiandt.

Both ETFs are designed to reflect the price of gold owned by the trust, less the expenses of the trust's operations.

The funds will pay their fees by selling off small amounts of gold bullion. In other words, the fractional amount of physical gold represented by each share will decrease over the life of the trust.

Gold, like artwork, is classified as a collectible by the IRS and is therefore taxed at a higher 28 percent capital-gains rate in the United States after being held for more than one year.

According to filings, both ETFs will be structured as grantor investment trusts rather than registered investment companies, and expenses will be priced identically at 0.4 percent of assets. The Bank of New York will be the trustee for both ETFs.

Elsewhere, gold ETFs have already been listed in England, Australia, and South Africa.

In midday trading, shares of the gold ETF were down 0.7 percent to $44.12.

John Spence is a reporter for CBS MarketWatch in Boston.

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Treasury Secretary Snow is losing all credibility with his inane comments:

Asia News
Markets see Snow comments as green light to sell dollar

LONDON : Far from reversing the dollar's slide, comments from US Treasury Secretary John Snow have been taken by markets as a sign that Washington welcomes a weaker currency, to the alarm of eurozone officials as the euro hit new highs.

Snow's repeated insistence on a tour of Europe this week that the US "strong dollar" policy remains intact has been received with increasing disbelief by dealers, who chased the euro to a new record high of 1.3074 dollars……

For the full story:

Click here: Channelnewsasia.com

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Silver guru and GATA friend David Morgan just came out with:

Silver and China Special Report

http://www.lemetropolecafe.com/img2004/china-davidmorgan.pdf