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

Bill King takes it a step further and ferrets out more of the real US job picture:

The King Report
M. Ramsey King Securities, Inc.
Monday Feb. 7, 2005 – Issue 3092 "Independent View of the News"

Please note that the BLS only deleted 280k jobs this January, as opposed to the 321k it deleted last year. This means that the BLS in effect ‘added’ 41k jobs on a y/y basis. Without this bonus, non-farm payrolls would’ve been only 105k. Also note that Q4 ’04 jobs were revised lower by 59k.

Manufacturing jobs were horrid, down 25k with +5k expected; December was revised to -7k from +3k. The last three months, 137k jobs/month were created. 150k jobs must be created per month just to absorb working-population growth…The average workweek fell to 33.7 hours from 33.8 hours…The unemployment rate fell to 5.2% from 5.4% because 224k workers quit looking for work (discouraged). This forced the ‘participation rate’ down to 65.8%, the lowest level since 1998.

The BLS adjusted both December and November Net Birth/Death Model jobs. They adjusted December up to 66k from 62k, but November was adjusted lower, to 9k from 30k. This refutes those that claimed or will claim that lower Christmas-related hiring would keep the BLS from deducting as many jobs as last year. The BLS adjusted November and December B/D Model jobs 17k lower, but they truncated January deletions by 41k. This means the BLS in effect created 24k more jobs over those three months y/y.

Though the BLS asserts that the Net Birth/Death Model is not seasonally adjusted, the past two+ years of dynamic monthly changes appear to follow the seasonal pattern of job creation. Do start up businesses created and destroy jobs as quickly as larger, established enterprises?...Where is the explanation for the BLS methodology? Numbers are meaningless if one does not know how they were derived or compiled.

Last we averred that though The Street once again forecast a great employment report, the odds were extremely high that it would be disappointing due to the dictates of the CES Business Birth/Death Model that guesses how many jobs are created/destroyed in start up or micro businesses.

For the past year or so, we’ve been able to regularly out-guess The Street just by using the numbers from the B/D Model. When the model went dynamic a couple years ago, the BLS started changing the monthly totals from the static (same number until the model was adjusted) addition that began in 1985.

Two years ago, the BLS started deleted jobs. A criticism of the model since its inception was that it never accounted for start-up businesses that go bust. But BLS only deletes jobs twice a year – January and July. So, that’s how we reasoned that Friday’s report would be soft. However, we thought that stocks would decline because operators were buying stocks in expectation of a good report that would show the economy is getting jiggy again. That did not transpire; stocks rallied sharply.

So what sent stocks soaring on Friday? AMG figures, issued on Thursday evening, showed $4.3B poured into mutual funds for the week end Feb.2, the first significant inflow in 2005. And on Friday, Easy Al waxed wonderment about how the US current account would start shrinking due to the new fiscal restraint that Bush has proposed. AP: "President Bush's $2.5 trillion budget is shaping up as his most austere, trying to restrain spending across a wide swath of government from popular farm subsidies to poor people's health programs."

http://apnews.myway.com/article/20050206/D8839FP81.html And as the chart below shows, Easy Al went back to supplying the juice last week.

A couple years ago Al instituted a de facto zero interest rate monetary policy and the most simulative fiscal policy since LBJ or FDR depending on the counting. And what did we get out of that? Crony capitalists flourished in the ‘get me out rally’. But the US has experienced the worst recovery in jobs and income since WWII or The Great Depression, depending on the counting.

If all the steroid stimulation is now not only removed, but rescinded, what is likely the economy like to do? We’d guess a wicked readjustment in the economy must occur. The severity depends on: 1) Easy Al’s attempt to euchre the market and 2) the orderliness at which the over-levered economy readjusts.

Bush’s fiscal profligacy was a self-serving ploy to get re-elected. Easy Al’s monetary promiscuity was also self-serving. He wanted to be re-elected as Fed CEO so he could set the record for longest reign.

Bush no longer needs to be self-serving in the next year or so. Easy Al must leave the Fed next February when his 12-year NY Fed term expires. Al might desire to exit with things still jiggy. This raises our suspicion, as we have remarked regularly, that Easy Al will attempt the monetary sleight-of-hand that he performed in 1994 when he raised interest rates but allowed, or caused, adjusted Fed credit and the money base to increase by double-digit amounts.

-END-

Based on the evidence, the US jobs picture is bleaker than generally accepted and the US fiscal situation (vis-à-vis the budget) is much worse than presented. Meanwhile, the Fed is pumping out the money supply like crazy. One can envision why the bonds are doing what they are because the US economy is quietly in big trouble. Increased liquidity from the Fed and investors can explain the stock market run-up. However, the dollar run-up and gold sell-off makes no sense unless you understand the Working Group on Financial Markets, along with the US propaganda spin machine, has let it all hang out with every manipulation tool at their disposal.

Here we go again when it comes to understanding how market manipulation works in the US and how the mainstream powers use the "conspiracy" word to marginalize those who point out the truth. Excerpts:

February 4, 2005 NY Times
Tapes Show Enron Arranged Plant Shutdown
By TIMOTHY EGAN

VERETT, Wash., Feb. 3 - In the midst of the California energy troubles in early 2001, when power plants were under a federal order to deliver a full output of electricity, the Enron Corporation arranged to take a plant off-line on the same day that California was hit by rolling blackouts, according to audiotapes of company traders released here on Thursday..

The tapes and memorandums were made public by a small public utility north of Seattle that is fighting Enron over a power contract. They also showed that Enron, as early as 1998, was creating artificial energy shortages and running up prices in Canada in advance of California's larger experiment with deregulation.

The tapes provide new details of market manipulation during the California energy crisis that produced blackouts and billions of dollars of surcharges to homes and businesses on the West Coast in 2000 and 2001….

Company officials had long denied that they illegally shut down plants to create artificial shortages. In March 2001 - two months after the recording showed how the Nevada plant was shut down- Mr. Lay called any claims of market manipulation "conspiracy theories."…

-END-

Rhody on the leasing picture:

Good morning Bill:
You can't have silver rising while gold is tanking, so better lease like crazy so the two metals are trashed in sync. As you can see, we have a near term lease spike in silver. This is virtually always a load and dump on the spot price. These are relatively large lease increases, so the volume of metal is significant. It looks like someone is determined to see both gold and silver below their 200 dma.

Regards, Rhody
http://www.kitco.com/market/lfrate.html

My friend Mahendra sends up some of his latest:

Dear Members,
First, let me apologise for not sending the monthly newsletter on the 1st February. Here is the overall outlook for February 2005:

GOLD

Just as any plant would wilt and die for lack of water, gold has experienced a consistent deterioration due to lack of support from nature or planetary movements. That is precisely why it has remained directionless and weak for the last six weeks. I believe that you have gradually understood the influence of nature on the markets; planetary movements combine with nature to create a wave that influences peoples’ minds. Indeed, 80% of the people fall under the influence of this wave.

For instance:

During the technology wave of 1997 to 2000 February, the dominant talk at this time only concerned tech and telecom stocks.

The oil wave in the whole of year 2004 had the entire world and the media engrossed in discussions about oil.

The Dollar decline of 2002 to 2004 has been a hot topic throughout, with economists trying to ascertain the real dollar value.

Commodities wave – the wave of gold, silver, platinum, palladium, copper, aluminium, nickel, uranium, steel, cobalt and coal, etc. is still running.

I consider myself very fortunate and am grateful to nature and astrology for revealing waves and enabling me know their commencement and ending well in advance. We are currently in the commodities wave period and of course this will also end. However, various commodities shall have different wave ending times.

THE NEXT POWERFUL WAVE COMING WILL BE AGAINST THE STOCK MARKET (This period is not very far off).

Coming back to gold, it will finally triumph against the US dollar during this month. A ‘disconnection movement’ is clearly on the way in the month of February (may this prediction will give 100% recognize of my work in world financial market and it will be remember for the next hundreds of years). Today, gold traders and gold-bugs do not agree with me on this because they don’t think that it is possible since it has never happened in history. My friend and well know Mr. James Sinclair has also been waiting to see this move because he also believes that it cannot happen. However, he believes that it will be a great moment for metal investors and for my work if it indeed it does occur. James Sinclair and Bill Murphy have always supported my work and taken great interest in my theory and I heartily thank them both.

After 20th February gold will have a great upside move and prices may touch $442 by end of the month. Soon in few days gold will be rising with dollar and start gaining against all currencies.

SOUTH AFRICAN GOLD STOCKS WILL BE THE BEST PERFORMERS IN THE NEXT THREE WEEKS.

Thanks & God Bless
http://www.mahendraprophecy.com/

The XAU lost 2.50 to 88.59 and the HUI gave up 5.36 to 192.37.

The gold and silver shares continue to fall out of bed. Demoralization is rampant. Regardless of whatever comes out of the IMF gold sale proposal, the negative talk of IMF gold flooding the market has done damage to all. What a pity it is the poor who must suffer once again at the hands of the sinister central/bullion banks (the way my gold stocks are disappearing, it is making me poor). If the gold market doesn’t turn around in the weeks/months to come, which it should, England’s Brown and South Africa’s Manuel will have done more damage than any gold sale would eventually do to actually help those “down and out” in sub-Saharan Africa.

And how pitiful there is nary a peep about this travesty from the mainstream gold world.

GATA BE IN IT TO WIN IT!

MIDAS

Confession Time
Stephen Roach (New York)
MORGAN STANLEY
2/7

At long last, Federal Reserve Chairman Alan Greenspan has owned up to the central role he has played in sparking unprecedented global imbalances. His confession came in the form of a speech innocuously entitled, "Current Account" that was given in London at the Advancing Enterprise 2005 Conference on the eve of the 5 February G-7 meeting. In the narrow world of econo-speak, his prepared text contains the functional equivalent of a "smoking gun."

Greenspan’s admission came when he finally made the connection between the excesses of America’s property market and its gaping current account deficit. To the best of my knowledge, this was the first time he ventured into this realm of the debate with such clarity. He starts by conceding "…the growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the United States from almost 6 percent in 1993 to its current level of 1 percent." He then goes on to admit that the rapid growth in home mortgage debt over the past five years has been "driven largely by equity extraction" -- jargon for the withdrawal of asset appreciation from the consumer’s largest portfolio holding, the home. In addition, the Chairman cites survey data suggesting, "Approximately half of equity extraction shows up in additional household expenditures, reducing savings commensurately and thereby presumably contributing to the current account deficit." In other words, he concedes that a debt-induced consumption boom has led to a massive current account deficit. That says it all, in my view.

The obvious and most important point is that rapid growth of US mortgage debt did not come out of thin air. It was, of course, a direct outgrowth of the Fed’s hyper-accommodation of the post-bubble era -- namely, short-term interest rates that have been negative in real terms for longer than at any point since the 1970s. As Greenspan’s dryly notes, "The fall in US interest rates since the early 1980s has supported home price increases." That’s putting it mildly. Suffice it to say, were it not for the Fed’s aggressive monetary accommodation -- especially the post-bubble easing of some 550 bps in 2001-03 -- the home mortgage refinancing cycle would have been in a very different state. But it wasn’t just lower borrowing costs that spurred equity extraction. It was also the rapid rate of house price appreciation -- an outgrowth of what Greenspan notes has been the "unprecedented rate of existing home turnover" that he also attributes to sharply lower interest rates.

Equity extraction has been the pixie dust of America’s post-bubble recovery -- the newfound purchasing power that has fostered the biggest consumption binge in post-World War II history. Were it not for this wealth effect, consumers would have been constrained by an anemic pace of labor income generation -- long the most decisive variable in the macro consumption equation. Lacking in job creation and real wage growth, private sector real wage and salary disbursements have increased a mere 4% over the first 37 months of this recovery -- fully ten percentage points short of the average gains of more than 14% that occurred over the five preceding cyclical upturns. Yet consumers didn’t flinch in the face of what in the past would have been a major impediment to spending. Spurred on by home equity extraction and Bush Administration tax cuts, income-short households pushed the consumption share of US GDP up to a record 71.1% in early 2003 (and still 70.7% in 4Q04) -- an unprecedented breakout from the 67% norm that had prevailed over the 1975 to 2000 period.

These are the telltale footprints of what I have called the Asset Economy (see my 21 June 2004 dispatch, "The Asset Economy"). It’s a story that began in the latter half of the 1990s with the equity bubble. And it’s a story that involved the Federal Reserve as a key player at every subsequent twist and turn. Its role can be traced back to December 1996 with Alan Greenspan’s famous "irrational exuberance" speech -- his first and only warning of the bubble-related perils to come. Unfortunately, the Chairman was quick to become a convert to the very excesses he warned of -- embracing the New Paradigm of rapid productivity growth as justification for why the central bank would be willing to stand by and tolerate faster than normal growth. That acquiescence -- putting the Fed Chairman in the dangerous role of a cheerleader insofar as the financial markets were concerned - (the great unanswered question is why? Why did Greenspan visibly change his course at the end of 1996, after a visit by Robert Rubin. - Jesse) - gave a green light to investors and speculators all the way to NASDAQ 5000. Then when that bubble popped, the Fed went into its well-rehearsed "Japan drill" -- unleashing the aggressive easing that gave rise to the excesses of the home mortgage equity extraction cycle. This is the grand continuum of the Asset Economy -- wealth effects that morphed seamlessly from the stock market into the property market.

Aided and abetted by the conscious policy tactics of the Fed, Alan Greenspan can hardly profess innocence in assessing the current state of global imbalances. By warmly embracing asset appreciation and the debt binge it fostered, the central bank has encouraged consumers to all but abandon traditional income-based saving strategies. Instead asset-based saving has become the "new new" thing of the Asset Economy -- as has the debt-induced equity extraction that has driven US consumption to unprecedented excess. This shortfall of income-based personal saving, in conjunction with outsize government budget deficits, has created the very shortfall of national saving that makes ever-widening current-account deficits unavoidable. And that, of course, puts extraordinary pressure on the rest of the world to fund America’s profligate ways. (A role to which Roach's and Morgan Stanley's good and BIG customer, China, stepped up to more than willingly to support their mercantilist policies. Jesse) At long last, Chairman Greenspan owns up to the central role he and his colleagues at the Federal Reserve have played in fostering these developments.

Alas, he offers a hopeful prognosis as to how this all works out. Greenspan’s basic argument as set forth in his London speech is that we can all relax -- that "market pressures" are likely to play a key role in the coming US current account adjustment and in the global rebalancing that adjustment would spawn. In particular, he is optimistic both on the outlook for public and private sector saving. Undaunted by his mis-diagnosis of the fiscal outlook in 2001 -- he argued that tax cuts would be the wisest way to spend the government’s budget surplus -- Greenspan offers hope that the "voices of fiscal restraint" will finally prevail in Washington. We’ll know more on the fiscal policy front soon enough as the Bush Administration prepares to release its new budget. Suffice it say, a credible program of significant deficit reduction will be tough to pull off as the White House rules out tax increases and focuses, instead, on the 18% of federal expenditures that can be classified as nondefense discretionary spending (excluding homeland security).

Moreover, Greenspan also expresses the belief that "An increase in household saving should also act to diminish borrowing from abroad." This is a key assertion. What he is saying implicitly is that the Fed will need to withdraw support from the Asset Economy by restoring some semblance of normalcy to America’s real interest rate structure. What he is also implying is the hope that the US labor market will now provide increased support to the American consumer -- in essence, spurring the long-awaited "hand-off" from the new asset economy back to the more traditional income economy. January’s disappointing employment survey -- just the latest in a long string of subpar gains on the hiring front -- underscores how difficult it will be to execute this hand-off.

This may be the toughest nut of all to crack for the US central bank. It underscores the delicate tradeoff between real interest rates and saving as the Fed attempts to wean the American consumer from the excesses of the Asset Economy. Financial markets are presuming that the central bank will err on the side of caution in executing this delicate transition back to the income-based economy of yesteryear. The broad consensus of investors believes that the Fed wouldn’t dare flirt with a meaningful shortfall of economic growth. Futures markets are quite explicit in validating this perception by now pricing in only two and a half measured tightenings of 25 basis points each, between now and midyear. That’s hardly a move that would spur a spontaneous revival of personal saving, in my view. Nor would it be enough of a move to take away what I have called the "candy" of the carry trade that has spawned speculative excesses in a variety of risky assets -- including emerging-market, high-yield, and even investment-grade corporate debt. I continue to believe that it will take more Fed tightening than the markets are expecting -- in conjunction with a long overdue backup in long-term interest rates -- to spur a shift from asset- to income-based saving.

The Federal Reserve is trapped in a moral-hazard dilemma of its own making. It dates back to the Great Bubble of the late 1990s and the central bank’s unwillingness to take away the proverbial punch bowl just when the party was getting good. The close brush with deflation that then ensued was a painfully classic post-bubble aftershock. That experience underscores the greatest shortcoming of modern-day central banking -- the inability of monetary policy to cope successfully with asset bubbles and the deflationary perils they engender. The history of the 1930s and Japan in the 1990s are grim reminders of that shortcoming. Alan Greenspan’s confession finally sets the record straight on how he got us into this mess. But it is a confession that is still steeped in denial. The presumption that natural market forces can cure all ignores the lingering perils of an all-too treacherous endgame. Let’s not forget that nearly five years after the equity bubble popped, America’s imbalances -- to say nothing of the world’s imbalances -- remain in uncharted territory.

-END-

Café member's letters of interest:

Bill,
Hope all is well. Dropping you this e-mail to keep you up to date on the Spitzer letter I sent you back in the beginning of January. I sent you a copy and you said you would hold it. As of today Feb 5th, I have not received a reply back AT ALL. I find this to be very interesting in the grand scheme of things. Let me explain. When I first wrote to Eliot Spitzer back in February of last year they received my letter on Feb18th.This is verified because I have sent all my letters to him certified mail. I received a letter back from them on March 8th. It took them 18 days to respond back to me. Remember this was back during the campaign were many people were writing him letters. In May of last year, I wrote them a letter after the bombing of gold and silver, which they received on May 11th via certified mail. This was the letter in which Mr. Peter Drago wrote thanking me of my continued interest in this IMPORTANT issue. I would like you to know that I received this reply back from them on May17th.It took them only 6 DAYS to respond.

Bill,I truly think as Ted Butler has written recently that something very big is about to happen in silver. Remember the article I wrote a couple of weeks ago saying I thought silver was coiled and ready to blow! For the last month the big commercial shorts have been dropping like hotcakes. Although I cannot tell, maybe there has been some extreme pressure put on them. Back in Dec 2003 they were able to bring 20 million ounces of silver into the warehouse. Since then, as you well know, we are down to roughly 103 million ounces. This is with NO BIG shipments brought into the warehouse in well over 13 months! This is with many silver dealers saying they cannot fill many of there orders. This is the silver trap that David Morgan has eluded to.

I respect and admire all of the work and effort that you and GATA have done to bring this gold suppression scheme to light. But I must say, that the key to exposing the scam in the gold market, is the SILVER MARKET! This is the key to opening Pandoras Box. Unlike gold, there is far less silver to go around than gold. I would like to say, we owe a great deal of thanks to TED BUTLER, as he has been the pioneer in exposing the great silver manipulation. As Ted points out, silver is consumed while gold is not. Time will tell very shortly, as we have the march silver contact coming up on delivery. In a recent Midas, you said you heard of some big silver buyers coming in the middle of february. I know the sharks smell blood, but one thing they are careful of is not making the Mistakes the Hunt brothers did.

I respect and admire the attorney generals office. Really they are in a tough position, because I think they KNOW the truth, and they have been forewarned. Put yourself in their shoes, as Ted wrote some months back, what would you do? It is my hope and prayer that the attorney generals office will help put an end to this.

May the LORD bless you,your family, and all those in the GATA army. Thank you Bill,you are truly a pioneer in the gold camp.
Sincerely,
Scott Hennessey

Shaka Jr.,
FIAT NIRVANA & THE TEMPER-TANTRUM

Please thank the kind soldier who dug up Alan's missive.

After reading it through and attempting to filter the green-speak I concluded that somewhere in 1987 Alan must have been asked if he thought he could actually conjure up enough magic to create the "Fiat Nirvana" he described so well in his article from 1981.

I describe it as such because he almost succeeded, but not quite. His quote; "The only seeming solution is for the U.S. to create a fiscal and monetary environment which in effect makes the dollar as good as gold, ...". (read strong dollar policy).

He went on to conclude that this "environment" would produce (I'll paraphrase);

- a stable gold price, (a statistician could give you a perfect number), I'll speculate that since 1984 the mean gold price is about $350, and over the last twenty years I'd say that was "stable" when you consider the deterioration of everything else around us, so I think he succeeded in this regard.

- a sharp reduction in interest-rates, (even to 1%), again we got to hand it to him, he delivered.

- a "possible" further side benefit of political pressure on the administration and Congress to move expeditiously toward non-inflationary policies. (but how can this only be a "possible" side benefit IF you need this benefit as a PRECONDITION to the "dollar as good as gold environment" in the first place? This is the "great circular reasoning" of the banking caste that is used like a magician uses "slight-of-hand" to CONVINCE you OF his magic.

So this is where the whole daisy chain breaks down, and the Greenspan MAGIC unwinds in a chaotic schmutz, UNLESS YOU ACTUALLY SUCCEED IN CREATING NON-INFLATIONARY POLICIES YOU SHOULD NOT REAP THE REWARDS IT
PROMISES!

Yet America has reaped and reaped and reaped and raped ............

What I can't figure out is why Alan is not storming the halls of the Congress and the White House rage-fully screaming; "I used every tool in the bag to deliver you a "dollar as good as gold", and all you could do was squandered the greatest opportunity ever!" aaaaahhhh.

Oh well, I'm a happier man, and richer for pursuing the simple truths in life, and oh look ... there's ToTo pulling on a curtain ......
Buena Fe

@hpoth,
mit dem In-Ruhe-Lassen meinst Du hoffentlich nur den diskutierten Punkt.

Du weißt, ich schätze sonst Deine Beiträge sehr.

----------------------------------------

TV-Programm

Heute ARTE 19:00
Glanz der Erde - Nickel aus Neukaledonien

Morgen Arte 19:00 - Eisen in China

# ulfur

bezieht sich nur auf die Diskusion, bist Du jetzt beruhigt?

gruß hpoth

In dieser Analyse wird auf China und den finalen Krieg bzgl. der Ressourcen eingegangen, der schon voll in Gange ist:

http://news.goldseek.com/OnlineInvestorsNews/1107897207.php

Das ganze wird die USA schlimmer treffen als eine Atombombe !

February 8 – Gold $412.10 down $1.30 – Silver $6.53 unchanged

Passion From Cafe Members Over IMF Gold Sale Talk Is Pronounced
***"The poor do not need hand outs of the wealth stolen from them in the form of grants that control what they do and how they live. They need sound currency and the rule of law so they can do and live as they please as is in harmony with their neighbors and the land. Hence, the current manipulations in the gold market --- including the proposed sales of gold by the IMF -- are part of waging war on the poor. Ask yourself, who is it exactly that is accumulating all of this gold at suppressed prices? Finding out who is "piratizing" the gold out of central banks and governments and understanding the dirty tricks and black budget operations that have bankers and government officials kow-towing to such financial insanity will answer what is the most important UnAnswered Question regarding economic warfare today." ***
Catherine Austin Fitts

GO GATA!

When I had dinner in Vancouver with my friend John Anderson, President and CEO of Key Gold, he unequivocally stated that gold would trade down to $410 and then reverse. Well, so far he got the first part right…to the penny. Now for the reversal.

Today was vintage cabal. After an early slam to $410, gold fought back to unchanged, sold off and then went up on the day. Technical reversal in the air? Nope, not allowed – that would change the tone of the market. Gold was taken right down again. The Gold Cartel is milking this move down for all they have and with every market maneuver they can muster. Gold has now closed lower the last 9 out of 10 days:

April gold
http://futures.tradingcharts.com/chart/GD/45

Let’s hear it for IMF gold sales to help the poor!

Some very disturbing news coming out of London from my STALKER source. Seems like the big physical players over there plan to go into action soon to take silver down 50 cents to a dollar. This is a major change from what we heard recently that they would be going after silver on the upside in the middle of February.

The reasoning behind the supposed coming raid is even more disturbing and makes little sense to me. They want to teach the paper longs a lesson, which means what is left of the little guy specs, etc. Our STALKER source was contacted to warn him of what they say is coming. They also said once the raid was over, the market would take off again so there was no reason to panic.

Why these so-called big shots don’t just take delivery on Comex instead is beyond me. THAT would teach some people a lesson and point out the importance of owning physical. This kind of talk is sickening from these turkeys. This input is from the same guys who ranted over the Comex shorts ruining their market. So what are they going to do…reward them even more? You got me on this one. We shall see. Could be gobble-gobble talk, could be the real deal? What I do know is this is the sort of market commentary which is circulated when it is darkest before the dawn and when markets tend to turn around.

Gold and silver are very oversold, yet if The Gold Cartel and other market players are going to bury the markets, nothing can stop them in the very short-term.

When it comes to the significance of what The Gold Cartel and allies are doing, one only need reflect on the G-7 meeting. What came out of this trumped-up meeting? NOTHING except for talk of IMF gold sales and talk of these sales has been trumpeted all over the world… the BBC, the FT, CNBC, Reuters, Bloomberg, etc. This was a culmination of a month’s worth of effort by British finance minister Brown to cast a pall over the market. He and his cohorts, the financial market press, were effective.

Over the years critics of GATA have objected to our findings by querying the motives of The Gold Cartel. "Why would holders of gold assets talk down the market?" they query. "That would not be in their interest." Our retort has centered around the following:

*It is the essence of the US strong dollar policy, the evidence of which we have seen over and over again these past years.

*Gold as an asset is insignificant compared to the rest of the US and world financial markets.

*It is used by market pundits and the public as a barometer of the health of the US and world financial system. The lower the "barometer" price, the more this system is decreed to be healthy.

*When the gold price soars, what does the financial market ALWAYS focus on? Answer: inflation, crisis, safe-haven investing. Wall Street (and its bullion banks), the Fed and US administrations abhor a higher gold price for those reasons and have done all they can to manufacture a lower gold price than should be over the last decade.

The following is a perfect example GATA has hit the nail on the head with our rationale. Don Hayes is a veteran, highly-regarded observer of the markets and is known for his keen technical analysis and market commentary. So here we have The Gold Cartel and officialdom orchestrating the price of gold down, the most obvious of market manipulations. Therefore, in terms of what it inherently means to the state of the US financial markets, the real/essential correlation is ZERO because the lower price is an artificial and orchestrated one. Yet, look at what Mr. Hays said yesterday in his market analysis:

..have cited that I am watching with HUGE interest the price of gold in dollars, as well as in euros and yen. I strongly suspect Greenspan is as well. The action last week is sending pretty strong hints that the Fed needs to take a breather on raising interest rates. Let’s give this economy a few months to send the next message. Remember, there is nothing I believe on the economic realm as much as that the real enemy the Fed is fighting during these next few decades will be Deflation, and not Inflation. I believe the Technology Productivity enhancement, the perfect pricing of the e-net, plus the glut of workers on the international scene will keep prices under control. There will be many battles in this war. The Fed has been fighting a serious battle since 9-11, and they have won it, BUT that is just one battle, the next one will be right over the hill. The price of gold is sending good vibes that we are not too hot, not too cold, but j….u….s….t right for the moment. But it is also warning Europe to wake up and smell the growth roses. It is also starting to warn Japan that they have a tough road ahead, and need to keep promoting those few reforms of the past few years to get back on track….

I am purely guessing about what the perfect price of gold is, but keying off of the other times in recent history when conditions were "just right" as far as inflation vs. growth parameters. I think that the price of gold in U.S. dollars should be somewhere in the $380 dollar range. When it is above that, my thesis is that the Federal Reserve and the U.S. Government are adopting a too-liquid monetary blend of stimulus to keep inflation and deflation under control, while maintaining a healthy economic proposal. So the recent breakdown in the price of gold, according to my interpretation, is confirmation that the Fed is doing good—returning to norm. As we turn to Europe and Japan, however, we see that those ranges I’ve guessed are "just right" are now showing that they need to step up their pro-growth stances. I am really delighted to see this latest action in gold. This Baseline chart shows Friday’s lower low action very well. …Hays Advisory llc

So there you have it. I rest my case. That is exactly why The Gold Cartel and allies have done what they have – to elicit this sort of commentary, which in turn, does affect the markets in the short-term as various market participants act accordingly.

Do you think the US Treasury bonds would be soaring if gold was $475 bid? The significance of drawing this to your attention might turn on some light bulbs when you compare the US long bond with that of the share price of Fannie Mae (see below).

The John Brimelow Report

IMF considered

Tuesday, February 08, 2005

Indian ex-duty premiums: AM $7.69, PM $7.83, with world gold at $412.40 and $411 35. Ample for legal imports. The Reserve Bank of India is said to have intervened today to prevent the rupee following the rise of the dollar.

UBS remarks this morning:

"One of the most interesting factors in the gold market in 2005 has been very strong physical demand, mostly from India, Japan and other Asia and to a lesser extent Europe. This week has seen further demand, although at a slower rate than was noted in January."

Physical demand, of course, was far from absent in late 2004. As to recent demand, Reuters says today:

"In Singapore, premiums inched up to 60 U.S. cents an ounce from 50 cents last week, indicating that consumers from Indonesia, Malaysia and Thailand were buying gold at the lower prices." Gold stands today at a 4-year low in Thailand.

The ECB announced gold sales last week from subordinate banks of 81 Mm Euros, about 7.9 tonnes, rather more than in previous weeks.

TOCOM stepped aside. World gold did go out $1.30 below NY with the active contact up 7 yen, but volume was down 53% to only equal 11,895 Comex lots and open interest was static (down 27 Comex). Japan is not currently influential in gold.

Last night Refco Research issued a short call on gold, probably the first in half a dozen gold forays:

TRADE RECOMMENDATIONS:

Sell 1 April gold at market. Risk 420 (intra-day). Expect 405. Every momentum (or even short term chartist) must feel the same impulse. Rothschild – Sydney said yesterday:

"It now seems only a matter of time before we will see a net speculative short position."

A situation normally seen only at major lows.

A good exemplification of the curiousness surrounding gold commentary appeared to day on Reuters :

"IMF seen favoring gold sales over revaluation"

By Lesley Wroughton
WASHINGTON, Feb 8 (Reuters) - The International Monetary Fund is likely to favor sales over revaluation …analysts said… most analysts think the Washington-based lender's best course would be to sell some of its gold stocks rather than revalue them. While revaluing the gold stocks would increase the carrying price of the gold on the IMF's books, analysts said, it would not provide cash to fund the debt write-off. It would also come with costs for certain borrowers and shareholders."

In fact, of course, as discussed yesterday, most analysts actually involved in the gold business, who tend to be mildly literate in Financial matters, are bemused that anything except a revaluation/debt write-off would be considered.

This question of Financial literacy is really serious. Consider the comments later in this account by a spokeswoman for a basket-case nation lobbying group

"Nancy Birdsall, head of the Washington-based Center for Global Development and author of "Delivering on Debt Relief," said revaluing the gold would be less politically sensitive but would lower the IMF's cash balance and stifle its ability to lend to needy countries in the future.

"When it is gone, particularly if it is revalued so that there is a loss on the balance sheet, the heads of central banks of the G7 and other non-borrowing countries will sleep somewhat less well at night," Birdsall said. (JB italics)

Apart from accounting literacy, IMF gold sales are an esoteric matter. If the IMF revalued to market their gold on hand, they could then apparently write off some 72% of the 11 billion of basket case debt they have without impairing their capital. This is denounced as a book keeping matter, but in reality debt forgiveness is an extremely direct benefit to the debtor (as any mortgage borrower would immediately agree). Unless of course the debtor – and perhaps the lender – had already decided to ignore the obligation.

Fresh cash is a different matter. This could be realized by liquidating gold – or indeed any other IMF balance sheet asset – if the members felt like being charitable.

To confine the issue to gold, the strictly rational approach to debt relief would be to revalue and forgive to the maximum extent, and then turn to sales. The resistance to this sequential approach, to the extent that it is not simply illiterate, has to be considered as revealing the extent to which this campaign is driven by anti gold animus, as opposed to charity.

The noted gold bear today floats an interesting analysis, indicating that a massive decline in Comex call open interest starting late last year preceded the subsequent weakness in gold. He offers no explanation.

One wonders how sophisticated players could be so prescient.

JB

CARTEL CAPITULATION WATCH

The US stock market flutters right along. The DOW rose 9 to 10,724, while the DOG gained 5 to 2086. Of concern to stock bulls should the dive-bombing action of Fannie Mae (see below) and the extraordinary strength of the 30-year long bond. March closed up another 13/32 to 116 7/8, another contract high.

As I recall, 9 out of the last 10 US economic reports over the last two months have come out on the negative side – nothing disastrous yet most all of them have been disappointing. The bond market action suggests something more than disappointing lies ahead. Seems clear to me why:

*Effects of low interest rates are behind us.

*Government stimulus programs are behind us, with a number of them to be cut back in the near future. One market sophisticate from Canada said it all today. The US is cutting back on programs whose money would have been parked with the US consumer and deploying it in bullets which will be blown up in Iraq.

*The US consumer is tapped out.

*The effects of prior US tax benefit reductions have mostly run their course.

The dollar closed up a scant .05 to 85.14 led by a strong yen (105.75). The euro gave up .08 to 127.72.

US economic news:

NEW YORK, Feb 8 (Reuters) - U.S. consumers felt less confident about the economy in February, due in part to unease over federal economic policies, though the outlook for personal finances improved, according to a survey released on Tuesday.

Investor's Business Daily and TechnoMetrica Market Intelligence said their economic optimism index fell 1.4 points, or 2.5 percent, to 54.8 in February after rising to 56.2 in January. A reading above 50 indicates optimism….

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