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

Chuck checked in last evening:

All-in-all, today was a good one. We had the obligatory gap up and holding pattern in stocks. When was the last time that we had a bad day and had another bad opening the following day? The same with gold and the shares. We had a nasty gap down and then clawed back to almost even. The key is Newmont which closed up again even after one of its best days in months. This augurs well as Newmont has been lagging.

A move through 100 in the XAU and 220 in the HUI should be viewed as very positive. The surprise will be on the upside from here since there has been so much distress selling over the past year. I look for the juniors to snap to life here and have some shocking moves.

I would not be surprised to see the stock market turn down quickly. Judging by the continued call enthusiasm and the quick reduction in the volatility indices there is still a great amount of optimism at this point. Fear and trembling are on the way! Chuck

The news in the gold share world was also all over the place. While Newmont’s results were good, Placer D disappointed:

Placer Dome Profits Drop on Sluggish Sales

From Reuters
Wednesday, February 23, 2005

http://yahoo.reuters.com/finan…01-22-23_n23653558_newsml

The world's fifth-biggest gold producer posted earnings of $39 million, or 9 cents a share, in the fourth quarter, compared with $81 million, or 20 cents a share, a year earlier…

Placer Dome said it reduced its hedge book, contracts under which it has sold gold, by 1.5 million ounces in the final quarter of 2004. This left it with 9.0 million ounces of metal pre-sold at fixed prices.

The company said it expected to cut its hedge book to 7.5 million ounces by the end of 2005. It forecast 3.7 million ounces of gold production in 2005, and 410 million to 420 million pounds of copper production.

-END-

Placer’s shares dropped, however, that was nothing compared to Durban Deep which sounded cash crunch warnings and an urgent need for funds. At one point DD was down around 40% to around 80 cents. It came back a bit and was above $1 at last glance. Our Rocket friend has been going in reverse.

High production costs are hurting Durban badly as they are many other gold producers in South Africa and Canada. Many firms are doing worse financially than when gold was $100 lower. $430 gold doesn’t cut it for many these days. If gold were to be allowed to trade freely, the price would be at least $100 higher and cost issues would be moot. The Gold Cartel, via its heinous price suppression scheme, is devastating gold companies around the world, hurting the economies of sub-Saharan gold producing countries, as well as trouncing many gold shareholders. It is a travesty and a major reason GATA is hosting Gold Rush 21.

Some good news to report:

ECU Silver Mining Inc.: Press Release-Update of Mill Expansion

TORREON, Coahuila--(BUSINESS WIRE)--Feb. 24, 2005--ECU Silver Mining Inc. (TSX VENTURE:ECU)

ECU Silver Mining Inc. (the Company) wishes to report on the status of the Phase II expansion program at its Velardena mill site.

The work in progress is going at a better than expected rate and scheduled start-up of the expanded mill is slated for Friday of next week.

The Company expects that upon start-up, the initial feed rate of the mill will be approximately 240 tpd, which is a 33% increase over the current average feed rate of approximately 180 tpd. The Company plans to increase the feed rate on a weekly basis for an anticipated two to three month period and the Company expects that the mill will be optimized to a maximum capacity of between 320 tpd and 340 tpd, therefore nearly doubling the mills output.

Cash-flows will be positively impacted from the added sales of concentrate. The Company anticipates that the termination of the expansion program will go a long way towards allowing it to reach profitability. Production summaries will be published as they become available.

ECU Silver Mining, Inc. (TSX VENTURE:ECU)

CONTACT: ECU Silver Mining, Inc.
Richard Hamelin
(416) 907-0788
ecu@ecu.ca
http://www.ecu.ca

From a fellow Café member:

Doing a great job, keep it up.
I first purchased GSS on your recommendation a few years back. I'm still holding but there's no point in watching my profits go down the tubes. I find it odd that you haven't said anything about the company lately, especially since you hold their management in high regard. I for one would appreciate any positive or negative info you might have about the company and why it's still a great buy, if that's the case. I don't get to read the James Joyce table everyday so I may have missed something you penned about it. If you decide to write something about GSS, could you please indicate that in one of your email alerts so I don't miss it. It seems that GSS is being dumped like droppings from a flying duck. Personally, I get several newsletters and I certainly correlate the integrity of the writers with their views on stocks they recommend. Even though you don't recommend stocks often, I assume that when you do, it's fair and objective and effort is put into keeping your readers up to date on these recommendations. Now how about an honest assessment of GSS because I trust your judgment.
Phil

I am staying with Golden Star. They had production and cost problems which can develop in a mining operation. This is not the shoe business. Much more unpredictable. What is important is the majority of these problems are behind them, old news. They should produce around 300,000 ounces this year and are getting their costs under control. They still have the gold in the ground and are given ZERO credit for their valuable exploration properties. The management is top notch. Has to be a steal around $3.

PS:
I don't recommend stocks, yet I do explain what I am doing and love to highlight staunch GATA supporters.

The gold shares were rocked early and were rebounding as I go to press. The HUI sank all the way to 211.49 before heading north again.

GATA BE IN IT TO WIN IT!

MIDAS

steigende Silbernachfrage bei indischen Juwellieren:

http://www.business-standard.c…rypage.php?&autono=181834

February 25 - Gold $434.70 up 50 cents - Silver $7.26 down 9 cents

THE OUTRAGE BUILDS / CRB Now Has A 300 Handle
Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened...Winston Churchill

GO GATA!!!

If I did not firmly believe The Gold Cartel was not going to go down in flames in scandalous defeat, I would want nothing to do with gold and the companies' shares. What would be the point? You have an organized effort by the richest and most powerful people in the world to prevent the gold price from rising; to prevent it from reflecting the true state of economic affairs. While they are holding gold’s price hundreds of dollars per ounce below where it would be trading in a free market, production costs are skyrocketing. More and more gold companies are struggling to make ends meet.

Those costs are likely to maintain their increasing pace in the years to come. If The Gold Cartel is able to maintain their clamp on gold, there would be no point to investing in this sector. The price will go nowhere and gold producer profits will continue to shrink. Fortunately, thanks to the work of several in the GATA camp re the actual gold loan situation, we know this is not to be. The Gold Cartel will run out of enough central bank gold to suppress the price. As they do, gold is going to SOAR.

What is so frustrating for GATA is THIS issue is THE single most important issue as far as the gold price and your investments in the sector are concerned. Yet, only GATA is out there doing anything about it. We have come up with the evidence/goods confirming gold price management for many years now, yet the mainstream gold world maintains their silence on this subject. They don’t even bother to knock GATA any more, except for a Dennis Gartman comment here and there. The gold establishment just says nothing. What a revolting state of affairs, which is why GATA is hosting Gold Rush 21 in The Yukon in August.

The proof is in the pudding:

The numbers for 2004 which affect the gold supply/demand numbers are coming in. Anecdotally, they reflect the extent of the gold price manipulation this past year:

*Demand for gold surged in 2004 as reflected in this news out of India:

Feb 25, 2005 (AXcess News) Mombai - Both gold jewellery and retail investment are reported to have increased 49 and 32 percent in tonnage in India last year, according to a report issued by the World Gold Council.

Thanks to India's booming economy, the total consumer demand for gold spiked 17 percent in 2004. While gold jewellery climbed 18 percent and retail investment rose 16 percent, the WGC said.

Consumers were right to buy gold jewellery last year, having seen a rise in its street value of 63 percent between October and December 2004.

WGC Managing Director Sanjeev Agarwal was quoted as saying, "Last calender year was the year of gold demand with the total consumer demand increasing seven per cent globally and 17 per cent in India in tonnage terms."

With India's economy showing strong growth, consumers are most likely going to continue investing in gold jewellery, bullion and retail goods.

-END-

These demand numbers are stunning since the WGC (via GFMS) understates world gold demand to keep the surreptitious central bank gold loans via The Gold Cartel’s operations from standing out like a sore thumb.

In addition to the Indian numbers (documented by John Brimelow all year), the Turkish import demand numbers were astoundingly high (also documented by JB).

More on 2004 gold demand increases:

LONDON (Mineweb.com) -- The latest World Gold Council quarterly market survey shows that net consumer demand for gold in the fourth quarter of 2004 was up by 5 percent in tonnage terms and 18 percent in dollar terms by comparison with the fourth quarter of 2003. [This stands up under closer inspection, with the offtake in euro terms also up on year-ago levels, registering a gain of 7 percent].

For the year as a whole the argument is similar. Tonnage was up 7 percent, approximate dollar value 20 percent and euro value 9 percent. The Council comments that the figures, which are compiled by GFMS Ltd., show a healthy performance from the jewellery sector, even in the most price-sensitive markets such as India, the rest of Asia and the Middle East with consumers not only comfortable with prices in excess of $400, but expecting prices to hold firm or increase. The sharp price rises sustained at the start of November and in early December consequently had much less of a negative impact on demand than similar episodes have produced in the past…

-END-

*OK, so we know demand was way up for the year. In addition, we know the gold hedgers continued to reduce their hedge books, which reduced supply hitting the market during 2004. Don’t have the numbers with me, however, it was MANY hundreds of tonnes in reductions.

“Gold mining companies continued to allow their hedging programmes to unravel without renewing them. “De-hedging was high throughout 2004, 59% higher than in 2003,” the WGC said.”

Note the increase over 2003.

*Finally, as far as supply is concerned, it was just reported that mine supply during 2004 fell the most since the 1940’s. Just as astounding is that scrap supply shrank 14% in the fourth quarter, as it did all year.

[miningmx.com] -- GOLD supply fell 13% in 2004 compared to 2003 recording the sharpest fall in mine production since the 1940s, the World Gold Council (WGC) said in its annual review. Gold production, which totalled 2,478 tonnes in 2004, recovered slightly in the fourth quarter of 2004, however, owing to improved production from Grasberg, a large gold mine in Indonesia. The fourth quarter also benefited from a number of new mines, the WGC said.

Scrap supply was 14% lower in the fourth quarter “... continuing the trend evident in the first three quarters of the year,” it said…

-END-

One does not need to be an Einstein to appreciate the price of gold should have roared higher in 2004 with these supply/demand changes. The gold price should have gone ballistic. Yet, what did it rise for the year, $10? This sort of anomaly should have the gold establishment screaming bloody murder at The Gold Cartel. Instead, SILENCE, except from the GATA camp. If it weren’t for the bloody crooked cabal, gold would be knocking on the $600 door.

If you are sick and tired of this nonsense and the crumbs these arrogant Orwellians throw us for a gold price advance, support Gold Rush 21. CALL your gold company and strongly suggest they send their CEO.

While the big picture for gold becomes more explosive, The Gold Cartel’s desperate attempt to hold the gold price back could not be more blatant. Since gold’s surge Tuesday morning, they have been all over it and, in effect, stolen your money again. I don’t know about you, but I don’t like to have criminals steal from me day after day and get away with it over and over again. Where is the outrage? Where is the time for the crime?

More proof in the pudding surfaces by reviewing the daily gold chart:

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

The gold price was capped from 10 AM on Tuesday throughout the rest of the week. Clearly, The Gold Cartel was caught a bit flat-footed on Tuesday, but then went into all out gold manipulation alert. It is plain as day by looking at the gold chart. The fact that the dollar remained weak and the commodity markets as a whole continued to make 23-year highs means nothing when you have a bunch of arrogant elitists running their own casino. Where is the outrage in the mainstream gold world? Do they have a pulse? Sure is building in the GATA camp. I can tell you that from the emails I receive.

As far as the day goes, gold was up and down in a very tight range. The locals on the floor went very short, looking to touch off stops in the April contract at $433.50. They were drooling. Yet, each time gold came close to that level, HUGE buying showed up. The locals were forced to cover late.

Midas was not alone on gold this week. From the Lasco report early this morning:

I get the sense there is an invisible hand out there making sure that APRIL GOLD doesn't move much above 436.00 this week. When it should rally, it gets knocked down 2 -3 dollars then they let it go again. Just a feeling; let's see if I'm right.

EBO

He was right of course. In addition to Gold Cartel panic, it is month end on Monday. Normally, this has the crooks working overtime to keep their positions from showing too big a loss.

While early on in the day most of the gold-related financial markets traded in volatile tight ranges, they were resolved in gold’s favor late in the trading sessions. Course, that meant nothing in this rigged market. The CRB has a 300 handle on it now as it closed at 300.23, up a sizeable 2.19. The dollar fell to right below 82.70 and could not break through technical resistance. The euro was up around .43. Considering gold took out powerful resistance on Tuesday morning, it should have followed through with outside market support such as this. Nope, it means little when The Gold Cartel is going all out to cap the price.

Silver was attacked violently all week long. Jesse nails it when it comes to an explanation:

Its just a surmise on my part at this point, but as you know we just had an option expiration in the precious metals.

With metals options, if you hold them past a certain date and do not sell them you take possession of futures contracts in that metal adjusted to the strike price of your option.

What does that mean in an expiration like we just had?

Well, you now have a bunch of potentially weak hands holding futures instead of options. With options your losses are limited to the amount of money you put up. With futures your potential losses are .... substantial. For lots of newbies to the gold and silver markets who are used to playing 'safe' options that futures leverage can be a chilling
experience when price starts moving against you.

So often after an expiration in which a large number of options go into expiry, we see the price of the underlying metal get clocked AFTER the expiration as weak hands bail out and sell the futures, especially if they are given a hard head fake and lots of disinformation by the folks who are selling the options and futures, like bullion banks and some of their crony producers and assorted hangers-on. If you read the history of Wall Street its just a classic play. I'd look for gold and silver to move higher from here and break out without the weak hands on board, if we see the right reading in the open interest.

***

More on silver from Rhody, late:
Hello Bill:
There was a general rise in silver lease rates today across all terms, with the higher increases in the 6 month to one year terms. If you were wondering why silver got smacked today, look no farther. The hammering that silver has taken over the past three days (about 5% since Tuesday) has obviously been political. More people watch gold and it's a larger market, so it is not so easily contained. Gold's lease rate changes were mixed to slightly higher but the backwardation in rates persists. Both metals are under attack.
Regards, Rhody

http://www.kitco.com/market/lfrate.html

By the close, the dollar fell .24 to 82.65 and the euro rose .35 to 132.45.

The COT report released after the close revealed a 22,000 contract increase in the net commercial short position, revealing the effort The Gold Cartel is going to in order to cap the price.

The John Brimelow Report

interesting Japanese data
Friday, February 25, 2005

Indian ex-duty premiums: AM $5.62, PM $5.64, with world gold at $433.10 and $432.40. Adequate for legal imports. The Reserve Bank was intervened heavily to suppress the yen. The Indian Budget is announced on Monday. A rational step would be to cut gold import duty, encouraging the India public to help hold down the rupee. The Indian authorities have shown exemplary rationality on gold in recent years. Unhappily for gold’s friends, the premiums indicate the locals do not anticipate good news. TOCOM’s liquidation continues. On volume equal to 25,593 Comex lots (+13%) open interest fell another 599 Comex lot - equivalent to the equivalent of 98,822 NY lots. The active contract was down 2 yen; world gold went out $1.15 below NY. (Gold in NY yesterday traded 49,428 lots: open interest rose 498 contracts to 278,929.)

Japanese gold imports for January, announced today, were 10.95 tonnes, 97% above December and 71% above January ’04. While not a huge number in the context of world bullion, this is not insignificant. This is the first time Japanese imports have made double digits in a long time. It would be nice to see this as a sign of rising Japanese appetite for bullion ahead of the abolition of bank deposit insurance at the end of March. Probably, however, it simply reflected the view of the public that yen gold was cheap on the break. Further evidence of the muscularity of the physical market.

Thursday, of course saw a violent reversal in NY of a lunch time rally in Europe. This itself was then reversed. As usual, the Bullion Bank commentators generally attribute the weakness to “long liquidation” and the recovery to “short covering”. Neither thesis is supported by the open interest action. Clearly Fund buyers are being opposed by a resolute seller, probably Official. Gold’s chart this week, up and then sideways, is peculiar, to say the least. Perhaps all would agree that it is curious to see the CRB index at a 24 year high, without more response by gold. Apparently the Nesbitt Burns Conference next week has record attendance (congratulations Mike V!). The suspicion the there is covert action in gold by the authorities has never seemed more reasonable.

JB

CARTEL CAPITULATION WATCH

The US stock market roared right ahead as if all was hunky-dory with the DOW leading the way, gaining 93 to 10,842. The DOG barked, yet still rose 14 to 2065.

April CRB
http://futures.tradingcharts.com/chart/RB/45

US economic news:

08:30 Q4 GDP revised to 3.8% vs. expectations of 3.7%; Price Deflator reported 2.1% vs. consensus 2%
Personal Consumption 4.2% vs. consensus 4.6%. Prior readings were 3.1% and 2%, respectively.
* * * * *

10:00 Existing home sales 6.8M in January vs consensus 6.7M
Prior revised to 5.97M from $6.69M.

* * * *

14:49 PX PX raises prices for hydrogen and carbon dioxide, effective immediately
Price increases are roughly 15% for hydrogen and 5% for CO2, and will vary,depending on local supply conditions. Cites costs of electric power,natural gas, feedstock, distribution and other raw materials.
* * * *

S&P Warns of Airline Bankruptcies -- AP

The risk of multiple, simultaneous bankruptcies in the U.S. airline industry is growing, according to credit ratings agency Standard & Poor's, and could be triggered by renewed terrorism, a spike in fuel prices or pension liabilities.

Any Café member who has been around for any length of time has been inundated with fact after fact that what we having coming out of Wall Street and the politicos in power in Washington is as much spin and propaganda as it is about reality. What has been so special about our camp’s commentary over the years is we constantly back up our rant with evidence for our insight. For example:

The King Report
M. Ramsey King Securities, Inc.
Thursday Feb. 24, 2005 – Issue 3104 “Independent View of the News

The WSJ’s Justin Lahart: “One might think that if importers and wholesalers are paying higher prices, they'd pass them on to consumers, but in practice this doesn't always work. The Labor Department's method for gathering prices varies from report to report, with the CPI based on telephone interviews with vendors and on staff visits to stores in the first 18 working days of each month, and the PPI and import-price index meant to reflect prices on a single day. At the same time, the reports aren't meant to show the same things. The CPI indicates what consumers are paying for goods, while the PPI indicates what producers are receiving for goods.” This was published before the CPI release. Who is eating the cost differential between the PPI and CPI? And remember corporations reported jiggy earnings.

Japanese steel makers have agreed to a 71.5% increase in the price of iron ore with CVRD of Brazil, the world’s largest iron ore producer. The Japanese companies want to ensure a supply of iron ore because of concern of a global shortage due to Chinese demand.

We have been ridiculing the CPI for years. Yesterday’s CPI report is yet another bogus accounting of inflation. Energy prices fell 1.1% after falling 1.3% in December. Gasoline fell 2.1% and heating oil fell 5.2%. Gasoline prices are down 20.2% over the last 3 months annualized. Food & beverage prices fell 4.6% in the CPI-U (Urban) table while fuels fell 4.9%. Public transportation prices fell 0.8%. You saw the energy charts in yesterday’s missive. This is absurd.

Medical costs increased only 0.4%, 4.3% y/y and 3.9% for the last 3 months annualized. How come so many companies and their pension plans see much higher price increases in medical costs?

BLS has housing up 3% y/y! Owner’s equivalent rent, which is used instead of actual housing prices, constitutes 32.45% of CPI. It is up only 2.3% y/y, while industry associations and the federal government as represented by OFHEO (FNM and FRE’s regulator) has housing prices up 11% to 13%. This alone understates CPI by 2% to 2.25%!

Personal computer prices fell 13.6% y/y and 15.5% for the last 3 months annualized. Yet January PC prices increased 0.7%. But remember, the PPI had PC prices down 6%! It’s the hedonics, stupid!

Here’s how to easy debunk the hedonics on PCs, and other consumer electronic goods. As we learned over 30 years ago when we were collegiate audiophiles, some measurable improvements in a stereo amp, pre-amp or tuner, but they are not audible by humans. A hot new amp or tuner can produce sounds at 10 db. If the BLS hedonically adjusts the devise, it’s useless because the human ear cannot detect the sound waves at that low decibel level. The same can be true of harmonic distortion and other metrics.

Now let’s turn our attention to the main recipient of the BLS’s hedonic chicanery, the PC. Look around your office or trading floor. If all the PCs you see suddenly have triple the power or speed, will your and your co-workers’ productivity increase? For almost all the answer if NO! It’s so simple why the PC productivity is not changed, you’d think this would’ve been brought up years ago.

Most PC productivity is not determined by the PC speed, but by the users’ typing skills and speed. It doesn’t matter if your PC speed triples, you cannot type any faster. It’s typing speed that determines word processor, order entry, spreadsheet, etc. productivity. So PC hedonics are basically a fraud.

Wednesday’s stock rally was brought to you by the Plundering Heard. By early afternoon, Merrill had bought over 5k SPMs according to CME sources. They were basically the sole prop under the market.

St. Louis Fed President William Poole told USA Today that the neutral rate for fed funds is 3% to 4%. This is an affront to Easy Al; and Poole knows exactly what he is doing. And if he proffers a neutral rate for fed funds that is above the official inflation rate (CPI): 1) He believes CPI does not indicate the real inflation rate, and 2) if he’s offering 3% to 4%, he probably has a higher rate in mind.

The CRB Index is within striking distance of the 1980 inflation peak (It’s at the same level as February 1981 when it was falling from the peak.) Most people are not even aware of what is transpiring in the CRB (BLS has food prices falling the past two months!). Astute observers are astounded that the CRB is nearing an all-time high even though grains are modestly off multi-year lows. If ‘beans’ and other grains extend their nascent rallies, the CRB will go postal because it is weighted toward grains.

The Goldman Sachs Industrial Metal Index is at an all-time high, a multiple of the 1980 inflation peak.

-END-

The good times for investors in the US stock market as a whole are over:

Sweet period for U.S. profits to turn sour

NEW YORK, Feb 24 (Reuters) - Wall Street is staring at a sharp slowdown in earnings growth this year as the sweet period for profits ends, but some strategists think the market is still being too optimistic in its outlook for corporations.

Earnings growth hit around 20 percent last year as low interest rates and tax cuts lured consumers into shopping malls and spurred on economic growth.

Meanwhile, operating profit margins, which have crept higher over the past decade, rose to more than 8 percent for S&P 500 companies, according to data compiled so far for the year from Standard & Poor's….

But while fourth-quarter earnings have been robust, Wall Street was hoping for big bellwethers to lift the mood with strong outlooks. That, in the main, hasn't happened, and is part of the reason why stocks are lower for the year.

COMPANIES FACE MARGIN SQUEEZE

Margins were high last year, in part due to low labor costs, little capital spending and high productivity. But in 2005, companies could face higher job costs while spending more on their businesses….

-END-