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

Houston’s Dan Norcini has come up with a beauty here which clarifies in the most simplest of ways how much The Gold Cartel has been all over gold and artificially suppressing the price:

Here's the chart I put together the other night that I was telling you about Bill.

CRB vs. Gold Chart.xls (59KB)

You can see that the last time the CRB index was at this level was in March 1981 when it closed at 298.40. The closing spot price of gold for that month was $513.80.

One thing to keep in mind with the chart I created is that I only used the CLOSING price for the month which rules out intramonth spike highs.

I can wait until the CRB closes today to give you an updated one for the month of February 2005 since today is the last day of the month. In creating the chart I used Friday's close for the CRB index. It might make it over 300 today.

The chart really demonstrates the capping action in gold that has up to this point been successful in hiding the true inflation picture from the vast majority of the public. I personally think that $500 gold is the magic number which will spook even the clueless public. Without the cartel's insidious work, gold would be north of that right now. As it is, it is currently nearly $75.00/ounce below its 1981 price when the CRB was at this level.
Dan

Chuck checked in Saturday morning:

I think that the breakout through 100 and 220 respectively on the gold indices should do it. I don't understand the climate here but it seems clear that something very strange is afoot. Take a look at these charts, especially the 5 year jobs. Everyone appears to be breaking out. Given the strength in the major golds, it should start to filter down to the next tier and eventually soon the juniors. Bema and Wheaton are leading the mid-tier ones while stocks like Nova are clearly breaking out. My guess is that the incredible volume in Durban marked the climax of the gold bearishness. We should know as early as Monday.

http://www.kitcometals.com/charts/zinc_historical.html
Chuck

So did GATA’s Chris Powell over the weekend:

Fun chart, CP
http://www.zsvideo.com/~princ1/BIG.ht1.jpg

***

Rhody on leasing:

Hi Bill:
Gold is again in backwardation out to 3 months, and its rate curve continues to be flattened with the spread between one month and one year at a miniscule .06%

Silver lease rates are climbing with the one month rates up .02%. Silver's rates are now high enough to force one to pay as much in one month as one pays for one year to lease gold.
Regards, Rhody.
http://www.kitco.com/market/lfrate.html

Acceptances from money managers and gold producer executives for Gold Rush 21 continue to roll in. GATA received some fabulous news on that score over the weekend. Japan’s "Mr. Gold," Tami Matsufuji, President of Jipangu, told my friends Nick Ferris of J-Pacific Gold and John Anderson of Key Gold (who were in Tokyo) that he would be coming and has accepted our invitation. Why the excitement re this veteran GATA supporter:

Tamisuke Matsufuji is the most successful bond salesman in the history of Salomon Brothers. He went on to become a famous contrarian financial advisor who has authored 5 best sellers in Japan. In 1989 he wrote a book predicting the collapse of Japanese stock and real estate markets.

Talk about great calls!

At the moment, Matsufuji is predicting the coming of the new "Golden Age" and is preparing accordingly via Jipangu – a term for Japan brought to the west by Marco Polo. It means "Island of Gold" – ancient legends of the Japanese roof-tops covered in gold. Jipangu is the only pure gold company in Japan with a goal of becoming one of top 10 gold producers in the world.

***

This means GATA now has five Mr. Golds/Silver (all legendary figures) coming to Gold Rush 21 from five countries and many continents: Peter George from Cape Town, South Africa: Ferdi Lips from Zurich Switzerland, John Embry from Toronto, Canada, Hugo Salinas Price from Mexico City, Mexico and Tami Matsufuji from Tokyo, Japan. Never before have such legends been assembled at one conference. Might never happen again. Should be quite a show and treat for the attendees.

Both Nick Ferris and John Anderson will also be at Gold Rush 21.

One of our speakers, has an outstanding piece just out titled:

BROWN’S BLEEDING HEART

Excuse to dump IMF Gold

South Africa bends to the bankers

Here is a sample:

5.1 US OPPOSITION FOR THE RECORD

The poorest nations are in debt to a tune of $70billion owed to international institutions. Apart from $12billion owed to the IMF, there is further $58billion owed to the World Bank and others. Britain would cancel the lot by raising funds in the international money markets - a so-called International Financial Facility. (IFF) To cover IMF write-offs, Britain suggests revaluing IMF gold holdings and selling off sufficient to cover a $12billion loss.

Taylor’s response was as follows:

"The United States is committed to poverty reduction for heavily-indebted countries, but we cannot support the IFF…Our own approach, involving the complete debt write-off of poor country debts to multi-lateral institutions, and the use of (conditional) grants rather than loans, is the right way to go."

Other members have concerns the ‘conditions’ will be unpalatable to recipients. The problem is that unless one imposes conditions, recipients never learn to mend their ways. Irresponsible children are no different.

Taylor said he was also ‘not convinced’ by Brown’s other two proposals either. The first was that the IMF revalue sufficient of its gold reserves to enable them to write poor country debts off the balance sheet. The second was the question of sales.

Taylor continued: ‘The Bush Administration is not convinced that gold sales are a NECESSARY way to raise capital for debt relief.’

GATA’s reaction to the US attitude was quite direct:

"No country is more anti-gold than the US. GATA has six years of documentation of this. Therefore, you can be sure US Treasury Undersecretary John Taylor’s objection to gold sales is a red herring of sorts…Maybe the US is scared to death of the Gold issue being raised, it may lead to questions about US Gold, a portion of which has most likely been clandestinely …swapped out."

In contrast, Brown can console himself with the fact that support for his proposals is growing within Europe. The German Finance Minister, Hans Eichel, told the Guardian newspaper that Germany is in principle in favour of both the IFF and IMF gold sales plan.

5.2 THE ALLIANCE RUNS DEEPER THAN BLOOD

If the above reasoning on the closeness of US-UK strategy, fails to convince our readers, try the following. US and UK troops are standing and dying side by side in Iraq. There is however a matter, that runs closer and deeper than blood. It is the health of the world monetary system. Would they ever dream of not swapping notes on such a seminal subject as a plan to sell off gold - of course not! If Gordon Brown even vaguely suspected genuine US Treasury opposition was running high, would he openly court conflict with his blood brother- never!

In a leaked memo emanating from discussions at a highly secretive get together of the ‘Bilderbergers’ – the European equivalent of the Council on Foreign Relations meetings in New York – there was an innocuous description of how board meetings are conducted at the IMF.

"Everything the IMF does is voted on. But contested votes are rare: decisions are by CONSENSUS, with the consensus usually put together outside the boardroom."

If that is how members of the IMF conduct business in the wider context of big meetings, how much more so in the narrow confines of a ‘one on one’ discussion between two nations, linked at the hip by history, war and ongoing financial subterfuge. We rest our case. Prepare for a US ‘turnaround’ on IMF gold sales.

A couple of days ago GATA reported a Treasury spokesman saying:

‘Washington will not scupper the plan’.

He explained that:

"The British are hoping to strike a deal on a gold sale or revaluation as soon as April. We are waiting for the IMF to produce its report".

There we go. Let the situation develop.

***

The next section is entitled: "TAMING THE SOUTH AFRICAN SHREW".

It explains how and why South Africa agreed to IMF Gold Sales under pressure from the ‘international banking cartel’.

I encourage you to access the full report at Peter George’s website with a view to becoming a possible subscriber. The address is http:// http://www.investmentindicators.com

-END-

Nick Ferris stopped in Thailand on the way home from Tokyo. He thought you might like to see how gold demand was holding up over there. This jewelry is very high caratage and most of it is bought for investment purposes.

[Blockierte Grafik: http://www.lemetropolecafe.com/img2005/Midas/Midas0228A.jpg]

[Blockierte Grafik: http://www.lemetropolecafe.com/img2005/Midas/Midas0228B.jpg]

Had a great time in San Diego with my family. My niece Katie Murphy won two out of three of her college tennis matches. Sister Di, whom a number of Café members know out there, took us out to Mr A’s in San Diego itself. Top notch restaurant with a spectacular view of the downtown area including the harbor and airport (planes are at eye level as they go to land). Mentioning this big because of what I ate. A good omen. Was looking for a beef entrée and there it was with Yukon gold potatoes. Were they delicious.

I have had a number of requests to comment on what the deal is with Durban Deep. Adrian lays it all out:

Bill,
I have been reviewing some of the press releases about DROOY. KPMG (the auditors) warned of a cash squeeze as liabilities were almost offset by assets making them technically bankrupt.

When you look a bit closer the assets that are being referred to are the cash and liquid assets such as mining equipment. The assets are quoted as 700 million rand versus net debt of 300 million rand. That’s 121 million dollars of assets and 52 million dollars of debt. DROOY has 10 million ozs of gold reserves worth 4.35 billion dollars at todays price. But that doesn’t seem to figure in the assets. I am not an accountant but presumably because the current cost of extraction exceeds the gold price the gold in the ground has no value. The market cap of DROOY is 250 million dollars valuing the gold in the ground at $25/oz. In a bull market in gold the financials of DROOY are not good but their fortunes are likely to turn around rapidly. This view seemed to be held by investors on JSE as the DRDgold shares only fell 6% on JSE when the Durban financial results were released. In New York DROOY was hammered for 23% and then a further 15% the following day. Meanwhile Barrick can sell 2 billion dollars of gold that it hasn’t mined yet and that seems to be OK.

If there are any extraordinary large dips in anything gold isn’t it strange it always happens on a New York exchange? I don’t have anything concrete to go on but my nose tells me something is up. Let’s see which White Knight comes to the rescue of the cash squeezed, resource rich Durban.
Cheers
Adrian

Just checked the Access Market. As almost always the case, gold is down after its obvious price capping – 80 cents this time, wiping out most of today's gains.

The shares are trading as if they have been handed the same yoke. Today they bolted out of the box to the upside and then were hammered down even when gold was up $2. The XAU rose .09 to 98.97 and the HUI lost .04 to 215.32.

HUI
http://bigcharts.marketwatch.c…&o_symb=hui&freq=1&time=8

I’m not only who is ticked off:

Boy these crooks get more transparent everyday. They had a potential powder keg on their hands today with the HUI. FCX was on fire with copper. Gold and silver were flying. So what did they do? They pounded GSS and MDG. No news on either. JP Morgan of all places upgraded MDG last Thursday. MDG is not liquid and as such subject to big swings. So why not hammer it via naked short-selling and large sell offers? This is getting to be painfully ridiculous. I hope these crooks burn in hell.
Dave in Denver

The Gold Cartel is huffing and puffing for all the world to see. The good news for us is these windbags can’t control commodity prices, nor can they bamboozle the bond vigilantes forever. This, along with a diminishing supply of available central bank gold, is going to do them in. Can’t happen soon enough for me.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

By William Pesek Jr.
Bloomberg News Service
Friday, February 25, 2005

http://www.bloomberg.com/news/commentary/wpesek.html

It's THE question in global currency markets: What force of nature prompted South Korea suddenly to scrap plans to sell dollars?

On Tuesday, the dollar was plunging amid a comment by Asia's No. 3 economy that it would diversify foreign-exchange reserves into other currencies.

By Wednesday, Korea's central bank said it had no such plan, leaving traders scratching their heads.

Dumping dollars would be a logical move for the world's fourth-largest holder of reserves after Japan, China, and Taiwan. Korea, after all, is going against the tide in Asia, letting its currency rise. It no longer needs so many U.S. Treasuries, nor does it want to sustain huge losses as the dollar falls.

Korea's hasty and counterintuitive about-face makes you wonder if U.S. Treasury Secretary John Snow himself made a call to Seoul. It's hardly in the U.S.'s interest to see Korea pull the plug on Treasuries. It could prompt other Asian central banks to do the same, driving up U.S. debt yields.

Or maybe it was Japan, the biggest foreign holder of U.S. Treasuries, pressuring Korea. Shortly after Korea's denial, Japan's vice finance minister for international affairs, Hiroshi Watanabe, referred to "wild" moves in the yen and said Tokyo "will act when necessary" if its currency rises too rapidly. Asia hardly wants a resumption of Japan's yen-selling campaign.

Conspiracy theories aside, markets could be excused for wondering if Franz Kafka is roaming the halls of Korea's Ministry of Finance -- and whether the Czech writer is running its currency policies.

Kafka, of course, is famed for tales possessing bizarre, illogical, and nightmarishly complex qualities. And there are some rather Kafkaesque aspects to recent events, not only in Seoul but also on currency policies throughout Asia.

Korea's retreat from dumping dollars shows the bind central banks are in these days. This region's mercantilist tendencies have manifested themselves in exchange-rate management efforts the likes of which have rarely been seen before.

"Bretton Woods II" is what economists have dubbed the system that unofficially replaced the original post-World War II currency regime, which was based on a gold standard that collapsed in 1973. In gold's place, many nations adopted the U.S. dollar as an anchor, formally or informally pegging their currencies to it. We may be seeing the demise of this new system, with Korea in the vanguard.

"The risk of a disorderly unraveling of Bretton Woods II -- a sharp correction of the U.S. dollar and of the U.S. bond market, a surge in U.S. long-term interest rates, and a sharp fall in the price of a wide variety of risky assets such as equities, housing, high-yield bonds, and emerging-market sovereign debt -- is growing," Nouriel Roubini of New York University's Stern School of Business and Brad Setser of Oxford University said in a research paper this month.

As their findings suggest, the current system is looking more and more like a huge pyramid scheme. As long as Asian central banks stick together and buy dollar-denominated securities, things are fine. Once they start selling, virtually everyone loses -- central banks experience capital losses and economies become less competitive. Central banks have an interest in keeping the game going and hoping others do too.

Yet this week's events underline "how vulnerable the dollar is to negative news," says Carl Weinberg, chief global economist at High Frequency Economics, referring to the dollar's biggest drop against the euro in six months. The news, Weinberg says, "unwrapped a lot of tightly-wrapped traders who were spring-loaded to sell greenbacks on adverse news."

Sure, Korea's Treasuries holdings are much smaller than China's, Japan's, or Taiwan's, but its $200 billion of reserves may be at the forefront of trends to trim dollar holdings.

Central banks here don't buy U.S. debt out of altruism; it's to hold down currencies to boost growth. Monetary officials find themselves in the unenviable position of having to buy lots of dollar assets they know are likely to lose value over time.

This may be as good a time as any for the region's monetary authorities to avoid losses ahead of a possible surge in U.S. debt yields. Investors won't ignore the record U.S. current-account and budget deficits forever.

Yet it's a complex issue for Asian economies, which find themselves in a "damned if you do, damned if you don't" situation.

Korea seems to have chosen to let the won rise, and it's a good thing. Asia spends inordinate amounts of time weakening currencies, worried about growth a quarter or two out. That distracts from repairing structural problems. It's always easier to devalue your way to growth than to reform financial systems, improve corporate governance, and promote entrepreneurship.

Hopefully the rest of Asia will follow Korea's example. Rising currencies are a sign of confidence in an economy, not a problem. They lower bond yields and boost stock prices. Capital a hard money brings in can be more important than increased trade attracted by a
softer one.

The Kafkaesque state of the global financial system may leave Asia little choice in the matter.

-END-

By Irwin Stelzer
The Times, London
Sunday, February 27, 2005

http://www.timesonline.co.uk/article/0,,2095-1502209,00.html

Happenings in the two global markets that do not conform to Adam Smith's model frequently roil free-market economies such as America's. The foreign-exchange market is dominated by central banks that manipulate the value of national currencies for reasons
unrelated to what we think of as natural economic forces. And the oil market is heavily influenced by a producer cartel that is determined to keep prices well above those that would prevail in a competitive market.

So when the Korean central bank announced that it had lost interest (no pun intended) in acquiring more dollar assets to add to the $200 billion it already holds, and the Opec oil cartel drove prices above $50 a barrel by suggesting that it would cut output, shivers ran up the spines of investors. Share prices and the dollar both lost some 1.5% of their value in a single day.

Panicked investors foresaw a run on the American currency. That would force the Federal Reserve Board's monetary policy committee to abandon its policy of "measured" interest-rate increases in favour of much more rapid increases. The so-called house-price bubble would be pricked, consumers rattled, the economy slowed, profit growth curtailed and share prices driven down.

Worse still, the oil cartel plans to reduce output despite rising demand due to a cold snap in America, and China's insatiable appetite for oil, and shrinking supplies due to a decline in Russian oil production as Vladimir Putin's old KGB pals take control of the industry.

The resulting higher prices would, in the words of the new annual report of the president's Council of Economic Advisers, constitute "a headwind for the economy because they raise the cost of production, thus weakening the supply side of the economy, and absorb income that could have been used for other purchases, thus weakening the demand side of the economy."

Worse still, prices of commodities other than oil are soaring, in part because of China's huge purchases. Last week, the Anglo- Australian company Rio Tinto raised the price of the iron ore it sells to Nippon Steel by 72%. Many investors fear this commodity-price surge would add to the inflationary pressure created by high oil prices just as the US economy slows, reintroducing America to the stagflation it thought it had seen the back of when voters ejected Jimmy Carter from the White House.

It is not unreasonable to ask, in the face of this plausible and unsettling scenario, just how the president's economists can conclude that the American economy will grow this year at an annual rate of 3.5%, "faster than its historical average," driven by consumer spending, investment growth, and stronger exports.

The answer, in part, is that the Asian central banks have watched their Korean colleague dip its toe in the water of "let's get out of dollar assets" and get scalded in the process. So they have rushed out statements saying that they have no intention of unloading dollars.

Even the Bank of Korea looked at what it had wrought and was displeased. In its report to the national assembly, the Bank had said that to increase earnings on its reserves it would "expand investments into non-government bonds ... and diversify the currencies in which it invests." Surveying the carnage that this statement created, Kang Myun-Mo, head of reserve management, hastily issued a "clarification." He said that although he indeed intends to invest in higher-yielding non-government bonds, he has no plan to cut the share that dollars represent in the bank's total holdings.

The dollar recovered as it became clear that the Asian banks were aboard a tiger, and would see the value of their assets eaten if they climbed off. Were they to unload dollars, they would lop billions off the value of the dollar reserves they hold in their vaults.
So they will continue to buy dollar assets, although at a slower pace and shifting to non-government bonds.

Unless the gradually declining dollar sufficiently stimulates exports and shrinks imports, the American trade deficit, running at 6% of GDP, will at some point become difficult to finance without a significant rise in interest rates.

But that day has not yet arrived. The American economy is far more attractive to investors than the sclerotic EU, a Russia led by a president unfamiliar with the concept of private-property rights, a Middle East in turmoil, and a Britain heading down the European path
of ever-higher taxes. So investors still want to acquire dollar assets in sufficient quantities to prevent a run, although not a slide, in the dollar.

The more difficult problem relates to oil prices. Opec has decided to adjust output to prevent consuming nations from accumulating inventories to dampen price run-ups. The cartel will henceforth aim to maintain prices in the $40-$50 a barrel range, Saudi Arabia announced late last week, finally officially abandoning it previous target of about $25.

The higher price confers political as well as economic advantages on producing countries. Iran can resist pressure to abandon its nuclear-weapons programme because it is so awash in cash that it doesn't need western investment. Saudi Arabia can hold its American critics at bay by playing the crucial role of supplier of last resort. And Venezuela has the funds to finance Fidel Castro and anti-American groups in Latin America.

The disadvantages to America are obvious. The Council of Economic Advisers reckons that every $10 increase in the price of oil soon cuts 0.4% off real GDP. This means that current prices are shaving about a full point off the growth America might be experiencing had
Opec been content with its previous target ceiling. That, and constraints on its foreign-policy flexibility, are high prices to pay for the administration's refusal to develop a policy to reduce dependence on foreign oil.

-------------
Irwin Stelzer is a business adviser and director of economic policy
studies at the Hudson Institute.

shaka jr, "of things not yet seen"

hope you arrived home ready for a stellar week.

this morning it really hit me hard between the ears;

-what the dynamic societal growth demographics of china's burgeoning consumption class did to/for copper and oil, is what india's population/consumption demographics is doing/going to do for gold.

-there is absolutely NO doubt in my mind, gold is going to double (just like copper did) from here because of india's growing consumption class alone.

-from there gold is probably going to several thousand dollars or more because the cabal failed to factor this in and is standing on the beach, frozen in disbelief, watching the tsunami build. they WILL be wiped out, the Fed IS failing. (bye bye t-bonds).

-i believe that financial things in the US are going to get so whacked that the dollar we know today WILL NOT exist anymore after this is over, they will have to create a new one. for a time gold may become <"priceless"!

-i believe that one of the things that you will be remembered most for is your mantra of "Got to be in it to win it".

may you prosper,
buena fe

March 1 – Gold $432.40 down $3.70 – Silver $7.19 down 16 cents

HUGE Development For GATA And Gold In The Arab World!

A hard beginning maketh a good ending... John Heywood "The Proverbs of John Heywood" (1546)

GO GATA!!!

In the last couple of MIDAS commentaries I have done what I could to insult the mainstream gold world as much as possible for their ineptness and cowardly approach to dealing with the blatant manipulation of the gold price. Might as well make it a Trifecta and up the ante at the same time.

What is so grating is that the mainstream gold world dolts refuse to acknowledge the obvious modus operandi of The Gold Cartel. The cabal bums are so organized they repeat their manipulation techniques over and over again, like the $6 Rule – like taking gold down in the Access Market IMMEDIATELY after a concerted price-capping effort during the day.

Last evening Dallas time was a perfect example. Gold was shoved 80 cents to a buck lower not long after gold closed on Comex. The dollar then strengthened a tad later on. When I woke up this morning, the dollar was slightly lower, yet gold had weakened further, called down $1.40 going into the Comex open.

Contrarily, the S&P futures contract almost ALWAYS opens higher after a decent sell-off. Even Richard Russell has noted how the S&P’s are almost always called higher these days and have been for years now. The Gold Cartel is the one at work suppressing the price of gold. It is The Working Group on Financial Markets (PPT) who is propping up the US stock market and influencing its price action.

On that note Goldman Sachs and JP Morgan Chase pressed bullion right off the bat this morning, however, sizeable orders from physical market buyers showed up as the price took out $433. After a brief rally, The Gold Cartel attacked again, following up on their price-capping selling of the past week, even though both the pound and yen were modestly higher. Today’s battering had nothing to do with the dollar. It was all about The Gold Cartel forcing the gold price lower because the euro gave back a piddling of its recent gains.

Today’s outrageous manipulation is a classic example of what I have conveyed to Café members for years. The key to the gold price action is how The Gold Cartel uses the action of the dollar to rig the price. They go into capping mode on various gold up days in an organized un-American fashion, and in violation of all the US anti-trust laws. Then, they simultaneously strike to take the price lower when the word goes out from cabal headquarters to do so. Gold has traded this way for years. Can it be any more obvious? If you can’t see what is going on here, you couldn’t have the brainpower of a gnat or a "grapefruit." Perhaps I am being too kind? Meanwhile, the fact that commodity prices have gone berserk is completely ignored by the dullards in the mainstream gold world. PRICE ACTION MAKES MARKET COMMENTARY. Seems not much matters anymore to US financial markets. US deficits, crummy dollar, soaring real inflation, etc. What does matter is spin and market manipulation.

Gold and silver traded like heavy stones sinking in water the entire trading session. Rallies were non-existent. Only cash market pricing, as gold sank towards $430, saved the day. The gold open interest rose, as fully expected, to 287,801, up a sizeable 4271 lots. This reflects spec buying and Gold Cartel selling to cap the price, as brought to your attention by MIDAS yesterday. Spec longs who bought after Tuesday morning’s limit up day gold pop are now all losers.

The silver open interest fell by 3584 contracts to 101,630 as specs ran for the hills, as did mega long Morgan Stanley. No surprise there either.

The CRB rose once again, this time a mere .26 to 305.26, even though crude oil, beans, gold, and silver were lower. Once upon a time, pre-Gold Cartel and its price manipulation scheme, this chart would have had gold and silver rocketing:

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

The bonds continued their dipsy-doodle, falling another 6/32 to 112 29/32.

The dollar recouped modestly, rising .29 to 82.80 and the euro fell .57 to 131.16. The yen bucked the trend for the day and rose to 104.32.

The John Brimelow Report

Heavy Turkish buying; Heavy selling by ???

Tuesday, March 01, 2005

Indian ex-duty premiums : $6.18, PM $6.03, with world gold at $434.50 both times. Comfortable for legal imports. The Reserve Bank has been actively repressing the rupee, regrettably, from the point of view of gold’s friends.

Turkish imports for February, posted this morning on the Istanbul Gold Exchange’s website, were huge. At 29.411 tonnes, they were the third highest in the 9 2/3 years the Exchange records, despite $US weighted average prices, according the Exchange, being the 4th highest. February imports were 11.7% up on January and 35% above Feb ’04: $US gold was down 0.3% and up 4.7% respectively. Turkish Lira prices were -3.2% and +2%.

No doubt this quantity reflects a powerful response to the effort to break gold down in the first week of the month: but overall it is clear that the propensity of the Middle East to import gold has shifted. No wonder gold refused to break $400.

The ECB reported today that two subordinate Central Banks sold gold last week (a third bought coin); the net proceeds were E99Mm. This suggests about 9.4 tonnes, the highest this year. At an estimated 31.7 tonnes, the ECB zone sales in February are about equal to Turkey’s imports.

With world gold showing no resilience this morning, ("…spot gold was well offered by dealers" – Mitsubishi) TOCOM essentially stepped out of the market. On volume only equal to 13,014 Comex (-57%) open interest was static (up 338 Comex); the active contract was down 11 yen and world gold went out $1.60 below NY. (Yesterday NY traded 47,718 lots; open interest jumped another 4,271 lots – 13.28 tonnes.)

Yesterday, according to ScotiaMocatta, gold

"436.10/436.60 in New York and made a steady climb...A new high for 2005 (437.90/438.40) was posted before drifting back off on local selling. Selling from overseas sources then started to weigh on the market causing a sell off…"

The net effect of this was that it took over 13 tonnes of net buying to raise the gold price $1.50. In the past four business days, Comex has added 15,570 contracts of open interest (48.7 tonnes) to add $3.10 to the April contract... Plainly, there is a large seller about.

The Gartman Letter has noticed this:

"…there was selling yesterday at $437-438 which proved quite formidable; however, rather than direct gold selling we suspect this was simply profit taking correlative with the strength in the US dollar…. We look for short term support at the $431.50-433.00 level today and we doubt that that support shall be broken."

Profit taking, of course, would reduce, not increase, open interest. As Mitsui-Sydney ingenuously remarked this morning:

"…offshore buying meant gold was firm all day, pressuring resistance & some good size traded. Overnight it was pretty similar, however the flows were lighter. The question now is, with so much pressure being applied to the topside, what is holding gold back?"

Gold seems to be back in the 2001-2004 mode, with successive levels being ferociously defended, but eventually being overcome by rising physical offtake. That is what the Turkish data implies. From that perspective, the key development in gold this year has been the loss of downward momentum developed by the Great Liquidation of January.

The noted gold bear joins with a number of commentators – Gartman, Don Hays, various Neoconservative political writers, to proclaim peace is breaking out in the Middle East. This observation seems fashionable – or popular - at present. I doubt he is naive enough to believe it.

JB

CARTEL CAPITULATION WATCH

As usual the US stock market rebounded after a spanking. The DOW recouped most of yesterday’s losses, gaining 64 to 10,830. The DOG did better, jumping 19 to 2071. Liquidity is the name of the game. At some point reality is going to set in and this market is going to come hurtling down. Hard to know what will be the catalyst and when, however, it is coming. Denial and spin only goes so far. With inflation and interest rates on the rise, corporate profits are going to be squeezed. The rigging of the gold price to mask the true inflation barometer in the US will only go so far in this environment.

Platts:

New York (Platts)--1Mar2005/351 pm EST/2051 GMT
Analysts were at a loss to explain the decline in gold, even as Iraqui violence escalated… –END-

These analysts need to sign up for a http://www.LeMetropoleCafe.com membership. It would prevent them from remaining clueless.

US economic news:

09:59 Jan. Construction Spending reported 0.7% vs. consensus 0.4%
Prior reading revised to 1.2% from 1.1%.
* * * * *

10:00 Feb. ISM Prices Paid reported 65.5 vs. consensus 67.5
Prior reading 69.
* * * * *

Feb. ISM Manufacturing reported 55.3 vs. consensus 56.9
Prior reading was 56.4.
* * * * *

Marsh Has $676 Mln Loss, Cuts Dividend and 2,500 Jobs - March 1 (Bloomberg) -- Marsh & McLennan Cos., the world's largest insurance broker, slashed its dividend and planned 2,500jobs cuts after reporting a $676 million loss from settling NewYork Attorney General Eliot Spitzer's bid-rigging accusations. -END-

March 1 (Bloomberg) -- Japanese household spending had the biggest increase in nine months in January and the world's second- largest economy created the most jobs since 1992, adding to evidence a recession is ending.

Spending by households headed by a salaried worker rose 8.2 percent from December, seasonally adjusted, the statistics bureau said today in Tokyo. The economy added 470,000 jobs, helping the unemployment rate hold at a six-year low of 4.5 percent.

An improving job market and higher year-end bonuses boosted confidence among consumers, prompting them to spend more at Takashimaya Co.'s department stores and Skylark Co.'s restaurants. Japan needs a rebound in consumer demand, which makes up half the economy, to wean it from dependence on exports and corporate investment for growth.

-END-

A Tale of Two CPI Cities:

First, the US spin version:

U.S. economy still has output gap-Fed's Moskow

WASHINGTON, March 1 (Reuters) - The U.S. economy still has excess labor and production capacity, Chicago Federal Reserve Bank President Michael Moskow said on Tuesday, adding that oil price rises have yet to spill into underlying inflation.

"My own judgment is there still are excess resources in the economy, both certainly on the labor market side and in facilities, plants and equipment," Moskow told reporters after a speech to a National Association of State Workforce Agencies forum in Washington.

"So I personally think there still is an output gap. I think it is closing and that we are growing at about potential growth, but I don't think it has closed at this point. But it is something we have to keep monitoring on a regular basis."

Earlier, he told the audience oil prices have not yet pushed up prices excluding food and energy.

"If you look at that core rate, you have not seen a significant increase in that core rate over this period when oil prices have gone up," Moskow said. "Now if it gets to the point where people believe that inflation overall and core inflation will be higher because of that higher price of oil then that's a very important consideration for us as monetary policy-makers."…

-END-

Then, the real version via a fellow Café member professor:

The big-brained guys at Contrary Investor, authors of some of my most treasured Off-Wall-Street reading, have taken on the veracity of the CPI and concluded the numbers are boiled beyond recognition (go figure)...

http://www.safehaven.com/article-2672.htm

What is curious about this article is they also take on the question that I have found perplexing for years: Are people who cite the CPI numbers as accurate simply morons? Do they think we are morons? The Contrary Investors conclude that the answer is no, but rather some (the Feds at least) are using a "Don't ask don't tell" policy for convenience. A couple of you prominent folks are forced to cite bogus numbers: Is there no alternative?

Seems to me that investors will eventually demand transparency above all else or they will take their capital and go home (or back to Asia).

Just trying to share good stuff culled from obscure places with folks who might care (and maybe make a difference)...

Best regards
Dave

BTW-The smartest guy I ever met was a bean picker with a third grade education, and some of the biggest nimrods had PhD's in chemistry. With that said, these Contrary Investor folks do appear to have strong credentials. (Check out the blurb at the bottom of the article. It's kind of inspiring.)

David B. Collum
Professor of Chemistry and Chemical Biology
Cornell University

Which takes us to the latest development on this CPI controversy:

Bill:
I figure I can do Moskow one better! If they can spin, so can we....

News Alert
February 28, 2005
AP NEWS (Houston)

Renowned commodity trader Dan Norcini stunned the investing world today when he asserted that elephants roost in trees. Norcini, famed for his sometimes bewildering comments, confidently claimed that he had seen a dozen elephants sitting in the tops of the water oak trees surrounding his estate. So assured was he, that investors all around the world are now questioning whether he might be true.

"Norcini is one strange bird," quipped a pit trader in the S&P, "but he is a smart guy and anything he says has to be given thoughtful consideration."

News Alert
March 1, 2005
AP NEWS (Houston)- UPDATE

There has been a rash of sightings of elephants roosting in trees that has left authorities shaken and dazed.

"Calls are coming out of the woodwork," commented a deputy sheriff who is a member of a special task force created to handle the sightings.

The unusual development began after a famous commodity trader, Dan Norcini, announced that he has seen the elephants with his own eyes. While Norcini was not available for further comment, his attorney, Talkem N. TU. Anything, with the law firm of Doowey, Cheatum and Howe, stated that his client is completely convinced of the matter and has no reason to fabricate such a story.

End

More from Houston's Dan Norcini:

Bill;
We keep getting more and more of these reports detailing the squeeze that manufacturers are under as a result of rising input costs.

Here's another one, this time its Caterpillar. You had to wonder when they would finally cry, "Uncle," and hike costs. This is precisely the kind of thing one should expect to see accompany a rising CRB index and why I believe the deflation proponents will be proven wrong. Anyone who deals in steel knows all too well what I am talking about. It is a component in so many different manufactured goods that it is almost pointless to even attempt to list them - automobiles, heavy equipment, construction products, military equipment and armament, etc...

All one has to do is to simply think about the rising costs associated with soaring base metal prices and plastics which have their source in crude oil to realize that Caterpillar is not the exception; they are the rule and a sign of things to come.

It is also the very reason why the deliberately deceitful comments made by Greenspan, Bernanke and other various Fed governors such as the one I sent you earlier from Moskow are so patently absurd.

To assert, as they have so brazenly done, in the face of a rising CRB index and a soaring PPI (even in spite of its inadequacy) that inflation is "well anchored" or "contained" and that the CPI is not reflecting any pass through to end users by manufactures should strain the credulity of even the most ignorant of analysts. Yet, that is exactly what we do not see - on the contrary, we see the stupid lemmings swallowing the the purple Kool-Aid and parroting the official sector line that inflation is simply not a threat. "How do we know that?", they confidently assert. "Why just look at the price of gold. If it were a serious threat, gold would be reacting violently upward." Meanwhile they shovel the yellow stuff into the market as fast as they can find it in an attempt to meet the voracious demand and try to keep it from exploding upward to reflect reality.

Maybe we should pass on some advice to our friend Dennis Gartman and ask him to do himself and his hedge fund clients a favor by putting down the Kool-Aid long enough to let the cobwebs clear from his mind. That and some fresh air might bring him to his senses.
Dan