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

@ ghost_god

Zitat

they will sell the silver right on the spot market for whatever it brings regardless of the price.

Mr. Morgan's Aussage lautet also: die Tatsache, dass die Minen, welche Silber als Nebenprodukt am Markt verkaufen, für dieses keinerlei Preissensitivität haben und es also sozusagen zu jedem Preis auf den Markt werfen, habe mit zur tiefen Bewertung von Silber in den letzten Jahren beigetragen. Da das meiste Silber als Nebenprodukt gefördert wird, macht diese Aussage auch etwas mehr Sinn, als Deine Folgerung, was Mr. Morgen sagen wolle:

Zitat

die Tatsache, dass auch solche Minengesellschaften gefoerdertes Silber verkaufen, deren Hauptgeschaeft es eigentlich ist, andere Rohstoffe zu foerdern, haette dazu gefuehrt, dass der Silberpreis tiefer stuende, als er eigentlich stehen muesste...

Gruss,
Thom

Ansonsten stimme ich natürlich mit ghost_god und Spieler überein, dass man alle Artikel - seien sie pro oder contra Silberinvestments - genau auf ihre Aussagen und ihren Inhalt prüfen muss - es wird viel geschrieben, was keinen Sinn macht.

Hallo Thom,

kurz meine Meinung dazu:

Zitat

Mr. Morgan's Aussage lautet also: die Tatsache, dass die Minen, welche Silber als Nebenprodukt am Markt verkaufen, für dieses keinerlei Preissensitivität haben und es also sozusagen zu jedem Preis auf den Markt werfen, habe mit zur tiefen Bewertung von Silber in den letzten Jahren beigetragen. Da das meiste Silber als Nebenprodukt gefördert wird, macht diese Aussage auch etwas mehr Sinn, als Deine Folgerung, was Mr. Morgen sagen wolle

Ich sehe keine Bedeutung in der Preissensitivitaet des einen oder des anderen Wirtschaftssubjektes bei der Bildung eines Gleichgewichtspreises. Die Vermutung, die fehlende Preissensitivitaet eines potentiellen Verkaeufers fuehre zu tieferen Preisen impliziert, dass der Verkaeufer besser stuende, wenn er nicht zum Zeitpunkt x sondern zum Zeitpunkt x+1 verkaufte. Diese Aussage kann so aber nicht getroffen werden.Es ist ungewiss, wo der Preis fuer Silber zum Zeitpunkt x+1 stehen wird, bekannt ist nur, dass er aktuell (zum Zeitpunkt x) beim Marktpreis liegt.

Warum sollte also ein Verkaeufer von Silber auf den Preis spekulieren und es nicht unmittelbar zum aktuellen Marktpreis verkaufen?

Diese wirtschaftswissenschaftliche Milchmaedchenrechnung liesse sich natuerlich auch von der anderen Seite betrachten. Man koennte also ebenso gut behaupten, dass der Silberpreis zu hoch stehe, da einige potentielle Verkaeufer von Silber zu preissensitiv sind und bisher nicht zu den aktuellen Marktpreise verkaufen, da sie auf hoehere Preise hoffen. Taeten sie es allerdings, stuende der Preis wesentlich tiefer - somit (Mr. Morgan's und Deiner Logik folgend) liegt der Gleichgewichtspreis also unter dem Marktpreis, richtig?

Du siehst, der Gleichgewichtspreis liegt dort, wo das gesamte Angebot und die gesamte Nachfrage bedient werden. Einem Teil der Anbieter fehlende Preissensitivitaet vorzuwerfen ist wenig interessat fuer die obige Feststellung. Es wird ja nicht unter Marktpreis, sondern zum Marktpreis verkauft...

Gruss,

ghost_god

@all

habe das Gefühl dass die Minen mit POG nicht mehr mitkommen. Die sollten eigentlich dem POG vorlaufen. Wie ist denn Euer Gefühl ?

Gruss
yoyo

@ ghost_god

Zitat

Es ist ungewiss, wo der Preis fuer Silber zum Zeitpunkt x+1 stehen wird, bekannt ist nur, dass er aktuell (zum Zeitpunkt x) beim Marktpreis liegt.

Nun, Deine Aussage ist natürlich richtig, es ist nicht sicher, dass der Preis für Silber in Zukunft höher stehen wird. Aber ich zitiere sinngemäss Dich selbst, Du sagtest mal: "ich bin auch der Meinung, dass die Wahrscheinlichkeit zukünftig höherer Gold- und Silberpreise bei über 50% liegt".

Wenn diese Wahrscheinlichkeit also tatsächlich höher als 50% liegt, würden die Minen also mit einer höheren Wahrscheinlichkeit als 50% ein besseres Geschäft machen, wenn sie ihre Silberverkäufe aufschieben würden.

Tatsächlich ist es so, dass gewisse Silberminen, welche diese Wahrscheinlichkeit auch so sehen wie Du, tatsächlich damit angefangen haben, Silberverkäufe zu verschieben und/oder gar Silber am Markt zu kaufen - ich verweise auf das kürzlich hier gepostete Beispiel der Firma "First Silver Reserve" (nur am Rande - Goldcorp hält auch Gold vom Verkauf zurück, da sie in Zukunft mit höheren Goldpreisen rechnen).
Für eine Silbermine ist es bedeutend entscheidender, wo der Silberpreis in Zukunft liegen wird, als für eine Zinkmine, welche nebenbei auch noch etwas Silber fördert. Auch kann man Minen, welche hauptsächlich Silber fördern wohl zu Recht einen besseren Einblick in den Silbermarkt zugestehen, als Minen, welche Silber "nur" als (fast) unbedeutendes Nebenprodukt gewinnen.
Eine solche Aktion, wie sie First Silver oder Goldcorp betreiben wird daher eher von einer Mine zu erwarten sein, welche ausschliesslich Silber, rsp. Gold fördert, als von einer Mine, für welche die Silberförderung nur ein angenehmer Nebeneffekt ist. Da sind wir uns wohl einig.

Also kann die Tatsache, dass Silber hauptsächlich als Nebenprodukt gefördert wird, durchaus einen Einfluss auf den Silberpreis haben.

Zitat

Original von yoyo
@all

habe das Gefühl dass die Minen mit POG nicht mehr mitkommen. Die sollten eigentlich dem POG vorlaufen. Wie ist denn Euer Gefühl ?

yoyo

Ausgesprochen schlecht.
Die Minenaktien werden nur von geldgierigen Spekulanten beherrscht, die andauernd hin- und herschichten. Kein Titel kann so nennenswert steigen das es sich für Kleinanleger wie uns (bis 70.000 Euro) lohnt.

Ich plane jetzt bei der geringsten Erholung den ganzen Aktienkram hinzuschmeißen und die physischen Bestände weiter aufzustocken.

Dazu kommt, dass eine Zinkmine ihr nebenbei gefördertes Silber wohl auch noch zu 1USD/Unze auf den Markt werfen könnte. Eine reine Silbermine wird aber unter einem gewissen Marktpreis von Silber unrentabel, so dass sie ihre Produktion früher oder später einstellen muss. Was wiederum ein kleineres Angebot und damit höhere Preise zur Folge hat.
Auch aus diesem Grunde kann die Tatsache, dass der Hauptteil von Silber als Nebenprodukt auf den Markt geworfen wird, durchaus einen Einfluss auf den Silberpreis haben.

Zitat

Ghost_god: Er nimmt sogar das Wort "Equilibrium price" in den Mund, ...Das ist wirklich eine der peinlichsten Aussagen, die ich lange gelesen habe!

Nicht übertreiben, oder liest Du wirklich so wenig?

Das Silber, das als Nebenprodukt angeboten wird, gehört m.E. zu den "fundamentals" des Silbers und schließt den Gleichgewichtspreis nicht aus. Dieses Silber ist ein Teil der normalen Angebotsmenge.

Dennoch ist der Hinweis auf diese Angebotsanormalie wichtig. Dieses Silber wird quasi zu Cashkosten von Null (da die Kosten für das Hauptprodukt anfallen ) produziert. Deswegen führt ein Sinken des Silberpreises nicht - wie sonst üblich - zu einer Verminderung des Angebots. Allerdings wird auch eine erhöhte Silbernachfrage keine Produktionsausweitung nach sich ziehen, was zum explosiven Charakter des Silberpreises bei Nachfrageerhöhung beiträgt.

Aufgrund dieser Besonderheit des Angebots ist es sogar möglich, daß bei einem Steigen des Silberpreises das Angebot sinkt, wenn die Nachfrage nach den Hauptprodukten abnimmt. Auch der umgekehrte Fall ist möglich: Ein Sinken des Preises geht mit einem steigenden Silberangebot einher.

@ Ulfur

Das sagst mit anderen Worten genau das, was ich meine...

Zitat

Dennoch ist der Hinweis auf diese Angebotsanormalie wichtig. Dieses Silber wird quasi zu Cashkosten von Null (da die Kosten für das Hauptprodukt anfallen ) produziert. Deswegen führt ein Sinken des Silberpreises nicht - wie sonst üblich - zu einer Verminderung des Angebots.

Ich halte das für einen sehr wichtigen Faktor für den Silberpreis. Selbst wenn alle primären Silberminen wegen zu niedrigen Silberpreisen schliessen müssten, wäre von den sekundären Produzenten noch ein ziemlich grosses Angebot vorhanden. Wenn es ausschliesslich Silberminen gäbe, könnte der Preis langfristig gar nicht unter deren Cash-Kosten sinken, es sei denn es gäbe überhaupt keine Nachfrage nach Silber mehr (oder riesige Lager, welche abgebaut würden, aber auch dann wäre es nur eine Frage der Zeit).

Es macht also durchaus einen Unterschied, ob der Grossteil des Angebotes von sekundären oder primären Produzenten stammt, was ja eigentlich Mr. Morgans Aussage war.

Zitat

Allerdings wird auch eine erhöhte Silbernachfrage keine Produktionsausweitung nach sich ziehen, was zum explosiven Charakter des Silberpreises bei Nachfrageerhöhung beiträgt.

Genau das ist auch ein Grund, weswegen ich mir beim Silber prozentual deutlich höhere Preissteigerungen als beim Gold vorstellen kann. Auch weil die Nachfrage rel. inelastisch ist. Aber das hier nur am Rande...

[URL=http://www2.onwirtschaft.t-online.de/dyn/c/T-Online.de/Themen/Wirtschaft/Aktien/Suche/ExterneInhalte/ei-is-einzelwert,vv=dyn,ei=http://boerse.t-online.de/de/stk/ind/reports/chart.html?chart_market=GLD.FX1&chart_type=LINE&chart_datascale=abs&chart_axisscale=lin&chart_volume=1&chart_highlow=1&chart_avg1=200&chart_avg2=&chart_bench1=&chart_bench2=&chart_indicator1=&chart_indicator2=&sSymbol=GLD.FX1&chart_hist=1w&dummy=.html]Goldchart 1- Woche[/URL]

von 409 auf aktuell 425 innerhalb einer Woche - das ist schon was.
Lässt Öl grüßen, das 50 Prozent in wenigen Monaten zugelegt hat?

Right In Front Of Our Eyes

By: Theodore Butler

There were two extraordinary developments last week. Although the connection was not made openly, they were very much related. The first development was the historic one-day sell off in the base metals on October 13. It is difficult to recall a day when metals such as copper, aluminum, zinc and lead fell by as much as 10%, with nickel falling more than 15%. But what is most extraordinary is the reason all fell like they did, when they did.

When you strip away the noise and the after-the fact reporting of the news (such as another slowdown in China), prices rise and fall solely upon the relative aggression of the buyers or sellers. The sellers on the day of the big sell off (and subsequently) were clearly more motivated and aggressive than the buyers. Or so it would appear. In reality, the sellers were tricked by the buyers into selling, even though those sellers are still not aware that they were hoodwinked into selling at distressed prices.

Of course, the sellers were, almost exclusively, the same brain-dead technical hedge funds that I write about so often in silver and gold. I don’t have a real financial interest in the base metals. My axe to grind here is strictly the distortion caused to the free markets by the mechanical tech funds reacting as one entity, and playing into the commercial dealers’ collusive bid rigging.

It was the same old game we’ve seen enacted continuously in COMEX silver and gold, only this time the main stage was the London Metals Exchange (LME), the world’s leading base metals trading platform. The COMEX copper market was also part of the manipulative sell off, and it is from the soon to be released copper COTs that we will be able to confirm that it was mainly dumb tech fund selling and crooked dealer buying that caused the sell off. The LME is nowhere near as transparent as the COMEX, and there are no equivalent COTs there, to my knowledge.

I want to keep this brief, so let me make my point. Intentional or otherwise, there is a sickness that all of our markets have developed in the past two decades, as a result of the emergence of these technical hedge funds and the colluding commercial dealers who harvest them. Even though they are separate entities, because these tech funds are operating on essentially the same price signals and moving averages, their effects on the markets are the same as if they were under the control of one person. I ask you to think about this new concept.

My main complaint here is that the law would clearly preclude any one entity from buying and selling as much as the tech funds (and dealers) collectively transact. Yet, if the tech funds are all essentially doing the exact same thing, at the same time, isn’t the net affect the same as if they were one entity? In other words, what’s the difference (in market impact) between one entity buying or selling 50,000 contracts in a time-urgent manner, and 50 tech funds transacting 1000 contracts simultaneously? And I don’t think these tech funds even realize that they are acting as one. They jealously guard their secret trading formulae, when in reality it doesn’t matter what super computers they are using to compute moving averages, as the end result is essentially the same for all of them. Numbers are numbers.

Commodity law would never allow one speculative entity to control or transact 50,000 contracts of anything because it’s obvious that would manipulatively impact the price. Yet 50 unrelated tech funds controlling and simultaneously transacting the same amount of contracts for the same silly mechanical reason has the exact same manipulative effect on price. I submit that both should be disallowed. Remember, the very purpose of commodity law is to prevent speculators from setting the price.

Incredibly, there exists a simple solution to this problem of tech funds and dealers controlling the markets and setting prices, that’s already on the books. It’s called speculative position limits and you have seen me write about it often. These limits, when applied with common sense and fairness, would solve the issue of tech fund and dealer paper trading dominance over prices. If tech funds and dealers are going to transact massive positions collectively and in unison, reasonable speculative position limits should apply to the collective position. This isn’t rocket science.

So where are the regulators, namely the CFTC and the exchanges? I’ll tell you where they are – accommodating the dealer community. You see, it is the dealer community that sets the rules, and they would never set a rule that would cost them money. They earn great sums harvesting the tech funds and want to see the manipulative game continue. There’s even a hard to believe extra kicker that the dealers reap from the tech funds. In addition to taking the opposite side of whatever the tech funds buy or sell (euphemistically referred to as "market making"), the dealers actually do the tech funds’ trading for them, in the dealers’ dual role as tech funds’ broker and competitor. That means that the dealers always know the tech funds position and likely behavior and actually buy and sell for the funds, while trading for the dealers’ own benefit. This is an extremely unfair advantage, similar to being able to see the other guys’ down cards in a poker game. If that’s not unfair and corrupt, nothing is.

Unfair and corrupt. That leads us to the next extraordinary event of the past week, Eliot Spitzer taking on the insurance industry. While I am sad that there is so much wrong in America, I am glad that there are men like Spitzer trying to right the wrong. He is a true American hero. That is why I wrote to him in the first place about silver and AIG. I knew there were few men with the courage to stand up to such a powerful corporate juggernaught.

I am going to resist the temptation of patting myself on the back for first making the Spitzer and AIG link, and concentrate on analyzing the silver connection with this latest insurance industry scandal. But as I have written repeatedly, that AIG has apparently departed the silver business is solely because of Spitzer’s behind the scenes involvement. You don’t go from being the dominant force to running away for no good reason. I would suggest that those new readers unfamiliar with the issue look up past articles, as there weren’t many in the last year in which AIG was not mentioned.

There are some similarities and differences between the silver market and the unfolding insurance scandal. One similarity is that the practices under attack in the insurance scandal, from bid rigging to contingent commissions, were longstanding and widespread. It was only after an outsider, Spitzer, looked at them from a different perspective, that they were seen by all to be corrupt. Similarly in silver, we have longstanding practices that defy legitimate economic explanations, like the concentrated shorting of more silver than exists and the corrupt practice of leasing. Let Spitzer publicly question those practices, and not me, and the reaction will be profound.

Another similarity between the silver manipulation and the insurance scandal is that there exists an extensive body of law and regulatory apparatus expressly created to prevent the very wrongs being revealed. And in both cases, that body of law and regulatory apparatus failed to deal with the wrongdoing. In silver, the CFTC and the NYMEX actually deny any manipulation exists. It is a denial that will prove more embarrassing and damaging than the failures of the state insurance agencies that were just out to lunch.

In all of Eliot Spitzer’s great successes, from the Wall Street research scandal, to the mutual fund timing scandal, to getting AIG out of the silver business, and to the new insurance scandal, there have been designated regulators who were asleep on their watch. Without him, it would surely be (crooked) business as usual. To his great credit Spitzer is obviously motivated by a desire to help the regular guy. Also to his credit is his desire to reform as opposed to just punish. He is concerned with making the system better, not destroying it. If he wanted to, he could have snapped AIG like a toothpick, in either the silver matter or this insurance issue, so compelling was their bad behavior.

Also similar are the repugnant conflicts of interests that exist in both silver and insurance, from the insurance brokers taking commissions from both customers and insurance companies for the same policy, to the silver dealers taking commissions from and allocating prices for fills for tech funds and the public alike, on trades they take the other side of, as principals.

Perhaps the most glaring similarity between the silver manipulation and the insurance scandal was the regular bid rigging, price fixing and lack of real competition in both. That I have consistently used these very terms to describe the silver market and they are being used by Spitzer to describe the insurance scandal is no coincidence. Neither is the fact that one firm, AIG, is central to both scams. Whether it is an insurance broker creating phony bids for insurance to rig the price, or the COMEX silver wolf pack collusively pulling bids to snooker the tech funds, this is a distinction without a difference. Both were done to create an artificial price.

There are some big differences, however, between the silver manipulation and the insurance scandal. For one, I think the silver manipulation is more serious in that a single price has been manipulated, as opposed to individual insurance policies. Artificially low silver prices over the past 20 years have bankrupted some mining companies and caused the US Government to dispose of much of its silver at unfair price levels, to cite just two examples. It is because the silver manipulation is potentially more serious than the insurance, mutual fund or Wall Street research scandals, that Eliot Spitzer has chosen to work behind the scenes in silver, rather than publicly, in my opinion.

Another big difference is that the insurance companies involved and others not accused, stopped their bid rigging and conflicted commission arrangements immediately. Silver is still a bid rigging and price fixing crime in progress. Sure, AIG may be gone in silver, but the wolf pack still dominates. It will be a great day indeed when we can speak of the collusive bid rigging and price fixing in silver in the past tense.

The biggest difference between the silver manipulation and the insurance scandal, as well as the mutual fund and Wall Street research scandals, is that the others were unexpected and originated on basically a single complaint or revelation. Not so in silver. In silver, the manipulation has been openly discussed and debated for years. More than 3600 people, an absolutely enormous sum, have signed a petition to Eliot Spitzer beseeching his assistance. There were no such public pleas in the other scandals. In silver, the CEO’s and general counsels of the Silver Managers were personally notified of their firms’ involvement. In silver, the regulators were contacted more times than can be counted, by others and myself. There will be no claims of ignorance when silver blows.

The main lesson from the shocking developments over this past week is the reconfirmation of widespread institutional financial fraud in every nook and cranny. There can be no reasonable doubt as to the extent financial institutions will go to make an easy buck. It is against this backdrop of new revelations that I raise an issue I have harped upon recently, namely where are the metal mining companies in all of this, particularly the silver mining companies, that they don’t see what is right in front of their eyes?

Why a copper company, for instance, would remain silent as the price of its product drops 10% in a day, solely due to the tech funds being tricked from their paper positions is beyond me. But it is the silver mining companies, particularly PAAS, CDE, HL and SIL, which bear the greatest scrutiny. Silver has been manipulated for 20 years, copper hasn’t. Their collective silence on the silver manipulation issue defies analysis. One, PAAS, has actually taken to continue to publicly attack me, as if I’m some great enemy of silver.

I had always assumed that it was stupidity, cowardice or just plain stubbornness that accounted for these miners refusing to help themselves and their shareholders by speaking out against an increasingly obvious silver manipulation. Especially since other silver miners have broken rank and bought silver. In light of this week’s new developments, namely, the base metal massacre and the Spitzer attack on the insurance industry, the silver miners continued lack of concern is bizarre. I’m starting to agree with those that have suggested a more nefarious motivation. Is there some type of quid pro quo that we can’t see?

With so many new revelations concerning widespread financial fraud in so many areas, it’s getting close to the point that if you believe silver is not manipulated, you must also believe it’s the exception. Given all the facts, that’s just not reasonable. At the very least, the silver miners should be objective enough to acknowledge the possibility of a silver manipulation. The fact that they fight the very idea that it’s possible that silver is manipulated raises serious questions about their inaction. In the case of PAAS, its chairman Ross Beaty, has publicly written that gold is likely manipulated, but definitely not silver. Huh?

Make no mistake; it has been the silver miners’ lack of involvement that has prolonged the manipulation. A primary producer questioning a continued low price carries more weight than an analyst’s complaint. The flip side is that if events play out as I expect, great shame will be heaped upon those miners who did nothing, and great praise on those who did something.

-- Posted 20 October, 2004

Zusammenfassung der wichtigsten Aussagen:

Es gab 2 außerordentliche Entwicklungen in der letzten Woche:

1. historische 1-Tages-Verkauf von Edelmetallen am 13.10. als verschiedene Metalle zwischen 10-15 % fielen
2. Eliot Spitzer nahm sich der Versicherungsindustrie an (gemeint sind die problematischen Praktiken beim Handel)




Butler geht dann im Detail auf die Zusammenhänge / Unterschiede zwischen den Silberpreismanipulationen und den Versicherungsskandal ein.

@ Ulfur und @ Thom:

Ich habe den Eindruck, dass wir aneinander vorbeireden. Dem was ihr sagt, widerspreche ich gar nicht - im Gegenteil, ich stimme euch zu!

Doch hat sich eure Aussage recht weit von dem entfernt, was urspruenglich Mr. Morgan formulierte. Er sei hier nocheinmal zwecks Klarheit zitiert:

Zitat

If they get X amount of silver out of the ground, and the primary resource is copper, and that is what that are in business to mine, they will sell the silver right on the spot market for whatever it brings regardless of the price…………..That is one of the fundamentals I believe, that has helped to keep the price lower than it's fundamental or its equilibrium price.

Meine Kritik galt von vornherein dem rot markierten Satz, also der Aussage, dass der Silberpreis unter seinem fundamental gerechtfertigten Gleichgewichtspreis stehe, und sich dies in dem Verhalten von Minengesellschaften begruende, die Silber nur sekundaer foerdern. Dies ist wirtschaftswissenschaftlich schlicht inkorrekt - da laesst sich nichtmal verschiedener Meinung drueber sein.

Etwas anderes ist das, was ihr beide sagt. Naemlich konkret, dass der Silberpreis aufgrund des angesprochenen Verhaltens der "sekundaeren Silberproduzenten" tiefer steht, als er es ohne sie taete. Klar, es gibt tausend Gruende, warum Silber da steht, wo es steht und etliche Einflussfaktoren wirken kurssteigernd, andere wiederum kursdrueckend - so ist die Wirtschaft nunmal. Damit ist das Rad aber nicht neu erfunden....

Erkennt ihr den Unterschied zwischen eurer Aussage und der von Mr. Morgan?

Gegenueberstellung:

Ihr (und ich) sagt: Gleichgewichtspreis (unter Einbezug allen Angebots und aller Nachfrage) = Marktpreis

Mr. Morgan sagt: Gleichgewichtspreis > Marktpreis

Also lasst uns nicht weiter aneinander vorbeireden, dafuer habt weder ihr, noch ich die noetige Zeit. Mr. Morgan irrt, ihr habt recht und die meisten hier sind ein wenig schlauer...

ghost_god

October 20 - Gold $423 up $3.10 - Silver $7.31 up 17 cents

Go GATA, Go Red Sox, Go Gold

The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty...Winston Churchill

GO GATA!!!

The following is from my 10/11 MIDAS: "Still a Red Sox fan. Love my old park. Unless you are a Yankee fan, hard not to root for the Bosox? Only question for me is who wins the day first? The Red Sox finally win the World Series again, or GATA defeats The Gold Cartel."

Only few days ago the situation for both the Red Sox and GATA was bleak. The Bosox were down 3 games to zip and The Gold Cartel had stopped gold in its tracks at $420 with the specs mega-long and almost everyone predicting a "Commercials" victory – because they always win (like the rich and powerful Yankees).

What a difference a few days make, days which are so supportive of the old adage, "that’s why they play the game!" The Red Sox, down 3 zip, have a chance to pull off the unimaginable if they beat the Yankees in tonight’s 7th game final of the American League playoff. The GATA ARMY has a chance to win the day versus the heinous Gold Cartel if gold takes out $430, surely thought unimaginable by cabal forces only last week.

That said, the orchestrated gold close today engineered by the cabal forces was dreadful.

Close, But No Cigar. In recent days I have mentioned what we needed was a $3 to sharply higher opening and then go from there to really get going. Got the $3 opening today to the penny, followed by almost perfect cooperation from outside market forces. Result: the aggravating Gold Groundhog showed up again with more of the same blatant Gold Cartel manipulation to cap the price of gold. Only the BRAIN DEAD could fail to spot this coordinated intervention.

Gold closed near its lows of the trading session and $2.60 off its highs even though:

*The dollar closed at 86.43, down .50, while the euro gained .68 to 125.84
*Crude oil soared to $54.93 per barrel, up a mere $1.64.
*The CRB advanced closer to making 23-year highs at 227.62, up 2.21
*World stock markets were much lower, as was a sharply lower US stock market before the PPT showed up.

From Houston’s Dan Norcini:

Hey bill:
See attached. Shows how the "gig" is played attempting to use the technicals to run the specs.
Best,
Dan

THAT, is THE CABAL in action.

The Gold Cartel is waiting for the dollar to rally a nano-tick to take gold back down below $420 and away from $430 danger. Bottom line: same stinking analysis. Until The Gold Cartel is blown up, gold goes nowhere. $423 gold IS nowhere after all these years, some $300 per ounce lower than where it should be.

The Working Group on Financial Markets and Gold Cartel were able to stave off disaster today by stopping the gold advance and propping up a sinking stock market. They have been messing around in US financial markets far too long and set up the most extraordinary imbalances. While one could say they prevented defeat today, their fate is sealed. The outcome of this Orwellian misdaventure is going to end VERY badly. They will not be able to control gold too much longer and the US stock market is going to fall apart as their financial resources are exhausted.

The gold open interest rose 2979 contracts to 305,2225.

A wild day in the silver pits. Silver popped early to the tune of about 15 cents after the opening, mega-short Morgan Stanley then bombed it, taking silver down on the session. Big mistake. Instead of attracting other sellers, the floor and other buyers ganged up on him. In a blink, silver was up almost 25 cents. Did I see it occur? No. Both Kitco and TheBullionDesk were too overloaded to obtain quotes.

The silver open interest gained 1479 contracts to 111,307. While the gold open interest is back to its highs of earlier this year, silver is more than 10% off its old highs. Plenty of room for the specs to pile in at these levels.

From the MIDAS last night:

An eerie message my friend Mahendra sent to his subscribers well before Comex opened:

Gold prices will then move in an upward direction from mid Tuesday till wednesday. DURING THESE TWO DAYS a big player will enter the market or big money will shift in metals from either the stock market or oil.

Why did gold jump today? According to the floor, "Some mysterious buyer showed up."

Something else eerie here, which I will explain tomorrow.

***

Here’s what happened. No more than 5 seconds after I had written about what Mahendra had sent out, he called me out of the blue. I almost fell off my chair. When I told him his ears must have been burning, he chuckled, saying this coincidence confirmed what he had sent out. It was the same sort of comment he made when we walked across the street in Dallas after our meeting/cocktail party for him in Dallas last May and the heavens opened up with rain. He said then that the deluge of rain confirmed what he came to Dallas to talk to us about.

Why did I save this? Because, like many ex-pro athletes, I am a bit superstitious and did not want to jinx things for today.

Spoke with Mahendra after the close again. I was ticked at today’s price management. He was laughing. Says the shorts have, and are, trapping themselves this time (taking the bait like animals do in the jungle). By the way, Mahendra’s calls on the markets continue to astound. Love to get him some media attention. If anyone out there can help, would be a great story for journalists of all kinds. They can go to:

http://www.mahendraprophecy.com/

Some key charts for your review:

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

Gold weekly
http://futures.tradingcharts.com/chart/GD/W

December dollar
http://futures.tradingcharts.com/chart/US/C4

Dollar weekly
http://futures.tradingcharts.com/chart/US/W

The John Brimelow Report

India & Gartman too!

Wednesday, October 20, 2004

Indian ex-duty premiums: AM $6.96, PM $5.27, with world gold at $419.55 and $423.45. Ample, and adequate for legal imports. Impressively resilient, considering the sharp increase in world gold. The rupee strengthened further to a 3-month high today.

TOCOM activity slumped, the firmer yen probably suppressing any interest in gold futures. Volume fell 44% to only equal 11,480 Comex lots; world gold was essentially static (up 10c from the NY close); the active contract closed up 5 yen. (NY yesterday traded 45,130 contracts; open interest rose another 2,979 lots to 305,225, getting close again to the all time high.)

Refco Research guessed last night that open interest would fall in the wake of the palpable defeat of the bear raid early yesterday: instead it rose. Quite possibly tomorrow will see a record: estimated volume was 50,000, with a tell-tale acceleration at the close.

Institutional Analyst/groupie Dennis Gartman, finally becoming concerned about the dollar, asks the key question about gold (written very early today):

"Turning then to gold, we note that once again the $420-422/oz. level is material resistance, and it has been for the past several sessions…One might reasonably ask who the sellers are that are keeping prices from rising…What is important is that the price of gold is clearly trending upward; the sellers find their offers rather readily taken; support seems to come in at progressively higher prices and resistance is steadily chipped at."

Since Gartman has a fine sense about what his clients are willing to hear, gold’s friends should be grateful that he raises the (unanswered) question: any interest in the sector from this quarter is significant.

JB

CARTEL CAPITULATION WATCH

The December 30-year bond closed at 114 1/32 up 21/32. This is at its highest levels for the move, hardly a ringing endorsement of the US economy. I’ll hang with my analysis of the past many months, one that seems so obvious. The maneuvers by the Fed and Bush Administration to prop up the economy have run their course. What lies ahead for our economy and stock markets appears ominous.

Long bond:

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

The PPT is like the football teams of yesteryear that would run off tackle over and over again until it did not work any more. Only, in this case, it is their patented "Hail Mary" play used to rescue the DOW which they use over and over. The DOW was down over 90 in the early going. No matter, by the close it came back to 9986, down 11. The DOG gained 11 to 1933.

S&P:

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

The oil inventory news was super bullish:

10:31 DOE reports crude oil inventories +1.2M barrels vs. expectations +1.8M barrels
Gasoline inventories reported (700K) barrels vs. consensus +400K barrels. Distillate inventories reported (1.9M) barrels vs. consensus (1.0M) barrels. November crude is trading higher to $53.80/barrel in reaction to the data.
* * * * *

10:33 API reports crude oil inventories (972K) barrels
Distillate inventories reported (1.2M) barrels, while gasoline inventories (2.4M) barrels. Nov. WTI crude continues to trade higher, post-data, quoted last at $53.90/barrel.
* * * * *

Gold Cartel crowd rats beginning to leave a sinking ship?

18:13 C reports departure of three senior officials -- Reuters (43.59)
Citing an internal memo, Reuters reports Thomas Jones, CEO of Citigroup Asset Mgmt., Deryck Maughan, chairman of Citigroup Int'l, and Peter Scaturro, CEO of Citigroup Private Bank, will be leaving. Effective immediately, Citigroup Asset, Citigroup Private Bank and Travelers Life & Annuity will report to C COO Bob Willumstad.
* * * * *

Alan Greenspan and Wall Street have been dissing the real US inflation situation and soaring oil prices for months. Mainstream is reporting reality:

Oct. 20 (Bloomberg) -- Whirlpool Corp., the world's second- largest home-appliance maker, cut its full-year profit forecast, citing higher steel and oil costs.
Profit will be $5.85 to $5.95 a share, the company said in a statement distributed by PR Newswire. Whirlpool had said it would earn $6.20 to $6.35.

STOCKHOLM, Oct 20 (Reuters) - Electrolux, the world's biggest home-appliance maker, cut its 2004 profit outlook in the face of fierce competition and high steel prices as it posted third-quarter profits in line with expectations.
"Operating income for the full year 2004 is expected to be significantly lower than in 2003, excluding items affecting comparability," the company said in a statement on Wednesday.

-END-

A big miss and another chink in the cabal’s armor:

Oct. 20 (Bloomberg) -- JPMorgan Chase & Co., the second- biggest U.S. bank, said quarterly profit fell 13 percent because of costs related to the July purchase of Bank One Corp. and a slump in fixed-income trading.
Third-quarter net income declined to $1.42 billion, or 39 cents a share, from $1.63 billion, or 78 cents, the New York- based company said in a statement. Excluding acquisition costs, JPMorgan would have earned $2.2 billion, or 60 cents a share. The average estimate of 14 analysts was 74 cents, according to Thomson Financial. –END-

Edgar Bergen must be rolling over in his grave with Treasury Secretary’s Snow's continued Charlie McCarthy puppet routine. It is beyond inane:

12:52 US Treasury's Snow repeats support for strong dollar policy --- Reuters
The US dollar is trading notably lower against the euro and the yen, with gold trading sharply higher. Snow declines to comment on the latest drop in the dollar
* * * * *

More bad news for stock market bulls:

Market Intelligence

10/20
The bulls jumped almost 5%, all the way up to 58.9%, while the bears fell to 22.1%, a drop of 1.4%. Historically, these levels have proved very negative for equities. It is hard pinpoint a single reason for this increased enthusiasm, with averages flat, or within 4%, of where they started the year, but virtually all newsletters do look for a break in the high crude prices.

There were just 19.0% in the correction camp. They are short term bearish but longer term bullish, viewing an expected pullback to be a buying opportunity.

We consider "normal" readings to be 45% for the bulls and 35% for the bears. The bulls had been well below that level mid-August, and markets rallied. The sentiment readings are used on a contrary basis.

The spread between the bulls and bears expanded to 36.8%, moving into the 35-40% range most often seen at the levels of index tops.

-END-

The real CPI story:

The King Report
M. Ramsey King Securities, Inc.
Wednesday Oct. 20, 2004 – Issue 3020 "Independent View of the News"

From the BLS on CPI: "Energy costs declined for the third consecutive month--

From the BLS on CPI: "Energy costs declined for the third consecutive month--down 0.4 percent in September--after advancing sharply in the first half of the year. Within energy, the index for household fuels decreased 0.9 percent, while the index for motor fuel rose 0.1 percent. The index for food was unchanged in September, as a 0.2 percent decline in the index for food at home was offset by a 0.3 percent increase in the index for food away from home." http://www.bls.gov/news.release/cpi.nr0.htm Please reread the BLS line about energy prices declining for the 3rd consecutive month. Who possibly could believe this crap? Yet we know many, particularly Wall Street shills and permabulls, do. You cannot make up stuff like this; it’s tantamount to Orwell’s "1984".

Here is more altered reality foisted on the uninformed and gullible. BLS has energy prices +6.7% y/y. On 9/30/03 oil was $29ish; on 9/30/04 it was $49ish, +69% y/y…And Fed clowns keep trying to sell the notion that inflation is tame. The way CPI is compiled, there can never be meaningful inflation.

Wait, the assault on one’s intelligence is worse than above. For the past three months, BLS has its CPI energy component DOWN 9.8%!!! (Check the table at above link to BLS) Thank you sir, may I have another! We’d love to administer a test to anyone involved in financial decision making that asks them that given the evidence of the past 3 to 4 months do they believe the BLS’s CPI, and in particular the energy component…BLS has the CPI energy component up only 18.6% for 2004.

In our letter on Monday, we noted the following increases over the past 3.5 months: "Oil is +50%; heating oil is +54%; gasoline is +24% and natural gas is +6.5%. But the increases have not shown up in PPI or CPI." So either this month’s CPI energy index must soar or the incorruptible BLS is full of it.

BLS has used vehicle prices down 1.8% y/y. Mannheim, which doesn’t sample but counts all transactions, has them +0.4%. But Mannheim does not employ hedonic adjustments. Mannheim explains the problem with BLS’s used vehicle methodology at: http://manheimvalueindex.com/c…4m3r1c4/comparisonCPI.php

There is more hilarity in other categories of the CPI release and tables, but we don’t feel the need to delve further to prove the obvious.

How come in BLS substitution policy, there is never upward substitution if prices fall? If steak prices soar, the BLS assumes people will ‘substitute’ ground beef; and then there is no CPI increase. But what if beef prices fall? Does the BLS assume people will substitute ground sirloin for hamburger? It’s just like hedonics – there never is an adjustment for worse service or anything that might raise the CPI.

Yesterday’s WSJ had some analyst downplaying hedonic adjustments. We love analysts and reporters that suddenly have to address issues like hedonic adjustments and the Biz B/D Rate when they have ignored or were not aware of it for years. Most Wall Street analysts loathe ‘doing the work’, so they ignore troubling details. If economists and analysts acknowledge the problems, they must ‘do some work’ instead of just plugging dubious data into their ‘models’ and/or making specious forecasts on spurious data…As we annually note, Q3 (July to August) CPI is one of the most massaged numbers because it is the basis of COLAs. And we are pleased that others now report that fact…We’d love to hear the WSJ’s reporter and his featured analyst’s explanation for energy in the CPI.

The Social Security Administration announced a 2.7% COLA for its more than 47m recipients yesterday. This is about $25/month for the average recipient. Higher Medicare premiums will cost $11.60/month. Ergo, the US government on the paying hand (BLS) says healthcare costs are up only 4.4% y/y, but on the taking hand it exacts a higher toll…Congress is complicit in swindling the elderly - by deed or ignorance

-END-

With the false/gimmickry reporting we are getting from the establishment and the present administration in Washington, along with the blatant rigging of the price of gold to calm down inflation talk, one can’t help but reflect on two of my favorite movies: The Matrix and The Stepford Wives.

The latest from Dennis Gartman. While, he still doesn’t get IT, DG deserves credit for at least acknowledging our camp, unlike the gold industry, whose disdain for us and negligent silence towards our evidence of price manipulation is inexcusable.

"Turning then to gold, we note that once again the $420-422/oz. level is material resistance, and it has been for the past several sessions. Gold has tried vainly to push upward through that resistance, but thus far has been unable to do so. It shall likely require a move by the EUR upward through 1.2550, which shall set up any number of stops there to push gold upward through that resistance, but at this point both seem reasonably likely. We note also that the "attack" upon that resistance level in gold is being done from a higher price than previously. Driving through resistance at $420-422 when the 'attack" is begun from a base at or near to $417-419 is far easier than when the attack is begun from $410-412.

"One might reasonably ask who the sellers are that are keeping prices from rising, and the conspiratorialists among us will readily say that it is a cabal of Wall Street firms who hope to defend short positions they have inherited over the years. We have listened to the conspiratorialists for years, and we actually find their "enthusiasm" refreshing even if their thesis ill-advised. What is important is that the price of gold is clearly trending upward; the sellers find their offers rather readily taken; support seems to come in at progressively higher prices and resistance is steadily material portion of that crude to the US."

Ill advised? Nothing in market history has ever been this obvious! Especially today. Gold opens $3 higher. From there on in the dollar fails to rally, oil goes berserk, silver closes not far off its highs, world stock markets have closed lower and the US market tanks early on. You call that normal market action with massive floor short-covering early as the DEC contract took out fierce $423 resistance on the opening? They have you on CNBC all the time to talk about gold. You would serve them better by expounding on Tiddlywinks.

This is more like it:

Dear Goldman Sachs, I have a question. I have been following the gold market now for a couple of years. I have noticed that on days when the gold price declines, there is virtually no limit as to how far it falls...$6, $10, even as much as $16 in a single day it will fall. This has happened many times in the past 2 years. This usually takes place on days when the dollar is rallying modestly to greatly. However, on days when the US dollar is in steep decline, gold will almost never rally more then $4-$6. Only twice in 2 years has this happened and on the day following these events gold went into a free fall.

Now my question is this, on the COT reports, I have noticed that on days when gold rallies on bad US economic news, when gold gets to this $4 to $6 rally, it is almost ALWAYS Goldman Sachs who becomes a huge seller instead of a buyer like nearly everyone else. Why do you sell so enormously on days when others are buying? In my mind, it makes no sense. Would you be able to answer this question for me. I would really appreciate it.
Wendell Leytham

Hi
We can't comment on our trading strategies, or anyone else's. But it is important to recognize that the vast majority of trading which is reported under the rubric of Goldman, Sachs & Co., our broker dealer, is in fact undertaken on behalf of clients, i.e where we act as a dealer for someone else's trade. Only that institution could explain why they are trading in a particular way.
Regards
GS Investor Relations
gs-investorrelations@gs.com

Those clients being The Gold Cartel and allies, of course.

Anecdotal gold supply input from Canada:

Talked to a bullion seller today who said a customer informed him there was a 3 week wait for receipt of Maple Leafs from Bank of Nova Scotia in Vancouver (Canada’s primary retail gold supply bank). The Bank claims they have to wait for delivery from Toronto. This type of wait sounds too long for just shipment. Maybe some of your other readers can confirm possibility of tightness for ML’s.
Cheers,
Dave

On Indian gold demand, which John Brimelow has so ably reported on over the years. His work blows away that of everyone else in the mainstream gold world:
[Business India]: New Delhi, Oct 20 : MMTC Ltd, India's largest bullion trader, has been witnessing robust growth in its gold handling business since rules were eased in February allowing bullion traders to directly import.

Prior to February, the government allowed import of gold only through 17 designated agencies, apart from exporters who could source the yellow metal for value addition and overseas trade.

"Despite expectations that the bullion traders would opt to source gold on their own, MMTC continues to play a big role in import of the precious metal. We currently have 25 percent market share in India," said Sanjiv Batra, director of marketing in MMTC Ltd.

"As against 82 tonnes of gold imported by us in 2003-04, this year from April to September we have sourced 81 tonnes of gold. We expect to double this during the fiscal," Batra told IANS on the sidelines of a week-long Festival of Gold hosted by MMTC.

The largest consumer of gold, India's overall imports during the last six months has been 330 tonnes…..

"Instead of investing in bank saving, people are again investing in gold for better investment returns. This is also seeing an increase in demand for gold," said Batra.

In fact, the imports have risen from 418 tonnes in 2002-03 to 569 tonnes in 2003-04 and it is expected to be much more this year, considering that in the first six months the imports have been 330 tonnes.

-END-

Some thoughts from Down Under:

G’Day Bill,
There appears to have beena "fundamental" change in the Markets last night/yesterday, "Times are a changing"??!!

Strong move in commodities last night, with the US$ Index , Dow etc showing extreme weakness.

Web links:

http://quotes.ino.com/
http://www.goldsheetlinks.com/kitco.htm
http://www.gold-eagle.com/editorials_04/ackerman101904.html

The critical support level for the US$ Index is 84.8, and the Dow at 9840 and 9600.
The critical resistance for Gold is US$ 434.
If and when either of these indices breaks, then "it" might be "on" for one and all. (Pigs can also fly??!!)
The other commodities are in a stage of consolidation, and therefore Gold should take priority in terms of project identification and pegging documentation.
Och baye,
Haggis

At least the gold shares closed on an upbeat note, finishing on their highs. The XAU closed at 101.82, up 2.87, while the HUI jumped 8 to 229.46. A move above 230 should send this index off to the races.

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

This is the third time gold has traded up towards $430 over the past year. The other two times, the price was pounded lower as The Gold Cartel held the fort by capping those rallies and then mounted a vicious counter-attack. Until they are sent to the cleaners with $430 taken out decisively, we will not be out of harm’s way. They must be buried. Let’s hear it for Murphy’s Law.

GATA BE IN IT TO WIN IT!

MIDAS

Bratmaus

daran habe ich auch gedacht. Besonders wenn es mit den Börsen schlagartig abwärts geht werden auch die Minen daran zu kauen haben. POG steht fast auf 430 und der HUI und Minen sind weit davon entfernt die Höhen des letzten Jahres zu erreichen. Ein gefundenes Fressen für die Hedgefonds die alles shorten werden.

@ ghost_god

Einverstanden - wir haben offensichtlich aneinander vorbeigesprochen und unterschiedliche Dinge gemeint... mir ging es um die Tatsache, dass der Marktpreis durch die Tatsache, dass so viel Silber von Sekundärproduzenten gefördert und auf den Markt geworfen wird, tiefer steht, als wenn dem nicht so wäre (womit Morgan recht hat) und Dir ging es um seine Formulierung, der Preis des Silbers sei "unter dem Gleichgewichtspreis", eine so unzulässige Aussage.

Schönen Gruss,
Thom

- gelöscht, doppelt

15:46 EDT Thursday, October 21, 2004

TORONTO, ONTARIO--(CCNMatthews - Oct. 21, 2004) - Central Fund of Canada Limited ("CFOC") of Calgary, Alberta, Canada today announced that it has filed a preliminary short form prospectus with the securities commissions in each of the provinces and territories of Canada, except Quebec, and a registration statement with the United States Securities and Exchange Commission for a proposed underwritten offering by CIBC World Markets Inc. of Class A Shares to the public in Canada and the United States. CFOC will only proceed with the offering if it is non-dilutive to the net asset value of the Class A shares owned by the existing shareholders of CFOC.

Substantially all of the net proceeds of the offering will be used to purchase gold and silver bullion, in keeping with the investment policies established by the board of directors of CFOC. The additional capital is expected to reduce the operating expense ratio in favour of the Shareholders of CFOC.

Dies ist eine absolute Topmeldung heute ! Der Central Fund of Canada beabsichtigt neue Aktien herauszugeben und das Geld komplett in Gold und Silber anzulegen.

zur Erinnerung: Der Central Fund of Canada investiert das Geld der Anleger ausschließlich in Gold und Silber (keine Zertifikate, sondern dieses wird richtig physisch dem Markt entzogen). Beim letzten Mal hat der Central Fund of Canada im größeren Maße Silber gekauft (mehrere Mio. Unzen !). Sie haben aktuell 523 591 Unzen Gold und 26 173 412 Unzen Silber.

Ich bin schon sehr gespannt wie hoch die Tranche dieses Mal ist. Dies hat einen unmittelbaren Einfluß auf die Gold- und Silberpreisentwicklung. Den Gerüchten nach haben sie letztes Mal ziemlich lange auf die letzten Silberlieferungen warten müssen (mehrere Monate !) Wahrscheinlich gab es Lieferengpässe.

Zitat

Entwicklung des Central Fund of Canada (Wertpapiernummer 873782), der sich seit zig Jahren auf die physische Anlage in Gold/Silber spezialisiert hat und je ca. 50 % seiner Bestände in physischen Gold bzw. Silber hält:

Entwicklung des Silberbestands:

31. Juli 2003: 14,846 Mio. Unzen
31. Jan. 2004: 19,765 Mio. Unzen
30. April 2004: 26,174 Mio. Unzen (davon ca. 99 % physischer Bestand, Rest: Zertifikat)

Der an der Börse notierte Central Fund of Canada hat Ende 2003 neue Aktien auf den Markt gebracht, die offenbar einen sehr guten Zuspruch fanden, so daß er seine Gold-/Silberbestände deutlich erhöhen konnte. Laut den letzten Quartalsberichten lag der Anteil am Barbestand z.T. unter 10 %, d.h. mind. 90 % der Gelder liegen im Form von physischen Gold-/Silberbarren bei einer kanadischen Bank.

Alles anzeigen

Das letzte Mal wurden über 6 Mio. Unzen Silber physisch gekauft !!

October 21 - Gold $423.70 up 70 cents - Silver $7.26 down cents

Dollar Sinks Against All Major Currencies, Gold Capped By Cabal

Whatever you do, you need courage. Whatever course you decide upon, there is always someone to tell you that you are wrong. There are always difficulties arising that tempt you to believe your critics are right. To map out a course of action and follow it to an end requires some of the same courage that a soldier needs. Peace has its victories, but it takes brave men and women to win them...Ralph Waldo Emerson

GO GATA!!!!

Same drill like we have seen so often the past couple of weeks. Gold came in a couple of bucks higher, following dollar weakness, and then was taken right down by the cabal crowd. They received some help from some "fast funds" who took profits. However, strong support showed up with gold down close to $2 and it popped right back up. Locals, caught short, were forced to cover on the bell, giving gold a close at the high end of where it traded most of the session.

The Gold Cartel continues to cap the price as it waits for the dollar to turn so it can pound gold below $420. That could not be more clear. Meanwhile, the specs are piling in. The open interest rose 5884 contracts to a new high of 311,109. Many observers are waiting for the cabal to flush the humongous amount of longs out before gold takes off. I have no idea if they will succeed. What we do know is a surging physical market is making that task a very difficult one.

We have a Commercial Signal Failure coming – maybe within a week, maybe a month. The Gold Cartel forces are going to be routed as more and more smart money moves into gold.

Some reasons for this to occur and for bullion to blow through $430:

*That surging cash market.
*A stinky and sinking dollar. It closed at 86.12, down .33, and lower against every major currency. The euro ended up at 126.14, up .30, while the yen has risen to 107.43.
*Commodity price boom. The CRB is not far off 23-year highs at 286.74, down .88.
*Skyrocketing oil prices. DEC WTI finished at $54.47, up 6 cents, and doesn’t seem to want to break
*Weakening US stock market and US economy which will put a break on rising interest rates and keep gold as a sound alternative investment.

Silver popped early, leaping to $7.37 right off the bat and then ran into a stiff headwind. Morgan Stanley continues to press the short side.

The silver open interest rose 1935 contracts to 113,247.

What a crummy chart:

December dollar
http://futures.tradingcharts.com/chart/US/C4

The John Brimelow Report

Surprise! A big seller. But interesting BW thought on Oil

Thursday, October 21, 2004

Indian ex-duty premiums: AM $6.66, PM $6.10, with world gold at $424.30 and $425.30. Ample, and adequate, for legal imports. This is basis Bombay; the same is true for Ahmedabad, usually seen as Bombay’s major competitor; the other two cities Reuters monitors are marginally in legal import territory. The rupee helpfully firmed a little further today.

When Gold last attempted the $420s, in late March and early January, Indian premiums were $2-$4 dollars lower and the country had stopped importing. Attempts to move gold down from here will meet earlier and stronger Indian buying.

Despite the firmer yen, Japan took an interest. TOCOM volume jumped 118% to the equivalent of 24,890 Comex lots, open interest rose the equivalent of 2,027 Comex, and according to Mitsubishi, the "General Public" increased its long by a quite steep 5.6 tonnes. Perhaps this was offshore hedge funds, but ACCESS volume was not exceptionally heavy: there have been some remarks out of Japan to the effect that locally-based speculators are influenced by the oil price. TOCOM’s oil contract is not deep. (NY yesterday traded 61,119 contracts; open interest jumped 5,984 lots to a new all-time high of 311,119 contacts.)

Japanese gold imports for September were announced today: 6.779 tonnes, 9.5% above August, bringing Y-t-D imports to 58.7 tonnes, up 131%. While small by the standard of the 80s and early 90s, this is a modestly respectable quantity on a global basis, and further bolsters the thought that the demand schedule for gold for the Japanese public has indeed shifted.

Yesterday, just like today, gold in Asian hours was quite lively, but encountered heavy selling in NY time. ScotiaMocatta said:

"Gold started the New York session 423.30/423.80 where offers soon appeared from overseas sources. The price was forced as low as 422.50/423.00 where funds appeared on the buy side…The metal made a steady climb…oil ran up to over$55.00 a barrel and in turn helped gold reach 425.80/426.30…The rally soon stalled, as it appeared a number of the long positions established over the past week were selling out, taking profits. Further offers appeared late in the day forcing the price back to 423.30/423.80 at the close."

Refco Research’s version was

"From open on the COMEX, gold futures saw early technical buying as the open had breached 423 resistance…Temporarily, fund buying lost impetus near 426 in the face of bank selling. But the oil inventory report gave energy prices a lift and sent gold to session highs only to see gold retreat on further bank selling."

In fact, of course, the 18.3 tonne jump in open interest refutes any idea that there was net liquidation by Comex longs (no bullion dealer, of course, ever admits seeing short selling). Since last Wednesday, open interest has risen 15,823 contracts – 49.2 tonnes! - for an $8.40 rise in the December contract. Some technically-influenced observers are getting excited: Standard-London:

"Technically gold is poised on the verge of a major break to the upside with a clear break and close above $426 bringing $455 - $465…on the radar screens of long term charts watchers while a solid band of support is in place between $415 and $410."

A more normal development, based on experience over the past year would be a violent sell-off attempt, which will, however, fail.

While waiting for this cycle, it is pleasant for gold’s friends to contemplate today’s Bridgewater Observations, which calmly acknowledges to possibility of $120 oil in the near future:

"In our opinion, without a much greater tightening in both developed countries and China (which we do not think will occur soon), the engine will not be slowed enough to prevent a move in oil prices to over $100 to $120/brl… That is not to say that we do not expect the energy price rise to be more noticeable over the next few months, because we do. However, we do not expect it to have a material impact on either energy consumption or GDP growth."

Bridgewater may or may not be right in their calmness of the general economic consequences of such a move, but it is hard to see such a wealth transfer not helping gold.

JB

CARTEL CAPITULATION WATCH

The DOG charged all day long, led by E-Bay fever. It wound up at 1954, up 21. The DOW was frenetic. Higher early, it swooned down to 9800 and appeared almost to be in a real washout mode. Then, it turned right around with another Hail Mary rally to go up on the day before selling off late again. Very strange.

The US economic news was negative on balance:

08:30 Jobless claims reported 329K vs. consensus 345K
Prior week revised to 354K from 352K.
* * * * *

10:00 Sept. LEI reported (0.1%) vs. consensus (0.1%)
Prior reading unrevised at (0.3%).
* * * * *

12:00 October Philadelphia Fed index reported 28.5 vs. consensus 18
September reading was 13.4.
* * * * *

Comments on the Philadelphia Fed Report:

WASHINGTON (CBS.MW) - Manufacturing in the Philadelphia region rebounded in October, the Federal Reserve Bank of Philadelphia reported Thursday.

The Philly Fed's activity index rose to 28.5 in October. This reversed the decline in September, when the index had fallen to 13.4 from 28.5 in August. Read full survey.

The increase in October was much larger than expected.

Analysts noted that there was a "huge disconnect" between the headline number and some of the details of the report.

The new orders index fell to 24.6 from 26.4 in September.

The employment index fell to 14.1 from 21.5 in September.

In addition, the unfilled orders index fell to -5.4 from 3.1.

Expectations about the economy in six months worsened, as the expectations index sunk to 27.6 from 44.9.

The prices paid index rose to 57.1 from 56.4 in the previous month.

On the other hand, the shipments index rose to 28.2 from 22.4.

As a result, Treasury prices gyrated after the report was released and the dollar remained lower as a result of the decline in the employment index.

The Philly Fed index is closely watched because it often accurately forecasts the national purchasing managers survey on manufacturing activity reported by the Institute for Supply Management just after the end of each month.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said there was "almost no chance" that the ISM Oct. index would have a similar bounce as the Philly Fed index.

The ISM factory index slipped to 58.5 percent in September from 59.0 in August.

-END-

From Jesse:

Greenspan did a coupon pass yesterday, and I was surprised to see another one today.
I have not seen back to back coupon passes in quite a while. This is a hot money injection for the markets.

-END-

More from the Fed on oil:

12:08 Fed Gov. Bernanke says higher oil prices are likely to curb U.S. economic capacity longer-term
Notes that higher oil prices could lead to a wider trade deficit. Bernanke says the impact is "manageable," assuming that oil prices do not spike further. Bernanke says it is unclear if any big new sources of oil can be tapped in the next 5 years. Bernanke says the market interest rates and surveys indicate no rise in expectations for inflation.
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Everything is hunky-dory according to the Fed. Joe and Jan public are not so sanguine. Reality is hitting home:

US consumers get cold feet as energy costs soar

By Andrea Hopkins

WASHINGTON, Oct 21 (Reuters) - The surging cost of fuel oil and gasoline have set the stage for a cold, expensive winter in the United States and sparked concerns that consumers will cut spending, a move economists worry will hamper growth.

The chill of winter has already descended on Wisconsin, but Deidre May, a part-time hotel worker and divorced mother of five in this northern Midwest state, has yet to turn on the heat at home.

"I've purposefully kept the heat off because I know I can't afford to pay the bills right away," said May, a full-time Milwaukee college student with five daughters aged 6 to 19.

"I make sure the girls put on extra clothes, and keep them as bundled up as they can be at night," she said, adding she has cut back on car trips and activities for the kids to save money for when winter descends and the heating bill soars.

On Wednesday, the average retail heating oil price hit a record $1.99 a gallon, while gasoline prices topped $2 a gallon earlier in the week, just 2.9 cents below the all-time high.

The inexorable rise in energy costs has prompted many Wall Street banks to lower their forecasts for 2005 economic growth, due to concerns the higher prices will finally derail the American consumer -- whose stalwart spending kept the 2001 recession relatively short and shallow.

While U.S. gas prices are only about a third of what many Europeans pay, economists said the price spikes have a big psychological impact in suburban and middle America, where car is king and prices are posted on nearly every street corner.

"Energy costs have already taken a toll on economic growth," said Jared Bernstein, an economist at the Economic Policy Institute. "Somehow that big sign on the gas station that says the price of a gallon just went up 2 cents, it just resonates in a way that other prices don't."

"(Add to that) the price of oil and expectations of where it is headed coming into the winter with home heating oil -- it's leading consumers to be pretty nervous about their ability to meet their consumption needs," Bernstein said.

NO CLARINET FOR YOU

Consumer sentiment fell sharply in early October, rattling some economists who say shoppers have already begun to cut back on luxuries and debt payments due to energy worries.

"As the prospects of a full-blown oil shock rise, the prospects of outright global recession in 2005 loom more and more likely," Morgan Stanley chief economist Stephen Roach said this week in cutting his bank's growth outlook.

May said she knows her heating gas bill -- which averaged about $200 a month last winter -- will be more expensive this year and she is braced for the worst, cutting back on the little extras like car trips to the library and clarinet lessons for her 11 year-old.

The Energy Information Administration forecast costs for heating with gas, oil or propane will climb by at least 15 percent and by as much as 28 percent this year, taking the average winter heating bill to between $1,003 and $1,396. It also said the winter will likely be colder than usual.

Linda Meric, executive director of 9to5, the National Association of Working Women, said every day she hears from people who can barely get by in an economy that has not yet regained the jobs or momentum it had before the recession.

"We're still getting calls every day from people who have been looking for work for a very long time. And the ones who have found jobs have found jobs that pay significantly less and have fewer benefits than the job that have been lost," said

"They are struggling now to make ends meet. With heating costs going up, it's only going to get worse."