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

By Peter Brimelow
CBS.MarketWatch.com
Monday, November 8, 2004

NEW YORK -- Gold's spot price closed at $434.30 on Friday -- its highest level since December 1988. It's been trending relentlessly upward since May.

But the Hulbert Gold Newsletter Sentiment Indicator, which reflects the average recommended exposure to the gold market among a subset of gold-timing letters tracked by the Hulbert Financial Digest, is only at 57.41 percent. It has not moved for some time.

This stolidity is in dramatic contrast to the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average equity market exposure among a subset of short-term market-timing newsletters.

As of Friday night, the HSNSI stood at 55.07 percent -- up from 48.9 percent the day before and 27.9 percent in September.

Mark Hulbert has concluded that on a contrarian analysis, this stampede of bullishness suggests that the post-election stock rally is overdone.

But he doesn't feel that way about the gold rally. It just hasn't attracted the same enthusiasm from the letters monitored by the HFD. So -- Hulbert tells me -- it may go on.

Similarly, the gold stock indexes -- the Amex Gold Bugs index (HUI) and the Philadelphia Gold and Silver Index (XAU) -- are well below their recent highs.

Over the weekend, the Australian gold service The Privateer.com came up with this quote:

"'Interest is very limited,' sighs Caesar Bryan, manager of the Gabelli Gold Fund (GOLDX), who ruefully concedes to being the longest continuously-serving manager of gold funds in North America. Cash flow is light. 'Anecdotally I hear this is true across the group.'"

The Privateer believes gold is in a major bull market. A close above $440 would signal a breakout.

And then there's the Elliott Wave forecasters grouped around Robert G. Prechter. Paradoxically, Prechter is a long-term gold bull. But he has been calling for a savage short-term bear market in gold -- unless it sends a clear signal that would cause him to review his technical work. That signal used to be "a close beyond $422."

Several readers have been interested to know whether Prechter and his lieutenants at the Elliot Wave Financial Forecast accept that this signal has now been given.

Prechter seems to have quietly forgotten about $422. This is not necessarily a gotcha! offense -- the ultimate test is whether an adviser is right, not how consistent
his arguments are.

Still, the latest Elliott Wave Financial Forecaster says:

"The rally from the May 10 low of $375.70 has carried higher than anticipated, but the overlapping waves of the rise are clearly corrective. ... Gold should be at a top. A downward reversal would be the start of Wave 3, a multi-month decline. As previously noted, a close above the April 1 high [$436.50 basis December] would cloud the picture and require a re-examination of the wave count."

I read this to mean that futures have to close above the April intraday high.

It hasn't happened yet. But it's getting very close.

-END-

November 8 – Gold $432.50 down 40 cents – Silver $7.47 unchanged

Strong Cash Gold Market Giving Gold Cartel Fits

I know the price of success: dedication, hard work, and an unremitting devotion to the things you want to see happen...Frank Lloyd Wright

GO GATA!!!

When I went to bed last night, gold was up $2 and starting to do what it ought to after such a dramatic day on Friday and after making 16-year highs. However, as we know, gold has traded like no other market in history over the over the past half-decade+. It rarely trades as it should from a technical standpoint. Of course, we understand why. It is a managed market.

Today was no different than so many other times over the past many years. Gold was stuffed by The Gold Cartel at the $430+ level AGAIN. It makes little difference to them whether gold is $435 or $427. They will just sell more to do what they can to keep the price from getting away from them. We know this is so because of the growing open interest, up another 7,365 contracts to a new record of 331,018. The specs keep piling in and the price managers keep selling.

In addition, the cabal continues to make sure gold goes nowhere in many other currencies. Here is part of the general enthusiasm/investment interest problem – from a Café member very involved in the financial markets in Europe:

Hi Bill,
While you guys enjoy the break through the 430 USD/oz barrier, there is nothing to celebrate in Europe.
The gold price in EUR is one beautiful distribution formation.
And very easy for the Powers-that-be to hedge their short gold positions with a currency-contract...
Regards
Bart

Then this additional comment followed:

Hey Bill,
Great day on Friday!

Anyway, isn't is amazing how "they" won't let POG rise above Euro 344? I mean, Trichet today said he WANTS a weaker Euro, but still POG doesn't rise so much as a cent against it.

The chinks in the armor are expanding.
Andrew

It is remarkable how limited the thinking is about gold vis-à-vis foreign currencies in the establishment world. The analysts are blind as bats and extremely ignorant. Gold has been held in check against the euro, etc. It is the manner in which Gold Cartel has rigged the price. No need to go into the cap, cap drill for the 1000th time. However, it is important to mention this gold world blind spot to demonstrate a significant reason most gold analysts don’t comprehend why the price is going to explode at some point in the near future. They are clueless even with so much GATA evidence staring them in the face.

Meanwhile, The Gold Cartel’s efforts to send gold back down below $430 were rebuffed today. The reason: the same one brought to your attention all the way up to these price levels: the physical market is on fire. There is tremendous competition for supply on every dip. The cabal induced gold to trade down to $430.60 during the Comex trading session and that was that. Back up she went.

Here is a BIG POTENTIAL POSITIVE. The gold spreads are blowing out. Not long ago the December/June spread was running at $5 June premium. Friday it blew out to $5.90 and today it closed at $6.10. OK, so why the big deal?

Before gold went nuts in 1979, the spreads did the same thing about two weeks before gold went ballistic. Perhaps we are looking at the same pre-market, take-off occurrence? There is a good chance many traders are looking at inflation REALLY accelerating in the US. If so, interest rates will shoot up – bond yields will head north. This will increase the contango (spread between the futures markets trading months). Gold exploded in 1979/1980 on inflation fears. Those fears may be creeping their way back into the thinking of the more sophisticated traders out there.

Early today our floor sources were pleased to see the amount of scale down buy orders on their books, figuring it was this way on many other books on the floor. Early morning they felt price setbacks would be well cushioned. This became evident by the close.

Silver fell 8 cents, took off to the plus side for 8 cents, and then settled down to a nothing day. The open interest rose 1742 contracts to 120,756.

The Comex silver stocks DROPPED once more, falling 591,940 ounces to 103,067,278 and another new low for the move. This is bad news for the silver bears.

The dollar rose a whopping .10 to 84.17 and the euro fell .23 to 129.23.

Crude oil slipped 52 cents to 49.09.

The John Brimelow Report

A Fallujah gold market?

Monday, November 08, 2004

Indian ex-duty premiums: AM $8.16, PM $7.91, with world gold at $434.45 and $432.65. Ample for legal imports. The India Central Bank had to intervene heavily to check the rupee’s surge today, notwithstanding which it closed at an import-facilitating 5 month high. The Bombay Stock Exchange closed at an 8 month high having risen 4% last week. The rupee is being bolstered by foreign portfolio investment inflows, reported today to have reached $5.8 billion this year compared to $6.7 billion for the whole of last year, having accelerated since the summer lull. The recent decline in oil prices is adding momentum too.

India looks set to be a major buyer of world gold in the immediate future.

Japan also seems to have been a buyer. Open interest rose the equivalent of 1,753 Comex lots and, according to Mitsubishi, the "General Public" long jumped 6.4 tonnes, or 2,058 Comex lots. The active contract closed up 12 yen and world gold stood at $434.80 at the end of Tokyo trading, $1.55 above the NY close. Reuters once again refers to bullion buying by the retail public in Japan. Volume was equal to 18,464 Comex lots (+3%). (In NY on Friday 83,754 contracts traded, 10% more than estimated; open interest jumped 7,365 lots to a new record of 331,018.)

If Standard London’s prices are to be believed, premiums in the Gulf remain, hardly surprisingly, firm.

However, although world gold made and held new 16 year highs for several hours during the early Asian day, there was considerable opposition. Mitsubishi remarks gold was:

"…offered above 434.00 by US profit taking selling…and spot gold was gradually weighed by dealers offer… capped by weak Loco LDn gold …While EUR/USD was traded around 1.2970/1.2985, spot Gold was capped by dealers long liquidation… Saw good Public buying on Tocom."

Mitsui-HK simply remarks

"Resting offers provide

Prices on the Shanghai Exchange have one again fallen to deep ($2 ½ - $3 ½) - discounts to world gold: from the vantage point of physical prices, China continues to act as a dampener on world gold.

For once, the usually accurate UBS commentary seems wrong: they say:

"In Asia this morning gold made new 16 years highs this morning as more speculative buying was seen that outweighed light physical and Tocom general public selling."

Tokyo in fact seems, according to the statistics to have been a buyer, while ACCESS volume was not particularly heavy. UBS is concerned to argue that the gold price rise is simply a facet of the dollar:

"The failure of the metal to move higher in non-US dollar terms demonstrates that there is no reason to own gold at the moment, a point we have made on a number of occasions recently."

Perhaps this suits the overall House view: it does not accord with the physical market.

Friday’s refusal to collapse in the aftermath of the payroll data was, it now materializes, an event involving heavy volume and substantial buying (and consequently, selling) rather than being a simple echo of dollar movements. Barclays suggests the alleged advent of the NYSE gold ETF is beginning to effect trading. But given the timing and geographical origin of the gold buoyancy, this looks more properly like a Fallujah rather than an ETF market. The Canadian broker Doug Pollitt is quoted on Bloomberg saying:

"Four more years of Bush is a gift to the gold markets – more war, more deficits, more divisions"

Putting aside the fairness of this assessment, it looks as if it is a view widely shared to the East, as well as the North.

JB

CARTEL CAPITULATION WATCH

The DOW held its ground at 10,391, up 4, while the DOG was steady at 2039.

07:31 ECB's Trichet says recent appreciation by euro/dollar is "brutal"
Says the moves are not welcome.
* * * * *

A number of Café members were waiting to learn what Bill King would have to say about Friday’s surprising US job numbers:

The King Report
M. Ramsey King Securities, Inc.
Monday Nov. 8, 2004 – Issue 3033 "Independent View of the News"

The market has absorbed the shock of a much larger than expected non-farm payroll number. And because of the preeminence of wise guy trading, the analysis of the Employment Report will commence after the knee-jerk market reaction.

The details, as usual, are not as jiggy as the Employment Report on first blush implies. Job growth appears to be the result of the hurricanes and the election. Construction jobs surged by 71k, temp jobs jumped by 48k and government jobs increased by 41k. How many of the tens of thousands lawyers hired to litigate the election and support staff are in the Employment Report?

5k manufacturing jobs were lost, a gain of 9k was expected. There was no change in average hourly earnings or the number of hours worked per week. Income growth is still abysmal.

"The Bureau of Labor Statistics also reported that wages and salaries grew only 2.4 percent over the past year. That's the lowest one-year pace on record - and it lags behind inflation, which clocked in at 2.7 percent. It's nice to see consumption up. But these numbers show it's being fueled by borrowing, not fatter paychecks, and that is worrisome." http://www.nytimes.com/2004/11/06/opinion/06sat3.html?th

Grant Noble: "The U.S. economy has 2.7 million fewer manufacturing jobs and 1.26 million fewer private sector jobs now than when George W. Bush was inaugurated…The only areas of job growth are in government, restaurants and bars, education and health services, construction, and credit intermediation. During October U.S. manufacturing lost another 5,000 jobs. Charles W. McMillion, president of MBG Information Services, reports that hours worked for non-managerial manufacturing workers have declined 7.6% since the current recovery began - an unprecedented development."

-END-

The latest heads-up on the yuan chatter:

No timetable for yuan adjustment-China bankers

SHANGHAI, Nov 8 (Reuters) - Comments from two Chinese central bankers suggested on Monday that Beijing will resist pressure from the United States and other trade partners for a quick revaluation of its yuan currency.

Wang Yu, secretary-general of the country's monetary policy committee, was quoted in the state-owned Securities Times as saying that China would maintain a stable monetary and yuan policy as it keeps a racing economy in check.

And the deputy governor of the People's Bank of China, Guo Shuqing, told reporters in Basel, Switzerland: "FX policy (is towards) a markets-based floating system ... (we have) no timetable."

China, the world's seventh-largest economy, raised interest rates for the first time in nine years last month, triggering speculation that Beijing could move at any time to revalue the currency.

Washington is pressing for such a move, arguing that current rates put Chinese exporters at an artificial advantage….

-END-

November 9 – Gold $435 up $2.50 – Silver $7.51 up 4 cents

New 16-Year Gold Highs, Investing Public Yawns, So Bullish!

We must learn to reawaken and keep ourselves awake, not by mechanical aid, but by an infinite expectation of the dawn...Henry David Thoreau

GO GATA!!!

Gold came in a buck higher this morning even though the dollar was slightly firmer. Right from the get-go the dealers went after the market, doing all they could to prevent gold from getting away from them and their massive short positions.

Gold drifted lower in the early going. However, when it went down on the day, the selling dried up completely and then Deutsche Bank turned aggressive buyer. Gold ratcheted its way back up, steadily making new highs. As we saw one day last week, this is a change from the usual pattern of making highs right after the opening bell and then stalling all session long due to Gold Cartel price-capping. It is a sign the strong hand of the crooks is becoming shaky.

The entire gold world was looking at the April spike high of $436.50, basis the December contract and stops were taken out above that level. It would have gone $440 bid except for MASSIVE selling by Goldman "Hannibal Lecter" Sachs, who was a huge seller all session long. They were the only major seller.

When Goldman continued to press their case and the buying dried up, the locals turned sellers and gold backed off after making a high of $436.40 in the cash markets.

The specs had their buying shoes on yesterday as the open interest rose again – this time up another 3036 contracts. The OI now stands at 334,054.

Some points to keep on the front burner:

*Every gold spec long is a winner and every commercial short is a loser.

*We are getting very close to a Commercial Signal Failure – long predicted by MIDAS.

*The open interest in December is an unprecedented 246,826 contracts with only 11 ½ trading days until the rollover period. This is a huge amount to be on the books with so few days left until first notice day. If a fair number of longs stand for delivery, GOOD GRIEF, it will be all over for the cabal forces. GATA will need additional volunteer stretcher-bearers to carry the bums out.

*The Friday after Thanksgiving is a full moon. Could be spooky times for the cartel shorts.

*There are no near-term gaps to fill. Gold is due for an explosive break out some day soon.

Is The Gold Cartel hitting the wall? Are they running out of available gold supply to keep the price from going bonkers? Only the price action can tell us for sure. However, the anecdotal evidence from the WGC data in yesterday’s MIDAS suggests this might well be the case.

From September 26, 1999 through that date in 2004, European central banks dumped an average of 8 tonnes of gold per week from the European signatories to the Washington Agreement – for a total of 2,000 tonnes over that period of time, or at a rate of 400 tonnes per year. Bullion dealers made a big deal the beginning of this year about the new agreement allowing 500 tonnes to be sold per annum. Somehow this extra supply was supposed to be a huge. Then concerns surfaced from the likes of UBS Paine Webber they might not even be able to come up with 250 tonnes per year. When the new Washington Agreement was signed, there wasn’t a peep from those who ballyhooed it for years. And what do we learn what was sold over its first month : 1.65 tonnes per week!!

Today the ECB announced a sale of 14.5 tonnes last week. While this is a big change from the previous weeks, it only brings the total to 20 tonnes during the first five weeks of the new agreement. This is an average of only 4 tonnes per week. If this average holds up for the year, the ECB will only sell 40% of what it could under the new agreement. Just as important is the psychological effect this will have on other central banks and the investment world. It tells everyone who is paying attention that the major selling by central banks to suppress the price is coming to an end.

Heard from our STALKER source late. His conservative London bullion dealer says gold is very tight over there and is looking for it to trade $450/$455 before year-end.
Not much to say on silver. It is steady as she goes.

The John Brimelow Report

Another Central Banker speaks well of gold!!!

Tuesday, November 09, 2004

Indian ex-duty premiums: AM $7.47, PM $8.46, with world gold at $432.50 and $432.10. Very ample for legal imports. Reuters carries a story today quoting Indian bullion importers grumbling about loss of market share to consumer goods in the current festive season because of high gold prices. This is probably valid, but it was notable that nothing was said about increased domestic scrap supplies, a point usually made at times like these: India is clearly still on the bid in world gold.

Another Reuters story deadlined Singapore quoted an Indonesian bullion dealer commenting positively on gold demand:

"It’s pretty busy around here…A stronger rupiah (Indonesia’s currency) helps offset gold’s uptrend"

One hears that a JP Morgan gold analyst appeared on CNBC this morning extolling the positive influence of India on the gold price – a new development. Separately, Goldman Sachs just conducted a tour of major global fund managers to the country. Wider awareness of the importance and prosperity of India will be positive for gold.

TOCOM continues to quietly accumulate. On volume equal to only 16,801 Comex lots, open interest rose the equivalent of 808 NY contracts. Mitsubishi’s statistics imply the public added 3.6 tonnes to their long (1,157 Comex lots). The active contract closed down 1 yen but world gold edged up 25c above the NY close. Gold now seems to have a regular pattern of rising during the early Asian Day. (NY yesterday traded 51,375 contracts. Open interest rose 3,036 contracts to a new record of 334,054.)

Yesterday in NY gold quietly rejected the long decline in process throughout the European day from the fresh 16 year high achieved early in the day in Asia. But it seemingly lacked the energy to rally much. Adding a not-immaterial 9.4 tonnes to open interest, however, suggests there was more serious interest than met the eye. This has reappeared today.

This morning the regular ECB weekly announcement revealed one of the captive Central Banks sold 158 Mm euros of gold last week, about 14.5 tonnes. This is about ten times the amount which has been sold weekly since the new Washington Accord began (but not a great deal more that the weekly average implied by the 500 tonne annual limit). The market apparently took it well, but it does confirm suspicions voiced here last week that a seller was about.

Interestingly, a Dow Jones account of the under-reported Euromoney Gold conference last week quotes the Austrian Central Bank’s Treasury Director actually being polite about gold!

"The Austrian central bank will sell less than 90 metric tons of gold in the next five years…director of treasury Peter Zoellner said…Friday…on the sidelines of the Euromoney Gold Investment Summit… Zoellner wouldn’t specify an exact amount, but said sales would be less than during the previous gold sales agreement, when Austria’s central bank sold 90 tons. …"We’ve seen good returns on gold over the last five years; it has been a good experience,"." (JB emphasis)

This brings the number of Central Bankers to make positive remarks to three this year (the others being Argentina and Russia) – the most for many years.

JB

Congrats to John Brimelow on the presentation by Morgan’s John Bridges today on CBNC. Bridges hot topic was India and the high premiums. He must receive John’s commentary. First time I have heard anyone besides John touch on the subject and also be excited about it. Bridges related to the viewers what you have heard John and I pound the table on for MONTHS and that is the physical gold market is strong as can be. It is the key to the gold price and what will send that price to the stratosphere. It is this staunch cash market, with so many huge buyers entering the fray at the same time, which is going to bury the cabal.

Murphy’s Law is lashing out at the bad guys. Soon some new ETF’s will finally kick in and increase gold demand even further. Thus physical demand will increase even as the price goes up. Specs should have a field day in the weeks and months to come.

CARTEL CAPITULATION WATCH

Why did gold go up today? Must be:

*The dollar went down. Nope it rose .09 to 84.26.
*The euro must have gone up. Nope, it fell .11 to 129.01.
*Oil must have soared again. Nope, it tanked to $47.37 per barrel.
*The stock market must have swooned badly. Nope, the DOW was only 5 lower at 10,386 and the DOG rose 4 to 2043.

Well, well, well. Gold did it on its own. Just what the doctor ordered. That’s bullish.

US economic news:

10:00 Sept. Wholesale Inventories reported 0.5% vs. consensus 0.7%
Prior reading revised to 1.1% from 0.9%.
* * * * *

Chickens coming home to roost:

France's Sarkozy-U.S. deficits reason for concern

BIRMINGHAM, England, Nov 9 (Reuters) - French Finance Minister Nicolas Sarkozy said on Tuesday that U.S. deficits which are forcing the dollar down were more a reason for concern than the rise of the euro.

Asked by reporters whether he was concerned by the dollar's fall against the euro, Sarkozy said:"It is not a question of anxiety, it is like I said In Italy yesterday, it's a problem with American deficits."

The euro hit a record high against the dollar of $1.2985 against the dollar on Monday but has since fallen back below $1.29.

Sarkozy had appeared to criticise the U.S. over its dollar policy on Monday, saying that the Group of Seven finance ministers statement made in Florida earlier this year should remain valid.

"The Europeans and Americans jointly signed the Boca Raton G7 statement and we believe that the statement remains valid and I think the United States must remember it."

"The markets are worried by the strong U.S. current account deficit.

The Boca Raton G7 statement said that "excess volatility and disorderly movements in the exchange rates are undesirable for economic growth."

-END-

Robert "Mr. Strong Dollar Policy" Rubin set up the dollar for a big fall with his gold rigging scheme almost a decade ago. Americans are going to pay a terrible price in the years ahead because of this fraudulent scheme. Most won’t know what hit them. Sounds like he is doing an "Uh-Oh" here:

Rubin: Dollar Decline Could Accelerate

By CHUCK HAWKINS, AP Business Writer

NEW YORK - Former U.S. Treasury Secretary Robert Rubin warned Monday night that the dollar's recent decline could accelerate and interest rates could rise if politicians in Washington don't act quickly to narrow the federal budget deficit.

Rubin's comments came on the same day that the dollar fell to a record low against the euro, the five-year-old currency used by Germany, France and 10 other European nations. Each euro is now worth about $1.29, up from about $1.19 in May and an all-time low against the dollar of 82 cents in October 2000.

In European trading Tuesday, the euro was at $1.2915, up slightly from its late New York level of $1.2911.

"If I were still at Treasury, I'd still be a strong advocate of a strong dollar policy," Rubin said in a speech at the 29th anniversary dinner of Columbia University's Knight-Bagehot business journalism program. That amounts to at least a veiled criticism of the Bush administration, which some critics contend is allowing the dollar to gradually weaken against key foreign currencies so as to make U.S.-produced goods cheaper in export markets.

Rubin, who now is chairman of the executive committee and a member of the office of the chairman of Citigroup Inc., sounded a wide-ranging warning about the potential impact of continued federal deficits.

"If markets begin to fear long-term fiscal disarray and if foreign providers of the capital inflows upon which we have now become so enormously dependent share this fear and also develop a concern about our currency, then the markets may begin to demand sharply higher interest rates on long-term debt and possibly even create conditions of serious disruptions in our financial markets, with all the problems that that can lead to for our economy," he said.

And he added, "We have a lot of work to do in a very difficult political environment."

Earlier on Monday, European Central Bank President Jean-Claude Trichet described the recent increase in the euro's value against the dollar as "brutal" because of the pressure it puts on Europe's largely export-driven economic recovery.

Rob Nichols, a U.S. Treasury Department (news - web sites) spokesman, responded to Trichet's comments by saying the country's strong dollar policy remains unchanged and "with regard to the budget deficit, we have laid out a plan to cut it in half in five years. We are committed to the plan. We are achieving that plan."

Rubin, who was an adviser to Democratic presidential candidate John Kerry (news - web sites), was Treasury secretary under President Clinton (news - web sites) between 1995 and 1999. He left his job as co-chairman of Goldman Sachs & Co. in 1992 to join the Clinton administration, where he first led the National Economic Council in the White House.

While he noted his disputes with the Bush administration about portions of its tax-cutting policy, Rubin was careful to suggest that both political parties need to address the deficit issue sooner than later.

"Dramatic change in fiscal policy is imperative. And I think that reality is likely to increasingly assert itself on the political system, however unwilling or reluctant on a bipartisan basis that system may be to actually deal with the actual hard choices that restoring fiscal discipline imposes," he said.

Rubin also said he expects that in the years ahead, "China is likely to be the largest economy in the world and a tough-minded geopolitical power equal to any other geopolitical power on the globe." He also said he expects continued slow growth in Europe and that "Japan has not done most of what seems to me it has to do" to shake off years of subpar economic growth.

-END-

OK hotshot Rubin, would you please explain to everyone how you would implement your strong dollar policy again? When did you ever explain what you did in the first place? Besides, you don’t have the gold anymore to continue your scam of years past and you know it.

Input from Europe:

Bill,
Watching CNBC Europe - they are disappointed that there was no major Gloabl market rally, no big time, due to Bush.
All here dollar and US negative.
One major fund manger, said on TV, US market has been manipulted this year to prepare for the elections. Nobdoy disagreed with him.
Seeing Rodney Smith tomorrow, having lunch.
Cheers,
John

Bill Gross of Pimco on November 1. Sounds like one of us too:

But I wax philosophical and not financial. My/our most certain idea, as expressed in previous Outlooks, is that real interest rates in the United States will have to be kept low, that the old Taylor rule is out. Too much debt in a finance-based economy precludes raising interest rates like we have in the past and while that keeps the patient/economy breathing; it leads to asset bubbles, potential inflation, and a declining currency over time. How should an investor attempt to exploit this condition? Buy the assets that are being bubbled, invest in bonds that are protected against inflation (TIPS, German bonds with less inflation risk) and short the dollar—all very carefully, by the way, as described in the above paragraphs. Some asset and currency prices are nitroglycerine. One false move can ruin more than your day.

-END-

From Brother Tim:

Hey Bill, Gold has broken through the key 430 resistance with very little fanfare. The apathy towards gold right now is incredible given the price action. So many people have been beaten up this year, that even the staunchest of gold bulls would probably be surprised with a big rally from these levels. From a trader's standpoint, it's very bullish.

Given the recent sell off in GSS and disappointing action of most gold stocks, it really hit home that having a diverse portfolio is key. Just as my gold stocks are getting clobbered, my gold coins have gone up 25% in the last 2 months. I'm very confident that the stocks are going to explode, but it's nice to know that I'm making money somewhere else in the meantime. I would be more than happy to talk with anyone interested in knowing how to maximize a position in physical gold which would supplement their gold stocks nicely. We are still in the early stages of a bull market and it's critical to do everything possible to make sure we're in the game for the long run.

As always, keep up the great work. Brother, Tim

Tim Murphy
Swiss America Trading Corp
1-800-289-2646 ext 1019
trmurphy@swissamerica.com

Good news for a quality exploration company:

Vancouver, British Columbia, November 8th, 2004. Candente Resource Corp. - DNT:TSX-V ("Candente") is pleased to report analytical results have been received for the second two holes of a twelve hole core drilling program totalling approximately 2500 metres on its 100% owned Cañariaco copper project in Northern Peru. Mineralization and grades encountered in all four drill holes reported to date are consistent with those seen in large porphyry copper systems.

All holes are being drilled as part of a systematic pattern on a grid with 100 metre centres. Drill hole DDH-04-005 was drilled vertically to a depth of 202 metres (m) and DDH-04-006 was also drilled vertically to depth of 255 m. The two holes were drilled 100 metres apart on a north-south line and 100 metres east of DDH-04-001 and DDH-04-002, (a 100 metre square area). Due to logistical reasons holes were not always drilled in the same order that they were numbered and as such assays have not yet been received for holes DDH-04-003 and DDH-04-004. A map showing drill hole locations and a table summarizing all results to date are posted on the Company's website at:

http://www.candente.com/s/PeruProjects_Canariaco.asp

-END-

Hope to get this Golden Star Resources off the MIDAS pages very soon – for those of you who have no interest. However, since there are so many Café members who have invested in this company as a result of my stock ownership, it is important to update those who want to know what is going on, as promised last evening.

Spoke with Alan Marter, their able CFO in Ghana. A not-held recap of what the deal is:

*September was awful. Once in 50-year rains affected their production. That is behind them.
*Production should be up to prior expectations during the 4th quarter.
*Delayed production in their new Wassa mine should commence very soon.
*Their largest shareholder, a large fund based in New York, blew out on them unexpectedly, which induced all kinds of other selling.
*They have had trouble with a contractor who got into trouble because he failed to hedge his costs due to the rand rise.
*Obviously a sharply higher gold price this quarter will be a great help, like it will for so many other gold companies whose profits have been hurt by sharply higher mining costs.
*There are no major problems which should prevent the company from achieving their stated goals in the months and years ahead.

I would like to add that Peter Bradford, the CEO, is known for his mining skills. When they sought to take over Iamgold, analysts felt Peter’s mining ability was a big plus for the merger. That skill did not vanish the past few months.

This stock was the darling of the fickle gold world last year. After going to bow-wow status, there is no reason it won’t be a darling again next year. They still have wonderful exploration properties which has accrued them zip in the market place. What a great buy down here ($4.30, up 30 cents). Now if they will only cut unnecessary costs by getting out of the pathetic World Gold Council.

You can compare what I had to say with that of a fellow Café member:

I listened to the entire webcast of at the GSS site concerning 3rd qtr. earnings. Then I called the co. to confirm what I heard.

GSS was a victim of a quarter wherein the old saying, "when it rains , it pours" was appropriate - in one instance, literally. Huge rains impacted Bogosa during a period where the company was also absorbing the $3.9 million hit of the failed IamGold tender offer. Also, they had to process more expensive (to refine) stockpiled ore, in order to try to compensate for the rain problem. Thus, its cost/oz. was $333 vs. $183 in the 3rd qtr. 2003.

On the plus side, management still expects its production to double to roughly 350M oz. (annualized) by next summer and to increase to 400M oz. (actual) in 2006. That is not a misprint - the word is "double".

So, here is a company that made a boo-boo on IamGold and got whacked by monsoons, both of which are not recurring problems. It traditionally has had a cost/oz. under $200. The punishment? Stock gets whacked by almost 30% in a month.

Now, if one really thinks that this company is going to continue to have $300 oz. gold costs in the future, that the rain will never stop (it already has stopped), that none of its promising exploration efforts will yield fruit, that a gold price north of $400 ain't gonna benefit GSS (it made a profit in 2002 of $4.9 million on $311 gold) and that management is just kidding about a production double, then by all means sell! To me!
John Black, Germantown, TN

P.S. The Ivory Coast problems are not impacting Ghana. Moreover, the biggies, Anglo, Goldfields, and others have recently invested hundreds of millions in Ghana.

No more Golden Star stuff for awhile. Promise.

Here is a fun change of pace. When I was in LA last weekend, I went to Sunday breakfast with a good friend of mine for 35 years, Doug Bowey, a successful merchant banker by trade, and his lovely mate Shoreh. We went to the trendy URTH Café. Doug was talking about how you see all kinds of quirky people there.

What a laugh as I reflected on the morning after returning to the hotel. Doug and Shoreh found a beautiful white friendly rabbit one day a couple of years ago on their front lawn. It has been their friendly companion ever since and was sitting in a pouch with us at breakfast. Wonder how the quirky people viewed us?

Thanks to the bullion dealers in The Gold Cartel in New York, who should have been jumping up and down about gold for years, the US investing public knows nothing about the real gold market. How could they? Those on Wall Street who are supposed to be hashing out the real scoop are the ones lying to everybody about the real story. A few big names like Goldman Sachs and JP Morgan Chase are principal cogs in the price suppression scheme and ripped off the public. No way are they going to let the American public know what has really gone on over these past years.

Thus we have a market making 16-year highs with little to no fanfare. In addition, many advisors who have been around awhile are BEARISH. There is a slew of them out there, including my friend Mike Bolser. Twice today I heard from two disparate sources about how would-be buyers won’t step up to the plate because Mike’s work suggests The Gold Cartel is going to attack with a vengeance.

It is actually hard to find many bulls out there, incredible as that may seem. This recent price action is what we have waited years for. The Gold Cartel isn’t going to sound retreat by blowing a bugle (Goldman Sachs made that clear all day today). They are going to be carried out screaming and yelling and probably sooner than they thought possible.

One other point of importance to touch on. The bullion/central banks are SHORT some 16,000 tonnes of gold. This is obviously an ENORMOUS amount of bullion. You don’t hear ANYONE in the gold world discuss this. They don’t discuss it because not even 5% of it can be covered without financial market chaos reigning.

Well at some point soon, THIS is going to be THE most important factor as far as the gold price is concerned. Sure, maybe most of the loans will probably be paid off in cash. However, a certain amount will have to be paid back with physical. Just this alone is going to cause the gold price to go bananas. The gold derivatives neutron bomb is going to go off. Just a matter of time now.

Meanwhile, gold continues to break into higher and higher new ground and few in the investment world care. The public still cannot spell gold shares yet. Many of the smaller golds continue to go LOWER. How strange!

The XAU actually fell .23 to 106.30, while the HUI could only manage a rise of 2.84 to 237.91. The HUI stared at 240 briefly, then sold off in the afternoon. There is almost no belief out there that this gold market is for real.

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

This is not going to stand much longer. Once the HUI takes out 240, it should really run. Then, at some point in the near future, the smaller golds are going to take off and go bananas. Wild West gold rush time is on the way.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

Hi Bill
I've been a subscriber to your site for over 3 years now. This is the first time I'm writing to you. I've learned a lot about how the Gold Market is manipulated and have taken my lumps along the way. Golden Star has been my favourite stock and still is. Jim Sinclair says Gold will start trading much more volatile soon and a trader has to be very disciplined ( meaning very little or no margin) and to always sell some into strength and buy weakness. GoldenStar's big hit lately has mostly to do with margin calls and has taught me a hard but learning experience as well. I wish I could be buying now as these great prices. I'll be prepared next time.

Now for some positive views about GoldenStar. Please look at 10-year chart of GoldenStar. This is one heck of a large TeaCup with handle. Look at the first months of 1996 and see GoldenStar blast out and rise more than $10. in one month. The chart formation now looks like we are very close to what happened in 1996. A break out of above 5.50 or so could take us to about $20. GoldenStar just had a bad quarter with excessive rains plus the write down of costs to do with the IAMGOLD takeover. This is now behind them and I'm sure GSS is now over sold and is a gift at this price.
YOU THE MAN BILL
Sincerely yours "NorthStar"

Dear Bill,
I think Robert Prechter has some emotional baggage concerning his gold call. In his 2003 book, " Conquer The Crash", under Chap 13 - Can The Fed Stop Deflation, page 135 states: " I hope to recommend gold at lower prices near the bottom of the deflationary trend, but if gold were to move above $400 per ounce, I would probably be convinced that a major low had passed."

As you probably know, Prechter had a great record at times many years ago which attracted thousands of followers. It will be exceptionally difficult for him to reverse his call on gold. A sign of a great trader or investor is when they can admit they are wrong, and reverse course when necessary. It seems that Prechter has been hinting for some time on reversing his call on gold. If he is actually able to reverse his call on gold and go long, I will tip my hat to him. A Prechter reversal would mean a very large amount of money entering the gold market.
Regards,
Paul

Well, $436.50, basis December, was taken out today. Will be waiting to see if he deserves a tip of your hat.

November 10 – Gold $433.70 down $1.30 – Silver $7.39 down 11 cents

Against The Wind

"The battle, sir, is not to the strong alone; it is to the vigilant, the active, the brave." --Patrick Henry

GO GATA!

I am out of here until Monday afternoon to attend the New Orleans Investment Conference along with all of the GATA hierarchy. Should be much fun.

After a slump overnight, gold came in $2 higher while waiting for a modicum of US economic numbers, including the US balance of trade report, which came in slightly better than expected, yet still horrendous. While the pound and yen were already firmer, the euro took off. Meanwhile, The Gold Cartel led by Goldman "Hannibal Lecter" Sachs began to bomb bullion. Rumors are beginning to circulate of large dealer buy stops above the market and the cabal is desperately doing what they can to make sure they are not touched off.

Any other market in the world would have exploded this morning after making the kind of multi-decade highs gold achieved yesterday and with the euro on fire. Yet, we know gold is like no other market. It is shaking off a scurrilous plague.

This is most aggravating. The good news is that ought to be all it is. The corrupt ones are playing their same tried and true game of the past decade, which means kill gold at strategic technical points when it ought to soar. In the old days they usually got their way. Why? Because the physical market always dried up on sharp price advances. ALWAYS! It was then easy for the bullion dealers in the cabal to wipe out the specs in an orchestrated raid. Lately, when these bums have attacked, they have run into a wall of buying led by the Indians (see the invaluable JB report again below). At the same time, the Indians are competing against the Russians, Chinese and Arabs, etc., for a continuing dwindling supply of bullion.

As a result, these Gold Cartel stiffs aren’t getting too far. The specs are not getting knocked out and even more new specs are showing up to join the party when gold is not obliterated after each assault. Even still, who knows what could happen in the SHORT-TERM if the US Government says take gold down no matter what? Thus far, this has not been the case. The US might find the cost to be too prohibitive

The cabal attack this morning was very aggressive with gold battered lower to $431.90. Sure enough, the cash market buyers were laying in the weeds to scoop cheap gold up on the break. As mentioned in this column of late, the bad guys have been found out. These sophisticated buyers know exactly what the crooks are going to try and do and so they lie in wait. Just as GATA’s Mike Bolser predicted, they did attack with a vengeance. However, instead of a spec bloodbath, the cash buyers were in there saying, "Thank You Very Much."

***

It’s now 12 EST and gold is up on the day. According to our floor sources, UNBELIEVABLE buying showed up on the break this morning, led by a local house, Hudson River, thought to be buying for the Tudor Fund.

What we have going on here is remarkable. The open interest rose another 8092 contracts to 342,146 as the specs continue to pile in and the panicky Gold Cartel sells and sells and sells. We know who is selling and why. Yet, you NEVER hear anything about this from the pathetic mainstream gold pundits. They never inform the public about what is really going on. They never explain who the sellers are now that they cannot blame it on the hedgers any longer (Hedgers reduced their forward sale positions by 4.3 million ounces in the third quarter. In toto they have reduced their hedges by 41% since the high 3 years ago). They never explain why the dealers would be so aggressive to cap a rise in the price of their own asset? Well excuse me, we know the real deal. They are really protecting a liability - their borrowed gold, short position.

When the euro and gold went back up on the day, the Italian Finance Minister began making noises about intervening in the euro and down it went, taking gold along with it. So what we have hear is jawboning, perhaps market intervention, to combat the fundamental reality the dollar stinks and the price of gold should be soaring as it is undervalued by hundreds of dollars per ounce. Day to day anything could happen, however, the inevitable is etched in stone. The Gold Cartel is going down, as is the dollar.

With 10 ½ trading days until December rollover, the DEC open interest rose to a whopping 249,166 contracts.

Silver was weak right off the bat. Clearly it was a signal of what was to come. It does not have the strong hand cash market sponsorship at the HIGHER prices that gold does at the moment. Since the cabal coordinates its efforts, silver was taken down easily, touching off sell stops along the way. Yet, lo and behold, after sinking to $7.33, silver stormed back, before fading late.

The silver open interest set a new multi-decade record by rising 1098 contracts to 123,564.

The silver Comex warehouse stocks dropped to a new low again, down another 121,622 ounces to 102,958,851.

The dollar rose .24 to 84.50 thanks to a decent yen drop. However, the euro only fell .09 to 128.88. It wants to go higher in a big way.

The John Brimelow Report

He's there again

Wednesday, November 10, 2004

Indian ex-duty premiums: AM $8.67, PM $6.88, with world gold at $433.10 and $435.45. Lavish, and ample, for legal imports. The Indian Central Bank was hard put to restrain the rupee today, having to intervene heavily. Heavy foreign portfolio investment inflows are reported – the stock market rose another 0.74% - and of course the slide in oil prices adds to the euphoria in India. Friday marks the Diwali Festival, which is seriously observed in India, but expectations are that the rupee will make further gold-import-facilitating gains in the immediate future, so the respite to Bears is likely to be brief. The Indian wedding season has another couple of months to run, and it appears the world’s largest bullion importer is hungry for metal.

Illustrating this is a story from New Delhi in today’s Indian media actually going so far as to claim:

"The long held belief that Indians, being price sensitive, would shy away from buying gold no longer seems true…. "The sales this year are definitely better than in the previous two years," said Dinesh Kataria, sales manager of the leading Bholasons Jewellers."

(See http://news.newkerala.com/busi…?action=fullnews&id=41906 )

More reliably perhaps, via the invaluable thebulliondesk.com website, is a report from Burma of a gold rush triggered by fears that the regime will cancel the paper currency, a signal illustration of the utility of gold:

http://sg.biz.yahoo.com/041110/1/3oeke.html

Yen gold reached a two-week high in Japan this morning, and this was apparently enough for some Japanese futures traders. On volume equal to 20,651 Comex lots (+23%) open interest fell, for the first time in several days, by the equivalent of 1,242 Comex lots, to equal 108,364 Comex. The active contract rose 1 yen, but world gold was $1.70 below NY at the close. (NY yesterday traded 72,654 contracts, a notable 15% above the estimate; open interest jumped a substantial 8,092 contracts.)

Yesterday in NY an effort to turn the gold market down was quietly defeated, but it was notable that the move up to a fresh 16-year high was met by sharply enhanced volume. Half the estimated volume yesterday traded in the last 90 minutes, and the steep 25.2 tonne increase in open interest reached a new open interest record.

UBS attributes much of yesterday’s firmness to persistent buying by a "European bank" and there are rumors of another toxic hedge being dealt with. Perhaps these stories have substance, but the price/volume/open interest data simply suggest that the usual seller is having unusual difficulty dealing with the upsurge in physical demand…………

Yesterday, gold sold off on the Comex open, rallied $3 to a new 16 year high, and then backed off on accelerated volume. It now transpires that a huge 25.2 tonne increase in open interest was involved – 8,092 Comex contacts.

It is not news that a huge seller appears on COMEX highs. What might be news is the way gold has absorbed this pressure.

JB

CARTEL CAPITULATION WATCH

Trading in the US stock market was listless with the DOW down only 1 to 10,285 and the DOG 9 lower to 2035.

08:30 Jobless claims for w/e 11/6 reported 333K vs. consensus 337K
Prior week revised to 331K from 332K.
* * * * *

08:30 Oct. Import/Export prices reported 1.5% vs. consensus 1%
Prior reading revised to 0.5% from 0.2%.
* * * * *

08:30 Sept. Trade deficit reported $51.6B vs. consensus $54B
Prior deficit reading revised to $53.5B from $54B.
* * * * *

10:31 DOE reports crude oil inventories +1.8M barrels vs. expectations +2.0M barrels
Gasoline inventories reported (400K) barrels vs. consensus +800K barrels. Distillate inventories reported (100K) barrels vs. consensus +400K barrels.
* * * *

10:32 API reports crude oil inventories +2.4M barrels
Gasoline inventories (1.3M) barrels, while distillate inventories +2.2M barrels. Dec.
* * * * *

Crude oil roared back to $$48.86, up $1.49 per barrel.

12:00 EIA reports natural gas inventories +34bcf vs. consensus +21bcf
For reference, year-ago data was +32bcf. December nat'l gas futures are trading lower in initial reaction to the data.
* * * * *

Noted economist Jude Wanniski has been yapping about $350 gold for years. Another gold bear with his latest alert:

Date: Wed Nov 10 2004 08:15
Jude Wanniski (C e n t r o i d i z a t i o n @ $ 3 5 0 . 0 0) ID#196193:
A top has been made. Precipitous plunge pending present protruding pop.

***

Take a look at CBOT® Metal Futures!

The CBOT's Precious Metals complex continues to set new volume and open interest records.

Volume in the Precious Metals complex increased 59 percent compared to last week, while open interest was up over 16 percent
The CBOT Metals complex set a daily volume record of 9018 contracts on November 4, 2004.
CBOT 100 oz. Gold futures set a daily volume record of 3263 contracts on November 5, 2004.
***