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

All year long the pundits commented on gold’s rally in relationship to the euro’s rally. As we close out the year, we see how this relationship became unhinged courtesy of the blatant manipulation of The Gold Cartel. As today wore on the euro continued to strengthen, making all-time highs and touching off stops at one point. Eventually it settled back a bit, yet still managed an all-time new high close at 136.46, up .50. The dollar closed in new low ground at 80.60, down .50 while the yen finished at 102.99. Yet gold is wobbling around after one of the most blatant price manipulation takedowns of the year.

March euro
http://futures.tradingcharts.com/chart/EC/35

February gold
http://futures.tradingcharts.com/chart/GD/25

The euro gold price fell to 318.50 this morning before reversing course to close at 320.37, still, another NEW LOW for the move.

How can it be there are so many pitiful people out there analyzing gold who can’t see what is going on here? Ah yes, I forgot again. They live in their own Stepford Wives/Matrix world.

The gold open interest fell 3705 contracts. It is a clue; a roadmap of The Gold Cartel’s collusive activity. The OI rose 9500 contracts with gold at $445. They capped the price in unison, waiting for their planned raid. Yesterday their raid went off on schedule, the unsuspecting specs were mauled and dumped positions. When gold took out $435, the crooks turned buyers. RUMOR has it Goldman Sachs bought 5500 contracts near the bottom yesterday, which is why gold closed $2.50 off its lows. Not bad for a couple of days work. Totally illegal because of the collusion: but, effective and very profitable. Should be another superb quarter for Goldman Sachs.

As always, the spineless gold companies see nothing, hear nothing and say nothing, like a bunch of numb monkeys. I nicknamed Goldman Sachs "Hannibal Lecter" six years ago because the gold companies put up with this nonsense as in "The Silence Of The Lambs." Little has changed in all this time.

Silver continues to meander and moves with little conviction either way. The silver OI rose 1835 contracts to 101,101.

Some silver goodies to end the year. Spoke to our STALKER contact who heard from his London bullion dealer silver source. This veteran in England said the following:

*He (and others) have two Saudi Arabian orders for silver totaling $10 million and are having "unaccustomed difficulty" in filling the orders.

*He is disgusted that silver closed below $7 for the year and blames it on the Fed/US Government. Mind you this is someone who never speaks about GATA, nor do we know if he has ever spoken like this in the past. The hands of The Gold Cartel and friends have become this obvious!

*Blames the low silver price on the New York silver paper traders. If they disappeared, silver would be $20 per ounce.

*Says these traders are clueless about what is really going on in silver. That there is no way they can cover their short positions. That they are in deep trouble, which will all become known when silver explodes, as it must.

*These traders are on their own Titanic heading for an iceberg. Meanwhile, they party on.

*Mexico will remonetize silver as it is in their significant interest to do so.

I queried my STALKER source why the London silver people don’t take delivery of futures contracts here and ship the silver over. He said he would get back to me.

The Comex silver stocks are bobbing around these days. They rose recently, but fell 658,298 ounces today, back to 103,589,752.

Silver’s future looks EXTREMELY bright as we sail into 2005. Gold should skyrocket next year too as it breaks loose from the shackles of The Gold Cartel. At some point, bullion will move sharply higher (well above $500) and do so independently of the dollar action.

The John Brimelow Report

Raiders awkwardly postured for New Year?
Thursday, December 30

Indian ex-duty premiums: AM $8.86, PM $8.94, with world gold at $436.20 and $435.15. High: lavish for legal imports. New York has just given the world’s largest gold importer a New Year present, which it is relishing.

Japan of course was closed today. Shanghai Gold Exchange premiums virtually tripled, to the $1.41 - $2.44 range, which is high.

Comex traded a heavy 74,216 lots yesterday (20% more than the estimate, and apparently more than half the week’s total)) but open interest fell only 3,705 contracts, only about a third of the build up of the previous two days. Several of the conventional dealer commentaries describe yesterday’s sell off as "long liquidation" (as usual - they never see short selling); some must have occurred, but the small open interest change suggests there are quite substantial shorts about. Selling variously described as "Bank" (Refco Research) and "Investment Bank" (Standard London) blocked gold’s rally efforts today, to ensure a close below $440 for the Comex year.

These sellers must be disappointed their raid had so little effect, given its scale. They are likely to find themselves in difficulty next week.

Best wishes for 2005 to all friends.

JB

CARTEL CAPITULATION WATCH

The DOW lost 29 to 10,799, while the DOG rose 1 to 2178.

Feb Crude Oil closed out the year at $43.45 per barrel.

US economic news:

08:30 Jobless claims (5K) to 326K in 12/25 week vs consensus 335K
The prior week's figure was revised to 331K from 333K.
* * * * *

09:57 Chicago PMI 61.2% in December vs consensus 63.0% - Market News
The November reading was unrevised at 65.2%.
* * * * *

10:00 Help-wanted index 36 in November vs consensus 37
The October index was unrevised at 37.
* * * * *

CHICAGO, Dec 30 (Reuters) - Business activity in the U.S. Midwest expanded in December for the 20th consecutive month but at a slower rate than expected, a report showed on Thursday. –END-

Here’s one way not to solve US budget problems.

-U.S. agency to take over UAL pilots' pensions

WASHINGTON, Dec 30 (Reuters) - The U.S. pension agency on Thursday said it would take over the retirement plans of pilots at bankrupt United Airlines, which are underfunded by $2.9 billion.
The Pension Benefit Guaranty Corp., which insures traditional retirement plans, said it would likely be liable for about $1.4 billion in guaranteed benefits, the third-largest claim in the history of the agency's program.
"Retirees will continue to receive monthly benefit checks without interruption, and other pilots will receive benefits when they retire," said PBGC Executive Director Bradley Belt.
The plans cover more than 14,000 active and retired United pilots and comes after a deal between the airline and pilots over concessions. The pension plans of the airline's other employees were not affected, the PBGC said.

-END-

There is a great deal of strategic geopolitical goings-on which could create havoc next year. The western press doesn’t seem to be paying any attention to these significant developments. Russia and China will be having joint military maneuvers soon. Now this:

MOSCOW, Dec 30 (Reuters) - China emerged on Thursday as a dark horse contender for the assets of stricken Russian oil major YUKOS as the company's state-driven break-up took yet another abrupt twist.

Amid intense speculation over who will become the ultimate owner of YUKOS's million-barrel-a-day oil unit, Yuganskneftegaz, Russian Energy Minister Viktor Khristenko said top Chinese oil company CNPC may end up with a one-fifth stake.

Khristenko's comments came after a top aide to President Vladimir Putin said Yugansk, bought at auction by state oil firm Rosneft for $9.4 billion, would not be included in Rosneft's planned merger with Russian gas monopoly Gazprom...

-END-

Then we have the new coziness between the Chinese and Venezuela regarding energy.

Yet, that is not all. Some excerpts from a recent piece by J. Vialls of Western Australia delves into a potentially troubling development for the US:

On 10 November 2004, the India Daily reported that, "Russian President Putin is taking a lead role in the most powerful coalition of regional and superpowers in the world. The coalition consists of India, China, Russia and Brazil. This will challenge the superpower supremacy of America." … "He [Putin] wants to establish a long-term Russian footprint in Latin America in order to expand Moscow's geopolitical influence in the region. Brazil is very open to the coalition concept where these large countries support each other in term of trade, economics, international politics and defense."

Just this single strategic move means that the new coalition embraces just over three quarters of the world's total population, eighty percent of its natural resources, and a majority of technical and scientific experts. Nor does it end there, because the coalition automatically includes the Shanghai Cooperation Organization (SCO), which is presently comprised of China, Russia, Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan. Dangerously for America, the coalition will soon have another important member, Iran, currently due to enter informally in a few months time through the SCO "back door" because of a mammoth energy deal. We will return to Iran shortly….

-END-

Rhody on the lease rates:

Hi Bill:
As you can see from the included chart, gold lease rates are in slight backwardation, even though they have fallen by about one third in the short terms. This implies continued high rates of leasing at subsidized rates.

Backwardation almost always implies leasing pressure to short down the spot price, so despite the low absolute rates, the leasing pressure against gold continues. And why not, it's both a cheap source of gold and never needs to be paid back as lease contracts include a cash out clause for emergencies. (This begs the question why would anyone be foolish enough to lease their gold. The answer is the central banks would and do, but not because they are foolish. They are propping up the US dollar by creating the illusion that gold is less valuable than the paper.)

More interesting is the rise in silver lease rates. Gold rates have fallen and silver rates have risen across the board. Silver now demands 4 to 6 times the lease rates of gold over similar terms. This implies relative tightness of supply. Yet silver suffered more than gold in the latest correction. It's a smaller market, and therefore more easily manipulated.

Heavier manipulation over longer periods implies a much greater upside when this whole paper fraud system breaks down.

Please have a safe and happy New Years. Regards, Rhody

IF this news blurb regarding the World Gold Council’s GLD fund is correct, it reveals the WGC to be more inept than one can imagine:

Dec. 27 (Bloomberg) -- State Street Global Advisors is offering streetTracks Gold Shares, a gold-backed fund that is treated like a stock's initial public offering, the Wall Street Journal reported.

The fund is registered under the Securities Act of 1933 because it is run like an investment trust whose shares follow the price, equal to one-tenth of an ounce, of gold bullion, the newspaper said.

To follow the Securities Act, State Street must treat the Gold Shares fund as an IPO, where companies can't say much to investors, the Journal reported. This so-called quiet period never ends, the newspaper said. The fund has traded more than 6 million shares daily on average, the Journal reported.

-END-

In other words the World Gold Council can’t say anything important about gold to the investment world as long as they are involved with this fund. Perhaps this Bloomberg piece is off base. I should hope so.

Some things never change. And some things never get started. How can the leaders in The Gold Cartel be exposed month after month for one market shenanigan after another, for stealing the public’s money in the gold pits, and still be let off scot-free?

Bill,
Strange that these guys always show up when something illegal is taking place...
dk

JP Morgan Under SEC Scrutiny for Canary Trades - WSJ

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is examining whether J.P. Morgan Chase & Co. should have known that the Canary Capital Partners LLC hedge fund was making improper trades, the Wall Street Journal reported on Thursday.

Several employees of J.P. Morgan have given testimony to the SEC, the newspaper said.

The No. 2 U.S. bank's lawyers don't believe J.P. Morgan employees knew about the improper trades, but they said regulators could contend that the bank "should have known" Canary and its principal executive Edward Stern were "at least engaged" in short-term trading that violated rules of many funds, according to a memo to the bank's executives last September that was reviewed by the Journal.

The improper trades involved the rapid buying and selling of shares, known as market timing. Permitting hedge funds to market-time funds could be considered a violation of fiduciary duty by the fund managers. The profits earned from timing ultimately come from the pockets of long-term investors, regulators say.

Representatives from J.P. Morgan were not immediately available for comment, though a spokeswoman was quoted by the Journal as saying, "At the time that we were doing business, J.P. Morgan didn't know and had

-END-

Yeah sure, and the bank has no idea what their gold traders are doing either.

Speaking of hanky-panky, a couple of heads-up/thoughts for us on the Fannie Mae developments:

The Fannie Mae financing, with Lehman Brothers as the sole placement agent, actually raises more questions than it answers. To begin with, a financing of this magnitude is typically handled jointly and severally by multiple underwriters. And financings are usually doled out by companies as a payback reward for various unpaid investment banking duties such as capital market updates, enthusiastic analyst adulation, etc. The fact that this piece of lucrative business was given alone to Lehman should make everyone with half a brain wonder what Lehman is being compensated for. My guess is that Lehman is the counter-party to a lot of Fannie's funky derivative contracts entered into before the accounting fraud came to light and as such Lehman is exposed to economic risk that wasn't apparent when the derivative contracts were written.

Furthermore, one has to wonder who the buyers were of the preferred stock and convertible bonds. The fact that some investors anted up $5 billion in capital, given that Fannie has yet to file 3rd quarter financials and is being scrutinized for large-scale accounting fraud, is truly stunning. The fact of the matter is that if even Fannie can't put together required financial filings and its former auditor is no longer on the scene, how can any of the financial information in Fannie's computer systems be trusted, let alone trusted to the tune of $5 billion in fresh capital. It is hard to believe that typical institutional buyers could participate in this transaction and withstand scrutiny of fiduciary duties. We do know that Fitch recently downgraded Fannie's investment rating, and Fitch is typically the most thorough and conservative of the rating agencies.

We also know that it took a 7% dividend to get $2.5 billion of the capital raised. My sources in the junk bond market have told me that there are some below investment grade companies that could issue preferred securities at 7%. This is highly speculative on my part, but my guess is that the likely buyers of the paper would be the parties most interested in keeping Fannie alive, and that would be the foreign investors who have provided over 40% of Fannie's debt capital. Given the private placement nature of this financing, we may only find out who the buyers were if a large block of stock gets registered for sale if Fannie's stock ever gets above the $94.31 conversion price embedded in the convertible bond. All I can say is that this type of event reinforces reasons to be investing in gold and mining stocks.
Dave in DC

One more:

"A relative look at America's response to the earthquake"

December 30, 2004

Tectonic plates shifted.
Tsunamis crashed ashore.
The earth wobbled on its axis.

And the magnetic field that governs America’s moral compass continues to deteriorate.

A relative look at America’s response to the earthquake:

President Bush professed surprise that the world’s, and many American’s, first impression of US aid relief to the damaged countries was that America was being miserly. He responded that America has historically led the world in relief aid, the initial $35 million aid package would not be the last installment, and he intimated that the US response was not so trivial.

But relative to Franklin Raines’ fat "retirement" package of $1.37 million annual payment plus deferred compensation of $8.7 million, and lifetime medical and dental coverage, the US aid package looks pretty skinny. If Raines, now 55, lives to age 85 he will receive an additional $41 million dollars.

On the one hand, the case could be made that a bankrupt country could hardly be expected to make extravagant donations of money to another country in distress. After all, how would we do it? Just print the money out of thin air?

On the other hand, what is this country doing to help out poor ol’ Franklin and the boys at Fannie Mae who wrongly accounted for hedging transactions on its mortgage holdings, used improper "cookie jar'' reserves, deferred expenses so executives could get their maximum bonuses, and is probably carrying losses on derivatives far and above those which now force restatement of earnings by as much as $9 billion because at least that amount must be recognized now?

Well, let’ see….

It was announced today that Fannie Mae plans to sell $5 billion in preferred stock, the largest capital placement ever by the mortgage giant. The sale, to be made in two private placements—to mutual fund companies—is aimed at shoring up FNM’s decimated capital position after its regulators called it undercapitalized. This is little more than thinly-disguised debt transference to suckers.

On Tuesday, the FED entered the open market and added $6.25 billion into the banking system most of which was specifically targeted to support mortgage-backed securities. (Fannie Mae.)

On Wednesday, the FED entered the open market and added $4.75 billion into the banking system most of which was specifically targeted to support mortgage-backed securities.

On Thursday, the FED entered the open market and added $7.00 billion into the banking system most of which was apparently specifically targeted to support mortgage-backed securities.

And these are the visible efforts to prevent a collapse of one of our nation’s largest financial institutions. Who knows what is going on below the surface?

The rate-of-increase in the FED re-po pool seems to be going parabolic.

So where did that money come from? Did we just print that out of thin air? Of course we did!

Café readers know, of course, this is just one example of the willingness of the FED, with the blessings of our political leaders, to continue to break the budget as necessary to mitigate the pain on Wall Street when the bankers and financiers are on the wrong side of the trade.

Should America admit the truth and claim financial bankruptcy and only send financial pittance to other countries and people who are in pain after being hit with massive tragedy? Or, as long as our leaders have decided to continue to prop up a system broken by their own greed, should the same people try to maintain some semblance of moral balance, and at least print up and send off as much fresh money as they do each day to take care of Franklin and Fannie Mae?

I don’t pretend to know the answer. What I do know is that there has been less out-cry in America over Franklin Raines’ retirement package (that could hit $50 million dollars) than there has been over America’s announced $35 aid package to the Asian nations in trouble.

In many parts of our country yesterday, unusually heavy winter rains resulted in flooded communities.

Tears from Heaven.

Terry Wetzsteon
tpwetzsteon@cox.net

Down Under thoughts on the shares:

Hi Bill
Just a follow on from my email of 10 December.
Yesterday when gold was down circa 50 cents in Oz trading, Resolute closed down 5 cents at $1.39. All of the volume came in the afternoon and was contrary to all of the other Oz golds.
This morning after gold fell – Resolute got creamed again – down from $1.39 to $1.28, now with 1 hour of trading to go it is $1.34.
So ….. who knows what the hell that all means !!!
Keep the chin up J
Regards,
David Guy

More insight from Haggis Down Under:

G’day Bill,
We are now in the "land" of "No Mans Land"!!!!

Gold is clearly not "the" problem, as it is now only a mere indicator. The manipulation of the Gold price is now so blatant that we can only now expect it to be trashed. However consider:

[Blockierte Grafik: http://www.lemetropolecafe.com/james_joyce_table.cfm?cfid=1106959&cftoken=77645123&pid=4324]

The relatively small percentage gain in the physical gold and silver prices, relative to other commodities, would suggest that they are lagging behind the general commodity market. Hence, their short selling. Stating the obvious!

The leading indicator is now the US$ Index, which is caught in "no mans land", between 80 and 81 on the Index.

On the 4th November 2004 the US$ Index broke the 84.4 support level, and this was followed on the 3rd December by a large decline which threatened the 81 supprt level on the index.. Immediatelt after the latter date, the 3rd December, Gold was short sold in an attempt to "break"it as it threatened to move upwards beyond the US$456 level. This was followed by an aborted rally in the US$ Index, which effectively failed on the 23 December. Last night (Aussie time), Gold was yet again trashed down by US$10, to US$437, stopping above the US$ 436 support level, which is the support level established since January 2004, which (surprise, surprise) was the level when the Golden Bull was stopped in its tracks.

The difference between January 2004 and now, is that the "Bull" is now a "Tiger", and the question is therefore "who is prepared to grab its tail"???!!! Those who try will surely get mauled.

Today the US$ Index stands at 81.1, and looks very fragile. It must gain above the 82.4 level to break its current down trend.

The key issue is now support of the US$ Index, which is now a paradox (Gibson’s ???), which is frankly now a "Golden Dream", with an emphasis on a dream..

Given that Gold has been short sold to the tune of 17,000 tonnes, and that the US$ Idex will experience hyperinflation in an attempt to "pay" its debt, and the Chinese will revalue their currency (supported by Gold), then:

Increased price of Gold =

Gold short covering

+ Negative real interest rates

+ limited supply
+ increased demand
+ falling bond prices
+ crashing stock market
+ Financial Market Derivative contract strike calls
+ Commodity Market (Gold and Silver) Derivative contract strike calls
+ US$ hyperinflation
+ oil payments
+ War (cost of)

There is not enough gold in the entire world to fill the short positions ( 5,000 to 17,000 tonnes ).

We could eventually be paying thousands of dollars for one ounce.

This equation was generated, by yours truly, some 3 years ago, long before the War in Iraq.

So, what price Gold!!!

It’s not now a question, but a fact.