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

Two years ago unthinkable $43 oil was considered to be disastrous for the US economy. My how times have changed. The spin coming out of Wall Street has not.

Dear Bill,
While glancing at CNBC this morning, the topic was high oil prices and the negative effects on the economy. An official from the Dallas Federal Reserve actually said with a straight face that only oil prices in the $80 to $100 range would significantly effect the economy in a negative way. I started to laugh after hearing this ridiculous comment. When I hear this drivel from a Fed official, the term pathological liar comes to mind.

I had thought that Monty Python (an absurd English comedy) went off the air years ago. It appears that Monty Python has taken over the production of CNBC and is determined to make this production as ridiculous as possible.
Regards,
Paul

Jesse has it right:

These pilots remind me of Greenspan and Bernanke.

Two Blind Pilots

Two men dressed in Pilots' uniforms walk up the
aisle. Both are wearing dark glasses, one is using
a guide dog, and the other is tapping his way along
the aisle with a cane.

Nervous laughter spreads through the cabin, but the
men enter the cockpit, the door closes, and the
engines start up.

The passengers begin glancing nervously around,
searching for some sign that this is just a little
practical joke

but none is forthcoming.

The plane moves faster and faster down the runway
and the people sitting in the window seats realize
they're headed straight for the water at the end of
the runway.

As it begins to look as though the plane will plough
into the water, panicked screams fill the cabin.

At that moment, the plane lifts smoothly into the
air. The passengers relax and laugh a little
sheepishly, and soon all retreat into their
magazines, secure in the knowledge that the plane is
in good hands.

In the cockpit, one of the blind pilots turns to the
other and says, "You know, John, one of these days,
they're gonna scream too late and we're all gonna
die."
***

Rhody on silver:

Good morning Bill:
Gold and silver lease rates continue to firm this morning. Gold rates firmed up slightly in the 3 month to one year terms but is still in backwardation out to 3 months. Silver firmed slightly in the near terms and longer terms. You can still borrow gold for one year cheaper than you can borrow silver for one month, but silver's rate curve is the more "normal".

It is clear from this data that some of the ammunition used to cap gold and silver below $447 and $7.80 is borrowed metal.

From the March 2005 report on Silver by CPM group, the LBMA traded about 20 billion ounces of silver in 2002, and this has fallen steadily since. The CPM concludes that this silver is mostly interbank trading. Since total world production is about .75 billion ounces per year and total world visible stockpiles are less than .3 billion (for a total world inventory of about 1 billion ounces) where does the LBMA find 20 billion ounces to trade? Is the same ounce being traded back and forth twenty times or is each ounce being sold twenty times to twenty different people in paper form? See what I mean when I say gold and silver markets are opaque?
Regards, Rhody.
http://www.kitco.com/market/lfrate.html

agree with Peter:

Bill,
If the price of gold suppression scheme wasn't immoral, illegal and harmful to so many, I would laugh at it because it is so dumb. It is based on the same misconceived theory that Franklin Roosevelt's relied on — that government can change reality by fiddling with the price of gold. FDR, on the advice of a Cornell professor who had charted the relationship of gold and commodity prices through the ages, tried to fight deflation by raising gold from $20 to $35 an ounce. When farm commodity prices failed to go up along with gold the president moved on to other things. Reality is that gold doesn't control prices in the real economy — it only reflects them.

Today we have a bunch of "Strong Dollar" advocates trying to hold prices down by keeping the price of gold down. Same concept as FDR's but turned upside down. It isn't working any better, either. All the gold suppression and all the phony statistics in the world can't hide the fact that prices are going up — a lot. Pretty soon gold's price to recognize, but expectations of future inflation and devaluation created by Washington's crazy policies.

The way I see it, if you buy pms or mining stocks now, it's the same as getting a huge discount. The short sighted Cartel subsidizes most of the purchase price. How often does the government give away wealth instead of taking it? This looks to be a once-in-a-lifetime opportunity!

Best wishes,
Peter R.

Chuck checked in:
Even though the smaller gold shares are still undergoing selling from those who can't see what is going on, the trend is clear here. We are a moment away from a piling into the whole complex. The big money is first going into the larger capitalized companies while the players who will take the juniors and exploratory miners to unreal prices are still fearful of gold going back to $300. But the break out on many of the higher quality juniors such as Nova, Virginia and Wheaton signify that this mindless selling in the smaller ones will soon end and these companies will rise much more sharply than the rest. We are in a once-in-history market here. The sequence of the moves from largest to smaller and then to the more speculative ones is to be expected. The little ones are very small and illiquid especially in the up move just ahead. Hang on for the ride.
Chuck

Big news from ECU silver:

Press Release Source: ECU Silver Mining Inc.

ECU Silver Mining Inc.: Press Release
Thursday March 10, 5:01 pm ET

http://biz.yahoo.com/ccn/05031…86af7d5faf7cd43038_1.html

***

The dollar fell after gold closed when the budget deficit was announced. Yet, instead of gold following the euro up, The Gold Cartel knocked gold down 30 cents at the opening of ACCESS trading, AS USUAL.

Yesterday the gold shares sold off in anticipation of last evening’s orchestrated gold takedown and today’s blatant price-capping. Obviously the word is out among the bullion banks in the cabal that headquarters has forbidden gold to go higher from here. Thus, the Goldmans and JP Morgans are lining up to steal your money again in the gold pits and by dumping the shares.

The XAU lost 1.04 to 101.79 and the HUI gave up 2.06 to 222.06. At least it held 220 support after sinking to 219.89.

For years when the shares of acted strangely like this, The Gold Cartel has attacked fiercely. We need some help tomorrow to knock them on their butt. As is, the reasons for gold to move higher don’t get much better.

Regardless of the egregious activity of The Gold Cartel, the big picture for gold and silver investors brightens almost on a daily basis. It should be clear by now to all that gold is undervalued by more than $200 per ounce. Gold is going to make up the amount it is superficially undervalued and more, sure as shootin’. It is only a matter of time before the lowlifes run out of enough central bank gold to continue their fraud. That TIME should not be too far off. Fortunes will be made by our camp and The GATA ARMY. Hang in there.

GATA BE IN IT TO WIN IT!

MIDAS

The Worst Episode of Hyperinflation in History: Yugoslavia 1993-94

Under Tito Yugoslavia ran a budget deficit that was financed by printing money. This led to rate of inflation of 15 to 25 percent inflation per year. After Tito the Communist Party pursued progressively more irrational economic policies. These irrational policies and the breakup of Yugoslavia (Yugoslavia now consists of only Serbia and Montenegro) led to heavier reliance upon printing or otherwise creating money to finance the operation of the government and the socialist economy. This created the hyperinflation.

By the early 1990s the government used up all of its own hard currency reserves and proceded to loot the hard currency savings of private citizens. It did this by imposing more and more difficult restrictions on private citizens access to their hard currency savings in government banks.

The government operated a network of stores at which goods were supposed to be available at artificially low prices. In practice these store seldom had anything to sell and goods were only available at free markets where the prices were far above the official prices that goods were supposed to sell at in government stores. All of the government gasoline stations eventually were closed and gasoline was available only from roadside dealers whose operation consisted of a car parked with a plastic can of gasoline sitting on the hood. The market price was the equivalent of $8 per gallon. Most car owners gave up driving and relied upon public transportation. But the Belgrade transit authority (GSP) did not have the funds necessary for keeping its fleet of 1200 buses operating. Instead it ran fewer than 500 buses. These buses were overcrowded and the ticket collectors could not get aboard to collect fares. Thus GSP could not collect fares even though it was desperately short of funds.

Delivery trucks, ambulances, fire trucks and garbage trucks were also short of fuel. The government announced that gasoline would not be sold to farmers for fall harvests and planting.

Despite the government desperate printing of money it still did not have the funds to keep the infrastructure in operation. Pot holes developed in the streets, elevators stopped functioning, and construction projects were closed down. The unemployment rate exceeded 30 percent.

The government tried to counter the inflation by imposing price controls. But when inflation continued the government price controls made the price producers were getting ridiculous low they stopped producing. In October of 1993 the bakers stopped making bread and Belgrade was without bread for a week. The slaughter houses refused to sell meat to the state stores and this meant meat became unvailable for many sectors of the population. Other stores closed down for inventory rather than sell their goods at the government mandated prices. When farmers refused to sell to the government at the artificially low prices the government dictated, government irrationally used hard currency to buy food from foreign sources rather than remove the price controls. The Ministry of Agriculture also risked creating a famine by selling farmers only 30 percent of the fuel they needed for planting and harvesting.

Later the government tried to curb inflation by requiring stores to file paper work every time they raised a price. This meant that many of the stores employees had to devote their time to filling out these government forms. Instead of curbing inflation this policy actually increased inflation because the stores tended increase prices by a bigger jump so that they would not have file forms for another price increase so soon.

In October of 1993 the created a new currency unit. One new dinar was worth one million of the old dinars. In effect, the government simply removed six zeroes from the paper money. This of course did not stop the inflation and between October 1, 1993 and January 24, 1995 prices increased by 5 quadrillion percent. This number is a 5 with 15 zeroes after it.

In November of 1993 the government postponed turning on the heat in the state apartment buildings in which most of the population lived. The residents reacted to this withholding of heat by using electrical space heaters which were inefficient and overloaded the electrical system. The government power company then had to order blackouts to conserve electricity.

The social structure began to collapse. Thieves robbed hospitals and clinics of scarce pharmaceuticals and then sold them in front of the same places they robbed. The railway workers went on strike and closed down Yugoslavia's rail system.

In a large psychiatric hospital 87 patients died in November of 1994. The hospital had no heat, there was no food or medicine and the patients were wandering around naked.

The government set the level of pensions. The pensions were to be paid at the post office but the government did not give the post offices enough funds to pay these pensions. The pensioners lined up in long lines outside the post office. When the post office ran out of state funds to pay the pensions the employees would pay the next pensioner in line whatever money they received when someone came in to mail a letter or package. With inflation being what it was the value of the pension would decrease drastically if the pensioners went home and came back the next day. So they waited in line knowing that the value of their pension payment was decreasing with each minute they had to wait in line.

Many Yugoslavian businesses refused to take the Yugoslavian currency at all and the German Deutsche Mark effectively became the currency of Yugoslavia. But government organizations, government employees and pensioners still got paid in Yugoslavian dinars so there was still an active exchange in dinars. On November 12, 1993 the exchange rate was 1 DM = 1 million new dinars. By November 23 the exchange rate was 1 DM = 6.5 million new dinars and at the end of November it was 1 DM = 37 million new dinars. At the beginning of December the bus workers went on strike because their pay for two weeks was equivalent to only 4 DM when it cost a family of four 230 DM per month to live. By December 11th the exchange rate was 1 DM = 800 million and on December 15th it was 1 DM = 3.7 billion new dinars. The average daily rate of inflation was nearly 100 percent. When farmers selling in the free markets refused to sell food for Yugoslavian dinars the government closed down the free markets. On December 29 the exchange rate was 1 DM = 950 billion new dinars.

About this time there occurred a tragic incident. As usual pensioners were waiting in line. Someone passed by their line carrying bags of groceries from the free market. Two pensioners got so upset at their situation and the sight of someone else with groceries that they had heart attacks and died right there.

At the end of December the exchange rate was 1 DM = 3 trillion dinars and on January 4, 1994 it was 1 DM = 6 trillion dinars. On January 6th the government declared that the German Deutsche was an official currency of Yugoslavia. About this time the government announced a new new Dinar which was equal to 1 billion of the old new dinars. This meant that the exchange rate was 1 DM = 6,000 new new Dinars. By January 11 the exchange rate had reached a level of 1 DM = 80,000 new new Dinars. On January 13th the rate was 1 DM = 700,000 new new Dinars and six days later it was 1 DM = 10 million new new Dinars.

The telephone bills for the government operated phone system were collected by the postmen. People postponed paying these bills as much as possible and inflation reduced there real value to next to nothing. One postman found that after trying to collect on 780 phone bills he got nothing so the next day he stayed home and paid all of the phone bills himself for the equivalent of a few American pennies.

Here is another illustration of the irrationality of the government's policies. James Lyon, a journalist, made twenty hours of international telephone calls from Belgrade in December of 1993. The bill for these calls was 1000 new new dinars and it arrived on January 11th. At the exchange rate for January 11th of 1 DM = 150,000 dinars it would have cost less than one German pfennig to pay the bill. But the bill was not due until January 17th and by that time the exchange rate reached 1 DM = 30 million dinars. Yet the free market value of those twenty hours of international telephone calls was about $5,000. So the government despite being strapped for hard currency gave James Lyon $5,000 worth of phone calls essentially for nothing.

It was against the law to refuse to accept personal checks. Some people wrote personal checks knowing that in the few days it took for the checks to clear inflation would wipe out as much as 90 percent of the cost of covering those checks.

On January 24, 1994 the government introduced the super Dinar equal to 10 million of the new new Dinars. The Yugoslav government's official position was that the hyperinflation occurred "because of the unjustly implemented sanctions against the Serbian people and state."

Source: James Lyon, "Yugoslavia's Hyperinflation, 1993-1994: A Social History," East European Politics and Societies vol. 10, no. 2 (Spring 1996), pp. 293-327.

March 11 – Gold $445.50 up $3.40 – Silver $7.51 up 3 cents

Potential For Serious Financial/Real Estate Market Chaos Builds

The most beautiful thing we can experience is the mysterious.
It is the source of all true art and all science.
He to whom this emotion is a stranger,
who can no longer pause to wonder and stand rapt in awe,
is as good as dead:
His eyes are closed.

Albert Einstein

GO GATA!!!

We live in extraordinary times to say the least. Perhaps a more appropriate way to describe these times would be bizarre or surreal. On a number of occasions I have made references to the movies The Stepford Wives and The Matrix as a way to describe what is going on out there in US financial market land. Another has been referring to an Orwellian mob running the US with its Economic Fascism models. Both are useful in describing today’s action.

PS: the above commentary was written with the DOW down 20 and me scratching my head how could it not be down more with what is going on in the commodities markets. Now it is down 56. This makes a bit more sense.

Last night, as is almost always the case these days, The Gold Cartel took gold lower in anticipation of a rout today. Not only did they not get one, the cabal bullion banks had to be bailed out by their Godfather. This news set the tone for the day:

08:30 Jan. Trade Deficit reported $58.3B vs. consensus $56.8B
Prior deficit revised to $55.7B from $56.4B.
* * * * *

As MIDAS expected, the trade deficit was worse than anticipated. The currency markets began to gyrate wildly; up, down, up, down, then up again. As the foreign currencies shot up, The Gold Cartel went into action like they always do to cap the gold price. However, they suffered a real jolt when Goldman Sachs showed up as a massive buyer out of nowhere – to the tune of thousands of contracts. Gold went up from slightly higher to $2 and change higher. Stops built up around $446, basis the April contract. They were taken out on the next surge and then The Gold Cartel went on another one of their patented price-capping routines for the rest of the day. As is almost AWAYS the case, gold made its highs early and then was held in lock down. Because of all the fund buying in gold, the bums had their hands full containing the surge. Volume was VERY heavy. John Brimelow told me late this afternoon the estimated volume was a huge 80,000 contracts, 18,000 of it coming in the last half-hour alone. 50,000 of the volume came after gold shot up $4 to $5. That will give you some idea of the firepower the corrupt ones threw at gold to keep its advance modest. To aid them their mission, these creeps then went after the gold shares and silver to calm things down. Have you ever seen such a consistent market farce in all your life?

Meanwhile, the commodity markets keep going ballistic. It’s no exaggeration using that description. Regard:

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

Weekly CRB
http://futures.tradingcharts.com/chart/RB/W

May wheat
http://futures.tradingcharts.com/chart/CW/55

May soybeans
http://futures.tradingcharts.com/chart/SB/55

May cotton (up 25% in one month)
http://futures.tradingcharts.com/chart/CT/55

The spot CRB finished the day at an astounding 318.62, up 3.47. The move in US commodity prices is breathtaking. Meteor? Moon Shot? Take your pick. Haven’t seen sustained powerfully bullish action like this in 25 years. What’s exciting is the grain/soybean complex has come alive. Who knows what could happen should there be any kind of weather problem in the US this spring or summer.

Crude oil came right back, closing at $54.43 per barrel, up 89 cents.

The kid has been on a roll with his MIDAS headlines of late:

2/22 It Doesn’t Get Any Better, Yet $6 Rule Still Reigns / CRB Explodes

2/24 Gold Holds Technically, Gathering Strength To Go Much Higher

2/25 THE OUTRAGE BUILDS / CRB Now Has A 300 Handle

3/6 Think Volcano

Yep, it was some volcano week. Just in everything but gold and silver thanks to the heinous Gold Cartel. No sense ranting on that again for the 5th MIDAS in a row. What I do think is important to focus on is that IMO these Orwellians are setting up an economic/financial market CRASH in the US, probably sometime later this spring. Their lying and spin will have run its course. Reality is about to hit home in the US and it won’t be pretty. The only way the US is addressing a myriad of serious fiscal problems is by rigging the gold price to deceive the investing public. THAT, they have done successfully. Americans don’t have a clue what is about to hit them. What a shame. (see more on this notion below)

What was the huge Goldman Sachs buying all about? Hard to say. Could be this reason emanating from http://www.briefing.com:

"We hearing that a large investment bank says they will be buying gold as a hedge against declining Treasury prices. When asked where they see the 10-year note yield, they said they expect it to get above 5% sooner than many think."

Just because GS was a major buyer does not necessarily mean they are bolting from the cabal. After all, this is Hannibal Lecter we are talking about. Could have been a division of GS buying for hedge purposes, or a gold producer covering its own gold hedges.

Some good cheer:

The euro gold price was last at 331.12, up 2.08. It broke through a triple top at the 329.50 level or so. GATA like that a lot. Once gold rises to a considerable degree in all currencies, which it will, The Gold Cartel is toast.

Technically, gold is in good shape. The chart is a good one and remains explosive.

April goldhttp://futures.tradingcharts.com/chart/GD/45

I like the fact we don’t have any gaps to fill on the downside. At some point we are going to get a breakaway gap. Gold is going to come in $3 higher and run from there.

The John Brimelow Report

Indian CB joins $ disgruntlement squad: Washington in trouble?

Friday, March 11, 2005

Indian ex-duty premiums: AM $6.87, PM $6.41, with world gold at $441.20 and $440.15. Adequate for legal imports. The rupee closed at an import-facilitating one month high.

India joined the procession of Asian states making noises about diversifying FX Reserve holdings away from the Dollar. (Many would no doubt be surprised to learn that the country’s FX reserves are the sixth biggest in the world.) Reuters reports:

BOMBAY, March 11 (Reuters)

India's reserves, the sixth largest in the world, are at a record high of $135.66 billion, and Reserve Bank of India Governor Yaga Venugopal Reddy told reporters diversification was being discussed at the central bank.

"Yes it is being discussed. We are always discussing. It's a continuous process," Reddy said. "It is an ongoing debate with all central banks…

(JB emphasis)

Reuters goes on to report that Lehman has issued to report asserting that the Chinese are already well underway on diversification:

"Lehman Brothers has examined China's $206.6 billion increase in reserves last year in conjunction with currency market movements and Beijing's disclosure that it spent $195 billion on foreign exchange intervention in 2004.

The bank concludes that China reduced the proportion of its reserves held in dollars to 76 percent at the end of 2004 from 82 percent a year earlier."

-***-

Obviously this kind of story is not helpful for the dollar – but it is for gold.

TOCOM continues uninterested. Volume fell 19% to the equivalent of 12,161 Comex lots, the active contract closed unchanged, world gold went out 50c below the NY close, and open interest was static (up 156 Comex equivalent to equal 98,943 Comex contracts). (NY yesterday traded 67,727 contracts, a shocking 44% above the estimate; open interest edged up 769 lots to 303,062.)

Yesterday, of course gold once again underperformed the dynamic commodities sector. Mitsui-London noted:

"Gold was firmer with some fund buying on the back of the weaker USD, although one or two banks selling at just under 443 and keeping a lid on it"

Standard London found the action peculiar:

"COMEX opened at its session low before being levitated higher to the day’s high of 442.60 bid. Throughout the day, it seemed like it was traded for size as it moved around by jumping erratically…With gold having breeched above $439, a previous chart point in the medium-term charts and not running higher, is like turning on the car engine, applying pressure on the accelerator with the gears in neutral…"

UBS (which today raised its 2005 estimated prices for many commodities not including gold) thinks it sees the problem:

"…speculators. Positions remain lower than at recent peaks deterred, we believe, by the risk of negative news about potential IMF gold sales. While we do not expect any gold sales from the IMF - nor probably a revaluation - these headlines will deter speculative longs from entering the market in any size until this issue is resolved"

Many would agree that fear of Central Bank selling – not just IMF gold, either – has severely intimidated Western investors. UBS may well be using a euphemism, of course.

With estimated volume today a heavy 62,000 by 1PM, half of which has traded since 11 AM with gold moving sideways, some might even suggest that actual Central Bank selling is the problem. Who would want to short into these conditions on a Friday afternoon?

While waiting for a resolution of this problem, gold’s friends can draw some comfort from the degree of conviction expressed by intelligent Dollar bears. The Gartman Letter today displays the fervor of its recent conversion, worrying about Central Bank FX diversification:

"we do find it more and more disconcerting that Japan, China, S. Korea and a few other Asian nations find themselves with a staggering sum of US government debt (dollars)… We do not fear that they shall turn to become sellers of US debt and/or dollars, but we do fear that they may not be the buyers that they were in the past…

it takes a mere lack of buying to send at market down. We fear the lack of buying... and that is a fear far large enough!

we are a bit dismayed by the results of yesterday's 10 year note auction. The bid/coverage and other aspects of the auction were fine, but we did find it a bit

disconcerting that the so-called "Indirect Bidders," amongst which are the world's foreign central banks, bought only 11% of the total $9 billion at auction. This is down from last month's 29% foreign "take…"

The more consistent Bridgewater Associates is even more outspoken in today’s "Daily Observations":

The Break Down of The Dollar System:

"As you know, we believe that the U.S. is moving toward a balance-of-payments/debt crisis that is similar in its dynamic to the dollar/debt crisis of 1968-71 that led to the break-up of the Bretton Woods monetary system."

"Due to the Chinese peg, Asian monetary policy has basically been locked into a dollar system…This Asian dollar monetary system is now just about to self-destruct. Asian central banks have wracked up unprecedented amounts of dollars, just as Europe and Japan took in excessive amounts of dollars as the Bretton Woods system neared collapse in the early 70’s. In the early 70’s, France first, and then other countries, started to peel off the dollar standard and started to ask the Fed for gold instead of dollars. The result was inevitable as the race for the dollar door began. In the last couple of weeks the exact same dynamic began anew as Korea, then China and Thursday Japan, all expressed their interest in diversifying their dollar holdings. The race to the door is likely about to begin."

With these sorts of ideas about, the current decline of the dollar could get interesting. MarketVane’s Bullish Consensus for the Dollar Index was 27% last night, the lowest this year: but it spent all last November between 20% and 23%.

The noted gold bear plays the contrary opinion card. He continues to take comfort from the (amazing) complete lack of flow into the ETFs

JB

A few points to make on what John presented:

*"With gold having breached above $439, a previous chart point in the medium-term charts and not running higher, is like turning on the car engine, applying pressure on the accelerator with the gears in neutral…"

Exactly Standard Bank. It’s called THE GOLD CARTEL. This is what they do.

*"one or two banks selling at just under 443 and keeping a lid on it"

It’s called THE GOLD CARTEL Mitsui.

*Regarding the UBS comment re speculators shying from gold over concern of IMF gold sales. You can thank the traitorous South African Finance Minister Trevor Manuel and the Lilliputian Finance Minister in England, Gordon Brown, for this. These devious souls want to help the poor by keeping the gold price down so the gold companies in Africa lay off miners because many mines are not profitable at these gold prices at present cost structures.

Meanwhile, there is a 1500+ tonne natural supply/demand deficit out there. If it weren’t for The Gold Cartel, the price of bullion would be $200 higher, at least. The poor in South Africa would be far better off because there would be a mining boom like never seen before. Brown and Manuel could care less about the poor. They are trying to save The Gold Cartel’s butt.

*On the gold ETFs. Wonder what gives there? The Gold Cartel must have given the World Gold Council instructions not to allow any more buying when the cabal is so desperately trying to hold down the price.

CARTEL CAPITULATION WATCH

Are investors finally waking up to the fact the US has ENORMOUS financial market problems at the moment? Too early to tell. The DOW faded later on to close at 10,778, down 77, while the DOG lost 18 to 2042.

The dollar closed down .13 to 81.42 and the euro gained .29 to 132.55.

Jesse notes:

The Treasury has been putting out a line of money pretty steadily, but a repo of 17 billion for ten days is one of the larger Treasury repo liquidity infusions to the banker/dealers I have seen in a while, if ever. Must be the big surplus they just got from the Treasury auctions this week, eh? lol. I think they have another big auction next week too.

TREASURY OFFERS TERM INVESTMENT OPTION
Contact: Laura Carrico: 202-874-7119
Investment Management Division

Highlights of Treasury Offering
Offering Amount: ………………………………....$ 17 billion
Maximum Award (50% of Offering Amount): .... $ 8.5 billion

-END-

OPEC's muscle may be dwindling:

The Organization of Petroleum Exporting Countries may be at a crossroads when meeting in Isfahan next week.

The first OPEC meeting in Iran for 35 years may be a turning point in the cartel's history. OPEC is now producing at full capacity, and spare capacity is almost nil. Yet the IMF is urging OPEC memeber states to double spare capacity for the sake of world economic stability. The Isfahan meeting may mark the end of cheap oil. The first 100 dollar barrel option was sold on Tuesday.

-END-

Houston’s Dan Norcini comes up with a fine heads-up on the trade deficit. This month’s trade deficit was not good. Next month’s will be a whopper:

Nice call on that trade deficit Jesse- that detective work you did with the China news was right on target.

Did you guys notice the price that was used for the average January Oil Import Price was $35.35? That was the lowest price since July 2004 when it was $33.28. The previous month's release for December 2004, came in at $36.63/bbl. I realize that they are talking about the price of spot crude oil and not the futures market but no matter how you dice it, the price of crude in January 2005 was above that of December 2004. I wonder how what they did to lower it? There must be some sort of statistical adjustment they are using.

Either way, imagine what the trade deficit number would have been if they had used a higher and more accurate number. Especially consider what it might be when we get the February and March data with crude back over $50/bbl.

-END-

Could not agree with Dan more re what is going on out there:

I have to tell you in all my years of trading, I have never seen anything quite as remarkable as this. I was just coming out of college when the commodity sector boom took place in the late 70's and thus was pretty ignorant in general about the markets and what have you.

What we are seeing take place today must certainly have the potential to become even more spectacular in my opinion when we consider the sheer number of hedge funds that exist today in comparison to what we had back then. Watching these guys goose the beans and the wheat market while pouring into coffee and just about everything else is simply breathtaking to observe. The amount of money they have access to is hard to fathom.

Can you even try to wrap your mind around what will happen to the teenie-tiny world of mining shares once these guys commit to them?

That is what makes the gold price action even more suspect to me. Every report that I can read mentions commercial scale up selling into these rallies as they step back and allow the funds to bid the market up. They are simply thrilled getting the prices they are getting for their products. Why fight what is in their best interests? Then when we turn to gold we see it fighting tooth and nail to climb upward as the fund buying meets offer after offer. Again, without even knowing what GATA has revealed, anyone who has the least bit of market understanding would have to ask who it is that sells in such a fashion and WHY?
Dan

Speaking of a heads-up; from a fellow Café member:

Hi Bill,
This morning’s WSJ Online contains an article re: the Senate passage of the ‘bankruptcy’ bill. It looks to me like it allows for a ‘mulligan’ on derivatives contracts? I don’t know if this is important but I at least want to make sure you guys are aware of this provision.
Thanks,
Terry H.

Here’s the excerpt:

The bill also has a little-noticed but important provision that is designed to prevent systemic financial crises by letting creditors close out their derivatives contracts with companies that have filed for bankruptcy.

Although the provision has been long pushed by the Federal Reserve Board, the Treasury Department and big financial-services companies, it has been attached for years to failed past bankruptcy-overhaul legislation. The law would reduce risk by allowing swaps and other financial contracts to be unraveled quickly and easily, without the approval of slow-moving bankruptcy courts.

-END-

Gold Cartel news last night from Jesse:

I have been watching the intraday pricing action in AIG for a week or so now. Its been undergoing some heavy distribution.
This article is really vague, but I noticed that it was accompanied by a drop in the stock after hours.

AIG postpones Goldman, JPMorgan client meetings
Thu Mar 10, 2005 06:44 PM ET

NEW YORK, March 10 (Reuters) - American International Group Inc. (AIG.N: Quote, Profile, Research) said on Thursday client meetings between AIG Chairman Maurice "Hank" Greenberg and two investment banks had been postponed, without providing further detail.

The world's largest insurer by market value said in a statement a meeting with Goldman Sachs & Co. (GS.N: Quote, Profile, Research) had been scheduled for Thursday evening and another with JPMorgan Chase & Co. had been set for March 14.

AIG shares fell to $65 in after-hours trading on Inet from their New York Stock Exchange close of $66.12.

A Goldman Sachs spokesman declined to comment, beyond saying the firm had been scheduled to host a meeting between some investor clients and AIG. Goldman told clients the postponement was "due to circumstances beyond our control."

A JPMorgan spokeswoman declined to comment.

The two meetings had been announced in separate press releases dated March 8.

-END-

AIG sank $1.41 today to $64.71.

For many years AIG, JP Morgan and Goldman Sachs were the Three Amigos in The Gold Cartel.

What The Gold Cartel has wrought re their rigging as far as gold in foreign currencies is concerned:

Hello Bill,
Great work.

Here are some approximate figures I worked out by looking at currency/gold charts from Kitco on how gold is being "managed" in a number of major currencies to clearly make gold do nothing and not be a viable investment alternative to the US dollar.

Swiss francs - Gold is worth the same in Swiss francs as in May 2001.

South African rand - Since January 2002 gold has declined 26%.

British pound - Gold is worth the same in British pounds as in May 2002.

Euro - Gold has declined 7% in Euro since May 2002.

Canadian dollar - Gold has declined 6% in Canadian dollars since January 2003.

Australian dollar - Gold has declined 5% in Australian dollars since September 2001.

To generate any bull market interest and excitement gold needs to increase not just in US dollars but also increase in other currencies. It is absolutely staggering the way gold has been manipulated to prevent it making any significant gains in many other major currencies. It is criminal when you consider the gains oil, uranium, nickel, copper, iron ore etc. etc. have made in not just US dollars but other currencies. Gold is not even allowed to be a commodity.

Criminal charges ought to be laid against these crooks.

To think Martha Stewart did time. What a mockery of equity and justice that makes.
Regards,
Neil Davis.

That is why it is so important for gold to make a move in all currencies. Once it does, the cabal is kaput.

Rhody on the lease rates:

Good morning Bill:
While yesterday's gold/silver lease rates were mostly all up, today they reversed themselves. Gold is no longer in backwardation, but the rate curve is perfectly flat out to the three month term and the spread has widened slightly to .09. These gold lease rates still indicate a high volume of leasing at cheap rates.

Silver lost most of the gains in rates from yesterday, but silver is still two to five times more expensive to lease than gold. Volatility is increasing in both the gold/silver lease rates and in the spot market (what a surprise).
Rhody
http://www.kitco.com/market/lfrate.html