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CARTEL CAPITULATION WATCH
The DOW pulled off one of its patented rallies it has managed to stage since right before the Iraq War started. Down 55 with 45 minutes to go, it roared back to only close down 3 to 10,379. The DOW is never allowed to crater two days in a row for the investing public should never be allowed to think panic. The DOG climbed back too, finished off 5 to 2025.
GATA’s Mike Bolser:
Hi Bill:
The Fed added $3.25 Billion in temporary repurchase agreements today April 14th 2004, an action that upped the repo pool to $38.28 Billion. The Fed isn't too concerned about yesterday's DOW dip, if they were we'd see the pool jump up much higher. We do see however, that the DOW's 30-day ma is turning definitely flat as it begins to oscillate around the predicted trend line.
Rate talk
The rumor mill buzzes with rate hike talk and this ought to be interpreted as another piece of evidence of gold cartel capitulation. Gibson's paradox stipulates that gold and long term interest rates move together—higher gold, higher interest rates (in that order).
An important clue to rates is the linear 200-day moving average of the DIVG seen at http://www.pbase.com/gmbolser/interventional_analysis
It has beenmoving up since December 2003 and I have interpreted this to mean the Fedhas begun a retreat to permanently higher priced gold. They must therefore follow with higher interest rates in order to thwart an investment community move away from depreciating paper dollars and towards the better appreciating asset-gold.
For the remainder of 2004 the DIVG will appreciate by 13% if a linear extension of today's trend can be believed. At this hour the 30-year yield tracks at 5.2% right on its long term ceiling
http://ichart.yahoo.com/b?s=^TYX&d=c&k=c1&a=v&p=m50,m200,s&t=5d&l=off&z=m&q=c
So far we are still within the interest rate boundaries of the near past in the ten-year but we are poised to pierce 4.67% and that will be an import event that will confirm what the 200-day DIVG ma has been telling us since at least the end of January 2004---that the end game has begun. Everythingwill change once the rates start firmly up.
Will the Fed attempt to hold gold flat in an heroic defense leading to the complete drainage of all central bank vaults? That question is probably being asked today in the board rooms of the world's central banks. The United Arab Emirates recently capitulated under Fed pressure and drained their vaults. However, the bigger banks might not be so easily swayed. The recent turmoil at the Bundesbank may be outward signs of a gold sales policy war within.
What a magnificent buying opportunity!
Mike
Chuck checks in:
Just briefly:
The continued dumping on the opening of the shares and their weak closes signals to me that we are very near the bottom of the correction again. What we should be focusing on at this point is the relative strength of gold and the shares to the general stock market. Remember that gold runs contrary to the other markets, and that is why it was in a bear market for 20 years.
We are resuming the treacherous decline of the stock market and we're beginning to see some pockets of weakness such as in the real estate stocks for the past 2 weeks. One of these days the market will have a day like this, and fail to rally and the dam will give way. There is a deluge coming to pay for all of the monetary and fiscal foolishness of the past decades. My guess is still that we will have a good taste of it before the summer comes. Chuck
The real story behind yesterday’s surprisingly positive retail sales number:
Here could be another reason for the dollar rally and stock market comeback today:
US: Deficit $299.5b in first half fiscal '04
By Jeannine Aversa, Associated Press, 4/14/2004
WASHINGTON -- The government produced a deficit of $299.5 billion in the first half of the 2004 budget year, the Treasury Department reported yesterday.
For the budget year that began Oct. 1, spending totaled $1.1 trillion, while revenues came to $850.4 billion.
The year-to-date deficit showed the government bleeding more red ink than the $253.1 billion shortfall recorded for the corresponding period last year. The latest figures underscore the worsening state of the government's balance sheets.
Compared with the period last year, spending was up 6.6 percent in the first six months of the 2004 budget year. Revenues, meanwhile, were up 3.1 percent from a year ago.
-END-
The Café’s Greg Pickup sends us a quality inflation heads-up:
April 14.
We will start by asking a question. In the year ending Jan 12, 2004 what “commodity” increased the most in percentage terms? Answer: Freight . That is correct. The Baltic freight index increased 531%. As of November the increase was “only” 287%. Freight is not normally the providence of international speculators and hedge funds but is used by trade houses to transport physical commodities.
Freight + 531%
Natural Gas +72%
Cotton +58%
Copper+50%
NASDAQ + 50%
Soybeans + 44%
Gold +33.2%
S & P + 25%
Crude Oil + 25%
CRB Indust.+ 24%
Yen + 14.6%
CRB + 17.5%
Cattle +4.2%
US Bonds +.5%
Sugar - 14.3%
US $ Index –16%
As of April 8 the quotes are below , with chart.
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Hey Bill:
Looks like we finally got our washout that your sources have been talking about. I cannot think of a better buying opportunity and am loading the boat in gold at these levels especially in light of the following headline flashes below from Dow Jones. Gold anywhere near $400 is a sweet gift as far as I am concerned.
DJ. * US Mar Consumer Prices +0.5%; Consensus +0.3%
--------------------------------------------------------------------------------
DJ. * US Mar CPI Energy Prices +1.9%; Food Prices +0.2%
--------------------------------------------------------------------------------
DJ. * US Real Average Weekly Earnings -0.7% In March
--------------------------------------------------------------------------------
Wed Apr 14 08:28:48 2004 EST
Take a look first at the Consumer Price category and compare that to the consensus numbers that most economists and pundits were expecting. If we annualize March's numbers at +0.5% we have consumer prices rising at a rate of SIX PERCENT A YEAR. So much for the deflation argument. This is the result of the endless and by now mind numbing increases in the money supply by the Fed as they work to stave of deflation and debase the dollar in the process.
The next flash contains the soaring energy cost rise of +1.9%. Let's hope that does not continue to translate out to an annual rise in energy costs of 22.8% and that the price of crude and gasoline stabilize or else consumers are in for a very rough time indeed as more and more of their dwindling disposable income is spent paying for fuel and cooling and heating costs.
Now for the reak kicker and this is what terrifies me. Look at the Real Average Weekly Earnings number. It came in a -0.7%. Translation - while prices were soaring on an annualized rate, wage earners saw their real earnings dropping at the same time. In other words, they are bringing home less in real wages while prices simultaneously are risin across the board. And people wonder why their paychecks don't seem to stretch as far as they once did!
Now combine that with yesterday's number about retail sales rising and it does not take much to see that consumers are going further and further into debt in order to continue their current lifestyles. Americans are not saving - they are continuing to spend even when they have real less dollars to do so. Just how in the world is this nation supposed to build lasting and true prosperity on a rotten foundation of debt without savings? where is the capital pool to come from to fund economic growth? Where else but from foreigners.
Finally, below is a table detailing the real earnings data. Notice the final row I higlighted in blue. This one details exactly what is happening to the consumers pricing power as the Fed's dollar abasement continues unabated. Sum this all up and I cannot think of a more compelling reason to own gold. It is the only currency that is going to hold its value in the times ahead of us.
Dan Norcini
dnorcini@earthlink.net
DJ. Table of Data On US Real Earnings From Labor Dept.
DJ. Table of Data On US Real Earnings From Labor Dept.
March February January December
Seasonally Adjusted
Real Earnings -0.7% -0.1% 0.3% -0.8%
Hourly 0.1% 0.2% 0.3% -0.1%
Weekly Hours -0.3% 0.0% 0.6% -0.6%
Weekly Earnings -0.2% 0.2% 0.9% -0.7%
Current Dlrs $523.70 $524.58 $523.56 $519.12
Constant Dlrs* $277.53 $279.48 $279.68 $278.80
*Constant Dollars Adjusted
for Inflation. r = revised
The cabal in action:
Bill and David (Morgan),
After the CPI release this morning I was telling an associate that this explains the timing of the attack of gold and silver. Only comment from my associate was "what is the Government even doing influencing trade in our markets, makes you not even want to play in a rigged game".
In aviation terms, the Government rigging these markets is likened to someone changing the calibration or cutting the wires on the gauges. In Instrument meteorological conditions this can cause spatial disorientation resulting in stall/spins or even controlled flight into terrain. Due to Government rigging of all the gauges investors really can't see where they're headed. Once you go into stall/spin, if you wait to long, you pull the wings off the plane in an attempt to avoid the crash but you crash anyway. With controlled flight into terrain you just crash and didn't see anything coming.
Thank you for all that you do.
Tim.
South Dakota
More on the retail sales number from eagle-eye J Mc:
Bill,
Buried way down in today's front page WSJ article "Retail Sales Data Signal Economy Gains Momentum" is the disclaimer that voids the optimism of the headline. It says, "The retail sales data aren't adjusted for inflation, so price increases account for some of the gain, in particular for building materials." So this much ballyhooed 1.8% sales gain is in the context of practically everything inflating 10 - 50 %. If you sell butter and the price is 50% higher and your sales of butter are only up 1.8% isn't that actually a 48.2% DECLINE in product sold? This explains why they keep talking about a recovery yet the economy belies it. Less widgets sold at inflated prices. In my business we just raised the building material frame packages an average of 32% from 1st quarter to 2nd. I will be bitterly disappointed if sales are only up 1.8%. Just another rigged number from a government that better suits residency in the Kremlin than the White House. All available information contradicts this steep gold/silver selloff. I can almost hear the salivating of the players scooping up the metals at these prices. They won't be here long, IMO.
James McShirley
No surprise here, trouble ahead for housing:
NEW YORK (Reuters) - New mortgage applications fell last week for the fourth straight week driven by a huge drop in refinancing, as mortgage rates rose to their highest levels in three months, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted market index, a measure of weekly mortgage activity, fell for the week ending April 9 by 22.1 percent to 788.6 from the previous week's 1,012.9.
The weekly mortgage gauge fell its lowest level since the week of Jan. 9 when it was at 702.9. Loan demand, especially to refinance, has fallen in response to a sharp increase in mortgage rates in early April. –END-
The commentary from most Café members is right on:
Bill;
Trade and inflation worse than expected - they're trashing metals in Hail Mary style and buying the dollar of course. The stock, housing and bond markets - different story. The only thing missing from this picture is a monkey, an organ grinder and a cotton candy stand. The answer - take delivery of silver (in particular) while you can. Hail Mary's generally happen in the last few plays of the game. When the COMEX fails (and it will) the game is over.
best
Rob
More input that silver is very tight around the world:
Dear Mr. Murphy,
I read with great interest your daily information. I paid special attention the your lines regarding the silver shortage. You might be interested in viewing the link below and discover the UBS do not offer 1 kilo bars either. I recently bought a few of these bars from them and they had a hard time to collect even 6 pieces.
Keep up the good work! Congratulations !
http://www.ubs.com/e/ubs_ch/we…ismatics/numismaticsshop/
bars/silver.html
Luc Lacroix, Geneva
The real silver story:
The technical damage done to silver was huge. Gold dropped about 5% over the past three days, while silver has dropped over 12%. Silver dropped through all support and may weaken below $7 over the next few days. But there's no real silver out there in the real world. There are still two full weeks left in April in order to buy the May contract. The OI in the May contract has dropped about 15 Moz, but is still at 385 Moz. So paper silver is in plentiful supply (as usual) but the real stuff is non-existant. I'm tempted to annoy ScotiaMocotta by going down to buy silver at these contrived paper lows, but they are not worth the effort. I think what these idiots have done is manipulated the spot price down using derivatives, but in doing so merely transferred the OI from weak hands who were forced out by the recent margin increase to strong hands who intend to take delivery of the May contract.
The total OI dropped only 632 contracts (3.15 Moz) yesterday for a drop of $1 in the spot price.
The May OI is still 77321 contracts (386 Moz) The shorts are still trapped. They have a bigger problem now than before. Despite the fact that there is a world shortage of silver, they have maneuvered the price $1 lower but managed to reduce their obligations to deliver by a measly 3 Moz. Now they still have to come up with (assume 10% of the OI want to take delivery) 38 Moz of metal yet the spot price is $1 lower than it was a month ago! These guys may have 10 Moz themselves, but must acquire the rest. That means lower prices won't cut it.
Silver is going to float right back up to where it was, and while that is happening the OI will be increasing again as well. I give it a week and silver will be north of $8 again.
Rhody
Several Café members brought my attention to this very negative and caustic silver article:
Silver? No thanks, we got lots.
by Mark Taylor
April 13, 2004
http://www.financialsense.com/fsu/editorials/2004/0413.html
What is the point of dealing with this clown and what he has to say about "the GATA crowd" and Ted Butler? You know where I stand on silver. One of us is very right and one is very wrong. What grates me is articles such as these only surface on major corrections, not when the market is flying.
Speaking of Ted Butler, his latest can be found at
http://www.investmentrarities.com
WEEKLY COMMENTARY
April 13, 2004
The Relative Value Of Silver
"There is something I must say about today's dramatic price decline. Kodak and the users didn't use less silver than normal. The miners didn't produce more silver than usual. Nothing in the world of real silver changed - just the price. That's because of the paper games on the COMEX. That's expressly against commodity law."
On a cheery note:
Hi Bill,
Cartel's Last Flash
The crooked cartel bankers
Finished their frenzied feeding
The gold and silver bait fish
Have many shares a bleeding
Do not be discouraged
By this desperate metal bash
Like an old burning light bulb
We saw the cartels last big flash
The thousands of letters we sent
Have begun to take their toll
Many factors are in place now
To finally end the cartel's control
The lack of quantity silver
The soaring demand for gold
World violence and too many dollars
Will force the cartel to explode
The waters have quickly changed
To allow some fast bottom fishing
Seeing the crooks go out on stretchers
Will be our rewarding mission
Best, Gold Fish
-END-
So much for the rounded HUI bottom. Throw that one out the window. The HUI bounced off its 200-day moving average early after falling to 207.64, going up nicely on the day. However, it succumbed to its standard late day sell-off, closing at 209.20, down 4.45, but still just above that 200-day moving average. The XAU dropped sank 1.64 to 93.92.
The commentary about the gold and silver markets is becoming very emotional. Opinions are flying all over the place. This is why it is so important to stay grounded by keeping in mind what GATA knows. The gold and silver markets have been rigged for years. This price rigging is in the process of falling apart. As it does, silver is going to soar and gold will follow. Much of the rest of the day-to-day commentary is a lot of noise. Once The Gold Cartel is beaten, the GATA stretcher-bearers will show up; then gold will blow through $430 and soar towards $500.
The gold/silver shares ought to move substantially higher, VERY soon.
GATA BE IN IT TO WIN IT!
MIDAS
