Edel 
BATTLE ROYALE DAY 3
The Cartel has had three major battles this year that they have lost. Gold soared $12 on the day of the State of the Union address. Gold climbed $7.8 on Jan 31 the day of FOMC meeting. Gold closed up $4.0 today (the USDX down .5 at the time of writing) on a day when President Bush held a Press Conference and Bernanke testified before the Senate Banking Committee.
With Paulson at the helm of the Treasury it is inconceivable that these battles were conceded voluntarily. These battles were lost with almost every resource being called upon. In recent commentary I said that a careful study of the market suggests that there has been a transformation from a David and Goliath market to the "Battle of the Titans". This is NOT a battle led by the Hedge funds as widely publicized. They do not stand up and fight on days when they know the Cartel wants a particular market outcome. They watch their black box trading models and they do not fight market trends. Amaranth tried to go against the Cartel in the natural gas market and went bust in the process.
There are some big players taking on the Cartel. But it appears they are very shrewd. The speculators and the hedge funds have tried to beat the Cartel in the paper game. You have to be delusional to think that you can have highly leveraged positions where you don’t have enough fiat paper to back your bet and win against the people who have access to a fiat money printing machine! The forces moving this market appear to have the funds to back their positions and that is how the Cartel, even with their access to an infinite amount of fiat money, can easily be defeated.
The Cartel does not have the gold to deliver on their massive short positions. Dennis Gartman has claimed that GATA is spinning its intellectual wheels by examining who could be buying or selling and that it is of no consequence provided the market is moving in your favor. I could not disagree more. If the gold price is being moved by a collective purchase of futures by the Housewives Investment Club of Boise Idaho and not by entities connected to the Chinese Treasury I for one would like to know about it!
To those who are disappointed that gold did not hold above $670 nor silver above $14 I would say that if my hypothesis is true what better way to bait the cartel than to throw them a few morsels to get then to stick their necks further into the noose. Why frighten them away in to retreat when they can be persuaded to give away some more Western Central bank gold at bargain basement prices? It seemed to work a charm; while the usual thugs were selling with a vengeance into the close some one was clearly buying all the way to the bell.
This appears to be a different market with a different breed of players on the buy side.
Cheers
Adrian
Adrian calls it the BATTLE ROYALE, and it certainly is. Each time gold takes out, or approaches the $668/$670 level, The Gold Cartel whacks it down. Today was like a yo-yo … not a good blood pressure day either...
So what’s going on?
*The increasingly desperate Gold Cartel (I sent them their "Desperation Cologne" for Valentine’s Day, as planned) does not have enough available central bank gold at the moment to meet the enormous supply/demand deficit. They are scrambling and buying time by hitting gold in the derivatives markets to keep the price from exploding.
*Demand is very firm at these levels, perhaps increasing spec interest in anticipation of a US move on Iran. That said, today’s sharp drop in the price of oil ($59 per barrel, off $1.06) showed no such concern.
*Outside market factors such as rising oil and a weakening dollar have been generally supportive at times. Although, since gold’s move of $66 off its low at the beginning of the year, NEITHER have done anything price-wise (net change that is).
*Gold is on the move BECAUSE increasing demand is overpowering The Gold Cartel’s ability to suppress the price.
*Perhaps some serious derivatives issues are looming. We already know that UBS reported serious gold derivatives losses in their last financial report (see More Gold Goodies below). If so, The Gold Cartel and allies are going to do all they can to keep the price below key levels, such as $670, in order to keep a full blown gold derivatives crisis from developing.
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