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CARTEL CAPITULTATION WATCH
The US stock market gave up most of its gains, ending up only 13 at 10,244, while the DOG rose 8 to 1904.
Crude oil was all over the place, taking out $43 per barrel on the downside at one point. Yet, by the close it clawed its way back to $44 per barrel, up 42 cents on the day.
Something is very wrong out there. If the US economy is doing so well, as Wall Street and the Bush Administration says it is, then why are bonds doing this:
30-year Treasury bond
http://futures.tradingcharts.com/chart/TR/94
Bonds moving up, such as they are, with the Fed raising rates suggests something is not right at all out there in the US economy.
US economic news of the day, which surely had a good deal to do with the bond move:
08:30 Jobless claims reported 333K vs. consensus 340K
Prior week revised to 317K from 319K.
* * * * *
08:30 August CPI reported 0.1% vs. consensus 0.1%; ex-Food & Energy 0.1% vs. consensus 0.2%
Prior reading unrevised from (0.1%); ex-Food & Energy unrevised from 0.1%.
* * * * *
Does anyone believe the CPI numbers these days? Certainly no one does who looks at what they are paying on a monthly basis for necessities.
12:00 Sept. Philadelphia Fed reported 13.4 vs. consensus 25
August reading 28.5.
* * * * *
NEW YORK, Sept 16 (Reuters) - Factory activity in the U.S. Mid-Atlantic region slumped in September to its lowest level in more than a year, a survey showed on Thursday, spurring fears the economy's summer soft patch could extend into the fall.
The Philadelphia Federal Reserve said its business activity index dropped to 13.4 in September from 28.5 in August, although components, including new orders improved. It was the lowest reading since July 2003. –END-
The widely watched Philly report was a real bummer. That is the real world. Stock market players must be paying attention to what Mike Bolser has so aptly brought to your attention in his unique repo analysis.
U.S. net capital inflows slow in July to $64.0 bln
WASHINGTON, Sept 16 (Reuters) - Foreign investors showed continued interest in U.S. assets in July, though the pace of buying slowed from June, a Treasury Department report released on Thursday showed.
Net inflows of capital totaled $64.0 billion in July, compared to an upwardly revised $74.0 billion in June. Initially, June net inflows had been reported at $71.8 billion. –END-
GATA’s Mike Bolser:
Hi Bill:
The Federal reserve added $13 Billion in temporary repurchase agreements today and $.8 Billion in powerful permanent open market operations. This action pushed the intra-day pool over $74 Billion but it will slip back it $41.114 after the close. At this hour (10AM) the DOW is up slightly. I don't think it will fall today.
Richard Russell said yesterday "It will be interesting to see if the DOW closes below its 200-day moving average". My take: With a repo pool topping $80 Billion don't bet against the DOW.
DIVG Update: The MCDI may be turning down as the DIVG pma turns even farther
UP.
Even with a $2/ounce deep vee today (a steep dive exactly at the PM Fix time of 10AM) it looks as if the pattern of an upturn in the pma will continue but I'll have more data later.
Betting against the dollar may be in the cards. My pma guidance shows the first inkling of a phase change to the down side for the MCDI. It is very slight at the moment but none-the-less, real. I take this position because the PM Fix and its own pma is turning up at the same time and this potential pattern was noticed several weeks ago. IF there is to be an MCDI/PM Fix pma cycle intertwining, then today is the maximum for the dollar and the minimum for the PM Fix pma traces.
I should caution readers that the day-to-day public movements of the MCDI and the PM Fix aren't what they seem, in spite of the ocean of gold pundit propaganda offered as explanations. The pma is the real target in my view and short-tern movements are controlled noise.
The HUI move yesterday was a head fake designed to shake longs off the real UP move under way.
Russian Bear
The Russian Central Bank reported in their last foreign currency holdings release, $90 Billion. That is large enough to cause some serious damage in the gold markets if they decide to "send a message" via the gold markets to the West about its nascent Georgian/ Chechnian adventures. The mood in the Kremlin is very dark these days.
In a face-to-face meeting with President Mikhail Saakashvili on the sidelines of the CIS summit in Astana Thursday, Putin warned that neither economic nor military pressure from Georgia would solve the Abkazia problem (A Western province of Georgia with Russian leanings). Here is even more evidence of Russian geopolitical stress:
Russia warns BP it can revoke oil licences
Wed 15 September, 2004 13:58
http://www.reuters.co.uk/newsPac...on=finance
By Andrew Hurst
http://p088.ezboard.com/fdowns…ssage?topicID=10109.topic
MOSCOW (Reuters) - Russia has warned that production licences of foreign and domestic oil companies can be torn up at will if the nation's fabulous natural wealth is not exploited on Moscow's terms…….
++++++++++++++++++++
First it was YUKOS and its flamboyant US politico CEO, Khodorovsky. Then the tiny PAAS silver project was "absorbed" due to "licensing issues". And now we see the Russian Bear squeezing British Petroleum. The lesson here is that Vladimir Putin isn't a happy camper these days and he seems to be taking "profits".
The Iraq quagmire gets worse by the day and here is another chilling observation. A close examination of recently destroyed Bradley vehicle pictures reveals no large craters. There is always a crater produced by the classical road side "bomb" devices. They are six-inch artillery shells and as such leave a tell-tale carter about 4-6 feet in diameter. The absence of craters suggests that another type of anti-tank weapon may be in play. A weapon that is more lethal. Let us hope that the situation resolves soon.
IMF--Whistling through the graveyard
And finally the IMF's hubris is brimming over these days:
[SIZE=20[COLOR=red]]Global financial system is shock-proof, says IMF[/COLOR][/SIZE]
Larry Elliott
Thursday September 16, 2004 The Guardian
http://www.guardian.co.uk/busine...54,00.html
The world's financial system is in better shape than at any time since the pricking of the dotcom bubble and the September 11 terrorist attacks threw global markets into turmoil, the International Monetary Fund said yesterday. In an upbeat assessment of recent trends, the fund said it would take a major and long-lasting shock to upset a financial system now capable of riding out the collapse of a hedge fund or even a leading bank.
The IMF said it would step up its monitoring of the exposure of the financial sector to the volatile energy market, in which oil prices rose to nearly $50 a barrel last month, but that the biggest current threat was complacency.
"While it is obviously feasible that one or the other financial institution, such as a hedge fund or even a bank, might succumb to serious mistakes in risk management or to outright fraud, such incidents should be isolated cases with limited, if any, contagion to the system as a whole," the IMF said in its global financial stability report.
END
Mike
More from Mike:
Hi Bill:
The Fed added more repos later in the morning total for a total add of $26.05 Billion (Including $.8 Billion in perms) and the new repo pool stays VERY high at $60.364 Billion. Rumor has it that this is the largest repo operation since 9/11. Oil isn't going anywhere today under hugely positive fundamentals so there is the likely recipient of the primary dealer's repo money. Petroleum is the main cause of the trade deficit disaster we see unfolding so the Fed may be focusing all it's paper on oil for the moment...until the next strategic commodities disaster befalls them.
Mike
Chuck checks in:
I just want to add a quick observation regarding the gold shares. For almost two weeks the golds and the indices, with perhaps one exception, have not had a strong close. Plus, after a few minutes on the opening the indices have been usually down. This action is occurring as the indices are pressing against a breakout. To me this indicates that the gold buyers are more concerned about a setback than a potentially powerful move upward. This pattern has been helpful in the past in identifying bottoms. I believe this to be the case this time. If you are looking to buy the exploration or junior companies, I would not hesitate in doing so now. For good ideas, I strongly suggest Jay Taylor's excellent service, "miningstocks.com" If you haven't done so, buy a buffet of these companies at prices that we may never see again.
Also, if you want to peek at a very unusual chart, look at Apollo gold which has been under the hand of relentless liquidation with extremely heavy volume during the past couple of months. This is classic bottoming action just as very heavy volume after a long run up very likely spells a major top. Emotions run highest at tops and bottoms and most investors and traders make the same wrong emotional decisions at these points. Chuck ikiecohen@msn.com
Another price-fixing conspiracy makes the news:
Bill,
Heres another one for Dennis Gartman!!...but of course one would expect price fixing in a transparent and open market like the chip market...one would never expect anything nefarious in a secret, shrouded non-transparent market like the gold market!!
Cheers
Adrian
Chipmaker Infineon Admits Price Fixing
http://story.news.yahoo.com/ne…_te/infineon_price_fixing
***
The Gold Cartel is in deep trouble because just as demand for bullion is accelerating all over the world, gold supply is on the wane for a myriad of reasons. Hedgers continue to reduce positions, which takes supply off the market; high-graded mines have seen their hay day; governments and the greenies are making life miserable for miners in various countries; and lack of exploration successes over the past many years means future new mine supply won’t be enough to replace depleted ones.
Just a few examples of gold supply troubles that will add up as time goes by:
*Last week the government of Eritrea (Minister of Energy and Mines) told Nevsun, Sunridge and Sanu to halt all activity until further notice. Whatever that dictum was really all about still remains a mystery. However, anyway you look at it the edict is disconcerting for shareholders in those companies and will affect future gold mining production in that country to some degree.
*Business Day
September 16, 2004
Producer de-hedging accelerates in 2004
--------------------------------------------------------------------------------
Outstanding producer hedge positions were slashed by 209 tons in the six months to June, a sharp increase on the 43 tons cut in the six month period prior to that.
This is one of the key findings of GFMS' latest report on the gold market - Gold Survey 2004 - Update 1.
The significant fall left the delta adjusted hedge book at the end of June 2004 at a measured 1,997 tons, equivalent to 77% of 2003 annual mine production, the report says.
The position represented a 9% drop from the position reported at end- December 2003.
Commenting on the report, Senior Analyst Bruce Alway said: "It's worth pointing out that, on a quarterly basis, the pace of de-hedging accelerated progressively from the September quarter 2003. And there's every sign that this acceleration has continued into the second half of this year."
He identified three main drivers behind producer de-hedging in the first half of the year.
Firstly, hedged producers continued to reduce their cover in line with stated goals and in some cases exceeded these targets.
Of equal importance was merger activity.
Two major deals saw hedge books exchange hands and, in one case, substantially cut and, in another, completely closed out.
Finally, Alway highlighted the significance of book restructuring which contributed not only to an overall drop in protected volumes but, more importantly, had a marked impact on the make up of the global book itself, which was further concentrated in simple forward sales.
On a company basis, AngloGold Ashanti's combined hedge book was reduced by 62 tons from their respective positions reported at end-December 2003.
Barrick reduced its outstanding position by 51 tons, whilst a major book restructure completed by Newcrest resulted in a 22 tons decline in their delta adjusted position.
Other noteworthy contributors to the half yearly drop in the producer book were Placer Dome (19 tons), Avgold (18 tons) and Cambior (15 tons).
De-hedging is forecast to hold at elevated levels of over 200 tons in the second half.
The report points out that in the light of recent events - the announcement by Thistle Mining in August that it had bought back around 15 tons of contracts; news from New Zealand that Oceana Gold closed a 29 tons position and, lastly, the news at the end of August that Sons of Gwalia (who at end-June had a 52 tons delta adjusted hedge position) had been put into voluntary administration - the base case level of 200 tons of de-hedging could well be a minimum.
I-Net Bridge
*Peru Yanacocha - roadblocks could hurt gold output
Thu Sep 16, 2004 12:07 PM ET LIMA, Peru, Sept 16 (Reuters) - Gold output at Yanacocha, Latin America's largest gold mine, could be affected if roadblocks set up by Peruvian farmers protesting gold exploration continue for another month, the mine said on Thursday.
The roadblocks, which farmers set up at the start of September, could also put at risk Yanacocha's 2004 gold production target of 2.9 million to 3 million ounces if they remain in place for a prolonged period, said Carlos Santa Cruz, a director of U.S.-based Newmont Mining Corp. (NEM.N: Quote, Profile, Research) , which has majority ownership of Yanacocha.
"If (the roadblocks) are in place for a short period of time, then the situation will be manageable ... But if they are maintained for a month longer then, obviously, they will have impact on year-end production," Santa Cruz, director of Newmont's South American operations, told Reuters. –END-
*9/15 Zimplats
Zimbabwe's state-controlled Herald newspaper quoted President Mugabe as saying the government would demand a half share in the country's mines. In March, Zimbabwe's Mines Minister proposed that foreign companies sell 49% of their operations to Zimbabweans, though suspended any new law introduction while it consulted with industry. –END-
Some feedback on the sort of coverage the Sprott Special Report, "NOT FREE, NOT FAIR: The Long-Term Manipulation of the Gold Price," is receiving in the Australian brokerage community:
Hi Bill,
Here's a copy of a digest of the report sent out by major brokers in Australia.
Keep on bashing the buggers, consistent energy will bring them down...
GO GATA!
cheers Peter Douglass :
OZEQUITIES NEWSLETTER
GoldPriceManipulation.doc
ozequities@mail.smartchat.net.au
-END-
Little by little GATA’s message is making the rounds and I believe, as a result of the Sprott Report, we are making quiet progress. Therefore, NOW is the time for the GATA ARMY to pick up its pace to do what we can to make things happen and eventually win the day.
It is very important that all of us spread the word to gold companies of all shapes and sizes that GATA has been out there working in THEIR behalf for almost six years now. This is what is so strange. By the way various gold company CEO’s respond to us, you would think we were their worst enemies. It is bewildering. Seems they are more concerned with not ruffling feathers than getting to the truth about their own market. Going to the right industry cocktail parties, or not offending the "in crowd" is more important to them than doing what is best for the shareholders.
There can be no more important issue to gold company shareholders than the price of gold. The difference between $400 gold and $500 gold is staggering. Costs have risen so much the past couple of years that $400 gold doesn’t cut it anymore. Because of those rising costs, $400 gold today is the same as $325 gold a couple of years ago. This comes from two widely respected veterans of the industry.
The Sprott Report and the work of the GATA camp are critical for every gold company - even for the exploration firms, because it won’t mean much to find gold at these prices, levels which are not attractive from future corporate profit standpoints. The more and more people realize the GATA camp is correct about the real central bank gold picture; that their holdings are only around 16,000 tonnes versus the 31,000+ tonnes they say they have, the sooner more people will rush in to buy bullion at these price levels and the faster the price will explode.
Therefore, it is mind-boggling gold company CEO’s don’t embrace the Sprott Report and GATA’s findings and take it to the mainstream gold world and ask them to refute our findings in detail. There can be no more important issue for a gold company CEO to undertake. If they disagree with us, then they should refute our findings in writing with detailed backup to satisfy shareholders they have done their homework on this most serious matter. As shareholders, all of us should demand the naysayers respond in a professional and serious manner.
It’s time to stop pussyfooting around with the mainstream gold world and the companies we are trying to help. This is more like it:
Dear Julia Hasiwar:
I am a Wheaton River shareholder, and I'm wondering if you've noticed that the price of gold is more manipulated than Mortimer Snerd? It's obvious to me and I'm just a small investor with no background in such matters, no experience as a trader. Yet it's as plain as Kansas, so I'm wondering, loudly, why you gold mining concerns don't do something about it. Gold being held back might benefit hedgers, but certainly not the likes of WHT.
Please, don't hand me some stock answer; tell the truth. If there's one area where there should be solidarity amongst the mining companies, the blatant market manipulations that hold gold down should be it. Frankly, I'm a little tired of the spineless wonders that have so much of my money invested in their companies. You know, I'm holding almost 300,000 gold mining shares and I should be buying myself a Gulfstream by now. In fact, that Gulfstream should be due for a maintenance overhaul, not exist in my imagination only.
Thank you.
Very truly yours,
Marilyn A. Guinnane
