[Blockierte Grafik: http://www.goldseek.com/news/LemetropoleCafe/lmpc.jpg]
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CARTEL CAPITULATION WATCH
The DOW (10,195, down 67) and DOG (1960, down 29) had a bad day. The news was not particularly good. The unit labor cost for the first quarter was up .8%, far higher than estimates. An in the ISI non-manufacturing report the prices paid component was also much higher than expected, rising to 74.4 versus 68.6 in the last report. Normally, both of these surprises would be gold friendly, in a free market that is. However, in a rigged market the Orwellians want the investing public to ignore the growing inflation and sic them on a falling gold price to show how of little importance these numbers are. Sick is the right word for these market manipulators. They are creating enormous market imbalances which will have devastating market/economic consequences down the road.
The dollar only rose .1 to 89, while the euro only dropped .08 to 122.13.
The CRB was clocked for the second day in a row, falling 2.96 to 273.66. Frenetic soybeans have been all over the place. Crude oil dropped 69 cents to $39.28, however it failed to close below critical $39 support. OPEC agree to lift their quotas by 2 million barrels by July 1 and by another 500,000 barrels on August 1. The question many have is OPEC already pumping out this much?
All eyes on the jobs report tomorrow. The consensus is looking for 240,000 new jobs to have been created in May. One thing for sure, the fudgers are going all out to give Wall Street the number it wants. They have to be careful on this one. Too big a number could send the bond market in the toilet. Too weak a number will send the Democrats back on the jobless recovery warpath.
GATA’s Mike Bolser:
Hi Bill:
The Fed added $14.4 Billion in permanent ($1.4 Billion in a Bill pass) and temporary repos today June 3rd 2004. This action caused the repo pool to rise a bit to $38.85 Billion and kept up the rising support for the DOW. The Fed continues to act in a steady DOW supporting effort content to keep the rising slope of pool assets doing its thing in the futures market.
[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/repos0603.jpg]
Steve Saville opines that the Fed has no control over the amount of repo demand:
The Repo market is basically the commercial banks borrowing from the Fed on a repurchase agreement basis for one, two, seven days, etc. Central Banks can either
1) manage the Repo rate (the rate at which the funds are borrowed) and provide as much money as the banks demand, or
2) offer a set quantity of Repo funds in an auction, where the rate is
determined by the bank bids.
Most central banks, the Fed included, uses method 1.
This means the Fed has no control over the amount demanded.
Saville’s otherwise excellent technical commentary ignores the reality of the repo "market". The Fed’s primary dealers judge the open market return potential of their submitted proposals and as long as I can remember there has never been an under-subscribed repo auction because the primary dealers can extract a very good return in a manipulated market. Today’s is a common example where $31.45 Billion in repos were submitted by the primary dealers and only $2 offered by the Fed’s "Desk".
Total Propositions Submitted (in $bil.)
31.450
Total Propositions Accepted (in $bil.)
2.000
Total Money Value of Operation (in $bil.)
2.000
The Fed’s dutiful primary dealers will take as many repos as the Fed gives them so the claim that the Fed doesn’t control the repo demand is not accurate. The demand is controlled by the market’s repo return potential (Which always seems to be high enough).
Money on the rise
The M-3 aggregates are rising along with M1 and M2. One can get confused as to the implications of each category of "money" but there is no confusion over the overall rate of "printing press" increase as shown below from the latest Fed tables:
H.6 (508) Table 2
MONEY STOCK MEASURES
Percent change at seasonally adjusted annual rates
---------------------------------------------------------------------------
3 Months from Jan. 2004 TO Apr. 2004
M1__________M2__________M3
12.6%______9.5%________9.6%
Here we see the Fed’s official monetary inflation rate very clearly. It’s between 9.6% and 12.6%. If your investment doesn’t return this rate you are losing "money". Strategic commodities are a proven method to avoid this loss, despite the temporary manipulation in precious metals. No other investment can protect one from a monetary accident cause by Fed blunders.
June 29th: The Fed’s next meeting and a possible gold attack?
Many expect a rate rise at this two-day Fed meeting. Such a rise ought to boost the dollar a bit and hit gold in the process since the two are formally linked (More on this important subject in the future). The Fed may use this opportunity to launch a major counter attack on gold, so be forewarned.
June 29th and the DIVG
An important component of the DIVG’s 200-day moving average are the expiring data values. On June 29th there is a relatively large jump upward in the expiring values from about 340 to 351. This means the REMAINING values of the average lose some "weight". This weight loss means the Fed needs that much LESS gold selling activity to force the average to conform downward (Where it seems to be headed now). It presents a good opportunity for the Fed to launch a two-pronged attack on the gold markets, a rate rise and an assist from the expiring 200-day ma data. It fits their "style".
We will have to watch the DIVG’s 200-day ma very closely in the coming days.
Mike
Some thoughts on oil:
Bill
Thought I would change the subject a bit since gold/silver was kicked around today.
Got a little bored so I went information shopping at EIA site and decided to put together some numbers for us regarding actual petroleum reserves and production for the globe. Perhaps Adrian could kick in some additional info-anyway its rather scary what you will see next. Keep in mind that world production numbers do not allow for quality crude produced for export but a total of petroleum related products that equal a barrel such as heavy oil/distilits/byproducts as such a country that produces 1.5 mbpd could feasably only produce 1.2 mbpd of refinable oil-also the production numbers do not subtract that country's own usage/consumption such as Saudi that produces 8.5 mbpd yet consumes 2 mbpd.
EIA oil producing (countries)with production over 200k bpd number 29 which includes the north sea (Norway/Denmark/Netherlands) have a TOTAL reserve life 1298 billion barrels. According to the EIA world consumption for 2004 will exceed 82 mbpd. My math says this equals 1 billion barrels every 14 days@ or 33 billion barrels a year.
WHOA!!
If my math is correct then global reserves will last roughly 37-40 years and that is without consumption growth year after year-SCARY.
Now for the gas wars as we will see 3-4$ gasoline very shortly; Shell downgrades oil, gas reserves again
by: Oil Online
Wednesday, June 02, 2004
The Royal Dutch/Shell Group has downgraded its oil and gas reserves for the fourth time this year. Shell will move another 103 million barrels from "proven" to less certain categories. Company officials said the reduction was due to accounting changes involving royalties paid in cash in Canada. Since Jan. 1, Shell has now downgraded its reserves by 4.47 billion barrels. The latest change in reserves was announced before the company's published its annual report.
------------------------------------------------------
Today's lead story:
China imports shift to clean products due to refineries maintenance
China refinery maintenance season is here, coinciding with power shortages, and a fishing ban which will keep domestic oil prices a very high levels through the summer. This in turn will affect the tanker markets from the ME Gulf, West Africa and Asia to China. Sinopec, China's largest refiner, said it would shut down parts of four plants in June, whilst PetroChina, China's number two, will shut one refinery for maintenance.
China's thin domestic inventories of gasoil, gasoline and jetfuel have caused clean imports in June to rise significantly. China imported 90,000 tonnes of gas oil in June, bringing overall imports of clean petroleum products up 80% to as much as 580,000 tonnes in the first four months of this year.
The refinery turnarounds, are coming at a time when worsening electricity shortages across the country start to bite. Summer air-conditioning usually stretched the national power grid and has spilled over to diesel generators, used as replacement sources of power.
According to Reuters, reporting from Singapore, an extended annual fishing ban on China's coastlines, to conserve marine life, due start on 16 June and which has been extended to three months from last year's two months, would mean lower diesel demand from thousands of fishing boats, which also carry smuggled oil to southern provinces.
As many as 120,000 fishing vessels will be kept in port through the summer. The boats, which are the main the main conduits of smuggled diesel from abroad, also get their supplies from small local Chinese refineries, which are normally cheaper than those sold by state refiners such as Sinopec and PetroChina.
China's gasoline exports has fallen dramatically over the last half year because of the need for fuel for a domestic car boom. Reuters report that China's domestic fuel oil prices were under heavy pressure from bumper purchases in the first months of the year, forcing importers to slash May purchases into the leading Huangpu terminal by around 30% compared to April.
Fuel oil imports have risen by 64% compared to last year and totaled 10.2 million tonnes in the first four months, partly driven by the country's soaring gas oil market, which sucked in nearly 40% of heavy refinery product that can be processed into diesel, reports Reuters.
China's appetite for clean products this summer will mostly be met by other Asian refiners. However, with the US constantly in the market for Asian gasoline to supply the western coast of the country, competition could boost prices and the demand for tankers across the Pacific.
The Best of the Best Bill
Mark
Energy News:
Caracas, June 3 - USO, the United Workers Union, the union of the Venezuela oil workers, has voted to start a general strike in all the industrial installations of the state company ECOPETROL starting June 22nd, 2004.
NEW YORK (Dow Jones)--The continental U.S. generated 75,371 gigawatt-hours of electricity in the week ended May 29, up 1.8% from the previous week and up13.8% from the same week a year ago, the Edison Electric Institute reported Wednesday.
Eight of nine regions in the 48 contiguous states posted increases in electric output. –END-
Tom is not alone with these feelings:
Hi Bill
Market "management," "intervention" or whatever euphemism one chooses is now nothing less than Orwellian. We appear to be ruled by tyrannical interests who act as if they own us. Will gold, like the endless government statistical lies, ever be allowed to respond to market forces again? I really wonder. My belief in any integrity in government is gone. What a sad day for the republic, absolutely shameful actions by shameless rulers.
Tom K
Perhaps our side will be able to stir the pot in the near future and turn the tables against the arrogant ones:
Dear Dr. McHugh:
In Issue No. 54 of your Financial Markets Forecast & Analysis you wrote, “There must be a crisis of historic proportions coming, and the Federal Reserve Bank of the United States is making sure that there is enough liquidity in place to protect our nation's fragile financial system. The amazing thing is, the Fed's actions mean they know what is about to happen. They are aware of a terrible, horrific imminent event. What could it be?”
I think that Greenspan & Co. know that there will be a hearing in federal court next Monday to compel J.P. Morgan & Co. to reveal the names of the central banks that Morgan has been colluding with to suppress the price of gold (and to thereby support the U.S. dollar).
I spoke to Mr. Neil Ryan earlier today. He told me that defendants Barrick and Morgan have given plaintiff Blanchard the names of the bullion banks that Barrick has been dealing with but that the defendants have refused to name the central banks. This stonewalling has forced Blanchard to move that the court issue an order compelling the defendants to disclose that and other information.
Mr. Ryan also told me that Morgan has reduced its portfolio of gold derivatives from $70 billion to about $40 billion. He also said that Barrick's gold hedges are about $2 billion in the red. He invited me to call him again in about 10 days for an update on this situation.
Information about the Blanchard v. Barrick & Morgan lawsuit may be found on the web at http://www.savegold.com.
Sincerely, Scott G. Beach
The gold shares were hit again, closing on their lows. The XAU sank 2.04 to 85.78 and the HUI was hit for 4.57 to 189.76.
Patience time again. The Gold Cartel is pulling another tantrum. It is also time to step back and view the big picture. Are the gold fundamentals worsening? Heck no! They are getting better from gold’s perspective. Iraq and Saudi Arabia are a mess. President Bush may be in real trouble with the CIA operative disclosures. Gold demand is very firm. The dollar looks shaky. The US inflation numbers continue to build. The US stock market has been held up and could bite the bullet at any time, etc.
Thanks to the propagandists and financial market manipulators operating freely in the US scene, all is projected better than what reality dictates behind the scenes. One day the Orwellians are going to run out of room to maneuver and all heck is going to break loose.
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
From Capitol Hill Blue
Bush Leagues
Bush Knew About Leak of CIA Operative's Name
By Staff and Wire Reports
Jun 3, 2004, 05:28
Witnesses told a federal grand jury President George W. Bush knew about, and took no action to stop, the release of a covert CIA operative's name to a journalist in an attempt to discredit her husband, a critic of administration policy in Iraq.
Their damning testimony has prompted Bush to contact an outside lawyer for legal advice because evidence increasingly points to his involvement in the leak of covert CIA operative Valerie Plame's name to syndicated columnist Robert Novak.
The move suggests the president anticipates being questioned by prosecutors. Sources say grand jury witnesses have implicated the President and his top advisor, Karl Rove.
White House spokesmen, however, dismiss the hiring of outside counsel as a routine precaution.
"The president has made it very clear he wants everyone to cooperate fully with the investigation and that would include himself," White House press secretary Scott McClellan said Wednesday night.
He confirmed that Bush had contacted Washington attorney Jim Sharp. "In the event the president needs his advice, I expect he probably would retain him," McClellan said. There is no indication Bush has been questioned yet.
A federal grand jury has questioned numerous White House and administration officials to learn who leaked the name of CIA operative Plame, wife of former Ambassador Joseph Wilson, to the news media. Wilson has charged that officials made the disclosure in an effort to discredit him.
Bush has been an outspoken critics of leaks, saying they can be very damaging, but he has expressed doubts that the government's investigation will pinpoint who was responsible. While Bush has said he welcomed the leak investigation, it has been an awkward development for a president who promised to bring integrity and leadership to the White House after years of Republican criticism and investigations of the Clinton administration.
Even though he has a White House counsel, Bush is dependent on outside lawyers for private matters. A memo distributed to the staff last year reminded officials that the counsel's office works solely for the president in his official capacity and is not a private attorney for anyone.
Democrats seized on the news to criticize the president.
Zitat
"It speaks for itself that the president initially claimed he wanted to get to the bottom of this, but now he's suddenly retained a lawyer," said Jano Cabrera, spokesman for the Democratic National Committee. "Bush shouldn't drag the country through grand juries and legal maneuvering. President Bush should come forward with what he knows and come clean with the American people."
Plame was first identified by syndicated columnist and TV commentator Novak in a column last July. Novak said his information came from administration sources.
Wilson has said he believes his wife's name was leaked because of his criticism of Bush administration claims that Iraq had tried to obtain uranium from Niger, which Wilson investigated for the CIA and found to be untrue.
Disclosure of an undercover officer's identity can be a federal crime. The grand jury has heard from witnesses and combed through thousands of pages of documents turned over by the White House, but returned no indictments.
The probe is being handled by Chicago U.S. Attorney Patrick Fitzgerald, appointed after Attorney General John Ashcroft stepped aside from case because of his political ties to the White House.
Wilson has suggested in a book that the leaker was Lewis "Scooter" Libby, chief of staff to Vice President Cheney. But Wilson's book, "The Politics of Truth," gave no conclusive evidence for the claim.
The White House denied the claim and accused Wilson of seeking to bolster the campaign of Democrat John Kerry, for whom he has acted as a foreign policy adviser.
Wilson also said it's possible the leak came from Elliott Abrams, a figure in the Reagan administration Iran-Contra affair and now a member of Bush's National Security Council. And Rove, Bush's chief political adviser, may have circulated information about Wilson and Plame "in administration and neoconservative circles" even if Rove was not himself the leaker, Wilson wrote.
Another possibility is that two lower-level officials in Cheney's office - John Hannah or David Wurmser - leaked Plame's identity at the behest of higher-ups "to keep their fingerprints off the crime," Wilson speculated.
Sources within the investigation say evidence points to Rove approving release of the leak. They add that their investigation suggests the President knew about Rove's actions but took no action to stop release of Plame's name.
