Nr. 2979
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CARTEL CAPITULATION WATCH
The dollar continues to move higher, closing at 92.15, up .71 and a new high close for the move, with the euro falling .87 to 118.11.
The DOW was all over the place, ending the day down 34 to 10,011, while the DOG held steady ground.
Inflation Fears Send Stocks Skidding
By MICHAEL J. MARTINEZ
AP Business Writer
Published May 13, 2004, 9:18 AM CDT
NEW YORK -- New government data that showed a possible rise in inflation sent stocks sliding Thursday as investors feared the news would prompt the Federal Reserve to not only raise rates soon, but to raise them to a larger degree….
The Labor Department said that wholesale prices climbed 0.7 percent in April, the largest increase in a year, spurred on by higher dairy and gasoline prices. However, excluding food and energy prices, "core" whole sale prices rose by only 0.2 percent, matching economists' estimates. –END-
GATA’s Mike Bolser:
Hi Bill:
The Fed added $14.692 Billion today May 13th 2004, an action that caused the pool to slip to $34.87 Billion ( there was a large expiration today).
These Federal Reserve open market operations can be viewed daily at:
http://www.newyorkfed.org/mark…mm/temp.cfm?SHOWMORE=TRUE
for temporary operations
and http://www.newyorkfed.org/markets/permanent.html
for permanent operations. In addition the reader may see the repo pool daily at my own free website:
http://www.pbase.com/gmbolser/interventional_analysis
The permanent operation today was $1.692 Billion.
The Fed isn't ramming the pool higher even with a weakened DOW so I continue to believe they prefer to add their repo support in a gradual slope upward with no steep spikes as shown in the red 30-day moving average trace.
Support regimes--Follow the red line
With the onset of the "Iraq War Rally" the Fed has implemented four distinct support regimes. Each one exhibited a slightly different character. The first, which initiated the false DOW "rally" was parabolic in repo growth, the second was approximately linear in appearance, the next lasted a bit longer and carried a steeper up slope and the last and current regime of a more gentle up slope. The last three seem linear.
These regimes of government intervention have been designed to steer the DOW by adding futures support and the funds can be used in currency markets as well. Since the government has an unlimited supply of paper assets (hyperinflation) with which to support the DOW, don't expect them to suddenly walk away and let it crash. However speculators appreciate this and know about the required hyperinflation so they move out of the DOW and into investments that will survive the inevitable inflation. This potent force is known as price discovery.
The inflationary surge in prices has ignited an upsurge in the number of investors seeking protection from the ravages of government intervention. The rest of the world has increased their bullion purchases not to mention their energy purchases and storage capacity (China). The move is into commodities and precious metals in particular. Somewhere in this arena the Fed will fail in their interventional schemes. The time factor resides with the commodity longs while the remaining stocks of Fed bullion needed to continue the charade dwindle. When the central bank players decide enough is enough the Fed's grand gamble will be over.
Its only a matter of time.
Mike
The bond auctions this week were nowhere near as positive as they looked at first glance. The astute Bill King tells us why in his King Report last evening:
The more important story is the disappointing 5-year note auction, the 2nd tranche of the Treasury Refunding. Initial auction results looked modestly beneficial. However, the Fed had to buy $3.058B of the $15B auction (20%) because central banks only bought 34.5% of the notes. The past four months they have bought 41%, 44%, 43% and 40.4% of auctions. It’s revealing and troubling that the investment community insouciantly ignores the fact that central banks, principally Japan and China, have been funding over 40% of US Treasury Auctions. Where’s the commentary or concern?
We have opined that economic statistics are not indicative of the robust economy that most of Wall Street sees and heralds. We have also noted that the convenient sudden job growth is mostly BLS legerdemain and the taking of temp jobs because employment benefits have lapsed. However, we noted that it’s possible that intractabulls might be correct about the self-employment and small business boom. And that verification would appear when the IRS releases tax data.
Yesterday the US Treasury reported a $17.62B budget surplus for April. The average forecast was for $15.5B; some Wall Street bulls expected $23B due to the robust economy and employment boom. (Last year the surplus was $51.06B.) The CBO had forecast receipts of $222B and spending of $207B. April 2004 total tax receipts fell 4.8% to $220.091B (from $231.160B) ~$2B less than CBO forecast but spending was less than expected but a larger magnitude. Spending for April surged 12.4 y/y%.
For the first seven months of the current fiscal year (through April) tax receipts are up only 1.3% y/y. Bush’s tax plan cut receipts but this should disturb the supply siders and Lafferites who advocate that cutting taxes increases tax revenues because it stimulates the economy. Revenue from withheld income and payroll taxes increased only 2%. Social security taxes increased only 1.6% FYTD! Is this characteristic of a robust economy with a self-employment and small business boom? Or are many self-employed doing a Tony Soprano? PS - While tax receipts increased only 1.3% FYTD, spending surged 7.5% y/y.
April receipts were $9B or 4% lower than April ‘03. Tax refunds were $12B higher than last year, but April had 5 Fridays and the Treasury reports the majority of tax rebates on Fridays.
-END-
Some positive demand news for silver:
http://www.stamfordadvocate.co…l=stam-business-headlines
-END-
Congratulations to Silver Standard Resources for taking a step to counteract the silver trashing efforts of the cabal price managers:
Here is what Silver Standard Resources had to say in their press release.....
"With cash of $61 million, and marketable securities of approximately $10 million at March 31, the company decided to invest approximately 20% of its cash and securities in physical silver following the decline in silver prices in April and May. Silver Standard now owns over 1.95 million ounces of silver. This silver is held on an allocated and segregated basis and, consequently, is not available to be loaned."
Robert Quartermain, President
Silver Standard Resources Inc.
It seems like eons ago the World Gold Council launched plans to commence trading its Equity Gold Trust on the New York Stock Exchange. As it would be a positive for gold demand and attract more investor attention to gold, the GATA camp posited way back the authorities would make it very difficult for the World Gold Council to get up and running, which is just what has happened.
By Bloomberg News Service
Wednesday, May 12, 2004
The introduction of gold-backed shares in the United States has been delayed because of a longer than expected review by securities regulators, said Bobby Godsell, chief executive of AngloGold Ashanti, the world's second-largest gold producer.
World Gold Trust Services, a subsidiary of the producer-funded World Gold Council in London, said in May 2003 it was seeking approval from the U.S. Securities and Exchange Commission to sell as many as 60.4 million shares in the Equity Gold Trust.
The trust would be listed on the New York Stock Exchange.
The delay in getting approvals reflected a desire by U.S. officials "to make absolutely sure they understand the nature of the security and that it's meeting all of the regulatory requirements," Mr. Godsell said.
Equity Gold Trust shares would be "a little bit between an equity and money," Mr. Godsell said. "It's a product innovation. I guess you take time to get through the regulators when you're innovating a new product. I'm sure it will come out."
The World Gold Council's members include Denver-based Newmont Mining, Johannesburg-based AngloGold, and Toronto-based Barrick Gold, the world's largest producers.
Trust shares trading in London and Australia had generated 43 tonnes of investment demand for gold as the price of the precious metal had risen during the past two years, Mr. Godsell said. "We're very encouraged." -END-
Daily Rap for 05-11-2004
by Bill Fleckenstein
"Free the ETF".
Feeding Grass Roots to the Yellow Dog
On the subject of gold, I have received many emails asking what's happened to the ETF. All I can say is, I have no idea. But along that line, I have decided to take matters into my own hands. I would like to start a campaign, if you will, to "Free the ETF." After checking around a bit, I think that perhaps the most constructive thing folks can do is convey their sentiments, via letters to the SEC commissioners -- something along the lines of:
"I would like to trade gold, via an ETF, as soon as possible. With nearly 100 ETFs now trading on a variety of instruments, surely the SEC could allow gold among those offerings. And yet, the most recent S1A for the gold ETF was submitted almost six months ago. What's the holdup?" The letters should be sent to SEC Commissioners William H. Donaldson, Cynthia Glassman, Harvey Goldschmid, Paul Atkins, and Roel Campos. The address: SEC Headquarters, 450 Fifth Street, N.W., Washington, DC 20549. –END-
Fleckenstein remains in the blind camp when it comes to what the real gold story is all about. This "holdup" is just one more aspect of an orchestrated effort to hold down the price of gold.
Mahendra predicted the stunning upset of the elections in India:
"A study of Sonia Gandhi’s chart reveals a great rise after 25 July 2004. During my last visit to India I read in media, almost all astrologers and analysts predicted that Sonia Gandhi would never be the Prime Minister of India. However, destiny will prove them all wrong and just as I said earlier in the year, I still affirm that she will soon rule India."
The gold shares sold off in light volume with the XAU down .61 to 80.09 and the HUI 1.85 lower to 173.54.
All eyes will be on the CPI tomorrow. Will it show the real inflation spreading through the US system or will they concoct the numbers? Will The Working Group on Financial Markets use the number, whatever it is, as an opportunity to gun the dollar and grill gold? Or, will gold tank and then pull some sort of stunning comeback? With the fundamentals this bullish and the technicals very bearish, something has got to give. The price action will have to tell us what that is. A key will be not to panic if the cabal forces drill us and then be on the lookout for a key reversal.
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
A view of America from Down Under, a view which is becoming more widespread around the world. What is so scary about this commentary below is many months ago a Café member met with a former head of state of a foreign country. This head of state was discussing the Iraq War with President Bush when the President told him "God is on our side." This head of state said he never heard anything like it during his career in politics, describing the comment as both astonishing and disturbing.
In 1933 the Nazi party under the leadership of Adolf Hitler came to power in Germany. Hitler proclaimed a 'New Order', a one-party state led by him under the Fuehrerprinzip or 'leadership principle'. It was to be based on the infallibility of a 'master race', the Aryans, a theme which had no basis in scientific or anthropological fact, but was part of misty German folklore that had been around for centuries.
This new order was founded on military might, and from the start its aim was to capture new territory, or Lebensraum, so that Germany could extend its empire throughout Europe, extending to Russia and on to the eastern shores of Asia. Hitler proclaimed this 'Third Reich' (the First Reich was the Holy Roman Empire under Charlemagne, and the Second, Germany ruled by Bismarck) would last for a thousand years. In fact, it lasted just 12 years and 3 months.
The Nazis' rule was one which was characterised by the most appalling atrocities, none of which it is necessary to repeat here in detail -rape, torture, murder were their stock-in-trade. But if you wanted to sum up in one word what characterised the Nazi regime, that word would have to be 'arrogance'. The belief in one's invincibilty and that God is on your side (every German soldier had the words Gott mit uns - 'God with us', emblazoned on his belt buckle), the contempt for other races or Untermenschen who were good only for use as slaves to serve Germany and whose lives could be disposed of whenever deemed appropriate - all this reflected a supreme arrogance. And once that arrogance was instilled in the common soldiery, all and any kinds of human rights abuses became not only inevitable, but took on a twisted logic all their own. That phenomenon was not confined to Germany - more recent examples are the Serbian atrocities in Bosnia and Kosovo and the slaughter in Rwanda.
When the Soviet Union collapsed in 1990, the United States stood as the world's only superpower. Their military technology was, and is, unchallenged. When GWB was elected, a powerful group that we now know as the 'neo-cons' saw an opportunity to use a compliant, clueless president as a tool to implement policies that are designed to make America the only dominant nation, and to ensure that in strategic regions, governments are installed that are benignly disposed toward it. Nowhere is of more strategic importance than the Middle East with its vast reserves of oil.
When Hitler invaded Poland in September 1939 he used the pretext that Poles had been committing abuses against ethnic Germans. He also asserted that Poland had 'fired first' and that Germany was only acting in 'self defence'. All lies of course, just as the nonsense about Iraqi WMD's and Saddam's involvement in 9/11 were proved to be lies. The first casualty of war is truth, and the Bush administration's propaganda machine continues to churn out misinformation, disinformation, distractions and plain falsehoods on a daily basis.
When the US military won the brief campaigns in Afghanistan and Iraq, as they were bound to do, they collected thousands of prisoners and imprisoned them at Guantanamo Bay in Cuba. Discarding the Geneva Convention, just as all arrogant, brutal regimes do, they conducted interrogations that relied on torture and humiliation to extract information. We know this because Donald Rumsfeld has admitted to authorising 'harsh interrogation techniques' at that establishment. In my book, that equates to torture.
Now we hear of ever worse abuses in Abu Ghraib prison - women gang raped, prisoners savaged by guard dogs, and other acts that Congress says are too awful to be made public. Some Americans are indignant that the world should be so critical of America and its 'heroic' soldiers. Senator James Inhofe is one of those - he's angry about those 'do-gooders' as he calls them, and says that the Iraqis that were abused were terrorists and murderers. By extrapolation, I guess that means that torture, rape and murder are OK. Someone should tell him that the figures show that between 70% and 90% of those imprisoned by the Coalition were later to be proved to be totally innocent. No matter to Mr Inhofe, it seems. If he had been a German during WW2 he would have probably referred to those prisoners as Untermenschen.
A video-diary of one female soldier in Iraq was shown in part on BBC news this morning. In one scene, the body of a dead snake is shown. "A sand viper," says the soldier, "get bitten by that and you're dead in 6 hours. We haven't had anyone bitten yet, but a couple of prisoners have died. What should I care? Two less for me to worry about." Sure, who cares about untermenschen?
Apologists like our own Prime Minister say that because the Coalition are addressing these issues and will bring those responsible to justice, we are somehow not as bad as Saddam's people who did many more bad things and weren't punished. That is the most cowardly and obscene drivel I've yet to hear from anyone so far. The only reason that the abuses may stop is because someone blew the whistle on the whole disgusting exercise. You can bet that Bush, Rumsfled, Blair and the whole rotten crew knew what was going on, but chose to ignore it. Either that or it was a classic case of 'don't tell me anything that I don't want to know.'
Some may think I'm being unreasonable in drawing comparisons between the America of today and the Germany of the 1930's. But if power corrupts, and absolute power corrupts absolutely, the potential has existed for America to exert its power with impunity for a number of years, without resistance, and up until now, without condemnation. When you're unassailable, the temptation to go beyond the limits of human decency become too strong - it's so easy to say "We're doing this for the good of all - the end DOES justify the means." It's garbage and it's always been garbage. America, wake up and wake up quickly! You are becoming a pariah, hated by an ever-increasing number of people around the world. There are around a billion Muslims out there, and right now a goodly number of them want your collective heads on a plate - just as they got Nick Berg's in a show of barbaric murder yesterday.
Bill Bonner, editor of The Daily Reckoning, often says that we may not get what we expect, but we usually get what we deserve. Right now America is in grave danger - its government, its corporate sector, its media - everything is rotten, riddled with corruption, lies and naked greed. Last night on Wall Street, the Dow looked like it was in danger of collapsing. The Plunge Protection Team swung into action and a 175 point fall magically reverted to a 25 point gain in the space of two hours. If you don't think that's market manipulation you need to take a reality check.
Whatever 'it' is that America deserves you can be sure that it will eventually get it. And it won't be pretty.
The Idle Fellow