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May 11 - Gold $376.70 down $1.60 - Silver $5.51 down 24 cents
Gold Shares Continue To Rebound
Zitat
"If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold." - Robert Ringer
Gold came in lower in line with a weaker dollar, fell sharply, then put in a good rally, but twice failed to take out the unchanged mark and stay there. Disgusted gold bulls jettisoned positions going into the close and bullion closed in new low ground.
Silver was a disaster right from the beginning. It came in lower and failed to move up with gold all day long. Late in the date, silver plummeted, also making a new low close for the move in dreadful price action.
Thanks to what The Gold Cartel precipitated, we have almost a complete disconnect between the Comex paper market and what is going on in the real physical gold/silver market world. Most likely this disconnect is unprecedented. By only looking at the Comex price action, you would think the physical gold market is falling apart. Nothing could be further from the truth, which will become evident when you read John Brimelow’s commentary.
In addition, my STALKER source told me this morning refiners and miners in North America and Canada will no longer sell physical to dealers looking for bullion at the price melt value, which has been the case in the past. They want a premium these days. As far as silver goes, they are just not letting it go at any price to dealers looking for supply at the source with the Comex silver price this cheap.
The gold open interest rose 1319 contracts to 254,913. Spec shorts continue to build their positions. This is with producers covering their own shorts. HSBC was in there today for sure covering more gold producer shorts.
The silver open interest rose 1275 contracts - most likely new longs who were flushed out today.
The euro was weak all day, but did manage a late rally as soon as gold closed, finishing only .10 lower to 118.52. The finished at 91.93, up only .08 after being sharply higher most of the day.
A refinery blow up in Southern Iraq and a pronouncement by the Algerian Oil Minister saying he was against any OPEC oil output increase sent the price of oil up sharply. It finally closed above $40 per barrel at $40.06, up $1.13. Wall Street basically continues to yawn at the relentless oil price climb.
Many of the financial markets have gone one way in their view of future trends – many to the extreme. There is a record short spec position in the 10-year note on the CBT. The bullish consensus on the euro is very low with most betting on a higher dollar. Fifty two out fifty four of JP Morgan’s clients believe interest rates are headed higher. The capitulation in the gold and silver markets has been extraordinary.
Meanwhile, the geopolitical developments for the US continue to worsen, as surely will the Iraqi porno scandal. The Army Times is now calling for the resignation of Rumsfeld and Meyers.
It strikes me how out of control the manipulation of markets has become since GATA came into being in January of 1999. A case in point was the recent April jobs number, which showed surprising (to most every economist) job gains of 288,000. The effects of this pronouncement was substantial:
*President Bush’s political opponents have been silenced to a great degree in their decrying the jobless recovery.
*The dollar soared.
*Gold was clobbered, helping to defuse inflation concerns.
*Intermediate to long rates rose.
Since the number was released, all of the Wall Street pundits I have seen on the tube have taken it for granted the jobs picture is on the mend and this last important phase in the economic recovery is finally on track. It is now part of their economic/market analysis. There is almost no questioning this mysterious job build by any of the mainstreamers on Wall Street. But, is it on track? Do these numbers represent reality? Just today, MCI announced they are going to lay off another 7,500 people.
The real question is was this number fabricated to suit other agendas? Let us go back to what the Hoisington Investment Management Company in Austin, Texas wrote "Incidentally, 270,000 of the April job gains came from the birth/death model, a statistical extrapolation rather than a direct increase in the job head count. Previously the model was called a plug."
The very sharp maverick journalist John Crudele picked up the same theme today:
WHAT ARE THEY SMOKING AT THE LABOR DEPT.?
By JOHN CRUDELE
May 11, 2004 -- DON'T get too excited about all those new jobs that were supposed to have been created in April.
I'm not going to waste a lot of my precious space on this, but the bottom line is that most of the 288,000 jobs that the Labor Department says were created last month may not really exist.
They could be figments of statisticians' optimism.
Anyone who plodded through my column last Thursday knows I predicted that job growth in April would be better than the 160,000 to 170,000 jobs that the "pros" were anticipating.
But I also said, quite emphatically I hope, that the stronger growth would be an illusion - the result of the Labor Department's computers making happy predictions about seasonal job creation that could neither be verified nor justified.
I'll explain one aspect.
Back in the March employment report, the government added 153,000 positions to its revised total of 337,000 new jobs because it thought (but couldn't prove) loads of new companies were being created in this economy.
That estimate comes from the Labor Department's "birth/death model." You can look up these numbers on the Department's Web site.
As staggering as the assumption about new companies was in March, the Labor Department got even more brazen in April.
Last Friday, it was disclosed that these imaginary jobs had been increased by 117,000 to 270,000 for the latest month - because, I guess, the stat jockeys got a vision from the gods of spring.
Without those extra 117,000 make-believe jobs, the total growth for April would have been just 171,000 - sub-par for an economy that's supposed to be growing at more than 4 percent a year, but right on the pros' targets.
Take away all 270,000 make-believe jobs and, well, you have the sort of pessimism that the political pollsters are seeing.
If I was the suspicious type (and if I thought Washington was smart enough), I'd suspect a nasty motive behind the sudden surge in these mystery jobs. But for now, let's just acknowledge their existence.
Also keep in mind that the government doesn't distinguish between good companies being created and, say, a guy doing consulting work out of his basement because he can't find real work…
-END-
Thus, the jobs number, which appears to be a phony one when it comes to the real world, has had an enormous impact on the financial markets and was a real plus to the Bush re-election campaign strategists. An unintended consequence has been the stock market setback. You know what they say about the best laid plans.
Based on the real jobs growth number, it also may mean the Fed is not going to raise interest rates this summer because the economy is indeed weaker than the Washington Fed/political folks are willing to let on.
As far as the markets go, this one way bet, one based on increasingly obvious false premise, is likely to turn with a vengeance very soon. Bonds (with a potentially exploding oil price a caveat), the euro, gold, and silver should rally very sharply. Surely, gold and silver should not be down here with oil taking out key resistance at $40 per barrel.
Gold needs to take out $380 as a first step. If it does, it ought to run back up to $390 for starters.
