CARTEL CAPITULATION WATCH
The DOW and DOG both closed slightly lower after yesterday’s dramatic rally from an oversold condition.
March 26 (Bloomberg) -- U.S. personal spending rose 0.2 percent in February, the smallest gain since October, as purchases of automobiles and other durable goods slowed, a government report showed.
The increase was half as much as economists surveyed by Bloomberg News had forecast and followed a 0.5 percent gain in January that was larger than first estimated, the Commerce Department reported in Washington. Incomes climbed 0.4 percent following a 0.3 percent increase in January.
Consumer spending ``isn't driving the acceleration of the economy, but it's still shaping up to be pretty solid in the first quarter,'' said James Glassman, a senior economist at J.P. Morgan Securities Inc. in New York. ``As the expansion broadens to include hiring, that is going to provided ongoing support or the consumer.''
GATA’s Mike Bolser:
Hi Bill:
A quick update on the DIVG shows its 200-Day ma still powering higher along with the Euro Index Value of Gold (EIVG).
The previous 15 year highs for these absolute value metrics are 425 for the EIVG and 362.69 for the DIVG. This evening they stand at 416 and 359.75 respectively.
Even though the previous highs haven't been breached yet the real battle line at the DIVG 200-day ma has already been lost to the gold bugs as they gold cartel retreats upward...in a futile search for yet another defense line.
President Bush may crow and joke around at dinner parties about not finding WMDs in Iraq, but there's no joke regarding the unmistakable threat to US financial stability emanating from the precious metals markets.
THAT is the real war...and GATA is leading the charge.
Mike
[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/divg032604.jpg]
[Blockierte Grafik: http://www.lemetropolecafe.com…divg200masingle032604.jpg]
More from Mike:
Hi Bill:
The Fed added $9.75 Billion in temporary repurchase agreements today March 26th 2004, an action that caused the repo pool to keep inching up to $32.33 Billion and also kept the upwards pressure on the DOW futures market. At this hour (12 Noon) the DOW is moving up through 10,255 to what appears to be a good day.
It is easy to be seduced by the DOW crash theorists but we live in an interventional world where government paper rules the markets and the Fed has shown its desire to print enough to keep the DOW moving up. We are still on track with a rising DOW as the Fed displays its main diversionary vehicle. It is a red herring...a ruse by an institution in deep trouble.
Even as they imagine they are still in control of everything financial, the Fed is losing the overall battle in its most crucial theater...precious metals and especially silver. These indicators inflation are the sine quo non of inflation and silver has traded as high as $7.75 today. Indeed, the LBMA still has not reported its February volume figures at this hour, how bad must the numbers be?
Mike
Houston’s Dan Norcini:
Hey Bill:
A couple of quick comments on the open interest and Commitments Data for gold as I am pressed for time today as it is Snout count day for the hogs.
The commercial category pretty much absorbed the entire amount of fund long buying. Commercial longs bailed out and sold while the cartel piled on an obscene amount of further short positions to sit on the rally. We are now approaching the levels in both camps that we saw back near $430 in January once again.
What I found very strange is the sizeable increase in the fund short category; some 6200 new shorts. That one really has me scratching my head. They are only about 1200 contracts shy of their largest short position for the last year. Funds are typically black box players and are of the momentum type. As a general rule they tend to buy strength and sell weakness. I am not sure what these particular short funds are looking at since every technical indicator has switched over to the buy side and is showing strength. Could be they are attempting to play the cartel's game and piggyback on their selling hoping to ride a potential spec flush down. Regardless, they sold to the small specs who bought in by a three to one margin. Since the data is only good through Tuesday of this week, it is difficult to say whether any of them have covered yet but since open interest is now more than 5000 contracts higher than the Commitments data, it is unlikely. If they did cover, the cartel no doubt was there to meet them and take their place.
One thing is for absolute certain. Without the selling of the bullion banks, gold would have easily moved above the $430 level and garnered an immense amount of new buying. It is these white collar criminals who still refuse to go away who are the ONLY REASON gold does not explode right here and now. I know all of us are waiting for the day they get what is coming to them in that pit. A pox on the whole lot of them.
Best,
Dan
But, there is no inflation:
Hey Bill;
I run a manufacturing plant and thought you might like to know that when my steel suppliers quote us prices they are only holding their prices for 48 hours and tungsten and molybdenum prices are only good for 24 hours.
And we don't have any inflation!
Best Regards
Peter Sanborn
Barnstead, NH
New York Fed Accounts Activity:
Bill,
As you know, I have been tracking the NY Fed's market activities closely for some time.
For the weekly period ending March 25, the NY Fed's Custodial Accounts showed a weekly net outflow of about 1.6 billion dollars.
This is the first outflow since October, 2003. Recently the Accounts have been adding about 1.6 billion dollars per business DAY.
Perhaps Japan is serious when they say their support for the dollar is going to change.
Jesse
View of the day from Australia:
Bill
Coupla observations.
CDE bounced off uptrand support in the $6.30's and looks really like its getting set to go and challenge $7.50 again.
But the really story I think is Fannie Mae, which didn't participate in yesterday's rally at all, and has broken solidly through its uptrend that it established last August. Could this be the start of the blow-up?
Nem looks great but Agnico Eagle and Golden Star didn't participate in todays rally at all??
General market wise, the US close was pretty ugly eh and how is Jim Sinclairs commentary? That's downright scary.
I am trading a little silver/gold and currencies, but getting a "large-ish" position on almost impossible due to the volatility, which anyone with capital preservation in mind keeps gets stopped out in an instant, and the sudden plunges mean that I am sitting mostly on the sidelines simply in awe of how some wrong-footed currency traders and hedge funds must be in diabolical trouble right now due to the size and power of the latest moves.
Hope you are well.
Regards,
Rob O.
Some news from Samex Mining, my second largest holding. You can check it out at their web site:
http://www.samex.com/news/aa-news-2004/NR1-Mar25-04.html
In essence they have renamed their El Zorro project in Chile to Los Zorros. They have done so to better reflect their finding five potential gold/silver deposits of size all in one zone. The potential is extraordinary. Drilling will commence sometime this spring. If they hit on just one of the five targets, we have a winner. This is the reason I loaded my boat with Samex shares.
The gold shares have gone into a disconnect with gold. It’s as if the share folks are trading them with the euro. Either that, or they cannot believe gold will stay at these prices, so why buy?
Something to think about which will give you some idea of what is to come with the shares: A savvy gold fund manager knows a very successful retail stock broker who handles the accounts of 336 families (more than one account per family). Only five of those families have any gold stocks in their accounts and most of it is Newmont. In the years to come 85% or more will have gold stocks in their accounts.
Signing off from sunny California, dreamin' of the days we have coming our way.
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
From Jessie:
Two Thoughts
* Consider the implications for the US notes and the dollar.
* China still not as 'free market oriented' as people like to imagine. At some point they may cut off western investors at the knees if it suits them.
Sakakibara Says Dollar May Fall Below 100 Yen
2004-03-26 04:44 (New York)
By Mayumi Otsuma and Tatsuo Ito
March 26 (Bloomberg) -- The yen may strengthen beyond 100 to the dollar as Japan's economy grows faster than anticipated, said Eisuke Sakakibara, formerly Japan's top currency official. ``It's unavoidable that the yen will keep strengthening toward 100 per dollar,'' Sakakibara, now a professor at Keio University, said in an interview in his office in Tokyo. ``It's possible the currency will be stronger than 100 yen temporarily.'',
The Japanese government won't allow the yen to be stronger than 105 yen per dollar at the fiscal year-end of March 31, when companies close their books, said Sakakibara, known as ``Mr. Yen'' when he directed Japan's foreign-exchange policy from 1997 to 1999 at the Ministry of Finance.
The yen rose to its highest in five weeks in Asia today after government reports showed economic growth in Japan is boosting consumer spending, which may lure more overseas investment into the world's second-largest economy.
The yen headed for its third week of gains as a government report showed household spending in February rose by the most since 1982. Reports yesterday showed overseas investors bought a record amount of stocks last week and Japan's trade surplus widened.
The Japanese currency traded at 105.65 yen per dollar as of 5:36 p.m. in Tokyo, according to EBS prices, from 106.19 late yesterday in New York.
Sakakibara said major Japanese companies are becoming resilient to the yen's gains, and the yen at around 100 per dollar ``won't have much negative impact on the economy.''
He said a stronger yen is good news for companies that are struggling with rising prices of imported materials.
The yen has been gaining against the dollar because a recent recovery of the Japanese economy is ``a surprise'' to foreign investors who have been ``extremely pessimistic,'' Sakakibara said. They are increasing investment in Japan, particularly in the stock market, which has strengthened the yen, he added.
`Exit' from Yen Sales
Japan's monetary authorities are starting to ``exit'' from their ``massive intervention'' policy, and they will sell the currency only to slow rapid gains, rather than to weaken it, he said.
``It's obvious to everyone that massive intervention can't be continued, and such actions shouldn't be continued,'' Sakakibara said. ``Considering relations with other countries, it's very difficult to conduct intervention.''
Federal Reserve Board Chairman Alan Greenspan this month said Japan may have to scale back its yen sales as its economy picks up.
U.S. Treasury Secretary John Snow said this month that ``no one has devalued their way to prosperity,'' indicating that the U.S. opposes currency selling by several Asian nations.
Finance ministers and central bank governors of the Group of Seven nations won't make the issue of foreign exchange rates a big topic when they will meet in Washington next month, Sakakibara said. They probably will use ``neutral language'' in a statement and say that it's necessary to closely monitor the currency market movements, he added.
Chinese Yuan
Sakakibara also said China's monetary authorities told him this week that the country won't change its peg to the dollar as long as investors hold a large amount of yuan to take advantage of such a change.
``Chinese authorities know financial markets very well, and they said they won't take any action that will reward speculators,'' Sakakibara said, declining to identify the people he spoke to. ``It can never be possible for monetary authorities to move when speculation is rising.''
China ``probably considers making a shift in a four- to five- year period,'' Sakakibara said. ``There is no doubt that they aim at the year of around 2007.''
Sakakibara visited China for three days this week and met Chinese officials including Zhou Xiaochuan, governor of China's central bank.
China has pegged the yuan to the dollar since 1994 and valued it at about 8.3 to the dollar since 1995.
China has come under pressure to move to a more flexible currency policy from the U.S., Europe and Japan, which say the peg artificially cheapens China's exports, stoking trade deficits and job losses.
--Editors: Wellisz.
-END-
PAUL B. FARRELL
Next crash? Sorry, you won't hear it coming
Unpredictable external events will collapse market in 2004
By Paul B. Farrell, CBS.MarketWatch.com
Last Update: 7:57 PM ET March 24, 2004
LOS ANGELES (CBS.MW) -- Back on March 20, 2000, just before the Nasdaq peaked, I wrote column titled "Next crash? Sorry, you won't hear it coming." You didn't have to be a psychic to know the crash was coming ... and yet people didn't listen.
Yes, some Americans did hear the crash coming. The signals were unavoidable. For example, the astronomic price/earnings ratios, like those no-earnings Nasdaq heroes with 100 percent annual growth. But nobody wanted the party to end. So nobody listened then ... and nobody is listening now.
The new science of investor psychology, behavioral finance, tells us why: Investors tend to minimize or totally deny bad news, like a coming crash. We have an "optimism bias," with a mental valve in our brains that actually filters bad news out of our ears.
Listen closely: The next crash is coming ... it is coming!
I'll bet your filter's working. I could almost hear you call me a nut!
Notice, I'm not referring to the current mini-correction because technical indicators suggest the bull should snap back soon. Also, I don't need any psychic powers. And I don't even need to use any psychological analysis or behavioral finance research.
I do know I was on target in 2000, before the market crashed and moved into a long bear market, a loss of $8 trillion. And I'm sticking my neck out again.
Read my lips: The next crash is coming, and it could kill your retirement if you don't start planning ahead now.
Signs point to trouble
I admit I don't want to believe it. But the warning signs are all over, in spite of the pep talks we're hearing from the Fed chairman and the administration.
This time the reasons for the crash scenario are not internal to the structure of America's stock market, although the federal and Medicare deficits increase our long-term vulnerability. That's crucial to understanding the prediction: You can analyze the domestic economy, interest rates and markets all you want -- it won't matter.
Why? Because the reasons are external. Remember, shortly after 9/11 both Donald Rumsfeld and Warren Buffett publicly said that the question is not if we are going to have more attacks on U.S. soil, but when. That may not be news, but it is clear Americans are in denial about this truth, and that denial, unfortunately, will set you up for failure in your personal finance.
As a result of the Afghan and Iraq wars the global political landscape has become more destabilized than before. The Israeli roadmap for peace has collapsed. The Pakistani offensive against al-Qaida now looks like a farce. And the post-Madrid television warnings from bin Ladin's mastermind al-Zawahiri that "death brigades" are 90 percent in place to carry out new terrorists' attacks inside America's borders have an ominous promissory ring to them, as did the warnings of the blind cleric during his trial after the 1993 bombing of the World Trade Center.
So the "when" we heard from Buffett and Rumsfeld appears much closer on our radar than a few years ago. Indeed, the current 9/11 hearings reveal an inept government intelligence system that can easily be outwitted by determined terrorists armed with low-tech weapons focusing on new and unsuspecting targets.
Moreover, the Madrid bombing and subsequent threats telegraph the likely timing of the next attacks. The enemy is clever at changing tactics, to mislead us. Not planes nor trains, but a different venue next time. Madrid taught the terrorists that they can influence elections. The likely timing will coincide with a significant political event this year: The Fourth of July, a political convention, the 9/11 anniversary or the November presidential election.
Bears will have their day
This forecast was already well formed although unarticulated when I read in Barron's: "We are coming into one of the worse bear market in history." The prediction was made by Richard Russell, the highly respected publisher of the Dow Theory Letters. He has a solid track record predicting market turns since he launched his newsletter in 1958.
His dark omen reminds me of similar warnings from super-bears like Robert Prechter, the long-time publisher of the Elliot Wave Theorist. Prechter has also been sounding the alarm in recent months, reinforcing Russell predictions.
Prechter's solutions are drastic. In an earlier newsletter he offered many radical 'Bear Market Strategies:' Get out of stocks and funds and park all your money in Treasuries and money markets. Cash out insurance policies and stop looking at your home as an investment because that market's bubble will burst.
While I dismissed Russell and Prechter earlier, today the contrarian in me (the one discounting all the hype about the economy and market) is telling me to pay a lot more attention to them, telling me that unpredictable events can easily erase all our domestic successes in a flash.
Long-term I'm still an optimist: "Betting against America was a bad bet in the past. It'll be a bad bet in the future," said Peter Lynch shortly after the 9/11 attacks: "In the last 50 years we have had many periods of economic prosperity and many periods of uncertainty. Despite nine recessions, three wars, two Presidents shot (one died and one survived), one President resigned, one impeached, and the Cuban Missile crisis ... stocks have been a great place to be."
This time it is different. A couple quick wars in Afghanistan and Iraq? No, we are already mired in World War III, a global cultural war that has been accelerating for over a decade, and we must fight enemies who have made it clear in no uncertain terms that they will be trying to kill us and our way of life for generations.
So please, listen closely: "Next crash? You won't hear it coming." Or will you?
