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CARTEL CAPITULATION WATCH
The DOW (10,296, down 160) and DOG (1964, down 31) are finally breaking down. The PPT was overpowered today. It could get ugly.
The trade news was terrible, so the dollar surges??? Go figure!
March 10 (Bloomberg) -- The U.S. trade deficit widened to a record $43.1 billion in January, as exports of foods, consumer goods and auto parts declined and prices of imported oil rose, a government report showed.
The excess of imports over exports of goods and services in January compared with a trade deficit of $42.7 billion in December, the Commerce Department reported in Washington. Exports fell 1.2 percent, the biggest drop since August, and imports were the second highest on record. -END-
GATA’s Mike Bolser:
Hi Bill:
The Fed continued its planned reduction of DOW support by keeping the repo pool low at $26.50 Billion after adding only $4.22 Billion today March10th 2004. This consisted of $3.75 Billion in temporary omos (open market operations) and $470 Million in permanent omos (which were announced yesterday but delivered into the system, and thus effective, today).
Obligingly, the DOW has dipped below its 30-day ma in a conspicuous manner not seen since November 2003 just prior to its recent engineered run up. We see the DOW today again struggling along at 10,450 as it gasps for more repo oxygen. Surely, without this Federal Reserve artificial support the DOW would quickly plunge many thousands of points.
Market Commentary
Market commentary regarding the DOW that ignores the Federal Reserve repo pool and its heavy influence is just window dressing, good only for its entertainment value. As you have highlighted for many years here at the cafe, precious metals market commentary that ignores government intervention is similarly useless.
The dogmatic, not-invented-here stance by such thinly aware metals gurus hurts the people they most want to help their own subscribers, as it deprives them of a logical framework from which to make reasonable future market assumptions and replaces that framework with their own home brew of TA mixed with their special trading, hence expensive, "experience". The record is clear who have been correct.
I have updated my interventional analysis site
http://www.pbase.com/gmbolser/interventional_analysis
with the following brief addition:
Definitions:
(1) DIVG is the price of gold adjusted for the changing value of the US dollar
(2) DIVG 200ma single is a vertical expansion of the DIVG with moving averages added
(3) Changes_Currency_Gold displays the relative changes in euro, yen, dollar and gold since December 5th 2002. The O'Neill Period is the interval after his departure and before the confirmation of his replacement. During that period the ESF (Exchange Stabilization Fund) could not be utilized for currency or gold price controls since the action of both the Secretary of Treasury and the President are required
(4) Repos tracks the daily correlation between the pool of un-expired Federal Reserve repurchase agreements (permanent and temporary) and the DOW
Mike
Chuck checks in with a bunch of goodies:
It seems obvious to me that we are in motion here. The usual tedious gap down in gold and the shares, is tracking lockstep the dollar's rally in the Euro. Of course, once the XAU heads down, it never rallies. Get me out!
But, on the other hand, the market is continuing its technical break sneaking down without drawing any real concern reinforced by the past year's pattern. Every 30 points is met with some by those who see the break as a historic opportunity to buy at these cheap levels. The breaks should get steeper and more frequent and soon. March has been a major turning month since 2000. This year doesn't appear to be any different. "Man is a mere phantom as he goes to and fro: He bustles about, but only in vain; he heaps up wealth, not knowing who will get it." Psalm 39: 6 Chuck ikiecohen@msn.com…….
This looks like it, warts and all. The weakness in gold shares are to be expected at the first thrust, but I think we will see good relative strength from here. The next pop up while the market sinks should be a positive sign. Who is left to buy this stock market. Looks like a fascinating spring.
Chuck….
A final look at the market today is needed because the stock market definitely appears to be changing gears and direction following a full year of greed, manipulation and extreme technical sentiment. I have felt that that these three factors would ,sooner or later, lead to a decline that will be frighteningly sharp, perhaps culminating in a panic.
The tip offs have been the unnatural way in which this market has performed. No attempted sell offs, no bad openings, no bad closes, no fear, just a greedy expectation, almost a just entitlement. In other words, the spirit that pervaded the bubble mentality of the late 90's never left the cadaver. That explains the rampant bullishness of the public and Wall Street in spite of all of the historically bearish technical evidence, and with the stark warnings by proven top investors such as Warren Buffett and Bill Gross. The end of this mindless speculation befits our once proud and industrious nation that fell prey to a philosophy of easy credit and winning the lottery, all along fueled by a deceived political system and an all too accommodating Federal Reserve apparatus.
I believe that the ensuing decline will conclude these delusions and a interminable period of suffering and tribulation will be the hallmark of the next one. That is also why I mentioned the two phenomena of "The Passion" and "The Purpose Driven Life" in this context. All of the constant warnings and evidence of a once great nation on the ledge of a massive decline that you have read in this site and elsewhere on the Internet are about to sadly realized. America is about to be bankrupted materially, but find the true meaning and purpose of life in its wake.
I have felt it was definitely possible to, at first, have some sympathetic decline in the precious metals area as the inflationary bias is purged out the financial markets. But, I seriously doubt that there will be much of a decline given the enormity of the structural problems. Please remember that the market is prescient, the single greatest leading indicator ever found, and if there is a financial crisis on the horizon, as I and many others believe, the gold market, particularly the shares will anticipate it. Do not be shaken out of your convictions or positions. In conclusion, expect anything from this time on. I will. Chuck ikiecohen@msn.com
Houston’s Dan Norcini:
Hey Bill:
I am sure you no doubt noticed that bizarre sell off in the majors within mere seconds immediately follow the release of the horrendous trade deficit figures.
The Euro spiked up as the dollar dropped only to get cut down like someone swung a scythe across it while the dollar was miraculously resuscitated.
The widest EVER trade deficit on a monthly basis was posted back in March 2003 when the figure came in at a negative $43 billion. Today's figure for Janurary 2004 of negative $43.6 billion blew it away. Currency traders immediately sold the dollar on the release of the data only to be met by a huge wall of buying that somehow managed to set Humpty Dumpty back on its wall again.
This has to be perhaps one of the strangest phenomenon's we have seen this year thus far. It now seems that even the cure for a runaway trade imbalance is no longer to be permitted by those who would be gods over us. What will it be next month? $45 billion? The month after- $46 billion? Nothing else could explain such a convoluted reaction to the trade numbers except that the financial authorities are becoming terrified of a dollar in free fall and felt the need to prop it up to prevent a complete meltdown of the thing in today' session. What a conundrum they have created - they MUST allow the dollar to fall if they have any hope whatsoever of bringing the trade deficit under control and reviving the U.S. export industry in time for the election. Yet, if they step out of the way, the dollar will be smashed with the result that inflationary pressures will see the lid come off the pressure cooker.
It was amusing watching the Bill O"Reilly show "The Factor" last evening on the Fox News Channel as he was on a tirade about soaring gas prices at the pump. The pitiful "expert" that he had on to explain the phenomenon laid the root cause everywhere except for where it belonged - the weak dollar! But what was revealing is that the soaring gasoline price has now obviously caught the public's attention. We now are witnessing the legacy of Greenspan and Bernanke's "accomodative monetary policy" as the price of tangible goods begins to defy gravity. What do we think is going to happen when the public actually wakes up and begins to realize that the cost of everything is soaring while the authorities continue to repeat their accursed "there is no inflation" mantra? Whose head are they going to demand?
What is equally strange is watching the Yen moving up a bit while the rest of the majors sold off. Apparantly this action in supporting the dollar is strictly limited to the ESF. The BOJ is holding their power dry waiting for the Yen to approach their new line in the sand. Yet it is Japan that has the huge trade surplus with the U.S. One would expect that the Yen would have particularly moved up sharply given the huge imbalance we have with them. Perhaps the trade deficit numbers were so bad that the ESF called in the aid of the BOJ after all to keep the yen rise under control and limit it to just a few points.
While I have grown somewhat nonplussed in witnessing the ever-increasing forays by this new brand of elitist central planners, today's action has me sitting there shaking my head in astonishment at what is happening to our system of price discovery mechanisms. They simply no longer function. The more these desperate men meddle, the worse the inevitable correction is going to be. One would think that as brilliant as some of them are who are behind the intervention, they would surely realize what kind of Frankenstein monster they are giving birth to. Maybe they no longer are capable of seeing. That is what is really frightening.
Dan
dnorcini@earthlink.net
More from Dan:
Bill:
Check out this Euro Silver chart. It is simply stunning. I can send you one of the yen that I maintain as well if you want a peak. Simply astounding.
Euro Silver 3-10-2004 Chart
By the way, have you seen platinum today? Up over $17.00/ounce as I write this at $915. Wow!
Best,
Dan
Gold coin news:
Bill:
Interesting conversation today with a large PM dealer in Chicago (he supplies a lot of smaller shops and has lots of inventory at any given time).
He noted that gold bullion coins of any kind are "very, very hard" to get right now and that the only reliable source is the new Eagles coming from the US Mint.
Surprising in light of the current POG--indicates to me that there is very strong demand for gold at these prices.
Bob
Jim Puplava and Eric King have a terrific piece up at Kitco titled:
Open the Checkbook - Buy the Ounces
http://www.kitco.com/ind/Puplava/mar092004.html
The Dow Jones Spitzer story is getting around nicely.........
http://www.newsnow.co.uk/newsfeed/?name=Precious+Metals
Good news for ECU Silver shareholders. From CEO Michel Roy:
Dear shareholders,
We finally received some of the assays from the samples sent to independent recognized assayers. There is no surprise on the continuity of the CC and Gs veins that are our main current source of ore, the grades and thicknesses are similar to what we get in the stopes. A nice surprise was a wide intercept in the A4 vein less than 15 meters from the actual workings that could allow us to open a new high yield stope this month. Furthermore, several ore grade intercepts in new veins could eventually generate new producing areas.
However, we think that the wide intercept (26.75 meters) of mineralized skarn could be much more significant that all the other news. In the last few years, hundreds of samples of skarn were assayed for gold and silver and only one returned a value above background, namely 7 g/t silver. Now, we have several samples that returned values for gold and silver with some copper, lead and zinc. The logical geological explanation is that we are getting closer to the mineralized contact between the intrusive and the host rock, those contacts generally host the ore deposits in this type of geological environment.
Truly yours,
Michel Roy
011-52-871-727-1061 cell Mexico
1-450-771-8652 cell Canada (until March 16th)
819-797-1210 off
ECU Silver closed at 64 cents Cdn., up 3 cents.
The gold shares were hammered. The XAU dropped 3.24 to 97.74 and the HUI was clobbered, falling 8.84 to 220.47. My take on this retreat and poor action lately is hedge funds short the dollar, long gold/shares, long high tech stocks are running for the hills. Money management rules have them selling portions of their portfolios in all categories.
It’s only a matter of time before gold and silver follow platinum’s lead.
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
Derivatives losses fuel doubts over Fannie Mae
By Stephen Schurr in New York
Financial Times
Tuesday, March 9, 2004
Fannie Mae paid a net $25.1 billion on derivatives transactions in under four years -- nearly all of which may represent losses that cannot be recouped, in turn depressing future earnings.
The potential scale of the liabilities, which have yet to be recognised in the company's earnings or in the minimum capital adequacy required by its regulator, raise fresh doubts about the financial health of the mortgage finance giant.
Regulation of Fannie Mae and its sibling Freddie Mac is rapidly moving up the agenda in Washington, amid concerns that the two goverment-sponsored entities have grown so big that they pose a systemic risk to the U.S. financial system. The two entities own or guarantee mortgages totalling $4,000 billion.
How the $24 billion losses estimate is reached
On Tuesday John Snow, U.S. treasury secretary, renewed the criticism, saying: "We don't believe in a too-big-to-fail doctrine, but the reality is that the market treats the paper as if the government is backing it."
His comments follow similar warnings from Alan Greenspan, chairman of the Federal Reserve, and Gregory Mankiw, chairman of George W. Bush's council of economic advisers.
Fannie Mae acknowledges it has taken losses in its derivatives trading that have not yet been recognised it its earnings, but declines to disclose the amount. The reason, said Jonathan Boyles, vice-president of financial standards and taxes at Fannie Mae, is that "we don't believe it's all that meaningful."
A Fannie Mae spokeswoman added that the company typically held its positions to maturity and as such it did not see the losses as material.
Next Monday Fannie Mae is due to release its annual "fair value disclosure" -- a statement of the current market value of its derivatives positions. Observers will be watching to see if the gap between the company's regulatory capital and fair value has widened further than the $6 billion shortfall of a year ago.
A Financial Times analysis of Fannie's accounts suggests it may have incurred losses on its derivatives trading of $24
billion between 2000 and third-quarter 2003. That figure represents nearly all of the $25.1bn used to purchase or settle transactions in that period. Any net losses will eventually have to be recognised on Fannie Mae's balance sheet, depressing future profits.
Fannie Mae maintained that the losses from cashflow hedging will have no bearing on the capital adequacy required by its regulator.
However, critics increasingly question whether Fannie Mae's financial disclosure offers a complete picture of its fiscal health.
"They have used the derivative accounting rules for cash-flow hedges to defer some losses that they have taken," said John Barnett, senior analyst at the Center for Financial Research & Analysis, an independent research firm. "They may not be as
well-capitalised as they appear to be for regulatory purposes."
*************
Kauft noch etwas zusätzliches physisches Gold und Silber !!
Es geht bald los. ich kanns schon richtig spüren.
Falls Fanny Mae, oder Fredy Mac den Bach runter gehen sollten, stehen wir vor Problemen die wir uns gar noch nicht richtig ausmahlen können.
Falls beide Firmen aus ihrem Derivativ Chaos nicht mehr herauskommen, und Konkurs gehen sollten, betrifft das nicht nur die Amis, sondern auch uns Europäer, ja die ganze Welt.
Das war jetzt keine Panikmache, sondern ein Rat sich nicht nur in Calls, und Aktien auf Gold und Silber zu investieren, sondern auch echtes Gold, oder Silber, oder noch besser gleich beide Edelmetalle zu kaufen. ich glaube viel Zeit verbleibt uns dazu nicht mehr sich zu diesen vom Cabal manipulierten Tiefpreisen einzudecken.
Gruss
ThaiGuru
