Beiträge von Ulfur

CARTEL CAPITULATION WATCH

US stock market participants who were moaning about $44 oil last week have changed their minds. They seem to be deliriously happy as oil speeds towards $48 to $50 per barrel. The PPT did their job efficiently and won this battle, holding the US market long enough to turn the technicals and momentum sentiment. The DOW surged 110 higher to 10,083 and the DOG leaped 36 to 1831. Both have recaptured key technical levels which are critical to the incumbent Administration as the number of days to the upcoming US elections wane.

The day’s oil news:

10:30 DOE reports crude oil inventories reported (1.3M) barrels vs. consensus (1.875M) barrels
Gasoline inventories (2.6M) barrels vs. consensus (650K) barrels. Distillate inventories +2.1M barrels vs. consensus +1.5M barrels. September WTI crude is trading relatively flat in initial reaction to the data.
* * * * *

10:32 API reports crude oil inventories (1.5M) barrels
Gasoline inventories (3.5M) barrels, while distillate inventories +1.6M barrels. Crude spiked to $47.20, then fell to $46.90, following the release of both sets of data.
* * * * *

07:16 Speculation of bankruptcy filing by Yukos today
Unconfirmed speculation has it that Yukos could declare bankruptcy today. Yukos locally is trading down roughly 7% on the speculation. We're told an appeal hearing may be set for tomorrow. We note this speculation is likely adding to the increase in oil prices. September WTI crude currently quoted aty $46.95, off earlier highs of $47.04.
* * * * *

06:31 OPEC ups oil demand estimates for Q4, f05
For Q4 raised to 28.25M b/d, up from 27.45M. OPEC raised their estimate to 28.28M b/d in Q1 05, vs. prior estimates of 27.81 M b/d. OPEC says output may reach 30M bpd in August and may reach 30.5M/day in September. Production was up 599 K b/d from June to July, according to the report.
* * * * *

Followed by some potentially important copper news:

Aug. 18 (Bloomberg) -- Copper prices in London fell after inventories monitored by the London Metal Exchange had their biggest increase in 34 years.
Copper stored in warehouses monitored by the exchange rose 30,925 metric tons, or 39 percent, to 111,1000 tons, the LME said. It was the biggest increase in percentage terms since April 1970 and came a day after the stockpiles fell to their lowest since July 1990.
``Obviously it's knocked the market back a bit,'' said Angus Macmillan, an analyst at Prudential Bache International, in an interview. ``Thirty thousand tons of metal doesn't find its way to the market every day.''
Copper for delivery in three months on the London Metal Exchange fell $58, or 2.1 percent, to $2,770 a ton 10:14 a.m. local time.
Copper consumers had withdrawn metal from LME inventories amid forecasts that demand will outpace supply this year. Global demand will rise 6.9 percent to 16.8 million tons, exceeding output by 432,000 tons, Credit Suisse said last month….-END-

September copper fell 3.70 cents to $1.2705.

GATA’s Mike Bolser:

Hi Bill:
The Fed added $3,25 Billion in repos today August 10th 2004, an action that caused the repo pool to dip to $41.015Billion and to continue the roll-over of the pool's 30-day moving average. This change is the first is some timean as I mentioned before represents an important move. Taking any long positions in the DOW futures at this time is not recommended. There still remains a slight chance for a surprise DOW launch just before the election but that probability wanes with each passing day. Why the Fed is removing repo support at this time is anybody's guess but they ARE doing it for a reason. Even though the Dow Jones index is up at this hour, one should be wary.

The Venz

Hugo Chavez trounced his challengers in a referendum much to the chagrin of Washington who was hard at work attempting to change things in this oil-rich Latin American country. Chavez may move to strengthen his hold making any further US attempts that much more difficult. There will be no Kuwait-style oil rescue from the Venz anytime soon.

DIVO

The dollar index value of oil (DIVO) continues to rocket higher with its 200-day ma launching a very steep trajectory and this signals a profound weakness in the US Strategic Petroleum Reserve as I cannot imagine any president this close to an election permitting high oil prices if there were any way to avoid it. In other words, the president would have already aggressively sold oil in the SPR to drop its price if he could. To somehow wait until the very last political moment for an oil price drop rescue from the SPR doesn't fit with the other preemptive moves this administration has made. More and more it seems that the SPR is drained of sellable oil.
++++++++++++++++++

Big Oil isn't gaining friends these days:

World Bank ignores its own advice
By Nadia Martinez

"The World Bank's rationale for continuing to subsidize oil companies is that people in developing countries need energy. However, the Institute for Policy Studies' research suggests that 82 percent of the bank's oil - extraction projects wind up supplying consumers in the United States and Europe. The Institute has also calculated that the main beneficiaries of World Bank fossil-fuel extractive projects are Halliburton, Shell, ChevronTexaco, Total, and ExxonMobil, in that order, and the list continues.

Another rationale the World Bank offers is that its involvement in these projects offers oversight that makes them more environmentally sound and less prone to corruption. In reality, many of the bank's projects are riddled with these kinds of problems. For example, the president of Chad reportedly used part of the first proceeds from the World Bank-supported Chad-Cameroon oil pipeline on military weapons."

+++++++++++++++++++++++++
Heating-oil prices to stay hot for winter
http://www.csmonitor.com/2004/08...-usec.html

Some suppliers are already charging 35 cents a gallon higher than 2003. By Ron Scherer | Staff writer of The Christian Science Monitor

NEW YORK - If you think it's expensive to fill-up the SUV, wait until the fuel truck starts delivering this winter's heating oil.

That's right - there will be no respite from this summer's high prices. Fuel-oil companies are now offering customers' contracts that cap prices at about 35 cents a gallon higher than last winter. The Energy Information Agency estimates it will cost consumers an extra $100 to stay warm this winter using oil and an extra $179 using natural gas. And those estimates are based on wishful thinking: government forecasters are hoping today's price at more than $45 a barrel for crude oil will drop back to $38 by October. How much more it will ultimately cost to run the furnace this winter depends on the weather: a colder winter than normal could cause additional price spikes; a warmer winter might help lower or stabilize
prices.

++++++++++++++++++++++++++++

As for natural gas, there will be no retraction in natural gas prices. EIA reports Aug 10th:

³Henry Hub prices averaged $5.80 per thousand cubic feet in 2003 and are expected to average $6.21 in 2004 and $6.60 in 2005,².

Small debt-free natural gas firms with proven reserves continue to be an OK place to be.

+++++++++++++++++++++++++

Gold

I mentioned yesterday that gold may oscillate between $405 an $386 or so. This is exactly what happened today as the $404.40 high was swiftly followed by a bomb dropped by the manipulators.

My proprietary metrics (which now include synthetic real-time currency proxies) point to this pattern and in several important aspects the Fed seems to be choosing $400 as their dast-ditch defense line. They last defended DIVG 323 with several large up and down oscillations that were tradable at the time but today's up and down range seems far smaller and probably exceeds the transaction cost limits for average traders.

We see from John Brimelow's excellent reporting that the physical market is getting very hot. In addition, we see Ted Butler reporting large draws in COMEX silver inventories by way of a slick options sleight-of-hand by one of the COMEX traders which Ted believes can't happen again without a big jump in silver prices.

Against this backdrop of growing physical precious metals demand, bombing trade, economic and employment reports, continued geopolitical turmoil and soaring energy costs with the resultant deepening losses in real interest rates, it is astonishing that the Fed would adopt a line-in-the-sand strategy for gold and silver, and yet this is exactly what they have done.

The simplest advice to follow is to avoid the Fed's paper (bonds) like the plague and instead take their cheap gold and silver while it is on sale.
Mike

It could not be more clear The Gold Cartel is going all out to keep gold from leaving behind the numbers Mike has outlined for days. Do they win or lose? I bet they lose this time.

But, there is no inflation and WHY:

The King Report
M. Ramsey King Securities, Inc.
Wednesday Aug. 18, 2004 – Issue 2976 "Independent View of the News"

Here’s the most important thing you need to know about July CPI, and the same is true of August and September CPI: Q3 CPI is used for all COLAs. Ergo, the temptation to ‘fool’ with Q3 CPI is exceedingly strong because it saves Uncle Sam (robs Americans) billions of dollars.

Lower than warranted CPI overstates real GDP and real earnings. Within minutes of the CPI release a George Bush web site crowed, "Easing inflation in July had the effect of pushing up inflation-adjusted earnings. Real average weekly earnings, which posted a big 0.8 percent drop in June, rose 0.7 percent last month, according to a separate Labor Department report." But consumers have checkbooks shackled to reality. The consumer checkbook is not seasonally, hedonically or chain-weighted adjusted.

Permabulls, the Street propaganda machine and its appendages in the financial media heralded Tuesday’s economic data. These people ignored the disappointing readings in July industrial production and capacity utilization as well as the lower revisions of both for June. July industrial production was 0.4% (0.5% expected) and June is revised to -0.5% from -0.3%. July capacity utilization was 0.4 worse than expected at 77.1%. June is revised to 76.9% from 77.2%. Why would capex boom with 77.1% capacity utilization? And those that believe much of that unused capacity is obsolete don’t seem to realize that new capex, actually a historic capex boom, is occurring on a different continent.

The main reason for econobulls getting jiggy is the better than expected housing starts and permits. As we keep harping, housing starts greatly outpace sales, which means inventory building at the top of (if not a bubble) a long, historic run in housing. Plus permits keep soaring. If Easy Al continues to keep interest rates at emergency levels, and industrial loan demand stays soft, bankers and other financial entities will eagerly supply loans to builders. And builders will gladly take money and build, regardless of market fundamentals. You’d think more people would under stand the concepts of sated demand and borrowing future economic activity for immediate gratification.

-END-

But, there is no inflation!

WASHINGTON, Aug 18 (Reuters) - BellSouth Corp. said on Wednesday its new labor contract had triggered a $3.3 billion increase in its estimates of future retiree medical costs, reducing fourth-quarter earnings by 3 cents to 4 cents a share.
BellSouth spokeswoman LeAnn Hansen said the company was still calculating the effects of the increase on earnings beyond the fourth quarter. Analysts had estimated on average that BellSouth would earn 49 cents a share, according to Reuters Estimates.
The change raises BellSouth's total retiree medical benefit obligations by about 46 percent to roughly $10.5 billion from estimates calculated at the end of 2003….-END-

Lois Ringel thought some Café members might have an interest in some history:

I am giving you the main link for this article. There are various references to gold in different segments of links in the boxes (I - VI ) I have taken the following quote from the 1932 - 1933 section. It is unbelievable how much of this context shadows what is going on today. Although this article is very long, a quick synopsis can be done by clicking each link and just reading side notes in each one. Would be a very interesting link for Midas..
Best,
Lois

Click here: Great Depression, Collapse of governments

France and England had at last recognized their policy errors, by U.S. political stupidity remained in full force and effect.
However, the war debts were one of the fundamental causes of the Great Depression, and a discharge in bankruptcy was now the only way out. At least, at the Lausanne Conference, Britain and France had recognized the error of their political policies and demonstrated a willingness to correct their past errors. But U.S. political stupidity remained in full force and effect.

The available supply of gold was sufficient for financial needs as long as trade restrictions are not so high as to force settlement of financial obligations by exporting gold instead of goods

-END-

I was talking to a devout Christian Café member about Mahendra this morning and he brought some thoughts to my attention. I asked him if he would write them down and send in for the MIDAS as I have spotlighted the "M" man of late. This is for clarification purposes for various members only, not to open up email discussions on the merits of these comments (have no time for it).

Bill,
Some café members may wonder why you give any mention of an "out of the box" type of seer like brother Mahendra. Especially those of a more religious bent. Well maybe they might consider a little history. (Also consider the veracity/sincerity of many of the Wall Street seers, oh sorry; to be doctrinally correct I should call them "analysts").

The "wise men" who were the FIRST to arrive (brought gifts and recognized the Messiah -some 30 years before he even went public about Himself!), were actually Babylonian astrologers (Strong’s #3904, "magos" (word of Babylonian origin)) and most likely descendants from the mentoring/teaching/training centers originated by the great seer Daniel! I believe it is still a valid BUT delicate art today.

I am NOT flat out condoning astrology as the preferred way of guiding ones every move, NO NO. But one shouldn’t throw out a valid art just because there are many misguided/dishonourable folk practicing it for ill-gotten gains. Every area/facet of human life; spiritual; physical (air, water, food); social/political; financial/commercial (now there’s your specialty); and intellectual/scientific, has been CORRUPTED by the fall of man.

So it is imperative and the responsibility of each individual to make an effort to discern "truth from a lie", remembering that even their most trusted leaders are still fallible.

Consider that there was a time when the "Church" taught that the Earth was flat, and those that taught otherwise did so at risk of death! So I always try and follow the Masters advice, "You shall know them by their fruits". This does not mean that Mahendra’s every call has to be correct (it never will be), but in what kind of SPIRIT does he offer it!

As an aside, the Master also said "Blessed are the peacemakers". The fruit of past president Jimmy Carter sure comes to mind as a great example. The current administration …. well I do have to wonder how time will evaluate that.
Keep Well & Stay True,
Buena Fe

The John Brimelow Report

JB: Ominous open interest build

Wednesday, August 18, 2004

Indian ex-duty premiums: AM $4.84, PM $5.58, with world gold at $403.10 and $403.30. Slightly below, and above, legal import point. India is tolerating the rise in world gold quite well: this fits with Reuters’ physical market round up today, quoting unusually sanguine Indian dealers:

"As long as gold is there in the range of $395 to $405, people will buy it. But at $405 and above, I don't expect much demand to come," said Rajeev Damani, managing director of Damani & Co in New Delhi. But some others dealers said consumers in India would have to buy gold anyway even if prices stay firm in the next few weeks. Indians consider gold an auspicious metal and like to buy or give it for marriages and during the festival season that generally begins in August and ends in November with Diwali, the Hindu festival of lights. "On those occasions, buyers must buy. They don't have options," said Amit Gupta, chief executive of PP Jewellers."

The story also reports premiums to be steady in the Far East.

TOCOM is not impressed. Liquidation continued, encouraged by a rallying yen. Open interest fell another 783 Comex contracts, the active contract closed down 4 yen and world gold went out $1.40 beneath the NY close. Volume slipped 21% to the equivalent of 14,716 Comex contracts. Mitsui-Sydney observes:

"The GP position is now down to 51.6 tons of longs. They normally average between 80 & 120 tons long & never go short. There could still be another 20 tons of selling but it is unlikely to get below 30 tons."

("GP" is the Japanese speculative community, or "general public". This was written before the publication of yesterday’s open interest data. They are probably now appreciably below 50 tonnes, or about where they ceased liquidating in Q2 last year. This particular ammunition source for the Bears is about exhausted.) (NY traded 44,277 contracts; open interest rose an appreciable 5,363 lots.)

Observers are unusually ambivalent about yesterday’s NY trading, noting that gold managed a rise against all currencies, and disagreeing about whether yesterday’s economic news did or did not help the metal. Gold has moved above most pet technical indicators (including the rarely mentioned downtrend line from the March 31 top), but has started to trade heavy volume and build open interest rather ominously.

Barclays today argues that gold has diverged from the usual relationship with inflation expectations since April (on the chart they offer – see attached - this seems to be so all year). At the risk of displaying one’s antiquity, it appears this month to be trying to follow Oil. Standard London’s frequently- updated Dubai kilo bar prices have shown high premiums this week almost without faltering, which is consistent with this thought.

On balance, the onus of proof lies with the Bears.

JB

August 18 - Gold $404 unchanged – Silver $6.81 up 11 cents

NO FORCE ON EARTH!

They who lack talent expect things to happen without effort. They ascribe failure to a lack of inspiration or ability, or to misfortune, rather than to insufficient application. At the core of every true talent, there is an awareness of the difficulties inherent in any achievement, and the confidence that by persistence and patience, something worthwhile will be realized. Thus, talent is a species of vigor...Eric Hoffer

GO GATA!!!

The gold open interest rose 5361 contracts to 227,948 and goes to show you how determined The Gold Cartel is to keep bullion from taking out VERY key technical resistance at $405. From a technical perspective all gold needs to do is take out $405 to take off. It has already cleared other important resistance/chart points. The horse patoots manipulating the gold price, and fleecing most of you, know that. Therefore, the cabal has JP Morgan Chase sell and sell and sell yesterday, no matter how much physical market buying shows up. Then, they come back in again today to put the pressure on further, despite oil taking out $47 per barrel.

It is almost comical to hear the mainstream financial market commentators continue to remark how old market relationships don’t seem to hold anymore. Of course they don’t when markets are rigged. With WTI crude oil closing for the day at $47.39 per barrel, up another 64 cents, the gold/oil ratio has fallen to new lows at 8.52. (The Merc oil close was $42.27).

However, the bad guys have their hands full. It is called a surging physical market. Significant players all over the world (Arabs, Chinese, Russians, Indians, Turks, Koreans, etc) can see what these foolhardy morons are doing with their suppression of the price of gold. They know the value of gold with oil doing what it is and they understand how the US Government has let our financial house completely disintegrate, considering the state of US budget/trade deficits, etc. They know we are a house of cards ready to fall apart at any moment as time goes by. SPIN can only go far and Wall Street and Washington will find out in the months to come it won’t work any longer.

Besides, to paraphrase my friend Mahendra, NO FORCE ON EARTH!

"THERE IS NO EXTERNAL POWER ON EARTH OR THE UNIVERSE THAT CAN BRING DOWN THE GOLD AND SILVER PRICES. DESTINY HAS BEEN WRITTEN AND I AM JUST PREDICTING IT AS IT IS." Mahendra late last week

Silver turned things around for the precious metals today. A MIDAS comment written mid-day:

The silver trading was very thin. Morgan Stanley, the big player in that pit these days, joined others early on the sell to take it down a dime, apparently in an attempt to buy back what he sold yesterday at higher prices. The selling dried up and silver drifted back up. When Morgan S turned buyer, silver turned positive on the day in a flash.

***

About an hour later silver began to soar, rising 15 cents at one point. Not only did silver put in an outside key reversal day to the upside, it closed above all near term technical resistance at the $6.75 level. It is cleared to take out its gap left at $7.20 for a first stop.

September silver
http://futures.tradingcharts.com/chart/SV/94

The silver open interest only rose 155 contacts to 96,119. There is room for 30,00 new spec longs to power silver to new multi-year highs.

Silver continues to outpace gold. Maybe it’s because the price managers don’t have the ammo to stop it.

Gold, which fell back to $401.20 in the early going, then caught some life late in the trading session. It began to take off out of nowhere as silver surged. Going into the bell it went $404.90 BID when practically the entire cabal came out selling – namely Duetsche Bank, JP Morgan Chase and Goldman Sachs. ALL SOLD AT THE SAME TIME!!!! It’s called blatant price manipulation/price capping! Clearly, they ALL received orders simultaneously from Gold Cartel headquarters to prevent gold from getting through $405.

The gold manipulation farce goes on and on and the dingbats in the mainstream gold world will continue to say nothing as they have failed to do for so many years. These cretins remain beyond contempt.

Fortunately, the crooks may have too much to handle to keep gold down here any longer. Let’s hope so. As long articulated in this space, gold will only fly when these corrupt bums are carried out. With so many well-heeled foreigners doing the buying, this could finally happen.

For the second day in a row, gold came back from a deficit to go positive later on in the trading session. This tells us there is a substantial bid in gold, one which is clearly giving The Gold Cartel fits who desperately want to hoodwink the world skyrocketing oil prices are not inflationary. The easiest way to show this is so is to surreptitiously and artificially hold down the price of gold and then point to its subdued price action. Are the bums a tad desperate? The way the entire cabal assaulted gold late seems to reveal a bit of panic on their part. Panic? It couldn’t happen to a nicer bunch of guys!

According to the floor, the funds have turned extremely bullish after a mamby-pamby attitude towards gold the past couple of weeks. That breakaway gap MIDAS is looking for should not be too far off.

The dollar fell late closing unchanged. It was much firmer in the early going with the euro down to 122.80 before it rallied to close at 123.32, down .06. The yen was very firm, finishing the day at 109.31 in the cash market and up .62 in the futures market.

The Japanese fiscal half year ends the last day of September. Last year, in advance of that event, the yen took off as part of a repatriatization process. Japanese corporations, in order to shore up their balance sheets, bought yen, sending the yen a good deal higher. The Japanese government, in order to neutralize this process to some degree, sold dollars and bought bonds, sending the US bond market higher. At the same time, the Japanese and others bought gold, sending the gold price higher. Whether the gold move up was tied particularly to what the Japanese were doing, and will occur again, remains to be seen.

An interesting heads-up from my friend Judith McGee at Refco in Toronto.

Kupfer fiel heute auf 1,28 $/lb, nachdem der LME Lagerbestand um 30.925 Tonnen auf 111.100 t stieg, ein Anstieg um 39%. Der größte Lageranstieg seit 34 Jahren.

Aug. 18 (Bloomberg) -- Copper prices in New York fell as much as 4.4 percent after global inventory surged by the most in 34 years.

The London Metal Exchange said stockpiles rose 30,925 metric tons, or 39 percent, the biggest gain since April 1970. The increase was mostly at warehouses in Singapore and South Korea. Copper prices had climbed 65 percent in the past year as higher global demand sent supply in storage to a 14-year low.

``Thirty thousand tons of metal doesn't find its way to the market every day,'' said Angus Macmillan, an analyst at Prudential Bache International in London. ``It's knocked the market back a bit.''

Copper Prices Fall After Inventory Gains by Most in 34 Years

CARTEL CAPITULATION WATCH

Bonds don’t like what they see coming up ahead in the US economic scene. They rose 21/32 to 111 13/32.

There was a slew of economic numbers this morning, led by the CPI below.

08:31 July CPI reported (0.1%) vs. consensus 0.2%; ex-Food & Energy 0.1% vs. consensus 0.2%
Prior CPI unrevised from 0.3%; ex-Food & Energy unrevised from prior 0.1%
* * * * *

One of the big depressants in the CPI was the drop in gasoline prices, leading to knee jerk headlines like INFLATION UNDER CONTROL. Good to know as crude oil closed today at $46.75, up 75 cents per barrel and at a new ALL-TIME HIGH!

So what gives? Over the past few weeks the US stock market was supposedly taken down out of concern over sharply rising oil prices – like $45 to $46 oil. Now oil is $2+ to nearly $3 per barrel higher than that and the US stock market has been on a bit of a tear for two days. Makes no sense. The DOW finished at 9972, up 17 and the DOG gained `2 to 1795. However, both seemed to run out of steam after firm openings. Psychological key numbers of 10,000 and 1800 could not be attained on a closing basis.

Perhaps it is ridiculous spin such as this which has stock market bulls in a flutter:

PLATTS --Analysts see positive US data pointing away from stagflation

Washington (Platts)--17Aug2004/150 pm EDT/1750 GMT

The nightmare menace of stagflation all but disappeared in July as data Tuesday showed US consumer prices dipped, industry ramped up output and home building boomed. "The recent spike in oil prices and the surprisingly weak economic data for June had caused a number of forecasters to contemplate a return of stagflation," said Wachovia senior economist Mark Vitner. "Today's CPI (consumer price index) data pour cold water on that notion," he said.

Stagflation is a crippling combination of stagnating economic activity and inflation. Many economists believed it was an impossible mix until the 1970s oil shock proved them wrong. But the threat of a return to stagflation now seems far-fetched in light of July government and central bank data showing the following: US consumer prices unexpectedly dipped 0.1% in July as sky-high gasoline prices at the pump slumped 4.7%. Stripping out volatile energy and food costs, prices were up only 0.1%.
--http://www.platts.com/petrochemicals—

More US economic headlines out this morning:

Reuters
Chain Store Sales Growth Slows
Tuesday August 17, 8:56 am ET

NEW YORK (Reuters) - Hurricanes Bonnie and Charley slowed U.S. chain store sales growth in the latest week, a report said on Tuesday.
Sales at major retailers increased by 2.3 percent on a year-over-year basis for the week ended August 14, down from the preceding week's 2.4 percent pace, said Redbook Research, an independent company. Sales in August so far were down 0.6 percent compared with July.

08:30 July Housing Starts reported 1.978M vs. consensus 1.898M; Permits reported 2.055M vs. consensus 1.95M
Prior Starts revised to 1.826M from 1.802M; Permits revised to 1.945M from prior.
* * * *

09:15 Industrial Production reported 0.4% vs. consensus 0.5%
Cap. Use 77.1% vs. consensus 77.5%. Prior Production revised to (0.5%) from (0.3%); Cap use revised to 76.9% from 77.2%.
* * * * *

09:44 YUKOY Yukos loses appeal on $3.4B tax collection order -- Reuters
* * * * *

12:17 Yukos loses appeal to pay its tax with Sibneft stake, reports Reuters
September WTI crude currently trading at $46.70.
* * * * *

You have to wonder what is really going on behind the scenes in Russia regarding oil!

GATA’s Mike Bolser:

Hi Bill:
The Fed added $5.5B in temporary repurchase agreements and $.9957Billion in permanent open market operations today, August 17th 2004. An action that caused the repo pool to drop a bit to $43.015B. The DOW's 30-day ma keeps dipping and we see the first real reaction by the Fed with today's largish permanent operation of $9957 Million. Recall that the market moving potency of the perms are far more than the temps but due to the way I carry them in the pool, this difference doesn't show up as clearly as it could.

This year we see the orange spheres (that represent the perms) with very few gaps compared to last Summer. This absence of gaps in permanent issuance tells us that the Fed is adding market interventional support in a kind of stealth fashion. Their action can levitate otherwise moribund markets in bonds and the DOW. I note with interest elsewhere at the café, that the Caribbean banks have shot up $17 Billion in their money transfers...perhaps we have a back-channel repo engine at work?

The ONE area that can be counted on to rise on its own (other than M1 monetary inflation) is energy. I will keep coming back and back to it as I see it as the greatest threat to the Fed's numerous rigs.

No one in the Fed imagined that a tiny boutique hedge fund had indirect control of $2 Trillion in derivatives but LTCM but they did and when they lost control the Fed was hard pressed to recover. Oil is like LTCM...a bomb with a burning fuse.

Oil to breach $50 barrier 'within weeks'
Oliver Morgan, industrial correspondent
The Observer Sunday August 15, 2004

Crude oil prices are set to break through the $50-a-barrel mark, according to traders and market analysts. After a week that saw records broken on successive days, traders believe the landmark figure could be passed within the next two months.

US crude went above $46 a barrel for the first time on Friday, while in London Brent broke through $43. Traders said volumes had been high throughout the week, particularly on Thursday, when more than 300,000 lots changed hands.

One Citigroup trader said: 'It is going to $50 before it goes to $40. The market is totally dislocated from fundamentals. Any piece of bad news and the market rises; anything else is just ignored.'

Friday's rises were connected to a fire at a BP refinery in America, but there is no shortage of news - from supply disruptions in Russia and the Middle East, to Chinese demand - to support record prices.

Last week the Paris-based International Energy Agency said there was only 600,000 barrels a day of sustainable spare capacity, although Saudi Arabia's oil minister attempted to ease fears, saying the kingdom could pump more if needed.

Another trader said: 'I have no doubt that the price is going through $50. I would say it will be there within five or six weeks.'

One analyst said prices would be kept up by the withdrawal of as much as a million barrels of refining capacity in Europe as plants were upgraded to meet new environmental specifications through the autumn.
++++++++++++++++++++++++++++++++++++++++++++++++
Russia

Notice the anti-Russian stories coming out? They're bending history, forgetting to mention Stalin's gulags in their history texts, says an AP piece yesterday. The Georgian mess heated up also yesterday with several dead in a fire fight between Russian dominated South Ossetia and Georgia, a province whose new Western leaning premier is supported by Bush. Meanwhile, the US is closing military bases and Sergei Ivanov, their erudite defense minister, is warning the US that a Russian encirclement strategy isn't helpful. Russian oil is fetching a pretty penny for them as they rapidly grow in financial strength. Add to the Georgian skirmish, the fact that Russia last week successfully tested an intercontinental ballistic missile, they keep on-again-off-again Iraq troupe offers conspicuously linked to WTO trade issues (so far not bearing Russian fruit) and we have a top-class piece of geopolitical entertainment unfolding. Sipping mint juleps between hurricane terrors... nothing beats it. Maybe I should build a bomb shelter.

You can always tell when Washington is preparing a policy move. They trot out negative "news" stories and the Russians always issue warnings through Itar-Tass news agency. I wonder how the compliant American press was prepped just before the battleship Maine blew up in Havana Harbor?

I imagine that the Russians are arming Iran to the teeth at this moment and perhaps our orbiting satellites have detected it. In any event, the last thing the president needs at this moment with his waning poll figures is yet another foreign policy explosion.

Gold
The cartel means to oscillate the PM Fix up and down around $400 by say, $4 or $5 either way.
Mike

Silver input from Europe:

Hi Bill,
Thanks for your outstanding service and comments regarding the gold and silver market.
Searching for silver bullions dealers in Europe IMO the following URL is highly representative for silver bullion demand and it's availability.
http://www.24carat.co.uk/silverbullionbars.html
Kind regards
Marc
(from Germany)

Gold was down around $1.20 this morning when Mahendra put out an alert to his subscribers (see below). Shortly thereafter, gold took off. Later on he sent all of us the following email:

Dear GATA Member's,
I promised that I will be back to GATA by 4th September but now I have decided to be early by two weeks. Because I feel that a small community on GATA should be given all kinds of news and views which are related to financial market. I still feel that, yes, also astrology has a role to play to giving guidance to investor's. I have found out a few extremists (not religious leader but financial market leader and as they feel that they own the market and an astrologer like me should be thrown out from the market).
Why are they worried? I want to work with all kinds of knowledgeable people, I won't take their chairs.
From the depth of my heart I really thank BILL and GATA to support my work.
Thanks Bill for your support, I am sure I won't let you and the metal community down.
Thanks & God Bless

*********************

.... (Der bereits bekannte Newsletter ist hier ausgelassen)

Gold technical input from Brother Tim:

Brother Bill, Looks like gold is rearing its 'ugly' head again. The weeklies show a solid head and shoulders formation that goes back to the beginning of the year.
Today the neckline was broken and a close higher than $403 basis spot on Friday confirms a break out with an upside objective of $455. The long term up channel which goes back several years also shows the top of the channel at $455. Given the strong technical picture of crude oil, the strong demand for gold in the cash market and the incredible public apathy toward gold, the odds favor a substantial move higher over the next few months. Keep up the great work. It's been a long haul this year, but our patience will pay off in a big way! Brother Tim

Tim Murphy
Swiss America Trading Corp
trmurphy@swissamerica.com
800-289-2646 ext 1019

The gold and silver shares remain lackluster and continue to fail to engender and decent sort of investor interest, certainly not remotely close to the enthusiasm of this commentator, nor compared to the outstanding gold/silver fundamentals.

GATA BE IN IT TO WIN IT!

MIDAS

The John Brimelow Report

Japan moves aside: who is next?

Tuesday, August 17 2004

Indian ex-duty premiums: AM $3.97, PM $5.37, with world gold at $402.15 and $401.50. Below, and approximately at, legal import point. A resilient performance, considering world gold is up $8 or so in a couple of days.

On reflection, the comment yesterday on India’s April-June gold imports was awkwardly expressed. India imported 202.55 tonnes in the period, 30.7% or 47.63 tonnes more than the year before. To put this in perspective, the entire gold holding of the World Gold Council’s Gold Bullion Securities pool is 48.87 tonnes. India’s growth in one quarter was approximately the same.

TOCOM continued liquidating, with the active contract during the day touching a 4 month high, but finishing unchanged (as did world gold v NY’s close). Aggregate volume rose 39% to equal 18,239 Comex lots, while open interest fell the equivalent of 476 Comex. From the TOCOM Member’s position data it appears that the "General Public" has sold some 27 tonnes of paper gold in the past 10 days or so, a moderately significant obstacle to world gold prices. Mitsui-London expressed the view that they are now "closer to neutral", so maybe this impediment to a rising price is about to fade. (NY yesterday traded 46,857 contracts; open interest rose 3,103.)

A spirited attempt, widely said to be fund-lead, to rally gold in the early NY day met an impediment of its own. By 10 am 27,000 lots were estimated to have traded: the bulk a day’s volume in recent times. UBS reports:

"good fund buying started to lift the yellow metal above the $400 handle. One NY Bank coming in with a large buy order in Comex Dec Gold and a higher euro inspired more buying and both hurdles of $401 (200 day m/a) and $402 were taken out rapidly… The buying of around 4000 lots was matched with good selling on the way up… With more buying into the close of the same NY Bank the shiny metal managed a good close."

Barclays saw:

"..fund buying taking prices up to an intra-day high of $403.50 before considerable selling interest took prices back to $402 where it closed…holding around $402 although the selling interest around these levels remains considerable."

In other words, an attempt to clear a major moving average (200-day in this case) is once again provoking heavy selling, strange behavior for a proceeds-maximizing owner. Given the posture of the physical market from a seasonal as well as a price point of view, and that of the NY spec community, at the very least a good deal of bullion seems likely to change hands.

JB

August 17 - Gold $404 up $1.50 – Silver $6.70 up 1 cent

Cash Market Spurs Gold Again, New All-Time Oil High

Never, never, never believe any war will be smooth and easy, or that anyone who embarks on the strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realize that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events...Sir Winston Churchill

GO GATA!!!!

Gold came out of the box with a good deal of volatility. After a lower opening, it shot up to $403.40 with Morgan Stanley the featured buyer, then was trashed by JP Morgan Chase and Republic Bank down to $400 before it rallied. Like the fact MS was a buyer once again, most surely a continuation of the cash market buying they did yesterday.

From a technical standpoint gold did just what it was supposed to do by bouncing off its 200-day moving average, as well as the psychologically important $400 mark. It also bounced off the downtrend line it broke decisively yesterday. However, The Gold Cartel went all out to stop gold from gaining any momentum to the upside. For the second day in a row JP Morgan was called in to halt the continuous rallies during the Comex trading session.

Even with The Gold Cartel all over gold, it managed to close well, running up to key resistance at $405 before it was bopped for a buck on the close. AND for the second day in a row, gold popped without the benefit of a softer dollar. The dollar (88.15, up .12) rose against most major currencies with the euro falling .04 to 123.47 and the swiss franc dropping .19 to 80.48.

This is just what should happen with such a strong physical market. There is no reason gold shouldn’t rally $100 per ounce with the dollar doing nothing. It did almost that in 1993 and that move didn’t have the aid of sky high oil prices. Naturally, a weakening dollar can only be of further support. However, one of the cabal’s worst nightmares is for gold to develop a strong bull market in all currencies.

We received word yesterday that the Arabs were beginning a move into gold with new buying. This also fits in perfectly with what John Brimelow has brought to our attention of the enormous cash gold buying emanating in Turkey. With oil doing what it is doing, there is no telling how much Arab buying could surface.

One other plus for the day. Gold traded "lightly." It was able to cut through cabal resistance as it made new highs during the session. This bodes well for the days and weeks ahead as it may indicate the bullion ammunition of The Gold Cartel at these price levels is insufficient to keep the gold price from taking off. This could have the bad guys in a forced retreat.

The gold open interest rose 3101 contracts to 222,587. That is a positive as it leaves room for many more specs to show up and pile gold higher.

Silver trader similarly to gold, coming in lower, rising sharply after the 8:30 US economic numbers were released, and then was hit hard (Morgan Stanley). However, silver quickly rebounded to go positive, a continuation of silver’s independent strength compared to gold.

Later in the day, the silver oomph faded in quiet trading.

The silver open interest gained 1108 contracts to 95,964. Plenty of room for the specs to pile in here also.

No gaps to fill below in gold. Soon, we should get our breakaway gap to the upside as gold comes in $2 to $3 higher and then rockets from those levels. It’s about time The Gold Cartel’s $6 Rule is obliterated.

17/08/2004
Norilsk Nickel: Goldabbau entwickelt sich positiv

Der Goldabbau-Unternehmen Poljus, das zu Norilsk Nickel gehört, gab RAS-Halbjahreszahlen bekannt. Im Berichtszeitraum baute Poljus 15,52 t Gold ab und erzielte damit einen Nettoumsatz in Höhe von rund 160,6 Mio. USD.

Der Nettogewinn belief sich auf 76,8 Mio. USD. Die Analysten waren mit diesen Ergebnissen sehr zufrieden. Zur Zeit umfasst Poljus mehrere Goldabbauunternehmen, die von der Muttergesellschaft jüngst erworben wurden, darunter Lenzoloto und die Matrossow-Goldmine. Norilsk ist dabei, diese Gesellschaften in ein Unternehmen zu konsolidieren.

http://www.kreml.net/news/news/full/index.khtml?blockID=6062

Norilsk Nickel works (Itar tass)

CARTEL CAPITULATION WATCH

The DOW leaped 129 to 9955, while the DOG rebounded 26 to 1782. Seems many, many market technicians were calling for a recovery from deeply oversold conditions.

Thank goodness for the foreigners:

09:01 June foreign holdings of Treasuries rose a net $71.8B in June
Note the demand for the 10-yr auction on 8/12 was very strong, with foreign demand cited as a reason.
* * * * *

Then again:

Bill,
Did you see that Caribbean banks bought 17 Billion in US assets? Meanwhile, the JAPANESE and CHINESE only purchased 1.9 Billion. The FED must have some offshore printing presses and by the way, you will not hear one word about this in the press.
Regards,
Sabregold

GATA’s Mike Bolser:

Hi Bill:
The Fed added $7.5 Billion in temporary repurchase agreements today August 16th 2004, an action that upped the repo pool to $51.269Billion. The pattern of the pools' 30-day ma however continues to round off from its previous straight line phase ands we must watch this closely as it signals a change in Fed tactics. After being restrained by a removal of repo pool support early in 2004 the DOW has not regained its previous upward trend. Indeed, the DOW's 30-day ma has set a new low for the move.

Perhaps an event awaits in the near future that will somehow jump the DOW far higher. There does seem to be some "Diamonds" buying (DOW future contracts) from the primary dealers (according to sources) and they generally don't move without reason. The bond sentiment is also waning and why not with commodities screaming along, except for the controlled precious metals. Anyone measuring real interest rates must be aghast at their losses. Recall that real interest rates are the Fed Funds rate minus the CPI. However, the CPI is adulterated and untrustworthy so a better measure is the actual money growth figure of M1 and that number runs at 9% per year yielding a substantial negative value (1.51% - 9%= -7.5%). This is what one is losing each year if we utilize the M1 money growth as a proxy for an adulterated CPI.

Models

Hurricane Charley caused a great deal of consternation for some and relief for others when it changed course inland early Friday morning. I was spared a direct hit East of Tampa while others fared much worse. Seeing the videos of screaming winds, commercial buildings turned to rubble and steel construction architecture roofs ripped off is a sobering experience and the puny preparations I had made seem almost laughable in retrospect.

The fateful turn came as a surprise to expert NOAA meteorologists and their myriad of standard pressure-based computer models. Alone against the conventional view was a product called VIPIR. It is a model based only upon radar signatures and upper winds data. It called for the inland turn as early as Wednesday evening but the local NBC affiliate that had paid a small fortune for it didn't believe the results because they conflicted with Miami. Only when the storm actually began its move did the local broadcaster weather man remark about the conflict. His tone and emphasis told me that there had been a great deal on behind the scenes discussion about the conflict. It seems that Miami did not want to change the original track, preferring to keep evacuation orders in place. In any event the decision was retained until it had to be changed.

Lesson

There is a parallel involved between forecasting weather and attempting to predict the interventional actions of government operators suppressing commodities markets. Often the conventional TA wisdom fails.

Almost all the big speculators on Wall Street use standard TA models based upon the greed/fear, over sold, over bought paradigm espoused by Elliot Wave Analysis doctrine. The Fed interventionists know this all-too-well and exploit it as if they were playing a violin while the specs get blasted and act befuddled afterwards.

Their entire belief mechanism is flawed because it is based on a flawed principle...that the market is controlled by only two forces, buyers desiring profit and sellers fearing losses. Their "black box" models are equally flawed and useless against the third party Fed's attacks.

Until these large strategic commodity speculators wake up and appreciate that they are in an interventional war and their expensive computer weapons are simply outdated, they will continue to be blind-sided as badly as the poor souls flattened in Punta Gorda, Florida.

The key difference with this analogy is that the retirees had no say in choosing their defense models.

Today's DOW and Gold

Defying TA logic but exactly confirming interventional analysis, the PM Fix delivered another spike at 10AM EST while the DOW was rescued by 100 points just as it seemed sure to bomb. We sit at $403 per ounce but don't expect it to run too much higher. I hope I'm wrong.
Mike

Been salivating this past week to read Bill King’s analysis of the latest jobs numbers (he has been on vacation). Here it is:
The King Report
M. Ramsey King Securities, Inc.
Monday Aug. 16, 2004 – Issue 2974 "Independent View of the News"

While we were away the employment report was highly disappointing for the precise reason that we warned. The CES Business Birth/Death Rate was due to deduct jobs for July (-83k in ’03), and given the 182k jobs it manufactured for June, the July number would be down at least 265k jobs. The actual B/D rate for July was -93k…Economists that forecast a higher number based on 4 to 5-years ago and 30-years ago data do NOT understand their milieu. Today’s employment numbers cannot be compared to numbers from different years because they are compiled and tabulated differently.

There was no B/D Rate prior to a couple years ago. It was the ‘plug’ or ‘bias’ rate. And that did not start until 1985. Furthermore, the survey and its sampling have repeatedly been changed or altered. A year ago the BLS commenced altering seasonal adjustments each month. The previous few years, the seasonal adjustments were changed semiannually. And before that the seasonal adjustments were altered annually.

There are an inordinate number of economists and forecasters that don’t know or understand how certain economic data is compiled, calibrated or calculated; and they don’t know the methodology. Yet brokerage firms pay them princely sums for their wisdom that is based on faulty data, which is in violation of the ‘scientific process’ that is learned in most high schools.

As dawn follows night, permabulls immediately upon release of the grossly disappointing non-farm jobs number bellowed that the Household Survey is the better indicator of US economic strength. Of course they have not been reading our missives or they would’ve learned not only does the Fed and other bean counters adhere to the CES due to its superior surveying sample and means, but the Household Survey counts jobs that don’t exist and paychecks that don’t exist. Several times this past year we have included verbatim BLS verbiage that lists the numerous non-paycheck earning jobs that the BLS includes as a ‘job’ in the Household Survey.

If you lose your high-paying financial industry job and then become a day trader or hedge fund manager or consultant or web site operator or professional gambler or ‘talent’ scout, you are employed as far as the Household Survey is concerned, whether you have earnings or not. And if your spouse takes a job selling real estate or also becomes a consultant, your household now has produced a net 1 new job (2 new jobs minus your job loss). And if a formerly unemployed household member becomes your assistant or helper, your job loss has produced two new net jobs as far as the Household Survey is concerned.

For those that have not paid attention or are new to our report or are insufferable permabulls, we will once again cite the BLS verbatim from the "Employment Situation Explanatory Note" to its monthly employment report as to the questionable employment it counts as jobs.

"Household survey. The sample is selected to reflect the entire civilian noninstitutional population. Based on responses to a series of questions on work and job search activities, each person 16 years and over in a sample household is classified as employed, unemployed, or not in the labor force.

People are classified as employed if they did any work at all as paid employees during the reference week; worked in their own business, profession, or on their own farm; or worked without pay at least 15 hours in a family business or farm. People are also counted as employed if they were temporarily absent from their jobs because of illness, bad weather, vacation, labor-management disputes, or personal reasons.

Differences in employment estimates. The numerous conceptual and methodological differences between the household and establishment surveys result in important distinctions in the employment estimates derived from the surveys. Among these are:

--The household survey includes agricultural workers, the self-employed, unpaid family workers, and private household workers among the employed. These groups are excluded from the establishment survey.

--The household survey includes people on unpaid leave among the employed. The establishment survey does not.

--The household survey is limited to workers 16 years of age and older. The establishment survey is not limited by age." http://www.bls.gov/news.release/empsit.tn.htm

The final arbiter of US jobs, IRS data, has shown little of no job growth the past few years, which contradicts the Household Survey.

You can ‘DK’ the ISM employment opinion surveys; they don’t include firms that have gone tapioca…PS - the household survey is subject to lying about one’s predicament – few people like telling strangers that they are indigent or unemployed. And there is the quality of jobs issue – as low paying gigs proliferate.

Remember the Atlanta example we mentioned in the spring? BLS said Atlanta had 84k new jobs in 2003, but the state later discovered that it had lost 65k jobs because the BLS did NOT sample closed firms.

California has discovered it has a big drop in jobs for July. San Francisco Chronicle: "California lost 17,300 payroll jobs in July, the state Employment Development Department reported Friday, an unexpected drop that overshadowed a slight dip to 6.1 percent in the state's unemployment rate." http://www.sfgate.com/cgi-bin/…004/08/14/MNG51886891.DTL

-END-

The following was sent to me by

http://www.otcjournal.com/

It is well written and gets right to the point of where we are today regarding the US stock market. The bulls are running with their earnings argument for higher stock prices. The bears like me are pointing to the fact that the good news is all behind us and that the stock market’s continuing fade tells us what lies ahead:

***

The chart you are looking at (compliments of the Agile Trader) represents a very strange and rare anomaly. You won't see it very often, and it won't stay this way for very long. Something will break hard, either one way or another.

The black line represents the level of the S&P 500 since December of 1998. The blue line is the operating earnings of the S&P 500 over the same time frame.

Note that up until about March of this year, the lines have roughly followed each other. Prices generally lead earnings by a few months as the market adjusts for perceived growth or deterioration.

Point A on the chart represents the beginning of '00 decline. Point B represents the subsequent beginning of the earnings decline. Note the two events are about six months apart.

Point C represents an unusual anomaly. The price of the S&P has radically and visibly diverged from the earnings line. Prices have fallen sharply while earnings have continued to accelerate at the most rapid pace in six years. This divergence cannot last. The lines have to begin to move in the same direction in the near future.

Here's the Big Question- Which line will move towards the other? Is the market accurately forecasting an earnings collapse, wherein the blue line will turn down and follow the black line, or will the market shake off the current IOU (interest rates, oil, uncertainty) fears, and turn back up in concert with earnings? That is the $64,000 question, and the one we will explore today.

The bullish argument is simple; In a word: EARNINGS. Earnings estimates for the S&P 500 stand at $66.77 for '04, and $73.20 for CY '05 (9.3% growth). This is exactly the kind of earnings growth the market loves. Not too radical to the upside. Steady and sustainable.

The PE ratio for the trailing 52 weeks stands at 16.9. For the next 52 wks, the PE ratio stands at 15.3. These are historically low levels in a low interest rate environment. Even with the FED raising interest rates, their policy is still highly accommodative to growth.

From Thomson Financial on August 9th:

This quarter will represent the 4th consecutive quarter of 20% growth or better for the S&P 500 index, which has only occurred twice in the past 25 years. More companies are beating estimates and fewer companies are missing estimates than during an average quarter. With 450 companies reporting earnings, 69% have come in above analyst estimates, 16% have matched estimates, and 15% have come in below estimates. In a typical quarter, 58% of companies beat the estimates, 22% match estimates, and 20% miss the estimates. In the aggregate, companies are beating the estimates by 4.3%, which is below the record high 7.9% recorded in the Q104, but above the historical average of 3%.

In short, earnings are strong and rising. Earnings growth rates are subsiding, but still remain healthy. A number of the smaller issues I cover in the OTC Journal have reported growth, growth, growth, and the stocks keep going down, down, down.

-END-

THE SAD NEWS.

CNBC AND THEIR COMMENTATORS ARE RAVING ABOUT THE ECONOMY AND THAT RETAIL SALES ARE SURE TO IMPROVE, SEE WAL-MART'S STELLAR PERFORMANCE IN INCREASING THEIR SALES.

THE SAD NEWS IS THAT MILLIONS OF PEOPLE INCLUDING WEALTHY AND PREVIOUSLY WEALTHY AND MYSELF WHO USED TO NEVER SET A FOOT INTO WAL-MART NOW FIND IT NECESSARY TO BUDGET MUCH MORE STRINGENTLY. THE INCREASE IN WAL-MART TURNOVER IS IN MY VIEW SIMPLY PROOF HOW TOUGH IT IS GETTING IN NORTH AMERICA AND HOW MUCH POORER PEOPLE ARE OFF BECAUSE OF FAILED ECONOMIC POLICIES AND FRAUDULENT MARKET INTERFERENCE, CAUSING MILLIONS OF INVESTORS TO LOOSE FORTUNES.

CHINA'S TRADE SURPLUS WITH THE U.S., WHICH INCREASED FROM $12 BILLION TO $14 BILLION IS MOSTLY DUE TO WAL-MART.

THE JOKE.

CNBC GUEST COMMENTATOR, UPON HEARING THE HUGE TRADE DEFICIT FIGURES:

"THIS IS PROOF HOW GREAT THE AMERICAN ECONOMY IS DOING AND HOW POORLY THE ECONOMIES OF EUROPE AND ASIA ARE DOING. THE FOREIGNERS ARE TRULY DOING POORLY, BECAUSE THEY CANT AFFORD TO BUY AMERICAN PRODUCTS, WHILST AMERICANS ARE DOING GREAT, BECAUSE THEY CAN AFFORD TO BUY MORE FOREIGN PRODUCTS."
HAVE FUN
ELMAR

Unfortunately, Mahendra nailed it again. From his 2004 WORLD & FINANCIAL PROPHECIES book, Page 19 - second paragraph:

"A hurricane will once again hit the USA East coast area around August. The hurricane will result in heavy damage and the people in the affected area should therefore brace themselves."

The strongest hurricanes affecting Florida usually hit in September.

Mahendra Mania is breaking out all over. Even my ex-wife Karen subscribed to his service (http://www.mahendraprophesy.com). This weekend he alerted his subscribers to look for a stock market rally and for oil to fall 10 to 15%. Those who bought the opening on the one and sold the opening on the other have big smiles. Crude oil closed at $46, down 58 cents per barrel.

Spoke to the "M" man this afternoon. He is all excited about what is in store for gold and silver, not only in the next couple of days, but the next couple of months. Oh yes, he is long platinum too. It has rallied over $80 per ounce in three weeks:

October platinum
http://futures.tradingcharts.com/chart/PL/A4

The HUI gapped up over its downtrend line on the opening and remained firm all day long, closing at 194.51, up 4.66

HUI
http://bigcharts.marketwatch.c…&o_symb=hui&freq=1&time=8

The XAU gained 1.85 to 89.69.

Chuck Cohen has been very impressed with the Newmont action. It keeps coming back and is very close to breaking out:
Newmont closed at $41.99, up $1.07.
http://new.stockwatch.com/swne…utilit_snapsh_result.aspx

Meanwhile, the smaller golds remain dismal. Some don’t even trade and many investors can’t wait to get out of them on rallies. Very strange, yet VERY BULLISH. As gold moves up from here, they will all take off all of sudden with no sellers in sight.

Frank Veneroso is VERY high on X-Cal Resources, who has been a stout GATA supporter for many years. I believe it is the largest holding in his gold fund. Frank says they have the real deal. Their CEO, Sean Kennedy, is top notch.

I am surprised from time to time by some of the responses I receive from Café members. For example, some do not realize that MIDAS is me, Bill Murphy. Don’t know why that is except I have not made it obvious to all. For others I have not made my background clear enough. Yes, I am a graduate of the School of Hotel Administration at Cornell University in Ithaca, New York and did play Pro Football with the Patriots about a hundred years ago.

Because of my anti-Wall Street/establishment views, one which have become more strident as the years have passed since The Café opened in early September 1998, other Café members probably think I am an angry radical and too downbeat on New York/Washington. Yes, I do think the elitists have taken America down the wrong path (big time), but it is a cultivated opinion acquired after focusing on the reality of the goings-on in Washington/Wall Street over the last six years. It is not anything I could have thought of in my wildest imagination based on where I started and from what I thought I knew just a number of years back.

....

Speaking of fun. Ironically, I just heard from an old friend whom I dated in New York as a bachelor when living in Manhattan. If any Café member is thinking about the hottest spot in Florida to go to, South Beach is it. It's something else. And if so, you might want to contact one clever woman, Rhonda Gainer, who knows the score down in that part of Florida. I know, I used to live in South Beach and was a part owner in a restaurant there before moving on to Coconut Grove, Florida, etc., and then on to DALLAS!

If you want to be on top of the South Beach scene, give my friend Rhonda a call. Voila:

http://www.ehopeinternational.com/secondsummer2004.html

Rhonda, another Cornellian and in great shape, is sharp as a tack!
GATA BE IN IT TO WIN IT!

MIDAS

The John Brimelow Report

I$ 400 the level?

Monday, August 16 2004

Indian ex-duty premiums: AM $4.09, PM $5.17, with world gold at $400.70 and $398.90. Below, and adequate, for legal imports. Interestingly, the newly-low sales tax cities in the North are appreciably better placed to import gold. These observations are basis Bombay.

The Indian Government has announced that gold imports in the April-June quarter were 47.63 tonnes - (30.7%)- above last year – 14.87 Mm ozs - an enormous number. Word Gold in rupees was not significantly changed in the period, since the rupee appreciated in the last year, so clearly the demand schedule for gold in India has shifted – very bad news for Bears

TOCOM saw gold at a 4 month high today (in yen) and continued to liquidate. Open interest fell the equivalent of 723 Comex lots to equal 96,453 Comex contacts; the active contract was up 11 yen and world gold went out $1.85 above the COMEX close at $400.50. (NY on Friday traded 46,384 lots; Open interest rose 1,310 contracts.)

Given the response of the dollar to Friday’s news, gold was sluggish. UBS remarks

"A rather modest performance given the record oil and weaker stock market"

and Barclays notes:

"Indeed, the most surprising thing so far has been how modest a reaction gold has had so far to the recent series of news events, particularly given the much more impressive gains in silver and platinum."

Both remarks fitting well with The Privateer’s weekend assessment:

"The most important feature on the weekly chart is the fact that the 40 week moving average (MA) is firmly above the 20 week moving…This week, and for the second week in a row, Gold has jumped back up to touch its longer term moving average on the last day of the week. Last week, it was a $US 7.60 up move. This week, Gold was up $US 4.60 on the Friday. The chart as a whole is making it more and more obvious that $US 400 has become the new "line in the sand" drawn by the financial authorities". (JB emphasis)

Given the apparent vitality of the physical market, $400 is not likely to prove a sensible level at which to take a stand.

The CFTC data appears to indicate that the downswing since the middle of July was accomplished by heavy shorting; the subsequent recovery has seen much of that eliminated. Whether the specs will soon have the courage to test the overhead resistance is the next question.

JB

August 16 - Gold $402.50 up $3.90 – Silver $6.60 up 9 cents

Physical Gold Market, Like Mahendra, on FIRE!

"Above all things, never be afraid. The enemy who forces you to retreat is himself afraid of you at that very moment." Andre Maurois (1885 - 1967)

Today was a weird one. Gold was firm overnight, then sold off as the dollar rallied. However, right from the get-go the funds showed up in a major way to blow bullion through $400, taking it up nearly $6 in the early going. Refco and Morgan Stanley led the fund buying. It appeared the corrupt Gold Cartel was taken by surprise. Nevertheless, they regrouped quickly and JP Morgan Chase, along with some help from Mocatta, set it immediately back a few dollars. As is almost ALWAYS the case, gold made its high within the first half-hour to hour. Over and over again we see gold trade like no other market in history – thanks to the bums.

Meanwhile, the economic news was terrible, as we have seen so often of late:

08:30 Empire Manufacturing reports 12.57 vs. consensus 32.3
Prior reading revised to 35.75 from 36.54.
* * * * *

NEW YORK, Aug 16 (Reuters) - Business activity at New York state factories slowed sharply in early August, in one of the sharpest turnarounds in years, a survey said on Monday.
The Federal Reserve Bank of New York said the business conditions index of its Empire Manufacturing Survey slumped to 12.6 in August, the lowest reading this year and more than wiping out July's rise to 35.8. Analysts had been looking for the index to dip to 32.5.
"While 46 percent of respondents had reported improved conditions in July, only 28 percent -- the lowest level in more than a year -- did so in August," the Fed said. "Sixteen percent reported that conditions had worsened, compared with 10 percent last month."
The new orders index almost halved to 14.9 in August from 28.6 in July, while shipments tumbled to 11.9 from 34 in July.
"The unfilled orders index fell below zero for the first time since September of last year, with 13 percent of respondents reporting a rise in orders compared with 32 percent in July," said the Fed.
The Empire State prices paid index dipped to 49.6 in August from 56.4 the month before. Some 52 percent of respondents reported an increase in prices. The prices received index edged back to 16.3 from 18.0 in July.
The number of employees index bucked the trend, rising to 17.0 in August from 13.1 in July. The average workweek index remained volatile, diving to 6.8 from 22.5 in July.
The index measuring expectations for business conditions six-months ahead, eased to 47.6 in August from 52.8 in July.

-END-

Bad news, right? Not as far as the US markets were concerned. The dollar moved higher, bonds were hit and the stock market took off. How strange! It was like the entire investing world was expecting the terrorists to blow up the planet over the weekend and when they did not, markets reacted in decisive fashion. Why did gold move up then? For that very reason. Since the world didn’t blow up, The Gold Cartel was less inclined to spend their ammo here to hold it down. Had the terrorists struck, they would have been all over gold.

The dollar closed at 88.03, up .06. The euro fell .13 to 123.53, which was well off its low of 123.11. Bonds sank 21/32 to 110 22/32.

Wonderful to see gold move independently of the dollar, which should happen more and more in the days, weeks and months ahead.

A lot to report to you from the physical market front and add to John Brimelow’s superb input. London, as might recall, was looking for gold to start its move the last two weeks of August. So far, so good. Our British dealer source checked in today and is very upbeat. NEW buying has surfaced out of Saudi Arabia and the Far East, notably Hong Kong (heavy buying). The feeling from England is that if gold closes above $405, it will shoot up to $428/$430 very quickly. Our London source is looking for $456 by the end of the year and $500 in the first quarter to second quarter of next year.

Also heard from a different source that THE STALKER is back in the market, after a sustained absence, and is going to buy 1 BILLION worth of BULLION. Meanwhile, a smaller stalker may also enter the fray, to the tune of 100 million to 1 billion. We don’t know the amount. What we do know is they are only going to buy strength, or when gold is "jumping." We take that to mean it has to take out $405 first.

Word to me this afternoon is that Morgan Stanley was a monster buyer today and it is related to new fund buying in the cash market. This fits in perfectly with the information brought to your attention from my STALKER and London bullion dealer sources. This is good, very good!

Gold’s 200-day moving average is $400.50. Nice to see gold take it out so easily this morning. This close, above that average, should attract new buying tomorrow. No gaps to fill, which means we could get a breakaway gap at any time.

The gold open interest rose 1308 contracts to 219,496. As recently mentioned several times, there is room for more than 100,000 new spec longs to jump in and power gold through $430.

The December gold chart is looking good. Today's sharp, early rally took out the downtrend line formed since late last March:

http://futures.tradingcharts.com/chart/GD/84

The weekly looks even better. Note how gold is breaking out of both a downtrend and a wedge formation:

http://futures.tradingcharts.com/chart/GD/W

Silver continues to creep up and to outperform gold.

The silver open interest dropped 250 contracts to 94,856, which is some 30,000 below its peak of earlier this year. Bummer of the day was the warehouse stocks went up by almost 2 million ounces.

Platinum is on fire. It closed at $881, up $19. This is the way gold should be trading, and will, some month soon.

Seems to me gold and silver, as mentioned last week, are ready to really pop. Everything is in place and FEW in the investment world and in the general public are paying any attention, as indicated by the continued abysmal Café Sentiment Indicator.

Warren,
danke für die Tabellen.
Merkwürdig, daß für das bürokratische Deutschland etliche Zahlen über das Sozialprodukt nicht vorhanden sind. Die Staatsentschuldung durch die Große Inflation und die Währungsreform lassen sich dennoch nachvollziehen.
1944 war die Staatsverschuldung 379.800 Mio RM, 1950 begann man wieder mit 9.574 Mio DM )

-------------
Gute indische Goldnachfrage:
(Rajya Sabha = Indisches Parlament)

[Blockierte Grafik: http://www.hindustantimes.com/on/img/headers/home_logo.gif]

Gold imports rise over 30% during April-June 2004
Press Trust of India
New Delhi, August 16

Gold imports into the country have jumped 30.7 per cent in April-June this fiscal, the Rajya Sabha was informed on Monday.
"The quantity of gold imports in the first quarter of 2004-05 is 202.55 tonne as compared to 154.92 tonne in the first quarter of the previous year," Minister of State for Commerce and Industry EVKS Elangovan said in a written reply.

The major countries from where gold is imported are Switzerland, South Africa, Australia, United Arab Emirates, Hong Kong and United Kingdom.

http://www.hindustantimes.com/news/181_950785,0002.htm

Warren,
danke für die Tabelle. (Jetzt fehlen mir nur noch die Zahlen vor 49, aus denen hervorgeht, wie sich der dt. Staat im 20.Jahrhundert mehrmals entschuldet hat)

[Blockierte Grafik: http://www.stern.de/img/logo_stern_nav.gif]
Edelmetall

Gold ist wieder begehrte Geldanlage
[Blockierte Grafik: http://www.stern.de/_content/52/84/528404/Gold500_pa_500.jpg]

Jahrelang fristete Gold bei Banken und Anlegern ein Mauerblümchendasein. In den 90ern galt das gelbe Edelmetall als fantasielos, renditeschwach und altbacken - Aktien waren hip. Jetzt ist es anders.

Der Goldpreis war im Keller. Seit einiger Zeit läuft es jedoch umgekehrt. Gold als Investment ist plötzlich wieder begehrt, eine Reihe von Banken hat neue Gold-Produkte aufgelegt. "Gold erlebt eine Renaissance", sagt der Chefvolkswirt der Dresdner Bank, Michael Heise. "Es ist eine Krisenwährung, und in der derzeitigen Krise flüchten sich die Menschen in die sichere Anlage."

Terrorwarnung macht Gold attraktiv
Die Goldhausse erklären Experten mit den Problemen der globalen Finanzmärkte. Geringes Wachstum, die verschuldeten Haushalte in den USA und Europa sowie Probleme bei Banken und Versicherungen machen Gold attraktiv. Der Aktien-Crash und die Terrorangst seit den Anschlägen vom 11. September 2001 lassen Anleger verstärkt zu dem schimmernden Edelmetall greifen. Die vom hohen Ölpreis geschürte Unsicherheit an den Börsen verstärkt den Trend.
Als Folge ist der Goldpreis immer mehr gestiegen. Kostete eine Feinunze Gold (31,1 Gramm) 1999 noch 250 US-Dollar, kletterte der Kurs Anfang 2004 auf 420 Dollar. Belastet durch Gewinnmitnahmen liegt er derzeit knapp unter 400 Dollar. Das sei aber nur ein kurzfristiger Durchhänger, sagen Analysten. "Bis Jahresende werden die Preise auf 450 Dollar anziehen. 2006 kann ich mir einen Preis von 600 Dollar vorstellen", sagt der Rohstoffexperte der Baden-Württembergischen Bank, Markus Mezger.

Gold als Inflationsversicherung
Seine Begründung lautet: "Gold spielt im Finanzwesen die Rolle einer Inflationsversicherung." Die meisten Analysten erwarten in diesem Jahr steigende Teuerungsraten in Europa und den USA. Aus Inflationsangst flüchteten viele Anleger ins sichere Gold. Zudem soll die Talfahrt des Dollar andauern. Die Faustregel lautet: Geht der Dollar in die Knie, glänzt Gold. Da die US-Notenbank und die Europäische Zentralbank die Zinsen auf historisch niedrigem Niveau halten, wird Gold wieder interessant.

Anleger sollten sich von den glänzenden Aussichten für die Kursentwicklung aber nicht blenden lassen: "Man muss sehr vorsichtig sein", sagt die Volkswirtin der Deka-Bank, Sandra Ebner. "Der Preisanstieg war nur gemessen in US-Dollar zu sehen." In Euro blieb der Goldpreis dagegen nahezu konstant, weil der Dollar gegenüber dem Euro so stark abwertete. Europäische Anleger gewannen 2003 nur knapp 4 Prozent, wenn sie Gold in den Tresor legten.

Lieber Zertifikate als Barren
Eines hingegen ist sicher: Gold erhält den Wert und verliert keine Kaufkraft. "Mit einer Unze Gold kann man sich zu jeder Zeit einen guten Anzug kaufen", sagt Experte Mezger. Die Banken empfehlen Anlegern grundsätzlich, Gold zur breiteren Risikostreuung ihrem Portfolio beizumischen. "Der Anteil von Gold am Depot sollte fünf bis zehn Prozent betragen", sagt der Zertifikate-Experte Heiko Weyand vom Bankhaus HSBC Trinkaus & Burkhardt. Kaum ein Kunde kaufe jedoch Barren oder Münzen wie den südafrikanischen Krügerrand oder den US-Eagle - physisches Gold wirft keine Zinsen ab.

Die große Mehrheit - etwa 90 Prozent der an Gold interessierten Kunden - investieren nach Weyands Erfahrung in Wertpapiere, die Zertifikate. Das gelte für Jung und Alt. Zertifikate entwickeln sich wie der Goldpreis und sind inzwischen in vielen Banken erhältlich. "Sie haben einen Mindestzins sowie eine Kapitalgarantie und bieten eine Absicherung gegen Währungsrisiken", zählt der Experte die Vorteile auf. Hoch spekulativ seien dagegen Optionsscheine sowie Minenaktien. Deren Kurse entwickeln sich parallel zum Metallpreis, allerdings mit höheren Ausschlägen - der Kunde gewinnt oder verliert überproportional.

"Zusätzliches Bonbon"
"Das ist nur etwas für Kenner", sagt Thomas Mai von der Verbraucherzentrale Hessen. Der Finanzexperte hält grundsätzlich nicht viel von Gold und empfiehlt es Ratsuchenden nur als "zuätzliches Bonbon" bei der Geldanlage. "Gold ist schön anzuschauen, aber man kann damit nicht planen und es ist nichts für die Altersvorsorge."

Marion Trimborn, dpa

Meldung vom 16. August 2004
http://www.stern.de/wirtschaft…x.html?id=528404&nv=hp_rt

Die Tabelle mit der Entwicklung der Staatsschulden in den USA seit 1791 ist hochinteressant.

So etwas für Deutschland in diesem Jahrhundert bräuchte man noch. Insbesondere würde mich interessieren, wie sich die Staatsbankrotte (Große Inflation und Währungsreform ) auf die staatlichen Schulden ausgewirkt haben.

Im Verhältnis zum Bruttosozialprodukt liegen die USA und Deutschland mit ca 60-65% m.W nicht allzu weit auseinander. Nur, daß Deutschland diese Schuldenlast in viel kürzerer Zeit aufgebaut hat.

Uh-Oh, Look What Happened to the Dollar
7 August 2004

For the past couple of weeks we have been watching and waiting to see if the dollar could reverse its long-standing downtrend. The market's verdict is now in, as is clear from the following chart of the US Dollar Index.

[Blockierte Grafik: http://goldmoney.com/en/images…arts/alert_2004-08-07.gif]

On Friday the dollar was slammed hard, and this chart of the Dollar Index shows the damage. But we should not be too surprised. The dollar in recent days has had every chance to break above its downtrend line. Instead, each time it tried to do so, there were more people willing to dump dollars than buy them.

Note how the Dollar Index was declining along the downtrend line for several days before Friday's thumping. That feeble performance was a sign of weakness, and that weakness finally manifest itself on Friday as economic reality set in.

The economic reality is of course that not everything is as rosy with the economy as politicians and the 'bubble-makers' at the Federal Reserve would want you to believe. For weeks, most everyone has been in a stupor waiting for lower oil prices, without giving much consideration to the damage already being wreaked on the economy by $2 gasoline.

This last point is important. The economy is slowing because of rising gasoline prices, which have diverted consumer dollars into energy and away from consumer goods. But rising gasoline prices have not yet reduced the demand for gasoline. So we should be looking for higher gas prices, which in turn will further raise inflationary concerns. Also, crude oil appears ready to stay above $40 given the tightness of supply and continuing strong demand.

This means that new lows for the dollar are already 'baked into the cake', given the rapidly climbing inflationary trends in the US and the slow pace at which the Federal Reserve is raising interest rates. The well-publicized 0.25% hike likely to be announced by the Fed on Tuesday is not going to make a difference.

In short, Federal Reserve actions suggest that they believe that the economy can better handle higher energy prices and more inflation than rising interest rates. The consequence is a lower dollar - and in time, much higher gold.

http://goldmoney.com/en/commentary.php

Orezone gehört neben Newmont und Southwestern Resourcs zu den top picks von John Embry, chief investment strategist, Sprott Asset Management Inc.

TV Aufzeichnung von Market Call 1:25 (nach der 54. Minute)
http://www.robtv.com/shows/past_archive.tv?day=tue

CARTEL CAPITULATION WATCH

Man, this PPT/Gold Cartel is one sad sack group. Clearly, the mission today was to keep gold below $400 and the DOW above 9800. Not even oil on its way to $47 per barrel, the Japanese stock market falling 271 to 10,787 and a potentially devastating hurricane in Florida was going to deter these market manipulators. The DOW took out 9800 late in the day, going down 30+ points, but then turned right around to close at 9825, up 11. The DOG moved up 5 to 1757.

Bombshell:

08:30 June Trade deficit reported $55.8B vs. consensus $47B
Prior deficit report revised to $46.9B from prior $46B.
* * * * *

Nothing in this one:

08:30 July PPI reported 0.1% vs. consensus 0.3%; ex-Food & Energy 0.1% vs. consensus 0.1%
June PPI unrevised from prior (0.3%); ex-Food & Energy unrevised from 0.2%.
* * * * *
Disappointing:

09:47 August Univ. of Michigan Confidence (prelim.) reported 94 vs. consensus 97.2
Final July reading was 96.7.
* * * * *

NEW YORK, Aug 13 (Reuters) - U.S. consumer confidence deteriorated in early August, reversing July's increases, as expectations for the economy worsened, according to sources who saw a survey on Friday.

The University of Michigan's index of consumer sentiment fell to 94.0 in early August from 96.7 at the end of July, said market sources who saw the subscription-only report. Economists polled by Reuters had expected the index to rise to 97.50.

The current conditions component rose to 108.4 from 105.2 in July, but the expectations index dropped to 84.7 from 91.2 previously. –END-

Greenspan and Snow think alike:
BOCA RATON, Fla. Aug 13 (Reuters) - U.S. Treasury Secretary John Snow on Friday predicated the slow pace of U.S. job growth seen in July will prove temporary, and said the economy remained poised for stronger growth.

"I believe the recent mild deceleration in job creation will be short-lived," Snow said in prepared remarks for delivery to a group of small-business leaders at a pharmaceuticals company.

"The underlying fundamentals of our economy are very strong. We've seen that tax cuts work and that job creation does follow economic growth," Snow added. –END-

Hard to imagine oil dips lasting too long with this going on:

China crude import growth holds strong at 40 pct
Friday August 13, 7:50 am ET

story: http://biz.yahoo.com/rc/040813/energy_china_imports_2.html

BEIJING, Aug 13 (Reuters) - Chinese crude imports, up 40 percent so far this year, show no sign of slowing despite high oil prices and government efforts to calm economic growth, latest monthly import data showed on Friday.
China, the world's second-largest oil consumer after the United States, imported 70.63 million tonnes or 2.49 million barrels per day of crude in the seven months to end-July, 39.5 percent above the same period of 2003, the official Xinhua news agency said on Friday.......-END-

GATA’s Mike Bolser:

Hi Bill:
I'm between tree lashing tasks this morning but have a few minutes to update things a bit. The Fed added $7.25 Billion in temps and this caused the repo pool to stay at $43.769 Billion.

Examining the pool's 30-day ma we see it beginning to round off in a kind of topping pattern even as the DOW's own 30-day ma leaks downward. The Fed doesn't act as if they care to much about the DOW but we DO see them all over the bond market and currency area...no weakness there at all.

DIVG

The 200-day ma DIVG's shows a very small up-tick but we shouldn't take this as a change just yet. More likely, it represents an oscillation pattern where it will move above then below the 343 ceiling. The apparent pattern, although very early, may represent a much tighter oscillation than we saw the Fed implement in 2003.

Such a tight ceiling in the DIVG is a kind of synthetic gold standard and the Fed chairman has said so in recent Hill testimony. Never mind that $400 per ounce is woefully inadequate to compensate miners and savvy investors know that a strategy like this is doomed to fail under inevitably rising physical demand. It is physical where the true leverage in precious metals lies.
Mike

More from Mike on oil:

Hi Bill:
With today's IPE Brent surge over $43 per bbl and the MCDI's mini swoon, oil has broken a four-year record at DIVO = 37.25. Doubtless this development can't be good news for the Fed's riggers as they are battered by absurd trade deficits.

Japan may not mind as they keep taking US treasuries, but others may begin balking at further acceptance of effectively diluted dollars.

The DIVO metric may be even more important than gold in judging the Fed's stress and eventual breaking point. Right now they are in a real bind.
Mike

Café member Robert Blumen has written an article called Debt and Delusion and can be read at:

http://www.mises.org/fullstory.aspx?control=1579

Should not what is good for the goose be good for the gander too?

U.S. Complains to Russia About Its Handling of YUKOS

Thu Aug 12, 2004 10:54 AM ET

WASHINGTON (Reuters) - The Bush administration has complained to Russia about Moscow's clampdown on Russian oil major YUKOS and its driving effect on oil prices, U.S. officials said on Thursday. .... –END-

Didn't I read somewhere that a Russian central banker was concerned about the U.S. intervention/manipulation in the gold market? Isn't this the 'pot calling the kettle black?' Simply amazing isn't it?
Rob

Some thoughts from fellow Café members:

Dear Bill,
There has been so much negative gold sentiment lately. I feel compelled to offer another view.

Absent a severe down turn in the dollar, gold and silver will only move once enough derivative losses are inflicted on the banksters in other markets. Looking at the option activity in the DJX, NDX, and OEX, it appears that big players are trying to buy
this market higher. There is only one slight problem for them. It isn't working. As you know, the Dow and Nasdaq closed near its lows. The net new 52 week high-low figure has slowly trended downward on the NYSE and on the Nasdog. The stock market has topped and we are going significantly lower.

The manipulators are also in big trouble in the oil market. The action yesterday was almost comical. I believe many of the manipulators are so arrogant they think they can move any market whenever they want to. The law of supply and demand is going to teach these
people a lesson.

In the currency market, the WSJ reported that option volatility is at a 52 week low. This tells me we are on the verge of a big move in the dollar. Due to numerous factors that you have pointed out, I believe the big move in the dollar is down.

To sum up. I believe that we are now in the driver's seat. Over the coming weeks, the derivative losses
sustained by the manipulators will be horrendous in the stock, oil, and currency markets. As they get pummeled in these markets, gold and silver WILL rise to much higher levels.
Sincerely,
Paul Yusem

Dear Bill ....
Just wanted to drop you a quick line to thank you for the wonderful enlightenment I have received from the work you do through GATA and your website. It has been about six years now that I have liquidated my mutual funds to buy unhedged gold stocks. In spite of recent lackluster action in the precious metals arena; my portfolio remains well in excess of four times my initial capital investment. For the most part, the conviction required to make that move was found as a result of your Midas commentaries.
Recently you have been lamenting the poor traffic to lemetropole as well as investor indifference to the PM markets at this time. There is no doubt that the manipulators have played their cards to maximum effect not only undercutting the price but demoralizing investors as well. This in spite of very bullish fundamentals for gold and silver. Letters you published recently clearly illustrate the despair many investors now feel.

I suppose I should feel the same way but I don't. Instead of looking for an exit , I've left the frying pan for a prominent place in the fire . Late last month I finally opened my shop in which I am trading gold and silver. In the past it was merely investment capital at risk.

Now my entire life savings are on the line. The time is at hand in which you will be vindicated for encouraging folks to take a position in precious metals. For now the artificially low prices are a gift for those who already haven't diversified out of paper assets. The longer the "cabal" can maintain this, the more gold and silver folks can accumulate at these ridiculous low prices . In spite of the harm to equities and producing regions ; these low prices are a very temporary gift and there is a saying about looking in the mouth of gift horses....

Something that I found most curious about silver. When silver was sub $5.00 last year, it has never been cheaper in all of recorded history in terms of buying power. There are plenty of references to the cost of goods in ancient Greece , Rome and Asia in terms of various silver coinages . Silver now has far more uses , some of which are vital and not cheaply substituted and yet it commands very little buying power.
While it is is true that silver remains available, the cost of obtaining physical through the charter banks in Canada has risen disproportionately. Service charges are up by over .50 per oz on 100 oz bars and considerably more on smaller units. The typical premium on gold maple leafs is well over fifty dollars over spot. It is probably easy for the banks to switch potential physical buyers into paper on those sort of premiums.

I see that I am rambling and there is one more important thing I wanted to share with you. During the winter I provided you some info regarding a large silver purchase by a European fund. I still don't know who they are or for whom they were buying, if not for themselves. In spite of the bear raid on the Comex in March, my source remains very bullish and continues to buy silver as though his house is on fire and only 100 oz bars will put it out. I suspect we will be hearing more about this in the not too distant future.
Sincerely ....Jack Fortin (Jaxville Gold and Silver Trading)

Jack has set up shop in Red Deer , Alberta. His temporary web site:

http://www.jaxville.com/

Gold vs. Silver

Gold is not a commodity. It is not consumed. The ability to increase the absolute supply above ground is quite limited. A lot of gold is still held by governments as a reserve.

As confidence in fiat currency goes down, the price of gold in fiat currency goes up. Therefore, governments that issue fiat currency have a strong incentive to control the price of gold, and they have been doing just that.

Silver is 80% commodity and 20% currency. Most of the silver ever mined has been consumed. The amount of silver above ground could be doubled in a few years, not so gold.

Since silver is 20% currency, and as such, competes with fiat currencies. Governments that issue fiat currencies have been inclined to control its price, and they have. As such, industrial demand for silver has outstripped new supply for some time.

The price of silver will go up mainly as a function of industrial demand in light of a supply that has been controlled. For thirty years now industry has been eating up the world's supply of reserve silver.

As confidence in fiat currencies goes down, monetary demand for silver will go up and there will be a severe shortage of silver on the market. The price of silver will go up, as long as there is industrial demand for it.

However, monetary demand for silver is limited, because it is not a very reliable store of wealth since the supply is so variable. Ultimately the price of silver will go up enough to supply industry in the absence of the reserve silver that has been drawn down over the last thirty years.

Therefore the price of silver may go up by a factor of 3 to 5 times its current price in inflation adjusted dollars.

However, as faith in fiat currencies goes away, there is an almost unlimited demand for gold. Never mind that governments hold so much gold. When they realize that their fiat currencies are in trouble, they will be loath to sell what they hold, so there will be a severe price pinch.

In a real panic, the major supply of gold will be people selling their jewelry. The supply will be quite limited and the price could spike to tens or even hundreds of times the current, inflation-adjusted price. The only way that you will be able to cash in on this situation is if you are sitting on a hoard of physical. The stock will not go up as much because people don't trust companies to hold something of value for them as much as they trust themselves to hold the same thing in their own hand.

The size of the spike in the price of gold will depend on how badly shaken is the public's faith in the value of fiat currency.

The size of the spike in the price of silver will depend partly on the depth of above stated panic, and partly on how much industrial demand exists, which is, in a sense, inversely proportional to the panic. In other words, if there is a currency panic, then industry will shut down during that time. The price of silver will not go up as much in that case.

So, I think that it's a good idea to have both gold and silver. They are both going to go up a great deal in real value because the price of each of these has been suppressed, however, the amount and timing of the price spike in gold and in silver will depend on different conditions.
Vincent Bressler

The gold shares caught a quiet bid and rose. The XAU gained 2.20 to 87.84, while the HUI made to its downtrend line at 190. It finished the day at 189.85, up 4.72.

The set up for gold and silver to take off is here. The gold fundamentals are "10++++." Whose to say whether we can break loose from the shackles of the abomination holding gold down, but with oil going nuts and the dollar under pressure, it is going to be very difficult for the bad guys to keep doing what they are doing.

The gold and silver shares could come to life any day and really take off. Sweet thoughts for the weekend anyway.

GATA BE IN IT TO WIN IT!

MIDAS

The John Brimelow Report

No one wants play

Friday, August 13, 2004

Indian ex-duty premiums: AM $7.64, PM $5.87, with world gold at $393.90 and $393. Lavish, and adequate for legal imports. The rupee weakened in the afternoon. Indian auto sales in July were reported to be 18.1 % above the previous year. Financial year to date (post 3/31) sales are up 20.5%. India continues to prosper and this augers well for gold purchasing.

TOCOM responded sluggishly to gold’s fall in NY yesterday. Volume did rise 38% to a miserable 12,592 Comex equivalent, but open interest rose only 8 yen and world gold lost further ground, going out 65c below the NY close. Open interest did edge up, by the equivalent of 822 Comex lots. Once again, the Japanese speculative interest is focused on platinum, which traded 80% more than gold by value and hit a 3 1/2 month high. (NY yesterday traded 33,192 contracts. Open interest rose a whole 19 contracts.)

Despite dramatically positive macro news over the last two days, Oil, the US$, Trade deficit, anxiety over stocks – the speculative community is thoroughly cowed. Very light selling has been enough to contain the metal below sensitive moving averages.

JB

August 13 - Gold $398.60 up $4.70 – Silver $6.60 up 7 cents

Gold/Silver Poised To Pop Next Week

"The dollar will be wiped out."- Dr. Franz Pick

A year ago if you had said oil would have taken out $46 per barrel, US interest rates were only 1 ½%, and the US trade deficit would blow out to $55 billion, most market observers certainly could have easily envisioned $500 gold – which it certainly should be at the moment. Instead, the manipulators are going all out to keep gold below $400. They just go on and on and on.

The dollar was hit hard when the stunning deficit news was released, however, gold struggled and really didn’t get moving until a disappointing consumer confidence number hit the tape. Yet, as always, after gold popped early, that was it. NO MAS. Very tedious.

The gold open interest rose a measly 17 contracts to 218,178.

As expected the commercials reduced their longs by 2,679 and increased their shorts by 11,953, according to the COT report. The Gold Cartel and friends have been capping gold above $400 and then buying the dips when the funds sell out below $390 to $395.

The Café sources on the gold floor have turned bullish. They see the specs more inclined to sell than buy, which they construe as bullish. Talk on the floor also is focusing on gold’s failure to rise with the oil price soaring. They are inquiring what is wrong. HELLO!

With all the collateral market gold bullishness this week, gold fell more than $1 when all was said and done. The good news is the base is built up even further – one which can propel gold sharply higher:

http://futures.tradingcharts.com/chart/GD/84

The gold sentiment remains moribund. There is little relative interest in the Café, speculating on the Comex and in the shares. A highly regarded money manager in Europe told me that raising new funds these days is very hard to do. Rarely is the precious metals sentiment this low for this long a period of time. It tells me that this is setting up a giant move to the upside.

Silver continues to perform well relative to gold and seems poised to take off at any time. Its open interest fell 582 contracts to 95,094.

The silver warehouse stocks fell another 199,039 ounces to 110,217,114.

Crude only closed at $46.58 per barrel, up another $1.08. Who knows what it could do next week? If there are any more disruptions in the Middle East due to sabotage, we will see $50 oil in heartbeat.

Bonds drew a bid, closing at 111 9/32, up 17/32.

The dollar fell against all major currencies and finished the day at 88.05, down .75. The euro gained 1.05 to 123.59.

The CRB seems to be breaking out after hold support in the 265 area for months. The CRB weekly:

http://futures.tradingcharts.com/chart/RB/W

Had two interesting conversations this morning – one with my seer friend Mahendra, the other with Frank Veneroso. Both were very excited – about different notions.

Mahendra, who recently predicted copper would take a run to the upside, and it did, rising a sharp cents today to 5.10 cents to $1.3210. He settling in to his new abode in Santa Barbara. What a contrast for he and his family from Nairobi. If you are a gold and silver bull, you will like what he has to say. It goes something like this:

*Gold and silver are about to take off and go bonkers after September 4th. To be specific:

* "The most important thing is that Gold is going to rise after 4 September 2004 and there is no power on this earth that can forestall that rise."
*The train will leave the station next week.
*The gold and silver move will be like a once in a lifetime 50-year rain
*It is unbelievable what is in store for gold and silver.
*For those heavily long it will be like the miner who has been digging and digging for yeas to make a discovery and he FINALLY does.

I think I will relax this weekend with those thoughts. What could I add that is more fun than that?

Oh yes, one more thing. Mahendra is very bearish, as you know, on the US stock market. Sees a 500 point down day coming. And when it comes, it will change investment thinking for many years to come.

Frank’s thinking is sobering too, that is if you are long the general market. He seeseconomic slowdowns all over the world, including China. "They have put on the breaks in China," Frank says. "Growth has stopped." He doesn’t like what he sees as far as the US stock market is concerned as a result, and hasn’t for some time.

Along those lines Frank also thinks copper could be in for a big fall. While the Comex warehouse stocks have been depleted, he sees them building elsewhere. Worse, with economic slowdowns on the horizon, copper production is going to rise 11% next year and then again the year after that. If this plays out, Frank says fall all the way back close to 60 cents.

Zitat

nur Gold ist Geld!!!!

Der Spiegel schreibt heute aber (Olympia):

"Gold ist wichtiger als Geld" [Blockierte Grafik: http://www.goldseiten-forum.de/images/smilies/biggrin.gif]

http://www.spiegel.de/sport/sonst/0,1518,313062,00.html