Beiträge von pflichtmologe

pflichtmologe · 21. Juli 2004

CARTEL CAPITULATION WATCH

The script The Working Group on Financial Markets planned for today came out almost perfectly. The DOW closed up 55 to 10,149, while the DOG gained 33 to 1917. The dollar rose late in the afternoon to finish up .61 to 87.96, while the euro lost 1.04 to 123.19, 1/3 of that loss coming after gold closed. The dollar gained ground against every major currency. Crude oil dropped $1.08 per barrel to $40.36. Now that Greenspan has assured everyone that all is well, we should rejoice.

What a surprise:

REUTERS Greenspan Expected to Say All's Well

By Glenn Somerville

WASHINGTON (Reuters) - U.S. lawmakers get a chance on Tuesday to grill Alan Greenspan on the significance of a June slowdown, but economists expect the Federal Reserve chief to pin it on a summer lull and stress that all's well with the
economy.

Greenspan will deliver the first leg of his two-day semiannual monetary policy testimony to the Senate Banking Committee at 2:30 p.m. EDT, where he is expected to say the recovery is solid and that gradual interest-rate hikes will keep the expansion healthy and lasting. –END-

Which is just what he said:

REUTERS Greenspan: U.S. Economic Growth Solid

WASHINGTON (Reuters) - The U.S. economy has entered a sustainable expansion that is generating some increase in prices, but inflation does not now appear a major threat, Federal Reserve Chairman Alan Greenspan told Congress on
Tuesday.

In remarks prepared for delivery to the Senate Banking Committee, Greenspan noted that Fed policy-makers said last month that interest rates likely will rise at a "measured" pace but that the U.S. central bank will respond as needed to keep
inflation in check.

"Not only has economic activity quickened, but the expansion has become more broad-based and has produced notable gains in employment," the Fed chief said as he presented his semiannual review of monetary policy.

Turning to a softening in some economic data from June, Greenspan said an apparent slip in consumer spending stems from higher prices and will likely prove short-lived…

-END-

GATA’s Chris Powell dispatch last evening was way ahead of the game:

9p ET Monday, July 19, 2004

Dear Friend of GATA and Gold:

Appended are a couple of today's precious metals market commentaries that may be of interest, particularly the first, from CBSMarketWatch, which finds a market analyst talking openly about central bank manipulation of the gold price.

We probably should expect gold and silver to be hit hard Tuesday and Wednesday as Federal Reserve Chairman Alan Greenspan testifies to Congress -- the usual drill. But maybe, as that analyst quoted by CBSMarketWatch suggests, people are beginning to figure this out and aren't panicking as much anymore.

In any case, with central bank manipulation of the gold price increasingly being taken for granted, we can take some satisfaction no matter what happens with the price in the short term.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Gold Futures Fall But Hold Above $400;
Traders Watch Dollar Ahead of Greenspan Comments

By Myra P. Saefong
CBS.MarketWatch.com
Monday, July 19, 2004

SAN FRANCISCO -- Gold futures lost ground Monday but closed above the key $400-an-ounce level for a seventh-straight trading session as investors kept an eye on moves in the U.S. dollar ahead of comments from Alan Greenspan this week.

Gold for August delivery closed at $405.80 an ounce on the New York Mercantile Exchange, down $1 for the session. The contract hasn't fallen below the $400 level
since July 7.

"Despite the lack of U.S. data out this week, the currencies are still set to have a heavy influence over the course of the week with Alan Greenspan set to address the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday with his semi-annual monetary policy testimony," said James Moore, an analyst at TheBullionDesk.com in London, in a note to clients.

Ahead of Greenspan's remarks the dollar was mixed, gaining ground against the euro, but weakening against the Japanese yen. That provided little near-term direction for gold.

"The gold is usually weak going into Greenspan's testimony," said John Stafford, editor of Stafford's Investment Strategy Letter.

But "since we all 'know' that Greenie must reflate, and now actually has a vested interest in reflating, [gold has] recently been stronger than normal after he finishes speaking," Stafford said, adding "there is a lesser fear of central bank manipulation of gold to keep a 'lid' on it -- whether warranted or not."…

-END-

GATA’s Mike Bolser:

Hi Bill:
The Fed added $5 Billion in tomos yesterday after their normal 9:30AM issuance (Kudos to a sharp eyed follower for this) and $4.25B this morning to raise the repo pool to $46.623B. The 30-day ma up trend for the repo tool stay intact and continues to signal the Fed's determination to support their national security interests (The DOW, bonds and the dollar).

It is difficult to determine, intra-day, which of the indexes are receiving the collateralized repo funding amounts, especially in the currency area. However we can see a general pattern of increasing Fed concern for a waning DOW and the dollar.

Of late, the MCDI has tracked flat as a pancake. Today it popped up about .45% and gold was disproportionately hammered down 1.4%. This was not unexpected as one of my metrics shows additional down pressure at least until Friday and perhaps into next week. Thereafter, things should look up.

I read Richard Russell last night with interest. His newsletter is the most successful of them all and even he at times admits government intervention in precious metals. He also is noticing virtually all of his DOW and other index ratios are turning down. What observers like Russell and others miss in their analysis is the pervasive power and determination of the government to change the tide of the major indexes to suite their government needs. The Fed has an unlimited sea of paper with which to work. The DOW is effectively tracking sideways, as if in "wait" mode.

Unlike the financiers of the 1924 Weimar Republic, the Fed has sophisticated pools of hidden money to flood the markets with. The paper Reichmark was all the German bureaucrats knew. The Fed's repo pool is only one of the pools available to the Fed. The GSEs, Fannie Mae and Freddie Mac, are another massive pool of sequestered, inflationary money created by simple fiat mortgage operations. The biggest pool of all is of course the derivatives monster with over $100 trillion in "notional" value. $29 Trillion at JP Morgan Chase's interest rate derivatives desk
http://www.pbase.com/image/31272753.

The attack on gold today tells us that there are real problems in the interest rate area as the Fed wants to reassure the bond guys that inflation isn't here... "Just look at sluggish gold" is their mantra.

In geopolitics, the Russian Federation is making noise these days with their perennial desire for WTO entry. We hear talk of a big 40,000 troupe support move for Iraq, apparent concessions by them in Georgia and mysterious Russian gold bars (Do they meet "good delivery" fineness?) showing up in Switzerland. The Chinese and Americans are outwardly adding pressure to the Russians on frivolous issues such as pork and grain exports. I suspect that these faux frictions are just for show and that the real deal is to get Russians to sell gold and pump more oil (If only they could). At the end of the day if a really big trade WTO moment happens, we can be sure that selling gold was there somewhere behind the scenes. Will they sell all their gold? Half? ....They are Russians...Russians never do what you expect.

One shouldn't forget that speaking about interest rates is speaking about gold so I get a kick when the CNBC bozos ask this or that self-appointed expert what their prognostication is for interest rates is to be. If gold were allowed to float, rates would necessarily rise in order to entice back former dollar holders so when the gold runs dry, as it must, there will be no limit up for interest rates, and no measuring the ensuing financial, social and institutional destruction.

The Iraq War dominates the headlines today. The hidden, desperate gold war is the one that counts.
Mike

A heads-up – an excerpt from Gary North's REALITY CHECK:

Issue 362 July 20, 2004

IS $30 OIL HISTORY?

Yes, according to T. Boone Pickens, the legendary Texas investor, who specialized in oil plays. He was interviewed on "The CBS Evening News" (July 18).

He was careful not to say that he had special information. He was making a "gut" prediction. The Saudis, he said, are not in a position to increase their oil output significantly. They are straining to produce today's output.

He said that he thinks oil is headed to $50/barrel. Thirty dollar oil is history. Gasoline could hit $3 a gallon before the end of the year…

-END-

Swiss legendary Ferdi Lips, a veteran GATA supporter, has sent us his wonderful speech presented at the University of St. Gallen (Allow for a decent amount of loading time):
Vortrag_UNISG_E_240604.pdf

The gold shares continue to fade away. The XAU lost .48 to 87.78 and the HUI fell 1.16 to 189.20.

As a result of what we have learned about gold through GATA, and about what is really going on behind the scenes in other financial markets, it feels like we live on a different planet. It is very difficult to view the markets like most others do because our prism is vastly different. The day is coming when many will finally "get it" and want to live on our planet too. By then it will be a very expensive place to live.

GATA BE IN IT TO WIN IT!

MIDAS

pflichtmologe · 21. Juli 2004

The John Brimelow Report

A Greenspan day for gold? + survey

Tuesday, July 20, 2004

Indian ex-duty premiums: AM $5.02, PM $6.40, with world gold at $$405.80 and $404.60. Dubious, and adequate, for legal imports. Since the end of normal business hours in India, of course, world gold has fallen considerably. One notes the respected American service Cropcast , which uses satellite images, offering Indian farmers in the drier districts some comfort:

"Rains are likely to remain limited in northwestern areas through the weekend, but the six to ten day outlook today does suggest a notable return of rainfall to the drier areas."

Japan reopened today, but interest in precious metals was limited to pushing up platinum. TOCOM only traded the equivalent of 10,062 Comex lots (- 61% from Friday). The active contract was down 3 yen but world gold was actually 30c higher than yesterday’s NY close. Open interest edged up the equivalent of 336 Comex lots to equal 100,591 Comex. The TOCOM Members position report, lagged a day, indicates the public continued moderate liquidation on Friday. (Gold traded 31,225 lots in NY yesterday; open interest finally slipped a little, by 1,522 lots to 262,052.) Yesterday in NY, according to ScotiaMocatta,

"Selling…appeared from overseas sources, pressuring the price back down" from the morning high. Dealer commentators indicated (wisely) concern about what sort of price action might be seen on a Greenspan testimony day like today, but beyond that it is clear that many were taken aback by the magnitude of the selling which has blocked gold from exceeding the high seen ten days ago. UBS remarks

"Comex-trading speculators bought more than 5 million ounces of gold in the week to 13 July and subsequent changes in Comex open interest indicate that another 2-3 million ounces of additional buying has taken place since then, taking the net long position to around 16-17Moz by our estimates. While this is less than the April 2004 all-time high position of 22.5Moz… this position may be getting a little extended."

Standard London says the unsayable:

"the latest CFTC Commitment of Traders report showed that the net fund long gold exposure on the COMEX factor rose to 70,434 lots, up from 31,409 lots, the largest weekly gain for almost four months, explaining gold’s recent strength, although some might argue that the move in the gold price, given the return of large scale Fund interest, is disappointing and suggests significant producer and/or official selling into the rally." (JB emphasis.)

(Of course, unless a mine is increasing a hedge book, it has little flexibility to opportunistically accelerate selling – and who could do so in this kind of size? Unless the CFTC data is misreporting some hero hedge fund, most of the selling has to have been official.)

Establishment of a barrier of this type invariably draws in speculative shorts, besides wearying the longs. Consequently, it was little surprise today in NY to find gold falling by more than double what the concomitant dollar rally implied on markedly heavier volume. The question is how aggressive the shorting will become. News from the physical front would counsel it should be cautious. Reuters today carries a Singapore story partially reversing their previous item on Far Eastern activity:

"Asia Gold-Chinese selling over, demand still limited ."

"SINGAPORE, July 20 (Reuters) - Chinese investors have stopped selling gold bars and demand in Asia remains limited because of volatile prices, dealers said on Tuesday."

"In Hong Kong, gold bars were at a discount of between 10 to 20 U.S. cents an ounce below London spot prices <GOLD/ASIA1>, compared with 30 U.S. cents last week…"I think people are happy to buy at around $400 and $402," said Ronald Leung, director of Lee Cheong Gold Dealers Ltd in Hong Kong, a key bullion trading city in East Asia."

"The physical market in Asia saw active buying from China, the world's third-largest gold buyer, and other Asian countries when spot prices fell to this year's lows of $371 an ounce in May…In Singapore, the entry point for much of the bullion trading in Southeast Asia, gold bars were quoted at a premium of up to 30 U.S. cents an ounce, unchanged from last week."

This story was of course written with gold above $405. Interestingly, the discounts on world gold displayed by the Shanghai Gold Exchange virtually disappeared today.

JB

pflichtmologe · 21. Juli 2004

The James Joyce Table

Midas du Metropole

Topic du Jour

--------------------------------------------------------------------------------

July 20 - Gold $401.40 down $3.90 – Silver $6.60 up 1 cent

Silver Storms Back After Cabal Assault

As my colleague Chris Powell said this morning, "The Gold Cartel has become laughable in their predictable ways of manipulating the gold market."

Their recent price suppression tactic of halting the gold price rise via massive selling ahead of Greenspan’s testimony before Congress today could not have been more blatant. The London AM Gold Fix this morning was $405.50, the same as the New York close last evening. That was as good as it was going to get for gold from there on in. As we came into our opening, the cabal began their selling avalanche. One could blame it on a weaker euro, but that is horse manure as gold was only allowed to rise a few dollars when the euro rose 1.10. Today with gold down $6 at one point, the euro was off only .70.

Worse, the economic news this morning was unexpectedly bearish for the dollar and gold friendly:

08:30 June Housing Starts reported 1.802M vs. consensus 1.99M; Building Permits 1.924M vs. consensus 2M
Prior housing data revised to 1.97M from 1.967M; permits revised to 2.097M from 2.077M. –END-

So what yawned the markets? Greenspan was speaking this afternoon; The Working Group on Financial Markets was not about to let gold have its day, let the dollar get hit hard, or let the stock market swoon, not when Greenspan was going to come out with the scripted spin Wall Street they expected from him. Greenspan is nothing more than a market lackey these days. He is praised for not surprising the markets like the Fed used to do from time to time. What the pundits don’t realize is the entire financial market game has changed over the years. We don’t have free markets like we used to. We have orchestrated markets – Economic Fascism is the name of the game in America at the moment. What Wall Street and the markets want to hear is what Greenspan gives them.

A veteran Café member nailed it with her comments this morning:

Hi Bill:
Gheesh these guys are getting so blatant it’s unbelievable; of course you (of all people) know that. Yesterday gold and silver stocks were whacked for no apparent reason; today gold gets whacked. Obviously someone knew this was coming today. Maybe we need to develop a new type of investment software called "blatant manipulation tracking". It could track and predict the next manipulation, generating advice based on the MI, "Manipulation Index". Something that accurate would probably blow EW out of the water; LOL.
Meg

The pleasant surprise of the day was silver’s stunning late day comeback. At one point early on, it was down 18 cents and following gold into the toilet. However, the shorts such as Republic Bank did not like what they saw and began to cover. Morgan Stanley was a good buyer and Refco bought late. For silver to close up on the day, after such a planned cabal attack, is very encouraging.

The silver open interest still is relatively low. It fell 176 contracts to 92,061. The silver warehouse stocks dropped another 221,802 ounces.

The gold open interest fell 1522 contracts to 262,052. Referring to Dan Norcini’s fine piece at The Hemingway Table, after today’s close gold has now only rallied $8.40 on a 37,801 Comex open interest increase (not including today’s number). It will be interesting to see if we had a good deal of liquidation, or whether the cabal continued to pour it on.

According to the floor, there was some gold decent short-covering late, most likely in sympathy with silver.

For gold to break loose from the shackles of the price manipulators something external, or new, is going to have to occur. Been saying that for years and it is just as true today as way back when. Fortunately, the odds of a Gold Cartel blow-up are increasing substantially. What could do it?

*The silver cabal runs out of enough silver to carry out their scam. They hit the wall and the price of silver explodes. Gold will inevitably follow.

*Gold demand surges around the world and substantially eats into the available gold supply The Gold Cartel has left to keep suppressing the price at these low levels.

*Oil soars towards $50 per barrel.

*The US stock market sinks under its own weight as the economic recovery runs out of steam.

*Iraq continues to disintegrate and a worst, or bad case, ending scenario becomes apparent and eventually inevitable.

*The dollar goes into a serious dive which shakes the financial markets.

pflichtmologe · 20. Juli 2004

Appendix

A note from Jessie on this important Stephen Roach piece below:

The primary point in all this is the last paragraph: that the Fed should not be allowed to use the Ken Lay defense when things go wrong, and simply say "We didn't know." The Fed, according to Roach, has abandoned its role as objective regulator, and has become a fully culpable accomplice, perhaps even a primary actor, in what looks like one of the greatest frauds in all financial history. Roach is writing this with an eye to history, and perhaps the formation of a new financial system in the future.

The World's Biggest Hedge Fund
Stephen Roach (New York)

The title belongs to America's Federal Reserve. Not only is the Fed the unquestioned leader in world central banking circles, but the US monetary authority has led the way in setting up the biggest macro trades of modern times. Highlights include Carry Trade I of 1993, the equity bubble of the late 1990s, and now Carry Trade II -- all direct outgrowths of trading strategies implicitly recommended by Greenspan & Co. So far, the world is no worse for the wear. But it's a world that now lives from trade to trade. And with that precarious existence comes the ever-present risk of breakage -- the aftershocks that follow the unwinding of every trade. We have the Federal Reserve to thank for that.

This transformation began in earnest in 1987. As the US equity market surged toward excess that summer, there was deep conviction that downside risks were not to be feared -- that they would be protected by the options strategies of the perfect hedge, "portfolio insurance." The Crash in October unmasked the flaws in that supposition. The Fed responded to this crisis by offering up the unconditional palliative of an open-ended liquidity backstop. Out of that chaos nearly 17 years ago, the dip-buying mindset of a generation of equity investors was borne. In retrospect, the buying opportunity created by the Crash of 1987 was a bargain that no serious investor -- especially the levered hedge fund community -- could afford to miss.

Five years later, financial markets were offered another learning experience. In response to what Fed Chairman Alan Greenspan dubbed "financial headwinds," the Fed slashed its policy rate to 3% in September 1992 and held it there until February 1994. The Fed believed that an unusually steep yield curve was the appropriate antidote for the credit crunch it thought was hobbling economic activity -- an outcome brought about by America's saving and loan crisis and widespread loan losses in the commercial banking system. With the federal funds rate pushed down to the inflation rate, overnight money was essentially "free" in real terms. For a troubled banking system, this was a great opportunity to re-liquefy balance sheets. For the levered hedge fund community, this was another no-brainer -- the only question was where to play the spread. The origins of the modern-day "carry trade" are traceable to this period.

Fast-forward to 2004, and it's déjà vu -- but with several important new twists. First, the financing of the current carry trade is now occurring on much more generous terms; the federal funds rate of 1.25% is fully 200 basis points below the headline CPI inflation rate (3.3% Y-o-Y as of June 2004) -- offering a negative cost of overnight money. The real federal funds rate hasn't been this low for this long since the late 1970s. In effect, levered investors are now being paid to play the yield curve.

Second, suffering from a shortfall of income generation in a uniquely jobless recovery, American consumers have turned into the functional equivalent of heavily levered hedge funds -- going deeply into debt to extract purchasing power from their homes (see my 4 June dispatch, "The Mother of All Carry Trades"). Third, the carry trade has now become central to America's twin-deficit financing imperatives; record budget deficits and current account gaps have been funded "painlessly" -- in large part though purchases of dollar-denominated assets by Asian monetary authorities. The yield curve play has turned foreign central banks into hedge funds as well.

The Fed obviously sees its role quite differently. Fixated on inflation control -- yesterday's battle, I must add -- the US central bank pays little heed to excesses that emerge in financial markets. Favoring a reactive over a pro-active approach, the Fed believes it has both the skills and the tools to respond to problems in asset markets as they unfold. In the words of Chairman Greenspan in describing the Fed's conduct as the equity bubble expanded in the late 1990s, "...we chose...to mitigate the fallout when it occurs" (see his January 3, 2004 speech at the Meetings of the American Economics Association, "Risk and Uncertainty in Monetary Policy"). The Fed believes that this approach has been vindicated by the subsequent course of events. In light of America's surprisingly mild post-bubble recession, Greenspan argued (in this same speech) that it is reasonable "...to conclude that our strategy of addressing the bubble's consequences rather than the bubble itself has been successful."

Success at what cost? That is really the ultimate question in all this. To the extent that the Federal Reserve continues to set the stage for one risky macro trade after another, I believe there is great peril in its strategy. Last year's deflation scare was a case in point. As disinflation approached the hallowed ground of price stability, nominal interest rates moved down to rock-bottom levels. But as the risk of "unwelcome disinflation" stoked fears of a Japanese-style deflation, the Fed went into a fire drill that pushed its policy rate perilously close to the zero boundary. Yet another carry trade became a sure thing in this climate. As the risk of deflation receded, the debate turned to the Fed's exit strategy -- the so-called normalization of an extraordinary monetary accommodation. By telegraphing that the ensuing shift in policy would be "measured," the US central bank put financial markets on notice that it will be taking its time in raising interest rates. For those playing the carry trade, time is money.

To date, of course, the Fed has taken but one small step in returning its policy rate toward a more neutral setting. This has done next to nothing to discourage the vast array of carry trades that are still on the books in financial markets. Amy Falls, our global fixed income strategist, argues that most of these levered bets are now almost back to positions prevailing before the Fed's late June move. That's especially the case, in the view of our fixed income team, insofar as most spread products are concerned -- namely mortgage-backed securities, high-yield bonds, emerging market debt, and even investment grade paper. Our European equity strategists, Teun Draaisma and Ben Funnell, make a similar point -- that with sharply negative real short-term interest rates, it takes a lot more than 25 bp of monetary tightening to unwind the carry trade (see their July 13 essay, "The Crowded Carry"). They underscore the weakest link in this daisy chain -- that the risks to the levered community are likely to fall most acutely on banks and consumers, where the need for carry-trade-induced income generation is most acute. That pretty much fits with my own concerns, especially with respect to the over-extended American consumer.

What worries me the most in all this are the mounting systemic risks toward carry trades and the asset bubbles they spawn. To the extent that such trading strategies create artificial demand for assets, a seemingly unending string of bubbles is a distinct possibility. That's precisely what's occurred in recent years -- from equities in the late 1990s, to sovereign bonds, a host of spread products, and now possibly to a global housing bubble (see my 15 July dispatch, "Global Property Bubble?" and the accompanying round-up of worldwide housing market conditions conducted by our global economics team). This profusion of carry trades would not have occurred were it not for the Fed's extraordinary degree of monetary accommodation and the steep yield curve it fostered.

It doesn't have to be this way. Both the Bank of England and the Reserve Bank of Australia have adjusted their policies to take property bubbles into explicit consideration. Moreover, Ottmar Issing of the ECB has publicly stressed the need for central banks to do a much better job in grappling with the linkage between monetary policy and asset markets (see his February 18, 2004, editorial feature in the Wall Street Journal, "Money and Credit"). The Fed, by contrast, remains in denial on this key issue -- refusing to concede that monetary policy must take asset inflation into account.

Unfortunately, the role of the US central bank goes beyond benign neglect. Over the past several years, the Fed actually has been quite aggressive in arguing why excesses are not bad. That was the case when it repeatedly justified the equity bubble on the basis of the so-called productivity renaissance of the New Economy. It has also been the case when the Fed has argued that America is not suffering from a debt problem, nor a twin deficit financing constraint. By serving as a cheerleader when financial markets are going to excess, the Fed is losing its credibility as an objective observer. It is no longer the tough guy that relishes the role of "taking away the punchbowl just when the party gets going" -- to paraphrase the legendary mantra of former Fed Chairman William McChesney Martin. By condoning excesses, the Fed, in effect, has become a stakeholder in the carry trades it spawns. Investors, speculators, income-short consumers, and financial intermediaries couldn't ask for more. It's the ultimate moral hazard play that that has turned the world into one gigantic hedge fund.

pflichtmologe · 20. Juli 2004

The John Brimelow Report
This Seller is HUGE (so is buyer)

Monday, July 19, 2004

(I did not publish on Friday due to mundane domestic reasons. Sorry.)

Indian ex-duty premiums:

Friday AM $4.94, PM $ 6.77, with world gold at $403.85 and $403.30. Dubious, and ample for legal imports. The Reserve Bank intervened aggressively to halt the slide in the Rupee on Friday afternoon.

Monday AM $6.23, PM $5.31, with world gold at $407.10 and $406.60. Ample, and adequate, for legal imports. A respectable performance considering the jump in world gold after Indian hours on Friday.

There is a considerable amount of noise confusing the situation of the world's largest gold buyer at present. The Monsoon appears likely to be disappointing in some regions, although how this effect aggregate farm incomes - which, of course, are a different thing to aggregate crop size - is not clear. The Reserve Bank has tightened up on the ability of gold importers to make a little interest income with the float from overseas trade credit. This has greatly annoyed them, and encouraged some Northern Hemisphere Bears, but in reality is quite marginal. More importantly, the State Government of Rajasthan, in the north, has effectively abolished sales tax on gold imports, a matter of some 1%. This will likely provoke a competitive response from other centres, and slightly help imports.

Often it is argued that gold consumption in India is rural and unsophisticated. Actually, urban and wealthier Indians have an astonishing propensity to buy gold. This is true even of Indians resident in America, a particularly self selected and, one might have thought, westernized community. A valuable demonstration of this, courtesy http://www.thebulliondesk.com , appeared in a New Jersey newspaper recently, and is strongly commended:

"With more than 30 jewelry shops clustered in a one-mile radius, the "Little India" in the Iselin section of the township has become a top destination for immigrants seeking the heavy 22-karat gold they favor. On a typical Saturday, parking lots off Oak Tree Road are filled with cars from Virginia, Maryland, Pennsylvania, North Carolina, even Ontario, Canada. The first Indian jewelry shop opened in 1989 on Oak Tree Road...The Kaur sisters watched as their mother hurried from one Oak Tree Road jeweler to the next. Their own explanation of why Indians love and buy gold was that it was all about keeping up with the Patels next door. But they understood it was part of their identity as Indians. "Gold will always be with us," Kamal Kaur said. "

Japan was closed today.

On Friday morning in NY, the dollar slumped following the CPI data. Gold buyers advanced, to meet a familiar situation: in UBS' words:

"Good professional selling around the $406 level initially capped the move higher but once this was done gold managed to grind higher on further strength in the euro before again running into good selling at $408 (Aug Future). Gold spent the rest of the session trading quietly near the highs and closed just above $406."

Comex traded 43,758 lots on Friday, with open interest leaping 7,339 contracts to 263,574. It has now risen 29,595 contracts since Thursday week's close: and gold has not advanced at all. Almost 3 million ozs of paper gold! 92 tonnes! Dow Jones reported on Friday that

"Some players were bemused by gold's lack of lift given the degree to which the US dollar sank and the levels of fund buying interest seen during the morning"

That any professional should be bemused is bemusing. As Refco Research comments dryly:

"The question is whether the August contract can breach 410 resistance before recently acquired specs tire of butting their heads against the determined selling below that mark"

The CFTC data, reported as of last Tuesday, are now somewhat out of date, but of course do show a steep build up. UBS says:

"Comex trading speculators cut their short gold positions by 1.5 million ounces and added 3.5 million ounces to their gross long positions. Overall the net long position increased by 5.0m ounce to 13.87Moz, more than we would have expected. While the net long position is still a long way short of its recent highs (22.5 Moz) there is clearly less buying room than there was before this recent move."

Actually the situation is slightly better than this because TOCOM liquidated some 60 tonnes (c. 2mm ozs) at the same time. The seller is not off the hook yet.

The noted gold bear points out that the large spec net change was the 5th biggest in history. This was certainly not true of the gold price increase.

JB

CARTEL CAPITULATION WATCH

Another Hail Mary late rally in the US stock market, led by S&P futures buying. The DOG bounced off its yearly low and the S&P rebounded off its 200-day moving average. Even so, the DOW lost 47 as the goose failed and the DOG finished around unchanged.

GATA’s Mike Bolser:

Hi Bill:
The Fed took no action today July 19th 2004. The repo pool stays at $43.373B and this is still very high. Indeed the repo pool's 30-day ma is the highest its been since I began this series in late November 2002. At this hour 10:30AM, the DOW tracks weakly at 10,140 with the 30-year bond yield at 5.12% almost exactly where it has been for months. No need to thrash the point on a rigged bond market by the Fed's use of their "policy puts."

In such an interventional stock and bond market, whose controllers want the DOW to rise but it resists against ever more repo pressure, it may be useful not to attempt to short the DOW in spite of all the classical shorting indicators. A major CNBC celebrity fund manager finally heeded this advise after having his short funds savaged for years.

There are may other popular contrarians who loudly preach that a crash is coming and believers should prepare by method of the short position taken against major indexes. At this moment I think this is a very bad idea because we see the Fed adding to the upward repo trend line. They are doing this for a reason and will keep doing it until they get what they want.

Guessing the Fed's intentions is part of what we all do in the sphere of speculation. In interventional analysis, I just use a different basis of knowledge and methods that are alien to everybody else. I have chosen 11,750 on Labor Day 2004 and this wouldn't be a bad option play for the DOW 'Diamonds". I've done this partly due to the coming election antics of the current administration in concert with the Fed's deteriorating economic fundamentals. The "diamond" premiums are fairly low low and you will likely be riding in the Fed's wake. The problem is one of contrarian philosophy.

However, we should always remember that the objective is to thrive in whatever situation presents and we see the Fed wanting a higher DOW at the moment and there IS a discount to taking a long option position. Moreover IF there is to be some sort of election "surprise" the Fed already knows about it and is preparing their support mechanism.

I also avoid the largest cap gold firms as they can be shorted by the fed and their primary dealers and the leverage is therefore suspect. The smaller exploration firms in precious metals that are debt-free are very good hedges instead as they contain both leverage to the gold price and discovery leverage as well. The big boys can't short them as easily since there is so little liquidity. In judging these small companies, personnel is almost always the key factor, especially professional exploration experience with a record of success. There is a substantial risk that no viable, mineable resource will be found, so one needs to learn as much as possible before committing to this path.

The Fed appears still to be in its transition phase for gold and we may see some additional weakness as they keep the pressure on for the moment.

With rumors of Russian support for Iraq in the form of 40,000 troupes, one can wonder what Vladimir was given in return and what the whole package contained. I was particularly interested in Friday's café report of Russian gold bars showing up on the European market. It may be nothing, or....
Mike

The road ahead for US stock market looks like a rocky one. The stimulus measures employed to jolt the economy the past couple of years are coming to an end. The following news items give more credence to the notion the average American is being squeezed as income is not keeping up with the real inflation. Meanwhile, the Fed is behind the curve as far as fighting inflation is concerned, yet if they raise rates too much it could cause an economic fiasco:

July 18, 2004
Hourly Pay in U.S. Not Keeping Pace With Price Rises

By EDUARDO PORTER
NY Times

The amount of money workers receive in their paychecks is failing to keep up with inflation. Though wages should recover if businesses continue to hire, three years of job losses have left a large worker surplus.

"There's too much slack in the labor market to generate any pressure on wage growth,'' said Jared Bernstein, an economist at the Economic Policy Institute, a liberal research institution based in Washington. "We are going to need a much lower unemployment rate.'' He noted that at 5.6 percent, the national unemployment rate is still back at the same level as at the end of the recession in November 2001.

Even though the economy has been adding hundreds of thousands of jobs almost every month this year, stagnant wages could put a dent in the prospects for economic growth, some economists say. If incomes continue to lag behind the increase in prices, it may hinder the ability of ordinary workers to spend money at a healthy clip, undermining one of the pillars of the expansion so far….

-END-

Fed needs to raise rates more quickly, opines Barron's

Joseph Carson's "Economic Beat" column believes the Fed could be overstating capacity and understating the potential inflation risk, which could force the Fed to increase rates more precipitously in the future. Carson says data indicates capacity seems to have contracted in 2002 and 2003, and believes the Fed should seek to better align nominal spending with inflation trends. –END-

RATE RISE COULD BANKRUPT DEBTORS
By DIANE HESS
NY Post

July 18, 2004 -- Four years of rock-bottom interest rates may have stimulated the economy, but now they threaten to drive millions of Americans into bankruptcy.

Since 2000, a series of Federal Reserve rate cuts has made borrowing dangerously easy. Low-rate mortgages, credit cards and auto loans have allowed the average American to live above his or her means.

Now that rates are rising again, it's going to become that much more difficult to fix the mess.

"Many families are just a few paychecks away about three to six months from having severe problems," said Sam Gerdano, executive director of the American Bankruptcy Institute.

In 2003, a record one-in-73 U.S. households declared themselves illiquid, ABI data show. That's more than 1.6 million new bankruptcy cases in 2003 alone, and nearly double the number from a decade ago. ABI predicts that 2004 will be another record year for personal bankruptcy.

Madeline Rodriguez, of Richmond Hills, Queens, knows the story all too well. The 49-year-old mother of one filed for bankruptcy recently.

"For the past few years, it was so easy to get credit cards," she said. "I got them in the mail or at department stores, and I went shopping. It's not something that I'm proud of."

U.S. households, on average, have more than $6,000 in credit card debt, according to BankRate.com's calculations of first-quarter census figures and the Federal Reserve's debt statistics.

As rates go up over the course of the next few years, the cost of borrowing and size of payments on those loans will only move higher.

Homeowners with adjustable-rate mortgages which vary according to interest rates at specified intervals could be among the hardest hit.

Spending on adjustable rate mortgages totaled approximately $300 billion, or 35 percent, of the nearly $850 billion spent on mortgages both purchases and refinancings from April through June, according to data released by the Mortgage Bankers Association this week.

"Significant rate adjustments could lead to greater instances of delinquency and default on other debts," said Greg McBride, an analyst with BankRate.com.

-END-

A heads-up:

And So It Goes..The Idle Thoughts of an Idle Fellow

A few months ago I wrote a piece suggesting that a new strong man would emerge in Iraq and would use tactics similar to Saddam's to keep the warring tribes under control (An Exit Strategy - April 1 2004).

In today's Sydney Morning Herald Paul McGeough has written that the new Iraqi Premier Iyad Allawi, personally shot dead 6 suspected Iraqi suspects detained in an Iraqi jail in front of as many as 23 eye witnesses including plain-clothes US security personnel. He apparently did this in cold blood and without a trace of emotion, commenting only that "they deserved worse than death." Victims of Saddam must be getting a hint of deja vu.

You can read the full account here :- http://www.smh.com.au/

It makes chilling reading - the more things change, the more they stay the same.
The Idle Fellow

Will be heading back to Dallas shortly from my trip out here to San Diego for my nephew’s wedding. Need the rest at this point. What a great time, but am worn out due to all the action from all the kids. Ran on the Delmar beach one day, which was fine and normal for me. However, my nieces asked if I wanted to got to their turbo kickboxing class at Rancho Bernardo’s 24 hour fitness gym. What a mistake! Never tried that stuff before. Ten minutes into it, I thought they were trying to kill me and there was still 35 minutes still to go. I was better off playing bocce ball the night before in my brother Mike’s back yard.

The wedding was absolutely a stunner and the most fun. It was held at La Jolla Presbyterian overlooking the Pacific Ocean. Magnificent!

One of the attendees and a friend of my family was a fellow named Jeremy P. McGhee who is confined to a wheel chair due to a spinal cord injury. He will be competing in a ski competition in Aspen this winter. Remarkable guy. I mentioned that I met Christopher Reeves (who went to Cornell) in New York before his spinal cord injury and know Marc Buoniconti who is in a wheel chair also due to a spinal injury suffered in a college football game. Marc’s Dad Nick was my teammate on the Patriots a long time ago. Pretty scary stuff, what could happen to any of us. Three years after my stint with the Pats, the guy who played my same wide receiver position, Darryl Stingley, broke his neck after a vicious hit by Jack Tatum of Oakland.

Anyone wishing to learn more about Jeremy McGhee’s Fight 2 Walk Foundation can do so at http://www.fight2walk.org.

It will put everything in perspective as we moan about the crummy gold share action. It stinks because the bums capping gold think they know what is coming for the gold price and are dumping the shares. So are other players who can see the blatant capping of the gold price and want out before bullion dumps once again.

The HUI lost around 3.76 and the XAU fell about 1.50.

While the odds are with the crooks, maybe they will be surprised! I’m hanging in there.

GATA BE IN IT TO WIN IT!

pflichtmologe · 20. Juli 2004

The James Joyce Table

Midas du Metropole

Topic du Jour

--------------------------------------------------------------------------------

July 19 - Gold $405.30 down 90 cents - Silver $6.59 down 10 cents

The Charade Encore!

The greatest discovery of my generation is that a human being can alter his life by altering his attitudes of mind...William James (1842-1910)

GO GATA!!!

The last time I used my laptop during my mid-June trip to Vancouver the title of the MIDAS was “The Charade.” It was still at the top of the working document used for the commentary. After viewing the gold action the past few days, I decided to use it again for this heading.

What a joke this gold market is! The open interest went up another 7,339 contracts Friday to 263,564 as the specs pile in and The Gold Cartel blocks the gold price from moving up at all. The crooks are making it crystal clear they are going to do all they can to keep bullion from showing any kind of stress in the system.

With this kind of intervention, the technical picture gets more bearish by the day. Talk about fighting City Hall. The bad guys are capping gold and waiting to pounce on the longs when outside market events go their way. Once again they plan to fleece the specs who are buying gold for the right fundamental reasons.

The odds are 95% the specs will be flushed on this go around (as usual) and bullion will tank from here. So why bother with gold and hang in there? Because at some point the anti-trust violating price fixers are going to hit the wall and run out of enough physical gold to carry out their corrupt scheme. Or, they are going to lose control of their scam due to outside market forces. When that happens gold is going to go nuts to the upside.

More than likely when gold does explode the technical scenario will look similar to what we have now. Many investors will exit the market, looking for gold to be belted as it always does when the specs get super long. However the day is coming when, instead of crashing, gold will keep on going and break through the massive resistance at $430. That’s when we get our Commercial Signal Failure. Those not on board will find it difficult to get back in position and many will miss the move of a lifetime.

Another reason to stay long in this very vulnerable point in time is because of the risk/reward ratio. While the probability of gold being trounced from here is very high, the downside price potential seems limited to me, while the upside is staggering. Unless you are a nimble trader, the best course of action is to stay the course – the way I see it anyway.

The technical picture in silver is nowhere near as dreadful as that of gold. The silver open interest rose 1025 contracts to 92,237 and is around 30,000 contracts off its early spring high. That doesn’t mean silver won’t fall along with gold. It just suggests the bums are not sitting on silver like the are gold. Probably because they don’t have enough silver to do the dirty at these price levels.

The silver trade today was extremely thin. Our floor sources told us a 150 lot order would move silver 6 cents.

The dollar was firmer earlier, yet weakened as the day wore on and finished at 87.35, up .05. The euro closed down 14 to 124.22, but the yen closed up half a point.

YES, Just in! Big draw in the silver warehouse stocks. Down 1,184,877 ounces to 114,777,538 ounces.

Crude oil closed up .14 to $41.44 per barrel.

pflichtmologe · 16. Juli 2004

-END-

Gold share activity Down Under from The Australian:

Global gold rush ups prices

By Robin Bromby
July 16, 2004
FOREIGN money is flooding into Australian gold stocks that are considered underpriced, generating speculation that some global players could be positioning themselves for another rally in the metal's price.

A second fund has moved - within the space of three days - into Bendigo Mining, outlaying $28.8 million for a 17 per cent stake in a company that is heading back into production. And market watchers have been astounded at the huge volumes of Lihir Gold going through the market every day since late June: about 40 million shares one day, and another 20 million yesterday. Meanwhile, mystery continues to swirl around the identity of the buyer of 8.8 per cent of Emperor Mines, a move that looks like derailing the takeover bid for that company by Durban Roodepoort Deep. While even Emperor staff have no inkling of who the buyer is, there are pointers that Swiss interests are behind the clearly well-timed and well-financed strike.

The substantial shareholder notice issued yesterday on behalf of Arduina Holdings, registered in Amsterdam, was signed by Michael Wilson and Robert C. Nicholls, representing the law firm Michael Wilson & Partners. The bizarre twist is that this law firm is based in Almaty, the capital of Kazakhstan. But it does have business connections with Swiss interests. Local brokers are coming around to the conclusion that the new buyer is someone in Europe. But broker Austock is not giving any indication to analysts as to who is laying out the money on Emperor. Investment adviser Fat Prophets told its clients yesterday to hold their Emperor shares and not accept the paper offer from DRD. "The battle is heating up for Emperor Mines," it said. DRD by Tuesday had managed to get to only 44.4 per cent. Fat Prophets is advising that a rival takeover could be about to be launched at a higher price - and that DRD has been locked in by declaring its offer final and unconditional and so cannot raise its own bid. There is growing speculation that a bid at 95c a share, against yesterday's close of 86c, would knock DRD out of the water - and trigger the sale of the South African's shares to the new bidder. Fat Prophets director Angus Geddes said he believed DRD was getting Emperor shares cheaply, with some estimates as high as $1.20 as to the worth of the stock. Following the purchase of 9.6 per cent by Merrill Lynch Investment Managers earlier this week, another foreign manager has moved on to Bendigo Mining's register. APS Asset Management, which gives both Helsinki and Singapore addresses, bought 40 million shares - or 17.2 per cent of the company - on behalf of itself and clients, including US financial houses JP Morgan Chase, the Northern Trust and State Street. This spate of activity coincides with gold's regaining $US400/oz after two months of weakness. Commonwealth Bank commodities strategist David Thurtell said he expected terrorism fears to underpin gold until the US presidential election in November.

-END-

A question on silver from Aussie Land:

Bill, g'day.
Was talking to my bullion broker today about rolling over a silver OTC call from September to December. He gave me the price (which is high) then said he'd recently been in a Mitsui metals conference call and they'd said that
many of the silver miners were disappointed that they had missed the last run up, so they have in place a lot of offers above the market, so a lot of resistance before $8. While Mitsui I take with a good grain of salt, the
"Silver Wheaton" deal gives me pause. I read that as them selling forward a heap of production. Am I correct? And what is your view of all the possible resistance offers the producers are alleged to be putting up?
Hope you can help my ruminations, Regards,
Ian

It would not surprise me if the trade does not sell silver heavily as we approach and rise above $8. In retrospect, that was just what to do on the LAST run-up. This would be par for the course and what could give us the real price surge expected by MIDAS and colleagues as this year plays out.

There is one guarantee about the precious metals markets. At some point we will get our long awaited Commercial Signal Failure, which will occur when The Gold Cartel gets blown out of the water. More than likely, it will happen in silver first. Thus as silver rises to the $8 mark, the specs will build their long positions and the trade (and cabal) will get more short. What should be different this time is the shorts won’t have the silver to meet the long’s requests from a delivery standpoint. When some of the shorts fail to come up with the goods, they will have to cover, sending silver blasting off above $10 per ounce.

More from Mike:

Hi Bill:
The DIVG is the London PM Fix X the major currency dollar index ÷ 100. It represents a currency adjusted value for gold (And also silver as the DIVS). If one is to obtain a durable sense of the gold market he or she must think in terms of the DIVG and not the PM Fix. A changing dollar negates any meaningful rise or fall in the PM Fix. The two should be combined for a more useful asset valuation.

For several years I have published this metric, originally suggesting that it may be the gold cartel's own method used to value their bullion holdings. This guess has turned out to be true and by following the DIVG we get a good view of the gold war's playing field.

As a result of recent advances, I can bring the DIVG to followers by 1PM instead of when the Fed normally publishes their MCDI data at 4:30PM Eastern. 1PM is still in time for the COMEX trading day in gold itself and especially for gold shares.

Today the cartel is near the end of a transition phase that has been punctuated by hard attacks on gold. Once their transition phase is complete and the Fed and its cartel friends have assumed a new path, we can gain even more insight as to their plans.

Because their fuel in the gold war is metal itself, their tactics and strategies depend heavily upon the remaining supply of bullion pledged to the effort. This is why information on physical supply is so valuable and why John Brimelow's efforts are so important (Seen nearby here at the café). Any movements the cartel makes are necessarily being influenced by this dwindling gold supply. For example their retreat from DIVG=323 was doubtless forced because their gold loss rate was too high. They may imagine a better chance to defend a weakened dollar at some higher DIVG level, maybe even 347 where we sit today. Time will tell.
Mike

Just the beginning of burgeoning Chinese gold demand:

People’s Daily Online
7/14

Gold bullions sell well at south China's Shenzhen market

Gold bullions from China Goldsilver (CGS) Co. Ltd. were formally put on sale Monday in Shenzhe. The unprocessed lumps of metal sold like hot cakes in the boomtown facing Hong Kong across the Shenzhen River in south China's Guangdong province.

The business office of China Merchants Bank Headquarters, which has been given a monopoly on the trading of gold bullions, noted that they sold 106 ounces of the precious metal within one hour of sale that day.

For instance, a man surnamed Zhang alone, spent more than 230,000 yuan (about 27,700 US dollars) to buy 18 gold bullions weighing 69 ounces.

The gold bullions in Shenzhen, where one of China's two only bourses are situated, come in three sizes -- two ounces, five ounces and 10 ounces, with 99.99 percent in gold purity, said Zhou Li'ang, CGS general manager.

Investors' demand for gold has continued to increase internationally over the past years.

For example, in Guangdong province, one of China's economic powerhouses, 140 tons of gold were sold last year, accounting for more than a half of the country's total gold sales. –END-

http://www.fxstreet.com/nou/no…4-07-15_05-07-16_SP243716

-END-

The Russians know what has transpired in the gold market these past years and are preparing for what is to come:

Gold and currency reserves of Central Bank stubbornly grow

RBC, 15.07.2004, Moscow 13:50:37.The gold and currency reserves of the Russian Central Bank amounted to $89.2bn as of July 9 hitting record their record high since the Central Bank began keeping records of its reserves. The gold and currency reserves added $900m over the past week. Over the two weeks ending July 2 the gold and currency reserves of the Russian Central Bank added $0.9bn. Thus, the Russian Central Bank has been increasing its reserves at a faster rate over the past week.

The Russian Central bank has been increasing its gold and currency reserves since May 14 adding $6.5bn. However, this new record high level is close to the level of February 13, when the gold and currency reserves reached $88bn.

-END-

Some superb input from a fellow Café member on Far East silver demand:

Some silver dealers said supply was tight in Hong Kong, a key trading market in East Asia, because many producers had yet to receive their export quota for the second half of this year.

China's Ministry of Commerce has allotted export quotas for a total of 3,050 tonnes of silver in 2004, up from 2,200 tonnes allotted in 2003. The quotes are issued in two batches and given to selected companies.

–END-

What we are up against:

Bill,
As I reflect on the garbage that continues to be being thrown at gold, I am reminded about what a big hurdle $330/oz was. I recall a mountain of worry, months of failures and many, many predictions that gold was on its way down to $200 or even $100 an ounce. It's a funny coincidence that almost exactly $100 over $330 is our high water mark this time, so far. I wonder if $530 will turn out to be another line in the sand.
Best wishes,
Peter R.

A view from London:

Good morning Bill
I don't know whether you see the same picture, but it seems to me that the Fed has its hands full fighting the following fires (markets): bonds, gold, US$, stock market and, probably, oil to some extent. I don't think it can fight more that a couple at once, with the result that it is rushing round pouring enough water on one to douse the flames, but not extinguish them. The result is that the fire breaks out again a short while later. Soon it will have several fires to fight at once and will likely get completely immolated in the resulting inferno.

All the above is non-specific, but my attention is drawn to it as I sit here and watch London gold this am. A considerable amount of physical gold is being thrown at the market to keep it down this week, but without a great deal of success. Just a few minutes ago a sale pushed spot down to $402.40, only for it to rise back up to $403.30 a couple of minutes later.

I was interested to read Mike Bolser's comments last week about COMEX closure and that this might be triggered by a sovereign nation requesting physical possession of its US deposited gold. This brought to mind the alleged US-German swap two-three years ago. If true, what chance has the Bundesbank recovering its swapped gold now held in the US, if the gold the US offered in exchange ever existed in the first place!

I have CNBC on the the background during the day. We have a European version until 12:00 noon, when it switches over to the US. Early UK am there is a morning presenter and yesterday it was a man called Hugh Hendry, a director of a group called Odey Asset Management. I would say that I hold no brief for them, don't work for them, or have any money invested with them, but he does talk our language.

What was interesting was his comment that he believes that stock markets should be left alone at the moment, no volatility, they are tired. He compared the price of a house he bought in Notting Hill, London (which used to be a really cr*p area of London) for £1.5 mio. last year with the price of around £4,000 paid by long time residents 25 years ago, with commodity prices - gold was nearly double its current price then, oil the same in cash terms, sugar several multiples more, and so on. His take being that commodities have much catching up to do.

When asked what his big positions were he said $42 mio. in gold futures, $25 mio. in silver futures, plus sugar and cotton. These people have a reputation of being some of the smartest investors around.

Overall, I have the impression that all the commentators we see on these financial channels are trying to give the impression that everything in the garden is rosy. No one is joining up the dots of Iraq being lost to Muslim rebels, the risk of the fall of the house of Saud, and all that entails for Middle East oil, terror threats for Europe and the US, inflation, slowing Western economies and so on. But then that reality might cause a fall in paper assets, and that wouldn't do at all, would it!
Yours ramblingly
Ian

The gold shares continued to meander with the XAU losing .02 to 90 and the HUI easing up .32 to 196.05.

The CPI number tomorrow could be a substantial market mover if it surprises either way. Days like this always seem to be difficult for our camp because:

*lately, the government numbers often appear to be fudged
*the more a number is gold friendly, the more The Gold Cartel sits all over the price

One day that will change, but only when the cabal forces are overpowered or lose control of the manipulation rigging game.

For years The Gold Cartel rigged the price of silver to keep attention away from their gold manipulation scheme. Let’s hope they are finally hitting the wall with their silver scam; that they are running out of physical and can’t keep the prices so low any longer. If this is the case, one I thought was coming last March, the bad guys are in deep trouble with their gold fraud. When silver explodes through $8.40, they won’t be able to push gold back down to anywhere near these levels.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

On staying healthy:

Bill:
There is a far better way.

The easiest and most effective way to maintain your health is by the foods you eat. Back in the mid 1980s peer reviewed nutritional science started showing that all living organism required very narrow ranges of nutrients for optimal health. In other words, when man was a hunter gatherer his food was a perfect match for his body's needs. Today's broad range of concocted foods are nutritional disasters.

If I sound a little fruity, maybe if you took a gander at the three following sites you'd see that there is some science involved in the importance of eating grass-fed livestock (versus grain-fed) and avoiding grain like as if it was the plague. Also, all partially hydrogenated oils (trans fatty acids) should be avoided like as if they were poison. They're a preservative that's in most American foods today and it has already been banned in some more enlightened countries.

Simopoulos, Artemis. "Omega-3 Fatty Acids, Part I: Metabolic Effects of Omega-3 Fatty Acids and Essentiality." Handbook of Lipids in Human Nutrition, pp. 51-73. (Heart Attacks)

http://www.oceanessentials.com…ence/Abstract.asp?did=283

Simopoulos, P Artemis M.D. "Omega-3 Fatty Acids In Health and Disease" Nutrition and Aging pp. 129-156 1990.

Here are two excerpts from reports by Artemis P. Simopoulos, M.D., President, The Center for Genetics, Nutrition and Health, Washington, DC. She says things like; "Today industrialized societies are characterized by (1) an increase in energy intake and decrease in energy expenditure; (2) an increase in saturated fat, omega-6 fatty acids and trans fatty acids (partially hydrogenated oils), and a decrease in omega-3 fatty acid intake; (3) a decrease in complex carbohydrates and fiber; (4) an increase in cereal grains and a decrease in fruits and vegetables; and (5) a decrease in protein, antioxidants and calcium intake."

http://www.oceanessentials.com…ence/Abstract.asp?did=381

World Review of Nutrition and Dietetics

Volumes in this series consist of exceptionally thorough reviews on topics selected as either fundamental to improved understanding of human and animal nutrition, useful in resolving present controversies, or relevant to problems of social and preventive medicine that depend for their solution on progress in nutrition. Many of the individual articles have been judged as among the most comprehensive reviews ever published on the given topic. Since the first volume appeared in 1959, the series has earned repeated praise for the quality of its scholarship and the reputation of its authors.
http://content.karger.com/Prod…kseries&ContentOnly=false

Much more can be found on this topic at:

Omega-3 Essays: http://slankersgrassfedmeats.com/focusing_on_nutrition.htm

After you read all this you'll find that strenuous exercise is not necessary for fitness and health -- but eating the right foods is critical.

70% of ALL deaths in America are due to chronic disease and chronic disease is caused by improper nutrition -- period, end of story.

Ted Slanker

P.S. Reagan had one or more chronic diseases related to the Omega-3 fatty acid deficiency.

pflichtmologe · 16. Juli 2004

The James Joyce Table

Midas du Metropole

Topic du Jour

--------------------------------------------------------------------------------

July 15 - Gold $403.60 down $1.40 – Silver $6.63 up 6 cents

Silver Continues To Lead The Way Higher

Worry a little bit every day and in a lifetime you will lose a couple of years. If something is wrong, fix it if you can. But train yourself not to worry. Worry never fixes anything...Mary Hemingway
GO GATA!!!

Yesterday’s mysterious HUI sell-off near the bell was the tip off The Gold Cartel was preparing to attack bullion this morning. They did just that. Gold came in flat and was then trounced on US economic numbers which were anything but stellar. The euro dropped around .20 and the cabal used that as their cue to stomp on gold, taking it $4 lower. The Gold Cartel folks and allies took out stops and then began to cover.

Depending on how you look at it, they did not get much bang for their buck. The fly in the ointment was silver which refused to follow gold’s lead down. Silver quickly popped higher, rising 10 cents and dragged gold off its early suppressed lows as it climbed all the way back to unchanged+.

A better than expected Philly Fed manufacturing report was released at noon EDT, which put a further bid into the dollar and the shorts pressed their gold case for the second time during the session. Gold sank again, yet found solid support on the break.

The gold open interest surged once more yesterday. This time it rose 6047 contracts to 254,213. We know the funds have been buyers, as is cited by market commentators. What these commentators don’t ever tell us who is selling and why. It’s not the producers, who on balance are covering. So who is it that is nullifying all the recent fund buying? The Gold Cartel of course. Clearly, they are doing all they can to keep gold from taking out the $410 area.

Houston’s Dan Norcini notes:

Hi Bill:
Someone took a big position in the February '05 gold contract yesterday. Have you heard anything from your source Bill on who that was? Better than a 2,000 contract increase in here. A bit odd since total open interest in Feb 05 is a bit over 6,000 total.

The way open interest is increasing we will be at 270,000 by next week's end easily. I know I said it yesterday but I am stunned by the amount of determined selling taking place this time around.

If I can get some time I will look into this rate of increase and compare it with last October's rally into the high at $430 by year's end.
Best,
Dan

The two short-term keys to gold’s price are the physical market (can it absorb the cabal selling?) and silver. Silver continues to trade like a race horse which wants to gallop, only to be restrained by its bit, which is in this case a capped gold price.

The silver open interest rose 1648 contracts to 88,810. The funds are entering the fray on the long side. It is interesting to compare the silver open interest with its price action in contrast to what is happening to gold. Like night and day. Silver has rallied substantially with only a slight increase in open interest; while lately, gold has been going sideways with a substantial open interest increase. When silver launched to $8.40+, its open interest was about 122,000.

The silver stocks in the Comex warehouses dropped again, another 505,969 ounces to 115,963,456. This is just what we want to see. Over two weeks ago one of our Café sources said that over 20 million ounces of silver were going to disappear from the warehouse stocks. So far, so good!

Silver has its sights on $7 for a first stop objective. This price rebound is another sign the silver move earlier this year was no fluke. That move was a warning sign of what is to come; that is, the price of silver is going to blow through $10 per ounce later this year.

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

The John Brimelow Report

Indiscreet Standard: Powerful Bianco

Thursday, July 15 2004

Indian ex-duty premiums: AM $4.77, PM $5.17, with world gold at $404 and $403.60. Slightly below, and more or less at, legal import point. The Indian rupee slipped to a 3-week low today, on gloom over oil prices, the Congress Government’s attitude to business, and a growing feeling the Monsoon will fall short of last year’s perfection. This did not help world gold.

Shanghai prices, on the other hand, have returned to modest premiums after a week of discounts. Kilo bar premiums in the Gulf were mildly favourable today also: averaging appreciably more than $1. Overall, the physical market appears to be adjusting to $400+ world gold.

TOCOM appeared indifferent: volume edged up 16% to the equivalent of 18,099 Comex lots but the active contract was unchanged; world gold fell $2.50 from the NY close. Mitsui-London claims TOCOM was a "good seller", but open interest only fell the equivalent of 640 Comex lots, so any liquidation was on a much smaller scale than seen a few days ago. The "General Public" is far more interested in Platinum at present. (NY traded 47,344 lots yesterday; open interest rose a tell-tale 6,478 contracts.)

Yesterday in NY, as Refco Research says,

"Fund buying and short covering offered lift although trade and bank selling kept matters in check."

Open interest has now risen a steep 18,000 contracts or 1.8Mm ozs of paper gold in three days, with gold stuck slightly over $400. Standard London is apparently sufficiently far down the food chain amongst Bullion dealers to break ranks and stipulate the obvious suspicion:

"It is interesting to note that the fixings in London have tended to be on the weaker side relative to the prevailing pre-fixing markets, which suggests that there is official selling around"

Others have clearly grasped this and it has emboldened opportunistic shorts.

ScotiaMocatta quite reasonably observes of Tuesday’s Comex data:

"The Comex open interest was up 2,261 contracts to a new total of 247,735. The fact that the open interest rose in a falling market tells us that new short positions had been established."

While Reuters reported this afternoon:

""We came off on some decent selling. The floor is offering it lower. They're bearish. The weak longs are liquidating. We're seeing some profit-taking. But I think we're going to hold here and rally. Silver's looking firm. I think this is a buy on the dip," said one COMEX floor broker"

Shorting is naturally easier with a back stop present. Volume was estimated at a heavy 58,000 lots today.

Nevertheless, the physical market as evidenced by the premiums is in a constructive posture and, unless the official sector is willing to do something heroic, will probably continue to edge gold higher in the immediate future.

While waiting for this, those friendly to gold will find yesterday’s Bianco Research Commentary refreshing. Entitled

"Why CPI Might Now Be The "Number Of The Month"

this essay offers a chart and observes:

"The chart below measures how inflation has been performing versus consensus expectations (as measured by MMS International)… In recent months…the expectations index has taken a sharp turn higher …In fact, inflation has been exceeding expectations to a degree never before seen in this data in that the rise in the chart below is the biggest ever seen…the actual inflation rate is currently at 14-year highs…Currently the six-month annualized rate of inflation is at its highest level since 1990."

"Conclusion

Inflation has surged ahead of expectations to levels not seen in well over a decade."

JB

CARTEL CAPITULATION WATCH

The DOW (10,163 - down 45 in quiet trading) closed on its lows for a change. The DOG continued its losing streak, closing at 1913, down 2.

The dollar gained .44 to 88.20 and the euro lost .55 to 123.27.

When the PPI was raging, our government couldn’t get the number out on time, using one bogus excuse after another. Today’s PPI was reported lower, thus all reporting problems disappeared. How ludicrous can it get? So few in the mainstream, save a John Crudele of the NY Post, bother to say anything on the subject!

There were numerous US economic reports released this morning:

08:30 July Empire Manufacturing reported 36.54 vs. consensus 27.8
Prior reading revised to 29.93 from 30.17.
* * * * *

08:30 May Business Inventories reported 0.4% vs. consensus 0.5%
Prior reading revised to 0.7% from 0.5%.
* * * * *

08:30 June PPI reported (0.3%) vs. consensus 0.2%; ex-Energy reported 0.2% vs. consensus 0.2%
May reading unrevised at 0.8%; ex-Energy unrevised at 0.3%.
* * * * *

08:30 Weekly jobless claims reported 349K vs. consensus 345K
Prior week revised to309 K from 310K.
* * * * *

09:18 Industrial production disappointing in June
The (0.3%) decline in June was disappointing, though manufacturing was down just (0.1%). Much of the weakness was due to a (2.3%) decline in utility production, which is often influenced by weather. Capacity utilization was 77.2% vs the 77.7% consensus. The strong July Empire State index will serve as an offset to this report, and the Philly index at 12 ET today will also be watched for an indication that June weakness was an aberration. There was little bond market reaction to the numbers: 10-year note (2/32) to yield 4.49%.

July 15 (Bloomberg) -- Manufacturing in the Philadelphia region unexpectedly expanded at a faster pace this month than in June and more companies reported rising orders and higher employment, a Federal Reserve report showed.
The Fed Bank of Philadelphia's July general economic index rose to 36.1 from 28.9 the previous month. A number greater than zero signals more manufacturers see business improving than deteriorating. The index reached a 10-year high of 38.8 in January and has been in positive territory since June 2003. –END-

Chinese inflation numbers come out tomorrow, which could have some impact on our markets. Some recent headlines

China's economy growth continue to speed up ( 07-15 )

China to be world's 2nd biggest aviation market by 2022 ( 07-15 )

Construction Bank sees profits soar in Jan.-June period ( 07-15 )

Airbus: China's air transport to grow 5 times by 2022 ( 07-15

Beijing economy keeps rapid growth [ 07-14 15:57]

Housing price up 10.4% [ 07-14 15:16]

Foreign trade soars in Shanxi [ 07-13

pflichtmologe · 15. Juli 2004

The James Joyce Table

Midas du Metropole

Topic du Jour

--------------------------------------------------------------------------------

July 14 - Gold $405 up $3 – Silver $6.57 up 20 cents

Silver Makes Recovery High, Gold Rebounds

"If you tell a lie big enough, and keep repeating it, people will eventually come to believe it. The lie can be maintained only so long as the State can shield the people from the political, economic, or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to discredit and repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the enemy of the state."
Joseph Goebbels

"An almost hysterical antagonism toward the gold standard is one issue which unites Statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire -- that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other."
Alan Greenspan

"Gold is not necessary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money."
Adolf Hitler

Pretty scary to me the way the US is headed. No free press, markets rigged, government data distorted for spin purposes. Meanwhile, the unsuspecting public is clueless about what is really going on in New York and Washington. Course, they just got a taste of it with the recent report on US intelligence which revealed the most instrumental rah rah reasons for going to war with Iraq were bogus. For whatever reason the American public was fed propaganda and most fell for it hook, line and sinker, just like they are being fed propaganda about what is really going on behind the scenes in the gold market.

Nazi Germany had its goons. So does the gold market. Goldman Sachs led the gold goon squad into action today as they usually do to cap rallies. As is also the norm, gold made its high within the first hour and then the bums sat on it all day long.

The gold open interest rose again, to 247,735, up 2261 contracts.

The silver action was stout. Unlike gold, silver made new highs going into the close and certainly was a key factor in stabilizing bullion, which fell nearly $4 from its early morning highs.

My gold floor source believes whoever has been stopping gold in the $406 to $408 area has done what they are going to do at those levels. They were seen going to the market this morning, which took gold back close to unchanged.

While the gold open interest has surged lately, the silver open interest is dawdling, which suggests to me the cabal shorts are nervous about taking silver on at these prices. The OI lost 504 contracts and now stands at 87,162.

The Café Sentiment Indicator remains abysmal. The Market Vane Index is modestly bullish at 75 or so, however, all this is people looking at charts and there is no way not to view the gold chart except bullish. When it comes to enthusiasm about gold, it is just not there. Look at how dismal the gold/silver share volume is. Investors seem to be bored with all the markets.

Silver is on its way to filling the giant gaps it left on the way down:

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

There is a "buzz" among many of the pro traders on the silver floor, a "buzz" not heard in a VERY long time. With the fundamentals and technicals SO bullish, silver ought to go $7 bid very soon, and move higher from there.

The silver stocks at the Comex Warehouses dropped a healthy 590,246 ounces to 116,469,425. Going the right way.

Mahendra put out an alert to buy gold and silver during the last hour yesterday. Those who did so are smiling today. Whatever he’s smoking, it works.

An FBI report leaked to Time concerning the vulnerability of western oil terminals helped to spur crude oil which soared to $40.97 per barrel, up $1.53. Also contributing to the price rise was a Korean tanker refusing to load oil out Iraq. Second time that has happened in a week.

August crude oil
http://futures.tradingcharts.com/chart/CO/84

The CRB soared 4.51 points to 274.66, led by the oil complex.

The dollar fell .25 to 86.75 and the euro rose .51 to 123.70.

The John Brimelow Report

Important Bullish data from India

Wednesday, July 14 2004

Indian ex-duty premiums: AM $5.09, PM $5.30. A bit tight, and adequate, for legal imports. The rupee unhelpfully softened to a two-week low today.

India’s Economic Times published an important article on India’s gold imports today (second attachment). It confirms, as asserted here at the time based on the behaviour of the observable premiums, that the price break in Q2 2004 triggered huge Indian buying (India has a March 31 Financial Year end):

"Explained by analysts as largely a function of the growing perception of gold as a credible investment rather than the recent relaxation of import norms, bullion imports by all major trading companies and designated banks rose in the first three months of ’04-05. …recent imports have broken all previous records by a huge range... Gold imports by MMTC, traditionally the biggest importer of the metal, surged 284% to over Rs 3,263 crore in the first quarter of ’04-05, from Rs 850 crore in the corresponding period of ’03-04. Imports by State Trading Corporation (STC) jumped by more than 200% in the first quarter to Rs 2,900 crore…The import of gold by other bulk importers — Handloom & Handicrafts Export Corporation and Project & Equipment Corporation — closely followed the trend. Retail importers also saw imports rise, although the momentum was slower than that of the bulk importers, sources said."

The report helpfully gives the tonnages involved for MMTC – 61.3 tonnes for the quarter, up 234% from 10 tonnes the previous year. By implication, STC imported about 54.5 tonnes, up from 18.2 tonnes in 2004.

As the article says, there was no further liberalization in import regulations or duty rates this year, and of course prices were higher. India’s demand schedule for gold simply seems to have shifted favourably. The Venerosian wealth effect seems to work, in India at least! Predictions like the Commonwealth Bank of Australia’s yesterday that gold will slide below $350 this year are difficult to credit, given this type of appetite.

Selling pressure during Japanese hours stopped today. Volume on TOCOM fell 33% to equal only 15,626 Comex lots, the active contract rose 4 yen, and world gold stood $2 higher than the NY close at the end. Open interest rose the equivalent of 1,088 Comex contracts. (Yesterday 58,017 contracts traded in NY; open interest rose 2,261 lots.)

Macquarie Bank was in no doubt as to the culprit for yesterday’s weakness:

"Gold was relentlessly sold from the open by a Japanese trading house in Asia today. Some support was found initially around the $405.00 level… but continued selling by the same Japanese player, eventually saw $405.00 give way…A small bounce was seen early London following the sharp retreat in Asia, this rally proved short lived as traders still caught long by the Japanese dealer selling during the day, offloaded their positions. Follow through offering was seen."

The question is, of course, for whom the Japanese outfit was acting. While it is not implausible that some liquidation by Japanese individuals occurred because of the higher $US price and apprehensions of a stronger yen, inspection of the TOCOM member’s position data indicates that virtually the entire contraction was in Mitsui’s position, with the other houses remaining steady. This strongly suggests a Fund (quite possibly not Japanese) seller was at least partially to blame.

Probably of greater future significance, Monday’s almost incredible 9000 lot open interest increase has been followed, as noted above, by another rise yesterday of a respectable 7 tonnes. In aggregate, the gold price has done little. Refco Research smells a rat:

"…the large gain in open interest +9000 contracts on Monday’s minor gain in price is sobering—either there’s a substantial diversity of opinion among the specs on gold’s outlook or some determined commercial selling (our belief)."

A number of the Bullion Bank commentators have been muttering about resistance at $408-10. Probably the dogged seller who fought so hard to hold gold below the 200 day moving average has found a new line to defend. With India in this posture and Gulf premiums consistently above $1 today, the physical market looks likely to challenge this. Certainly there has been extremely resolute buying recently.

JB

CARTEL CAPITULATION WATCH

The DOW rallied late, as is so often the case, yet still closed down 39 to 10,208. The DOG continues to disappear, falling another 17 to 1915.

For weeks now the US economic news has disappointed. Today was no different:

July 14 (Bloomberg) -- U.S. retail sales fell 1.1 percent in June, the biggest drop since February of last year, underscoring forecasts for slower consumer spending in the second quarter.

Last month's decline, which reflected a drop in spending at automobile dealerships and department stores, followed a revised 1.4 percent increase in May, the Commerce Department said in Washington. Economists had forecast a 0.8 percent drop. Excluding vehicles and parts, sales fell 0.2 percent after rising 0.9 percent a month earlier.

GATA’s Mike Bolser:

Hi Bill:
The Fed added a total of $5.398 in open market operations today July 14th 2004, an action that kept the upward pressure on the repo pool which now sits at $45.725 Billion. The DOW's 30-day ma (Green trace) wavers at the top of a mini-peak but well below my predicted target path. Even at this weak position, the DOW shares are still much better off than the market at large as noted by Sol Palha in "A Deeper Look At The Markets", nearby at the café. Indeed, his report recognizes the premise that the DOW has been artificially supported, something I've been reporting for well over a year.

Government intervention involves strategic commodities and financial indexes
that they deem to be in the national interest. These commodities and indexes are too big and important to fail. This seems to be the Fed's moral justification for steering otherwise free markets. In the process of force application against a normal trend, the Fed has created an ever increasing instability that will inevitably lead to failure. This failure may not come in the form of a DOW "crash" or a bond market rout as many expect, more likely the destruction will show up elsewhere, perhaps in the currency itself as concerned investors realize the true value of precious metals and
quietly act to exchange pieces of government colored paper for real assets, assets that have no corresponding liability.

More on silver

As noted yesterday, I have expanded my chart gallery site at
http://www.pbase.com/gmbolser/root

to include several other metrics of interest to precious metals followers. The dollar index value of silver
(DIVS) is one of these new metrics. Of importance is the fact that the DIVS has tracked differently from the DIVG thus proving that the suppression mechanism for silver is different from that used to control gold. The gold control mechanism has numerous supply depots in willing central banks from which to draw metal needed to keep the price down but the supply situation with silver is far different.

The fact that the DIVS got so far out of hand tells us that the number of players, needed physical delivery throughput and remaining stocks of silver are under great stress. Even though the COMEX publishes their "warehouse inventories" data one should not be lulled into thinking that this is the real inventory from which growing silver demand is met.

There is clearly another inventory (Suspected to be China). An out-of-control DIVS is ample evidence that the real silver inventory was temporarily withheld or perhaps exhausted altogether and a rush search was begun to fill physical demand. There was and still is an unusual delay in receiving delivery of quantity silver orders. Perhaps the seller of last resort was Mexico? We don't know. We DO know that there are now heavy Mexican trucks rolling across American highways. What a coincidence!
Mike

The oil news:

Oil ends near $41 on fresh supply risks
Reports show crude stocks fall; readings on gas mixed

SAN FRANCISCO (CBS.MW) -- Crude-oil futures climbed 4 percent to close at a six-week high near $41 a barrel, lifted by threats to global supplies from terror concerns, debt woes at Russia's Yukos, violence in Iraq and a hefty drop in U.S. crude inventories.

The closing prices for the energy futures were a far cry from the price declines in gasoline and heating oil and the directionless trading that crude suffered from earlier in the day, following contradictory data on U.S. gasoline supplies and higher distillates stocks.

Crude for August delivery rose $1.53 to close at $40.97 a barrel on the New York Mercantile Exchange. It's the contract's highest close since June 1, when futures prices ended above $42 at their loftiest level ever recorded. Late in the session, the contract climbed as high as $41.05.

Meanwhile, crude-product prices weren't quite settled. August unleaded gasoline was up 3.22 cents, or 2.5 percent, at $1.3175 a gallon. August heating oil was at $1.094, up 3.23 cents, or 3 percent.

"The concern from the Russian front is that exports are slowing, OPEC is near capacity, and we are not making any significant gains on inventories that are outpacing demand," said John Person, head analyst at Infinity Brokerage Services.

And "the uncertainties over Iraq's ability to export needed supplies is one of the main catalysts that keeps oil prices firm," Person said. A car bomb exploded near the headquarters for the interim Iraqi government in Baghdad Wednesday, killing at least 10 people. See CBS News for more.

But Phil Flynn, a senior analyst at Alaron Trading in Chicago, said a published report that points to a possible attack on U.S. energy facilities may be a key cause for oil's price rise.

Time magazine's online edition reported Wednesday that a classified intelligence bulletin from the FBI sent to local law enforcement agencies last week noted a potential terrorist threat to the U.S. energy infrastructure. See Time.com.

Flynn added that there was also speculation on the trading floor that oil tankers were refusing to fill oil at the Iraqi port of Basra because of security concerns.

After the mixed supply reports, "the bottom line is that supplies are very tight and any thought of a terrorist attack that could disrupt any part of the energy industry could have a bullish effect on prices," he said…..

-END-

Chuck checks in:

The central news, to me, is coming in the stock markets. I believe they are holding by the proverbial thread. If Intel's action had been able to spread to the rest of the markets, we might have had a severe squall, but either because of the "invisible hand" or the lack of logical connective prowess of the investors, the markets acted as though Intel's sharp drop through major support was unrelated to their decisions which is basically buy and hold and then buy again. One day soon it will be just bye, bye. The rounding top and collapsing wedge formations in all of the world's major markets is ready to change to a different formation, most likely a waterfall or just an old fashion plunge. Even with the daily weakening in virtually all of the sectors, sentiment remains unperturbed and historically unseen. Still about 17% bears in the Investors Intelligence (I still think that Investors Intelligence is the ultimate oxymoron.)

Because gold moves historically against the stock market, I am not disappointed in the lethargic action in the gold shares. Their apathetic action is the flip side of the unconcern towards regular stocks. If no one is selling stocks, why should they be interested in gold shares? This will change when it is obvious that we are no longer in a never-ending bull market. Reality is about to set in. Patience not concession is the motto for the gold gang. We are in the earliest phase of this move. I am of the belief that when gold goes up, other commodities will drop. We should be on the alert for relative strength against not only the stock market but also commodities.

In the meantime, the relentless slowing down of the economy should begin to influence the stock market. It is only going to take a small amount of selling to force the market down and nasty. With the insiders continuing to sell at such a enormous rate, the sentiment staying at such a high point, and mutual fund cash near record levels, the primary question is "who is left to buy?" Chuck ikiecohen@msn.com

GATA’s Ed Steer on the late HUI dump:

Hi Bill,
This must have been a coordinated sell-off in the gold shares. Who in their right mind would be doing this with what's going on right now? Especially with oil and the CRB up big time. Nope, this was deliberate.
Ed

The gold share action is horrendous. The XAU only managed a .32 gain, while the pitiful HUI closed unchanged. Could this be the quiet before the storm? Sure feels that way.

GATA BE IN IT TO WIN IT!

pflichtmologe · 14. Juli 2004

The James Joyce Table

Midas du Metropole

Topic du Jour

--------------------------------------------------------------------------------

July 13 - Gold $401.70 down $6.20 – Silver $6.37 down 14 cents

Comex Silver Warehouse Stocks Drop Again

Like an old gold-panning prospector, you must resign yourself to digging up a lot of sand from which you will later patiently wash out a few minute particles of gold ore... Dorothy Bryant

GO GATA!!!!

So much for the big change in the way gold is trading. Back to the same old, same old. What tedium! While we saw a dramatic change in the way gold came back from below $400, it is déjà vu all over again when gold sets sights on the $410 level. Bullion was battered for no apparent reason last night in the Hong Kong market, dropping close to $4 right off the bat. At the time, the dollar was only slightly stronger.

The joke of the day was the attribution gold was weak because of this report:

July 13 (Bloomberg) -- The U.S. trade deficit narrowed in May for the first time in six months as exports surged to a record, led by aircraft, engines and other capital goods, a government report showed. U.S. imports also were a record.
The $46 billion gap in goods and services trade followed a record deficit of $48.1 billion in April, the Commerce Department said in Washington. The 4.5 percent reduction in the deficit in May was the largest since October 2002. –END-

A $46 billion trade deficit is heralded because it shrank. Numbers don’t seem to mean anything these days. Vet Café members have heard this one before. Six years ago the trade deficit was running around $12 billion. Goldman Sachs put out a report it could rise to $19 billion and Wall Street was horrified. A little more than half a decade later, a $46 billion number is cheered!

The dollar, which was oversold, rallied on the exhilarating trade news. By day’s end it rose .36 to 88.01. The euro fell .70 to 123.19.

The gold open interest number is whacky. Yesterday was quiet, yet the Comex reported the gold open interest rising 9009 contracts to 245,474. You have to wonder if that could be correct. If so, it is more evidence The Gold Cartel is making its stand below $410 as the specs pile in on the long side.

Houston’s Dan Norcini read my mind on this one:

Just got the open interest figures from yesterday.
The amount of firepower that the cartel is expending to keep gold under $410 is simply enormous. Another 9,000 contracts added yesterday to hold it down. All of that tremendous technically oriented fund buying was completely absorbed. What is even more staggering is viewing the increase in open interest since last Tuesday, July 6, the day gold was clobbered before rebounding so sharply and setting us up for this surge above $400. We have seen nearly 20,000 new positions added in the week since then. Without the capping action of our "friends", we would be easily be sitting above $420.
Dan

$400 to the penny was the low for the Comex session.

From a technical standpoint this sell-off changes very little.

Silver was dragged lower by gold. It sank to its key support at $6.25, where it broke out and completed its multi-month base, and then drifted back up.

The silver open interest remains very low at 87,666, rising 676 contracts.

The best news of the day was the Comex silver warehouse stocks dropped substantially for the second time in a row, this time to the tune of 514,031 ounces to 117,059,671. Two days do not make a trend or the market, but you have to start somewhere. More importantly, this is just what MIDAS has been looking for, having brought an expected drawdown for July to your attention at the beginning of the month. Could be THE CHINESE!

The silver warehouse stocks ran 103 to 108 million ounces for a long time before running up to above 120 million ounces. Should they break below 103 million ounces, silver bells and whistles will go off all over the place.

The John Brimelow Report

TOCOM, unusually, blocks rally?

Tuesday, July 13, 2004

Indian ex-duty premiums: AM $6.04, PM $6.18, with world gold at $403.80 and $402.65. Comfortably above legal import point. Premiums in the Gulf appear to be around $1 today.

Reuters carries a story today from Singapore, reporting the Far Eastern physical market has not responded well to the surge in world gold late last week, with selling from China pushing bar prices in Hong Kong to a discount for the first time in four months. This is consistent with the wide discounts which have appeared on Shanghai since last Wednesday. Premiums remain positive in Tokyo, however, at 50 -75c, supporting the impression that the Japanese physical market is diverging positively.

The real divergence in the physical world, however, is between the Middle East and Indian sub-continent which remain inclined buyers, and the Far East. There is nothing especially implausible about this, with the different regions facing different geopolitical and economic conditions, not the least of which is the Far East’s "Undervaluation Axis" which of course has the effect of making gold expensive in domestic currency terms.

TOCOM traded the equivalent of 23,478 Comex lots, +13% over yesterday. The active contract went out down 3 yen, and world gold was $3.35 below the NY close at $404.10. Open interest was static (+4 Comex). Mitsui, however estimates that there was another 10 -15 tonnes of liquidation by the Japanese public this morning, implying 40 -60 tonnes since last Wednesday (e.g. 13,000 -20,000 Comex lots) and a virtual halving since late June. These sales must have materially contributed to stopping gold’s rise, but presumably cannot be sustained, at least from this source. (NY yesterday traded 48,048 lots: open interest surged 9,009 lots to 245,474.)

HSBC has revisited its amusing calculation on the alternative reinvestments of the BOE gold sales.

100% $US $3.49B
100% Yen $3.75B
100% Euros $4.01B
Gold $5.13B

JB

CARTEL CAPITULATION WATCH

Another listless stock market day. The DOW rose 9 to 10,248. The DOG fell another 5 to 1932.

Everything in the US is just peachy-keen according to the Fed:

1758 GMT [Dow Jones] Dallas Fed's McTeer says that while inflation is not down and out, it is certainly "on the ropes." He goes on to say that the Fed is determined to keep inflation on the run, but rate hikes are likely to be measured. In addition, there's plenty of slack in the economy, which should keep inflationary pressures contained, he said. (ATC) –END-

The market waited all day long for Intel’s second quarter results.

July 13 (Bloomberg) -- Intel Corp., the world's biggest semiconductor maker, said second-quarter earnings almost doubled to the highest in four years. Sales this quarter will rise to $8.6 billion to $9.2 billion.
Net income rose to $1.76 billion, or 27 cents a share, from $896 million, or 14 cents, a year earlier, Santa Clara, California-based Intel said in a statement distributed by Business Wire. Sales increased to $8.05 billion. –END-

The bottom line:

Bellwether Intel disappointed as the stock sold off 80 cents to a buck (around 4%) after the close. The DOG could be in big trouble!

BIG trouble, Intel now down as much as $1.25/$1.33 (below $25 per share) in after hours trading, as I go to press.

GATA’s Mike Bolser:

Hi Bill:
The Federal Reserve Bank of New York's "Desk" added $4 Billion in temporary
repurchase agreements today, July 13th 2004, an action that allowed the repo pool to slip very slightly to $44.327 Billion. This is still quite high by historical standards and keeps the futures buying pressure on the sluggish DOW. The 30-day moving average up trend for the repo pool and basically level for the DOW remain in place as the DOW's ma is about 700 points too low for my forecast of a Labor Day rendezvous with 11,750. There's a world of time and weird market events left before the deadline.

One hand gives...

Yesterday, I mentioned that the Fed now offers historical repo expiration data such that determined examiners can reconstruct from 2000 onward, a full repo pool record. At the same time, they did away with the 28-day temporary page reference which now makes it very cumbersome to quickly glance back to check missed expiration dates or keep a loose running total. One must now enter the desired date interval in order to get that information This is just another example of the Fed fooling around with data and procedures to
thwart scrutiny of its "monetary policy" methods.

The other takes...

Last week I commented that investors should take available speculative profits at or just below $408. With today's blast up in the dollar index and even more aggressive downdraft in the PM Fix, we see that it sometimes pays to step back whenever the Fed is in its transition game.

Today's blast is yet another "deep vee" exactly at the 10 AM eastern time which corresponds to the London PM Fixing time. Bill Murphy and many other experienced precious metals traders have noticed these deep vees or spikes upward which run to meet the 10 AM Eastern time slot.

Clearly, a dominant market force application is in work with these deep vees. Such a display of strength should be recognized for what it is...government intervention. Usually they are preceded by an overnight period of down trend followed by the deep vee or the reverse with an overnight rise and then a last minute spike to the 10AM time. Trading on this pattern is very dangerous unless of course, you are in the Fed's primary dealer's anti-gold "club".
Mike

Been a while since some of Richard Russell’s daily commentary has made it to the MIDAS column. The following was sent to me by a fellow Café member. It's vintage Richard Russell at his best:

Next, I'm going to write about a situation that has been on my mind for quite a while. It's one of the reasons why I believe this bear market is going to be a brute. Here goes --

Will unfunded liabilities ultimately bring on American's worst depression? It certainly wouldn't surprise me. Business Week this week runs a cover story in which it talks about US Corporations having built up almost a trillion dollars in unfunded pension liabilities. This is "killing" many of the older companies, who have built huge pension and medical liabilities. The low interest rates of the last few years have also hurt the pension and medical funds (for instance, think Ford, GM and the big airlines). These corporations are now facing stiff competition from new companies who do not have to deal with these liabilities.

But corporate unfunded liabilities are a drop in the bucket compared with US government's unfunded liabilities, which add up to around $45 trillion. Two books discuss this momentous issue. "The Coming Generational Storm, what you need to know about America's economic future," by Laurence Kotlikoff and Scott Burns.

Peter Peterson addresses the government's horrendous unfunded liabilities in his book, "Running On Empty." The sub-title of the book is "How the Democratic and Republican Parties Are Bankrupting Our Future, and What Americans Can Do About it."

Of course, we won't do much of anything about it -- until the problem hits us square in the face. There are only two solutions. One is to cut way back on Social Security and Medicare or somehow privatize them. The second solution is to print the money needed to cover these liabilities, and of course this would be wildly, and I mean WILDLY, inflationary. If this is the path we go on, the dollar would collapse, sending US interest rates through the roof -- while at the same time the economy would unravel.

As I see it, the unfunded liabilities present the basis for the next depression. I think the whole monetary system could ultimately break down in the face of this ocean of unfunded liabilities. Wait, there's such a thing as "starting all over again," and I believe there's a good chance that that's exactly what we'd have to do. Fantastic as it sounds, we might have to dump the entire current system, get rid of the Federal Reserve, and go back to what the US Constitution originally mandated. The US government would issue the money that it needs, the dollar would be backed with a specified percentage of gold, and the idea of a private central bank (the Fed) that can issue any quantity of money it wants -- would be relegated to history.

OK, honestly, I don't know how it will all work out. I do know that the US has built up massive unfunded liabilities. I do know that when you set up systems that are not funded, ultimately you either have to print the money to fund the system, change the system, or jettison the system entirely. But there's one thing that's certain -- any one of the three will entail pain -- a lot of pain.

The last two generations of Americans (people up to their mid-40s) are the only generations in US history that have never had to deal with true hard times. This length of painless era has never happened before. And I don't think most Americans say 45 or younger, can even envision what hard times are like.

What I'm afraid of is that this primary bear market, the bear market that I've been writing about since it started in late-1999, is going to end up as the mother all bear markets. It could easily be the worst bear market since the Great Depression of the '30s. Of course, what's been holding the pain at arm's length, what has kept the bear at bay -- has been debt -- the greatest build-up of debt in world history. How has this been allowed to exist?

One reason is that the dollar is the world's reserve currency. Another reason is that other nations want to continue selling to the US. Our overseas friends sell us their services and merchandise, and they pretend they're getting paid -- paid with fiat paper dollars. Our suppliers then turn around and buy up US assets with the paper dollars they receive.

It's a vast, incredible card game, with nobody yet ready to make the "call." Politicians and central bankers the world over simply hope that somehow the game can keep going. There, however, are those who believe the game will terminate somewhere ahead. These people keep their mouths shut and accumulate gold.

I've given a lot of thought about how to operate in the current environment in view of the trouble that I see coming up. Trouble that will materialize in, I don't know -- three years, five years, ten years. I really don't know -- if I had to guess, I'd guess the trouble will come within four years.

My thought is that there's no fool-proof way we can protect ourselves against what I see coming up. What will be, will be. The debt is there, the liabilities are there -- they're a fact of life. They exist, and, in fact, they're getting worse. My own thought process is to at least "act" as though the dollar will survive -- but just in case it doesn't, I'll continue to accumulate gold.

Stocks are overvalued today. Moreover, there's no yield, no income, from stocks. As I see it, there's no sense at all during a primary bear market holding dividend-less stocks that are overpriced. In the end, it's the guaranteed path to losing money. It's Wall Street's game, but it's a game that makes no sense when stocks are flagrantly overpriced, as they are today. You see, that's the awful secret that no analyst, no brokerage house, no broker will tell you. The secret is that stocks today are not priced to bring you profits; stocks today are priced to give you losses over time.

I liken buying and holding stocks today to gambling in Las Vegas. The longer you play, the surer the odds that the casino will take your money. The casino will do anything to keep you playing, simply because the casino has the odds. The longer you hold stocks today, the surer you will be building losses. Of course, Wall Street wants you to continue buying stocks, simply because that's what Wall Street survives on. Wall Street is a selling organization. That's what Wall Street does -- it sells.

My way, at this time in the cycle, is different. My way is to place a large portion of money in T-bills. A second portion of money goes toward compounding. And a third portion of money goes into gold and gold shares.

Compounding only makes sense if you do it correctly and consistently. That entails placing a certain portion of money in safe securities that pay interest or dividends. The process entails reinvesting all the interest and dividends back into other safe securities that pay interest or dividends. Top-grade municipal bonds will do.

What happens, you ask, if rates go up and the bonds go down? Answer -- the bonds still pay off at maturity, and after 20 years the compounding factor is so powerful that you can "burn" your original purchases.

Again you ask, "But what happens if we're sitting with bonds or T-notes or whatever, and the system collapses?"

My answer -- Then you rely on your gold.

But what happens if the government bans trading or even holding or selling gold?

My answer -- Why would they do that? It wouldn't make sense. But let's say the government acts stupidly (which they usually do); then we're back to what my father told me during the Great Depression. "Richard," he said, "There are only two things you can depend on. Your education, and what you have between your ears. If you have an education, and you're able to think -- you'll always be ahead of the game.." My father was right in 1935, and he'd be just as right today.

-END-

To subscribe to Richard Russell’s commentary go to http://www.dowtheoryletters.com

The gold shares continue to trade aimlessly, down again today. The XAU dropped 1.12 to 89.68 and the HUI sank 3.63 to 195.73.

If gold and silver are in as good a shape as I think they are, the prices should bounce right back up. In years past that line of thinking would have been a stretch, however the way gold soared the middle of last week, there is no reason for it not to do so again this week.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

Received a membership check from CIBC World Markets. Need to know who sent it for proper application.

Hi Bill:

Paul Skarp here. I had sent e-mail to you about two weeks ago regarding my Illinois state Senate story, if you can recall as I'm sure you receive plenty of e-mail.

Amazingly, out of all the potential clients I have talked with so far only two were initially familiar with GATA and the true gold market story. What surprised me was their reaction when they realized I supported GATA as well. The funny part is the initial "feel out" stage. Like one closet nutcase trying to find another like-mined closet nutcase. That will change one day.

I try to inform as many individuals that I talk with about GATA. Additionally, I also try to educate them on Hubbert’s Peak. Normally, this is also something they never heard of. Once again, a great job by the U.S. media in covering this topic.

Witnessing the excitement these two individuals demonstrated after they found someone to do business with who was on the same "playing field" as them has got me thinking.

I don’t know if LeMetropole Café currently has any recommended commodity and bullion brokers. So, I was wondering what it would take for you to consider me as a LeMetropole Café recommended broker who supports GATA and what it is trying to accomplish.

pflichtmologe · 28. April 2004

und da in dem Markt... und das merken die 1,5 Stunden nicht ...und das konnten die nicht füher stoppen .....und das werden die jetzt mal "investigating"

mein "investigating" bzgl. USA ist abgeschlossen: Fuck those liars
---------------
This morning at approx 10:00 AM EST we experienced a technical problem causing an incorrect silver quote. The problem was corrected at 11:30AM.
Providing accurate information to our customers and web site visitors is one of our highest priorities. We are investigating the cause of the problem and will take what ever action is needed to ensure that it does not recur.
We apologize for any inconveniences this may have caused.
KITCO

pflichtmologe · 28. April 2004

ich bin ja keiner von den hardcore-verschwöhrungs-theoretikern
aber was da heute bei kitco gelaufen ist, ist schon sonderbar
über eine stunde völlig falsche kurse.
gut es gab bei kitco schon öfters, dass die nen falschen kurs hatten, der hat sich dann jedoch auch nicht mehr bewegt.
und heute mit einem spread von 20 cent schwankt die kacke
zwischen 4,60 und 5,00.
hat wirklich geil ausgeschaut -25 Prozent und es ging immer weiter runter.
Halb amerika schaut auf kitco.
ich hätte auch fast schon panik bekommen und beinahe meine call zu "noch ganz guten kursen" verkauft.

gott sei dank nicht. meine scheine laufen bis 2006.
jetzt ist das gap bei 5, 80 geschlossen und ich sag .,...nur noch eins

AMERIKA VERRECkE in deinen fake Dollars

pflichtmologe · 27. April 2004

sind heute in den usa die optionen ausgelaufen ?

die vom midas haben doch die letzten tage davon gesprochen ?

wenn ja zu welchem kurs wird da abgerechnet?

im nach-Comex handel schießt silber hoch, könnte also sein, dass der short-zauber jetzt vorbei ist

pflichtmologe · 25. April 2004

lasst uns mal den Text von Spieler über "Gerüchte ? in Südafrika - Massenmord an Weißen nach Mandelas Tod ?" diskutieren.

Klar ist nur extrem unwarscheinlich

aber trotdem

was passiert wenn sowas passiert

im Hinblick auf Gold

Was dann den S-Minen also Drooy droht ist wohl klar.

Die würden dann wohl gegen 0 gehn.

Was passiert mit dem Goldpreis?

pflichtmologe · 24. April 2004

Thom

sorry, hab ich nicht gesehen. schlage folgende lösung vor:
pluspunkt wird von mir abgezogen und dir doppelt gutgeschrieben

pflichtmologe · 24. April 2004

WOLFRATSHAUSEN (GoingPublic.de) - Mit dem Ausscheren der altehrwürdigen Schweizer Rothschild-Bank aus dem Goldmarkt werden viele Fragen aufgeworfen. Fest steht nur, daß die offizielle Stellungnahme kaum mehr als ein Witz ist.

Rund 261 Jahre Historie, in denen die Schweizer den Goldmarkt dominiert haben, sind angeblich an ihr Ende gelangt. Von offizieller Seite hieß es, man ziehe sich zurück, weil – mehr oder minder – im Geschäft mit Goldtrading und -hedging etc. nicht mehr genug zu verdienen sei. Zweifel sind angebracht. Zieht sich Volkswagen aus dem Autogeschäft zurück, weil es gerade schlechter läuft? Immerhin erhalten Banken volumenabhängige Transaktionsgebühren, kein Pappenstiel bei durchschnittlich über 40 Mio. gehandelten Unzen täglich.

Nicht nur Ferdinand Lips, über Jahre hinweg selbst an der Spitze der Rothschild-Bank, bevor er Privatbankier wurde, meldete seine Skepsis an, um es vorsichtig zu formulieren. Vielmehr sehe es danach aus, daß sich die Rothschild-Bank in volle Deckung begebe, bevor es zu einem Crash der Papierwährungen kommt und damit das gesamte Weltwährungssystem in Frage gestellt werden müsse.

Die Bank selbst stand in den letzten Jahrzehnten an der Spitze der Goldpreismanipulation. Auch galt sie als treibende Kraft hinter den Hedging-Aktionen der Goldminen. Der Rückzug könnte ein Anzeichen dafür sein, daß man den Markt nicht mehr kontrollieren möchte – oder kann. Sollte jemals wieder ein Währungssystem auf Goldstandard ins Leben gerufen werden, könnte Rothschild federführend wirken. Schließlich sind sie rechtzeitig ausgeschieden, und wer weiß, ob sie die derzeitigen Edelmetallpreise nicht zum Aufbau von Beständen nutzen, anstatt zu versuchen, das gelbe Metall weiterhin auf künstlich gedrücktem Niveau zu halten.

Das entscheidende Kriterium ist nicht die Inflation selbst, sondern die Inflationswahrnehmung bei den Menschen. Da die offiziellen Statistiken nicht ihr Papier wert sind, müssen die Zentralbanken auf die „gefühlte Inflation“ achtgeben. Bis heute hat noch jede Papierwährung ihren inneren Wert konsequent angestrebt (Null), abgesehen von der D-Mark – sie wurde rechtzeitig durch den Euro abgelöst. Der US-Dollar hat seit Beginn des 20. Jahrhunderts 95 % an Wert eingebüßt, und es kann kein Zweifel bestehen, daß er auch die letzten 5 % seines Weges gehen wird. Die Asiaten experimentierten schon im 13. und 14. Jahrhundert mit Papiergeld, doch allesamt endeten sie in einer Hyperinflation. Daß die Welt später einen Goldstandard hatte, kam schließlich nicht von ungefähr.

Vergessen werden darf deshalb nicht, daß die derzeitigen Verkäufe von Zentralbankgold schließlich auch irgendwo landen. Nämlich in Asien, unter anderem. Das Epizentrum der Goldbestände verschiebt sich nach Osten. Wenn 1,3 Mrd. Chinesen zunehmend wohlhabender werden, werden sie kaum in den Papier-Dollar anlegen wollen – auch aus anderen Motiven sowie ihrer Erfahrung mit der Vergangenheit (siehe Absatz zuvor). Neben diesem gibt es sicher noch ein Dutzend anderer Gründe für einen höheren Goldpreis. Der Rothschild-Bank ist die Geschichte zu heiß geworden. Vielleicht haben sie noch die Kurve gekriegt, vielleicht war es aber auch schon nicht mehr ganz freiwillig. Früher oder später wird man es genauer wissen.

Die GoingPublic Kolumne ist ein Service des GoingPublic Magazins, Deutschlands großem Kapitalmarktmagazin. Bezogen werden kann das Magazin unter http://www.goingpublic.de. GoingPublic ist allein für die Inhalte der Kolumne verantwortlich. Informationen zu einzelnen Unternehmen stellen keine Aufforderung zum Kauf bzw. Verkauf von Aktien dar. Die Kolumne erscheint in Zusammenarbeit mit dpa-AFX.
Quelle: DPA-AFX

pflichtmologe · 21. April 2004

ich glaube die CRIMEX-Jungs wollen silber heute mit minus 10 prozent sehn

pflichtmologe · 18. April 2004

mit deiner meinung zu zertifikaten liegst du grund falsch.

die banken haben kein risiko, weil sie sich bei den dingern immer 100 prozent in futures absichern.
das einzige risiko ist wenn zb. bei einem Silber Long zerti kurs 7,2 Euro mit einem knock out von 7,00 es zu einem openig gap von 6, kommen würde. das Zertifikat wäre bei 7 ausgenockt die noch offene future position der bank wäre aber beim opening im minus und kann dann nur mit verlust glattgestellt werden.

long und short positionen sind bei zertis immer voll abgesicht

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