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The John Brimelow Report

Gold on the Western Front. Comfort from Bridgewater

Monday, October 25, 2004

India returned in a buying mood after Friday’s national holiday. Indian ex-duty premiums: AM $6.64, PM $7.22, with world gold at $428.40 and $428.80. Quite adequate for legal imports. This is basis Bombay: the second importing city, Ahmedabad, shows similar results. The rupee edged to an import-friendly 4 month high today.

Reuters carries the usual story quoting Indian importers moaning that prices are damaging their business; other news stories are more upbeat about gold seasonal buying, and indeed the Indian economy generally. See

http://www.newkerala.com/news-…?action=fullnews&id=38749

This is the highest $US price at which I have records of Indian prices being conducive to imports.

Japan opened to find $US gold up $4 from the NY close, record Oil prices, and the dollar reeling against the Euro and the Yen. TOCOM was a moderately firm buyer, apparently offsetting the firm yen against the Oil price action, perhaps; there was also some reference to the bout of bullion buying seen in Japan in 1995 following the Kobe earthquake. On aggregate volume equal to 22,681 Comex lots (+29%) open interest rose the equivalent of 1,986 Comex contracts to equal 100,507 Comex. Mitsubishi implies that the "public" (e.g. specs) added some 7.3 tonnes to their long (235,000 ozs). The active contract closed up 8 yen; world gold went out $4.50 above the NY close. (NY traded 34,876 contracts on Friday; open interest rebounded 3,277 lots to 310,363 – substantially erasing Thursday’s fall.)

In contrast to the position on COMEX, the spec long in Tokyo, at some 61.4 tonnes, is only about half the conventional peak reached three times earlier since 2000, so there is still some plausible potential support from this quarter.

Japan’s mild interest contrasts sharply with China. On heavy volume, the Shanghai Gold Exchange is showing steep –c. $4 – discounts to world gold. Whatever influence China is currently having on world prices does not include bolstering gold.

Friday’s 10.2 tonne increase in Comex open increase indicated the apparently gentle down/up fluctuation masked some serious activity. UBS notes:

"In New York on Friday gold opened under pressure form speculative selling - both via futures and through options. After the metal made a low…gold moved higher…despite some decent selling from investment banks. Gold closed around $424.00 / 424.50 just shy of the highs. In Asia, the weak US dollar triggered buying via Access ahead of the Asian open and the buying continued into Asia trading although reports of scale-up selling capped the move higher."

It appears that a reconnaissance in force by the bears was routed by buyers, who then attacked fiercely Sunday evening NY time. ACCESS volume was well over 3,000 by 11 PM, and over 9,546 contracts traded in the whole session, said to be a record - double what is usually seen on a busy day. Japan was really just a co operative passenger. The invaluable website thebulliondesk.com reported record traffic over the weekend, (a time they do not normally update) – English-speaking interest, inevitably. Comex looks certain to report record open interest tomorrow; perhaps by quite a large margin.

All this heroic buying achieved was to uncover a fresh line of resistance at $428-430. Another line of trenches – is this the Western Front?

However with macro events – oil, dollar, etc still pushed forward on one flank, and Indian/Middle Eastern buying matching pace on the other, the speculative outfits clearly in action at present may well feel they can still dislodge and overwhelm this obstacle as well, during this offensive. Heavy put buying, allegedly by a politically well-connected Investment Bank, and general nervousness about the size of the spec long are certainly caveats. But given the character of the gold market in recent months, a decisive follow-through to the achievement of a 16 year high on the AM fix this morning is probably going to require plenty of records.

While waiting, it is soothing to contemplate Bridgewater Associates’ argument today that ballooning foreign FX reserves are liable to be associated with surging commodity (& gold prices) and instability:

"…we think that this situation is most reminiscent of that which occurred in 1968-73, when Japan was in essentially the same position as China now… Back then, like now, it didn’t take much penciling to figure out that if the dollar wasn’t revalued, it wouldn’t be very long before Japanese ownership of U.S. paper would be larger than the entire Japanese economy. Right now, Chinese ownership of U.S. paper is nearly a third of the Chinese economy, up from about 15% two years ago…we estimate that the total value …of Chinese holdings of U.S. dollars will exceed the total value of China’s GDP in five years."

"a lot of dollars are being produced now, as they were being produced back in 1968-73 (though, as a percentage of GDP, they are being produced much more rapidly now than back then). The increases in the dollar supply and the dollar’s devaluation (which exacerbated the money supply growth, as money growth was no longer constrained), together with commodity supply/demand tightness, sent commodity prices higher. When shortages of inelastic commodities occur, prices classically rise in an upward arching pattern…until some structural change occurs. In the case of past oil shocks, it was monetary tightening, much more than the high oil prices, that slowed the economy and curtailed demand…. Largely for these reasons, we expect next year to become more interesting."

(The second attachment is derived from this Bridgewater. It shows the comparative magnitudes of the previous oil price shocks, and the gold price response. This time, of course, there has been a huge lag. Ultimately, the physical market will correct this.)

JB

October 25 - Gold $428.20 up $4.20 - Silver $7.32 up 3 cents

Cartel Caps Gold At $430 / America The Titanic

Yesterday I dared to struggle. Today I dare to win...Bernadette Devlin

GO GATA!!!

The early trading in Asia last evening was the strongest since the aftermath of the Washington Agreement announcement on September 26th 1999. With the euro up .60 and oil down 8 cents, gold popped $5. With the investment world so blasé about gold, as brought to your attention in the last MIDAS, this was an exciting development. Here we are approaching 16-year highs and so many potential gold investors are out of the market. The only question is to what extent The Gold Cartel will call on their resources to stop gold from taking out $430 in New York trading, as it had briefly pierced that key level in overseas trading?

If it were not for the blatant price-capping last week, gold would have come in $440 bid today which is one of the reasons for that capping in the first place. The heinous cabal needed some breathing room for a time such as this when the world wanted "in" as far as gold was concerned.

Thus, while excited last night to see such gold strength, I sensed it would be all down hill from there on in; that the fun was over for the next 24 hours. This day was likely to be similar to all the others when the cabal forces were in deep trouble, or when gold has approached pivotal $430. The Gold Cartel would swing into action in New York with all they had to keep the price below $430+ doomsday gold and to cap it until they could eventually get a tailwind from a price correction in the very oversold dollar.

All the above was written BEFORE the New York opening. Now, let us see what occurs.

***

Gold opened very firm in New York, beating the opening call, a rarity, and immediately went $430.40 bid, up $6.40 on the session, or limit-up ($6 Rule). At least this tells us The Gold Cartel is going to at least have some kind of battle on their hands in their effort to keep the gold price artificially suppressed.

8:11 CDT: might as well begin the commentary. The handwriting appears to be on the wall:

*Thus far gold has made its highs in the first 15 minutes (to an hour in almost all instances), which is standard operating procedure when the crooks go to work.

*The $6 Rule has been enforced, as is almost always the case, encouraging other sellers to side with the cabal for the trading session.

*The market is trading with little volatility and fanfare, another Gold Cartel trademark. Why? Because they are capping the price and deterring would-be buyers. After the capping, they wait for others to join in the selling. They will only attack more today if the dollar goes there way.

*All of this with gold at a 16-year high and a 16-year PM Fixing high of $429.15 (JB caught that one). The cabal has managed to keep gold excitement to less than a dull roar, more like a parade of monks.

I defy anyone in the gold establishment world to point to any market in history that has traded like gold, with the same predictable, repetitive Groundhog Day patterns mentioned above and for the past YEARS.

What blows me away (it’s SO bullish) is how little interest there is in gold from a public participation level. The small spec open interest, the lack of the usual futures participants at some prominent brokerages, pitiful US gold coin demand, lack of volume in the smaller golds, and the Café Sentiment Indicator, are all a contrarian’s delight. Never has a market had such constructive bullish fundamentals and attracted such an anemic following. Never has there been a three year BULL MARKET like gold which has attracted such ennui.

To give you some idea how powerful this neglect is adding up to, I did a Café Search using "Sentiment Indicator" over the last 6 months. These were five I found at random on my first shot. It is remarkable to me that this valuable indicator has been so low for so very long. This past Friday I still reported it to be only a 4.

Café Sentiment Indicator (1 is the lowest or most bullish and 10 is the highest or most bearish) five month history:

June 17 - Gold $388.70 up $4.30 – Silver $5.90 up 18 cents
The Café Sentiment Indicator has been about a 3 for some time. Just when investors should be paying the most attention to gold and silver investments, they have been showing scant interest. Some things never change.

July 9 - Gold $407.40 down 50 cents – Silver $6.45 up 4 cents
The Café Sentiment Indicator has barely budged off its lows. Compared to the price action of this week, the lack of interest in gold is remarkable – stunning really. What a contrarian’s delight. SO bullish!

August 16 - Gold $402.50 up $3.90 – Silver $6.69 up 9 cents
Seems to me gold and silver, as mentioned last week, are ready to really pop. Everything is in place and FEW in the investment world and in the general public are paying any attention, as indicated by the continued abysmal Café Sentiment Indicator.

September 20 - Gold $405 down 60 cents – Silver $6.23 unchanged
Had some interest to update the Café Sentiment Indicator. Café paying memberships has picked up. However, hits on the site are way down and new trials are as low as they have even been. Would have to put the indicator at a 3, where it has been plus or minus for some time. The fact that the indicator has been so feeble for so long and interest in the gold sector (junior and exploration shares especially) remains so abysmal, suggests a move of significant magnitude is coming. Quiet before the storm sort of thing. The gold fundamentals suggest this coming move will be one which takes the gold price sharply higher. Silver too.

September 29 - Gold $418.40 up $5.80 - Silver $6.90 up 25 cents
The Café Sentiment Indicator works again. It has finally started to move up to a 4 or 5, yet has a LONG way to go. What is significant in my book is that it was so lousy for so many months, which I constantly brought to your attention. Like a market which has built a broad base, this tells me the gold and silver moves up will be that much grander this time as the persistent lack of investor interest suggests there is that much more to finally show up during the months to come. Just when investors should have been paying the most attention by doing their gold and silver homework, they ran away in droves. Isn’t that always the way? Once gold takes out $430 for good, gold will be the talk of the town and The Café Sentiment Indicator will soar to 9 and 10.

***

The main reason for bringing this to your attention is think of this sustained gold neglect as a foreteller of the explosive market action ahead of us. Gold has worked its way up to 16-year highs and the public could care less. Think of how many future buyers are out there all over the place. GATA love that.

The following charts are very telling. The dollar has closed lower 9 trading sessions in a row and the price of oil has surged recently from a scarily HIGH $42 per barrel to almost $56 dollars per barrel. The dollar came within a whisker of 85 today. That combination ought to have gold close to $500 per ounce (minimum). Instead, it is not ALLOWED to even move above $430.

December euro (127.97, up 1.49)
http://futures.tradingcharts.com/chart/EC/C4

December dollar (85.08, down .89)
http://futures.tradingcharts.com/chart/US/C4

Weekly dollar
http://futures.tradingcharts.com/chart/US/W

December gold
http://futures.tradingcharts.com/chart/GD/C4

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

December oil ($54.54)
http://futures.tradingcharts.com/chart/CO/C4

If you had presented the oil, dollar and euro charts to anyone a couple of years ago, before their being prejudiced by the recent price action, most everyone would have had gold flying over $500 per ounce.

Well, when all was said and done, gold closed lower than where it opened and traded last evening, which is par for the course, even though the dollar weakened and euro strengthened during the Comex session. Never have crooks in the US (including the Mafia) been able to rip off the public and do so in such visible fashion. Where are the regulators? Where is the gold industry?

The gold open interest rose 3267 contracts to 310,353.

IN VERY LATE: Heard from our STALKER source. The skinny:

*The total gold buying by the main STALKER and three little STALKERS will be $4.5 billion. Half of that has been bought already.
*The main STALKER is about done, leaving the smaller STALKERS to do the buying.
*The smaller STALKERS may trade some of their purchases, i.e. sell rallies.
*The group is looking for $500 gold within 6 to 8 months.
*The thinking is some of the Asian buying last night was partly this group (thought to be Chinese and operating principally out of Australia).
*They are interested in silver, however, the Canadians are trying to sell them certificates. They want physical only and need a place to store it. If they can sort this out and can find silver in SIZE, they will be in the market.
*They feel that dollar still has 25% to go on the downside and there could be an official devaluation.

The London gold dealer connection to our STALKER source checked in too. Still bullish and looking for gold to take out $434 this week and then to move past $450.

Silver, which much prefers to run higher on its own (without the help of outside markets), surged early, as much as 17 cents, and then fell back. Perhaps the cabal couldn’t lean more on gold because of the pronounced dollar weakness so they took it out on silver. Remember The Gold Cartel’s mantra: keep precious metals excitement to a minimum as much as possible.

The silver open interest rose 1011 contracts to 115,321.

Even rigged markets won’t act the same way after a period of time. When it is this obvious, too many people find out the true score and then go after the manipulators if they find them to be vulnerable. With the gold fundamentals a "10+++++," we know the bums could go down at any time. So does the biggest money in the world (Russians, Chinese, Arabs, large hedge funds). They know GATA is correct and are acting accordingly. With the dollar very oversold, it could easily correct a bit from here and you can be sure The Gold Cartel will make their move to take gold down. Whatever, I cannot see corrections lasting too long. The cash market is TOO FIRM. The Gold Cartel is having trouble because of this most important element of the market. In the past the cash market was not there to support cabal attacks at this high a price level, as it failed to follow the specs. This time it has followed the specs all the way up, unlike the "public" which shows little interest.

Chuck checked in early:

Just got in. Also, very pleased with the Red Sox win. How neat would it be to see Clemens in the Series?

But to gold and the markets. Today sets up the real possibility of the stock market tanking. If it resumes the down draft and breaks 9800, we could see some heavy selling coming in. I think that it is very instructive that gold and the stocks did not react negatively as the market came back.

The charts on gold and the leading stocks (NEM and GG) look like they are having a major leg here. It is very similar to the look of 2002 as the stocks had a series of panic selling and then made giant move up. My sense is that since the smaller ones still have not attracted any speculative money we are going to have a much larger leg than the current fashionable thinking. I have felt that the dollar would hold here, but the look is more and more ominous. Throw in the continuing move upward in the short-term interest rates with its squeeze on lending margins and we have a tasty recipe brewing for disaster.

I'd be surprised given the above and the ongoing financial follies and scandals that there is anything left to defend the status quo. If not, we are going to have some very nervous shorts in the precious metals and some potentially explosive derivative points. I think we are very close to all this happening. Chuck

Then again later on:

Bill:
Today continues the eerie feel to the market. The market weighs a thousand pounds as the financial stocks are starting to turn down and what I consider the bellwether golds, NEM and GG, exhibiting good strength. It is obvious that the powers of the market place are trying to keep gold from breaking out here until after the election, but I'm not certain that they have the ability anymore. But I have been fooled before. Would expect a quick slam on the close again, but let's keep our eyes on the shares. …

Two more thoughts. One is the absolute lack of interest in the exploration companies even though the HUI has been acting well. I view this as very bullish since it shows that there is no public belief in the move in gold here. Tow is the release today of the Investors Intelligence which even at this potential breakdown point is the highest bullish sentiment in months, almost 60% bulls vs 23% bears. Pretty unbelievable!
Chuck

This Business Week story is gold positive, yet doesn't cut it in my book. If gold rises $200 tomorrow, you know what it really means economically, or tells us? Nothing, except the crooks lost control of a multi-year rigging process to prevent commentary like this:

OCTOBER 21, 2004

NEWS ANALYSIS
By Amey Stone

Gold Is Flashing Warnings

Having hit a six-month high, the precious metal seems to be saying America's recovery "isn't that great." Not everyone agrees, though.

Gold is on the move again. On Oct. 20 it reached a six-month high of $425 an ounce in trading on the New York Mercantile Exchange, up from a 52-week low of $375 in May. Although the yellow metal is still below this year's April peak of $430, its recent climb is pointing to some troubling economic trends.

"Gold is a store of value when uncertainty is out there," says Michael Cuggino, manager of the Permanent Portfolio Fund, which keeps about 20% of assets in gold. "It could be the pace of the economic recovery isn't that great," he says.

Stock investors seem to be coming to the same conclusion. The Dow Jones industrial average fell back below 10,000 yet again (it closed at 9,887 on Oct. 20) as Wall Street worries about less-than-stellar third-quarter corporate profits, rising energy costs, and declining consumer strength.

A DOWNER DOLLER. Gold typically rises when stocks fall, which means it can help lower volatility. That's making it increasingly appealing, not only to speculators but also to long-term investors looking for a way to diversify their portfolio, says Frank Holmes, chief executive of U.S. Global Funds, which has several top-performing precious-metals funds.

The weak dollar, which fell to an eight-month low against the euro on Oct. 20 is also contributing to demand for gold by foreign investors and central banks. "Our positive view on gold is based on our bearish outlook for the U.S. dollar," said a Goldman Sachs research report in August that predicted gold would trade as high as $450 in the next six months. Increasing prosperity of Asian consumers, especially in China, is another factor behind the strong demand abroad.

"Whenever you see gold going higher and the stock market treading water or going lower, it indicates to me that people are looking for alternatives," says Ed Giobbe, president of ESG Capital Management in New York. He invests about 10% to 25% of client assets in gold. "Those trends tend to last a long time."

"OUT TO LUNCH." Here's an important caveat to all this doom and gloom: The shiny stuff's higher price doesn't necessarily indicate that inflation is a problem and higher interest rates are on the way, say many experts. Indeed, rising rates present the biggest risk to gold prices, says Holmes.

Talk to Wayne Angell, a former member of the Federal Reserve Board who now has his own economic consulting firm, Angell Economics, and he'll tell you gold prices are actually declining -- relative to an index of other commodity prices, that is.

He doesn't think the Fed will need to raise rates to keep wages and prices in check. "Inflation isn't possible unless we get an increase in wages that enables workers to buy the products at higher prices," he says. "Clearly that hasn't happened." Pay is up just 2.3% year-over-year in the U.S. "Anyone that thinks inflation is a problem is simply out to lunch," he says.

ROCKY ROAD. Holmes, too, believes interest rates won't go much higher, even if the price of gold continues to soar. "We believe rate increases will occur in a slow and measured way," he says, "so gold should continue to benefit."

That's not necessarily a reason to rush out and buy some bullion now. Giobbe believes gold could trade down short-term as some investors take profits on recent gains. He notes that commercial gold buyers are shorting the market, while financial speculators are buying gold. "That's a very bad combination over the next couple of weeks," he says.

Long-term, however, Giobbe believes gold will moving much higher -- to as much as $500 an ounce next year and potentially even $1,000 an ounce in two to three years. The best time to buy, he says, is on weakness. And with the price reaching a new six-month high while economic conditions in the U.S. wobble, weak isn't the word for gold right now.

-END-

Chinese on the move:
GLOBE AND MAIL

China set to buy up Canada's resources

EXCLUSIVE: Noranda takeover is just a start, Foreign Minister tells GEOFFREY YORK in Beijing

By GEOFFREY YORK
UPDATED AT 5:10 PM EDT Thursday, Oct 21, 2004

China's Communist rulers have a blunt message for anyone who frets about the planned Chinese takeover of Canada's biggest mining company: Get ready for more to come.

In an exclusive interview with The Globe and Mail in Beijing this week, Chinese Foreign Minister Li Zhaoxing made it plain that the controversial $7-billion takeover of Noranda Inc. is just a small element in a much more ambitious strategy of investment in Canada's resources sector to feed China's voracious appetite for raw materials.

"Given our rapid economic growth, we're facing an acute shortage of natural resources," the Foreign Minister told The Globe.

"No matter how plentiful our natural resources, when you divide them by our population of 1.3 billion, the figure will be very small," he said.

"The Chinese government is encouraging Chinese enterprises to make investments in Canada, particularly in the field of resources exploitation."....

-END-

Gold demand news:

Central Fund Files Prospectus
15:46 EDT Thursday, October 21, 2004

TORONTO, ONTARIO--(CCNMatthews - Oct. 21, 2004) - Central Fund of Canada Limited ("CFOC") of Calgary, Alberta, Canada today announced that it has filed a preliminary short form prospectus with the securities commissions in each of the provinces and territories of Canada, except Quebec, and a registration statement with the United States Securities and Exchange Commission for a proposed underwritten offering by CIBC World Markets Inc. of Class A Shares to the public in Canada and the United States. CFOC will only proceed with the offering if it is non-dilutive to the net asset value of the Class A shares owned by the existing shareholders of CFOC.

Substantially all of the net proceeds of the offering will be used to purchase gold and silver bullion, in keeping with the investment policies established by the board of directors of CFOC. The additional capital is expected to reduce the operating expense ratio in favour of the Shareholders of CFOC.
-END-

The gold shares rose again on what seemed like light volume. The XAU finished at 102.20, up .40 and the HUI climbed to 231.85, up 2.39. Both indexes closed off their highs. However, as Chuck noted there is little interest in some of the smaller golds. The difference between a year ago and today (with gold at the same price) is dramatic. That will change.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

Open Letter from the Mining Community to Senator John Kerry Regarding His Position on Mining

October 21, 2004

Dear Senator Kerry,

You stand before the American people day after day and promise more jobs under a Kerry Administration. Yet your policies and record in the U.S. Senate prove these promises empty. The time has come for you to explain your positions and stop misleading the people of Nevada and this country about what a Kerry presidency would really lead to: higher taxes, rapid job loss and more government regulation.

Mining is vital to the Nevada economy, and behind South Africa and Australia, this state is the third-largest producer of gold in the world. Yet you propose increasing fees on mineral mining by $600 million, a position you have failed to defend to the people of this state.

The reality is the results of your proposal would devastate the hard rock mining industry, costing as many as 44,000 jobs nationwide. For someone who is promising Nevadans jobs, here alone are 44,000 broken promises.

Studies show that your policies would result in a net loss to the Federal Treasury of up to $500 million, an earnings loss of $1.2 billion and an output loss of more than $6 billion. How can you promise a "stronger" economy when the word that best describes your fiscal policies is "loss"? Not only is your liberal ideology out of the mainstream, you are personally out of touch with the Nevada economy.

You have continually sided against the people, economy and interests of this state, so much so that you have repeatedly broken with your own party. How can you lead as President when even fellow Democrats abandon you?

When it was time to overturn a Clinton-era, environmentalist-backed legal interpretation of 1872 mining law that your colleague, Sen. Harry Reid (D-NV), referred to as "disastrous," you said no. Reid later declared the successful reversal, which brought mining out of a virtual standstill, "good for our economy, good for our nation and good for Nevada." Time after time, Sen. Kerry, you have been on the wrong side of issues important to us.

The working people of Nevada have for too long been asking themselves where you are and what you really stand for, and the time has come for you to clearly explain what convictions you hold. Frankly, Sen. Kerry, we find what we have seen thus far unimpressive and unacceptable.

Your record in the Senate is appalling. You missed a vote to cut the capital gains tax on investments in precious metals which Nevada Senators Reid and Ensign supported. You voted for repealing tax breaks available to hard rock mining companies, legislation which Nevada Senators Reid and Bryan voted against. You have voted to limit the tax deductions of mining companies while also supporting harmful royalty requirements on the mining industry. Where does it all end?

We can only assume that your failures as a Senator will translate into failures as a President, only on a much greater scale. Before you claim to have a plan for creating jobs, you must explain to the people of Nevada why you choose to deny them theirs.

Sincerely,

The Northwest Mining Association

CONTACT: Tracey Schmitt (703) 647-2790

October 21 - Gold $423.70 up 70 cents - Silver $7.26 down cents

Dollar Sinks Against All Major Currencies, Gold Capped By Cabal

Whatever you do, you need courage. Whatever course you decide upon, there is always someone to tell you that you are wrong. There are always difficulties arising that tempt you to believe your critics are right. To map out a course of action and follow it to an end requires some of the same courage that a soldier needs. Peace has its victories, but it takes brave men and women to win them...Ralph Waldo Emerson

GO GATA!!!!

Same drill like we have seen so often the past couple of weeks. Gold came in a couple of bucks higher, following dollar weakness, and then was taken right down by the cabal crowd. They received some help from some "fast funds" who took profits. However, strong support showed up with gold down close to $2 and it popped right back up. Locals, caught short, were forced to cover on the bell, giving gold a close at the high end of where it traded most of the session.

The Gold Cartel continues to cap the price as it waits for the dollar to turn so it can pound gold below $420. That could not be more clear. Meanwhile, the specs are piling in. The open interest rose 5884 contracts to a new high of 311,109. Many observers are waiting for the cabal to flush the humongous amount of longs out before gold takes off. I have no idea if they will succeed. What we do know is a surging physical market is making that task a very difficult one.

We have a Commercial Signal Failure coming – maybe within a week, maybe a month. The Gold Cartel forces are going to be routed as more and more smart money moves into gold.

Some reasons for this to occur and for bullion to blow through $430:

*That surging cash market.
*A stinky and sinking dollar. It closed at 86.12, down .33, and lower against every major currency. The euro ended up at 126.14, up .30, while the yen has risen to 107.43.
*Commodity price boom. The CRB is not far off 23-year highs at 286.74, down .88.
*Skyrocketing oil prices. DEC WTI finished at $54.47, up 6 cents, and doesn’t seem to want to break
*Weakening US stock market and US economy which will put a break on rising interest rates and keep gold as a sound alternative investment.

Silver popped early, leaping to $7.37 right off the bat and then ran into a stiff headwind. Morgan Stanley continues to press the short side.

The silver open interest rose 1935 contracts to 113,247.

What a crummy chart:

December dollar
http://futures.tradingcharts.com/chart/US/C4

The John Brimelow Report

Surprise! A big seller. But interesting BW thought on Oil

Thursday, October 21, 2004

Indian ex-duty premiums: AM $6.66, PM $6.10, with world gold at $424.30 and $425.30. Ample, and adequate, for legal imports. This is basis Bombay; the same is true for Ahmedabad, usually seen as Bombay’s major competitor; the other two cities Reuters monitors are marginally in legal import territory. The rupee helpfully firmed a little further today.

When Gold last attempted the $420s, in late March and early January, Indian premiums were $2-$4 dollars lower and the country had stopped importing. Attempts to move gold down from here will meet earlier and stronger Indian buying.

Despite the firmer yen, Japan took an interest. TOCOM volume jumped 118% to the equivalent of 24,890 Comex lots, open interest rose the equivalent of 2,027 Comex, and according to Mitsubishi, the "General Public" increased its long by a quite steep 5.6 tonnes. Perhaps this was offshore hedge funds, but ACCESS volume was not exceptionally heavy: there have been some remarks out of Japan to the effect that locally-based speculators are influenced by the oil price. TOCOM’s oil contract is not deep. (NY yesterday traded 61,119 contracts; open interest jumped 5,984 lots to a new all-time high of 311,119 contacts.)

Japanese gold imports for September were announced today: 6.779 tonnes, 9.5% above August, bringing Y-t-D imports to 58.7 tonnes, up 131%. While small by the standard of the 80s and early 90s, this is a modestly respectable quantity on a global basis, and further bolsters the thought that the demand schedule for gold for the Japanese public has indeed shifted.

Yesterday, just like today, gold in Asian hours was quite lively, but encountered heavy selling in NY time. ScotiaMocatta said:

"Gold started the New York session 423.30/423.80 where offers soon appeared from overseas sources. The price was forced as low as 422.50/423.00 where funds appeared on the buy side…The metal made a steady climb…oil ran up to over$55.00 a barrel and in turn helped gold reach 425.80/426.30…The rally soon stalled, as it appeared a number of the long positions established over the past week were selling out, taking profits. Further offers appeared late in the day forcing the price back to 423.30/423.80 at the close."

Refco Research’s version was

"From open on the COMEX, gold futures saw early technical buying as the open had breached 423 resistance…Temporarily, fund buying lost impetus near 426 in the face of bank selling. But the oil inventory report gave energy prices a lift and sent gold to session highs only to see gold retreat on further bank selling."

In fact, of course, the 18.3 tonne jump in open interest refutes any idea that there was net liquidation by Comex longs (no bullion dealer, of course, ever admits seeing short selling). Since last Wednesday, open interest has risen 15,823 contracts – 49.2 tonnes! - for an $8.40 rise in the December contract. Some technically-influenced observers are getting excited: Standard-London:

"Technically gold is poised on the verge of a major break to the upside with a clear break and close above $426 bringing $455 - $465…on the radar screens of long term charts watchers while a solid band of support is in place between $415 and $410."

A more normal development, based on experience over the past year would be a violent sell-off attempt, which will, however, fail.

While waiting for this cycle, it is pleasant for gold’s friends to contemplate today’s Bridgewater Observations, which calmly acknowledges to possibility of $120 oil in the near future:

"In our opinion, without a much greater tightening in both developed countries and China (which we do not think will occur soon), the engine will not be slowed enough to prevent a move in oil prices to over $100 to $120/brl… That is not to say that we do not expect the energy price rise to be more noticeable over the next few months, because we do. However, we do not expect it to have a material impact on either energy consumption or GDP growth."

Bridgewater may or may not be right in their calmness of the general economic consequences of such a move, but it is hard to see such a wealth transfer not helping gold.

JB

CARTEL CAPITULATION WATCH

The DOG charged all day long, led by E-Bay fever. It wound up at 1954, up 21. The DOW was frenetic. Higher early, it swooned down to 9800 and appeared almost to be in a real washout mode. Then, it turned right around with another Hail Mary rally to go up on the day before selling off late again. Very strange.

The US economic news was negative on balance:

08:30 Jobless claims reported 329K vs. consensus 345K
Prior week revised to 354K from 352K.
* * * * *

10:00 Sept. LEI reported (0.1%) vs. consensus (0.1%)
Prior reading unrevised at (0.3%).
* * * * *

12:00 October Philadelphia Fed index reported 28.5 vs. consensus 18
September reading was 13.4.
* * * * *

Comments on the Philadelphia Fed Report:

WASHINGTON (CBS.MW) - Manufacturing in the Philadelphia region rebounded in October, the Federal Reserve Bank of Philadelphia reported Thursday.

The Philly Fed's activity index rose to 28.5 in October. This reversed the decline in September, when the index had fallen to 13.4 from 28.5 in August. Read full survey.

The increase in October was much larger than expected.

Analysts noted that there was a "huge disconnect" between the headline number and some of the details of the report.

The new orders index fell to 24.6 from 26.4 in September.

The employment index fell to 14.1 from 21.5 in September.

In addition, the unfilled orders index fell to -5.4 from 3.1.

Expectations about the economy in six months worsened, as the expectations index sunk to 27.6 from 44.9.

The prices paid index rose to 57.1 from 56.4 in the previous month.

On the other hand, the shipments index rose to 28.2 from 22.4.

As a result, Treasury prices gyrated after the report was released and the dollar remained lower as a result of the decline in the employment index.

The Philly Fed index is closely watched because it often accurately forecasts the national purchasing managers survey on manufacturing activity reported by the Institute for Supply Management just after the end of each month.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said there was "almost no chance" that the ISM Oct. index would have a similar bounce as the Philly Fed index.

The ISM factory index slipped to 58.5 percent in September from 59.0 in August.

-END-

From Jesse:

Greenspan did a coupon pass yesterday, and I was surprised to see another one today.
I have not seen back to back coupon passes in quite a while. This is a hot money injection for the markets.

-END-

More from the Fed on oil:

12:08 Fed Gov. Bernanke says higher oil prices are likely to curb U.S. economic capacity longer-term
Notes that higher oil prices could lead to a wider trade deficit. Bernanke says the impact is "manageable," assuming that oil prices do not spike further. Bernanke says it is unclear if any big new sources of oil can be tapped in the next 5 years. Bernanke says the market interest rates and surveys indicate no rise in expectations for inflation.
* * * * *

Everything is hunky-dory according to the Fed. Joe and Jan public are not so sanguine. Reality is hitting home:

US consumers get cold feet as energy costs soar

By Andrea Hopkins

WASHINGTON, Oct 21 (Reuters) - The surging cost of fuel oil and gasoline have set the stage for a cold, expensive winter in the United States and sparked concerns that consumers will cut spending, a move economists worry will hamper growth.

The chill of winter has already descended on Wisconsin, but Deidre May, a part-time hotel worker and divorced mother of five in this northern Midwest state, has yet to turn on the heat at home.

"I've purposefully kept the heat off because I know I can't afford to pay the bills right away," said May, a full-time Milwaukee college student with five daughters aged 6 to 19.

"I make sure the girls put on extra clothes, and keep them as bundled up as they can be at night," she said, adding she has cut back on car trips and activities for the kids to save money for when winter descends and the heating bill soars.

On Wednesday, the average retail heating oil price hit a record $1.99 a gallon, while gasoline prices topped $2 a gallon earlier in the week, just 2.9 cents below the all-time high.

The inexorable rise in energy costs has prompted many Wall Street banks to lower their forecasts for 2005 economic growth, due to concerns the higher prices will finally derail the American consumer -- whose stalwart spending kept the 2001 recession relatively short and shallow.

While U.S. gas prices are only about a third of what many Europeans pay, economists said the price spikes have a big psychological impact in suburban and middle America, where car is king and prices are posted on nearly every street corner.

"Energy costs have already taken a toll on economic growth," said Jared Bernstein, an economist at the Economic Policy Institute. "Somehow that big sign on the gas station that says the price of a gallon just went up 2 cents, it just resonates in a way that other prices don't."

"(Add to that) the price of oil and expectations of where it is headed coming into the winter with home heating oil -- it's leading consumers to be pretty nervous about their ability to meet their consumption needs," Bernstein said.

NO CLARINET FOR YOU

Consumer sentiment fell sharply in early October, rattling some economists who say shoppers have already begun to cut back on luxuries and debt payments due to energy worries.

"As the prospects of a full-blown oil shock rise, the prospects of outright global recession in 2005 loom more and more likely," Morgan Stanley chief economist Stephen Roach said this week in cutting his bank's growth outlook.

May said she knows her heating gas bill -- which averaged about $200 a month last winter -- will be more expensive this year and she is braced for the worst, cutting back on the little extras like car trips to the library and clarinet lessons for her 11 year-old.

The Energy Information Administration forecast costs for heating with gas, oil or propane will climb by at least 15 percent and by as much as 28 percent this year, taking the average winter heating bill to between $1,003 and $1,396. It also said the winter will likely be colder than usual.

Linda Meric, executive director of 9to5, the National Association of Working Women, said every day she hears from people who can barely get by in an economy that has not yet regained the jobs or momentum it had before the recession.

"We're still getting calls every day from people who have been looking for work for a very long time. And the ones who have found jobs have found jobs that pay significantly less and have fewer benefits than the job that have been lost," said

"They are struggling now to make ends meet. With heating costs going up, it's only going to get worse."

The John Brimelow Report

India & Gartman too!

Wednesday, October 20, 2004

Indian ex-duty premiums: AM $6.96, PM $5.27, with world gold at $419.55 and $423.45. Ample, and adequate for legal imports. Impressively resilient, considering the sharp increase in world gold. The rupee strengthened further to a 3-month high today.

TOCOM activity slumped, the firmer yen probably suppressing any interest in gold futures. Volume fell 44% to only equal 11,480 Comex lots; world gold was essentially static (up 10c from the NY close); the active contract closed up 5 yen. (NY yesterday traded 45,130 contracts; open interest rose another 2,979 lots to 305,225, getting close again to the all time high.)

Refco Research guessed last night that open interest would fall in the wake of the palpable defeat of the bear raid early yesterday: instead it rose. Quite possibly tomorrow will see a record: estimated volume was 50,000, with a tell-tale acceleration at the close.

Institutional Analyst/groupie Dennis Gartman, finally becoming concerned about the dollar, asks the key question about gold (written very early today):

"Turning then to gold, we note that once again the $420-422/oz. level is material resistance, and it has been for the past several sessions…One might reasonably ask who the sellers are that are keeping prices from rising…What is important is that the price of gold is clearly trending upward; the sellers find their offers rather readily taken; support seems to come in at progressively higher prices and resistance is steadily chipped at."

Since Gartman has a fine sense about what his clients are willing to hear, gold’s friends should be grateful that he raises the (unanswered) question: any interest in the sector from this quarter is significant.

JB

CARTEL CAPITULATION WATCH

The December 30-year bond closed at 114 1/32 up 21/32. This is at its highest levels for the move, hardly a ringing endorsement of the US economy. I’ll hang with my analysis of the past many months, one that seems so obvious. The maneuvers by the Fed and Bush Administration to prop up the economy have run their course. What lies ahead for our economy and stock markets appears ominous.

Long bond:

http://futures.tradingcharts.com/chart/TR/C4

The PPT is like the football teams of yesteryear that would run off tackle over and over again until it did not work any more. Only, in this case, it is their patented "Hail Mary" play used to rescue the DOW which they use over and over. The DOW was down over 90 in the early going. No matter, by the close it came back to 9986, down 11. The DOG gained 11 to 1933.

S&P:

http://futures.tradingcharts.com/chart/SP/C4

The oil inventory news was super bullish:

10:31 DOE reports crude oil inventories +1.2M barrels vs. expectations +1.8M barrels
Gasoline inventories reported (700K) barrels vs. consensus +400K barrels. Distillate inventories reported (1.9M) barrels vs. consensus (1.0M) barrels. November crude is trading higher to $53.80/barrel in reaction to the data.
* * * * *

10:33 API reports crude oil inventories (972K) barrels
Distillate inventories reported (1.2M) barrels, while gasoline inventories (2.4M) barrels. Nov. WTI crude continues to trade higher, post-data, quoted last at $53.90/barrel.
* * * * *

Gold Cartel crowd rats beginning to leave a sinking ship?

18:13 C reports departure of three senior officials -- Reuters (43.59)
Citing an internal memo, Reuters reports Thomas Jones, CEO of Citigroup Asset Mgmt., Deryck Maughan, chairman of Citigroup Int'l, and Peter Scaturro, CEO of Citigroup Private Bank, will be leaving. Effective immediately, Citigroup Asset, Citigroup Private Bank and Travelers Life & Annuity will report to C COO Bob Willumstad.
* * * * *

Alan Greenspan and Wall Street have been dissing the real US inflation situation and soaring oil prices for months. Mainstream is reporting reality:

Oct. 20 (Bloomberg) -- Whirlpool Corp., the world's second- largest home-appliance maker, cut its full-year profit forecast, citing higher steel and oil costs.
Profit will be $5.85 to $5.95 a share, the company said in a statement distributed by PR Newswire. Whirlpool had said it would earn $6.20 to $6.35.

STOCKHOLM, Oct 20 (Reuters) - Electrolux, the world's biggest home-appliance maker, cut its 2004 profit outlook in the face of fierce competition and high steel prices as it posted third-quarter profits in line with expectations.
"Operating income for the full year 2004 is expected to be significantly lower than in 2003, excluding items affecting comparability," the company said in a statement on Wednesday.

-END-

A big miss and another chink in the cabal’s armor:

Oct. 20 (Bloomberg) -- JPMorgan Chase & Co., the second- biggest U.S. bank, said quarterly profit fell 13 percent because of costs related to the July purchase of Bank One Corp. and a slump in fixed-income trading.
Third-quarter net income declined to $1.42 billion, or 39 cents a share, from $1.63 billion, or 78 cents, the New York- based company said in a statement. Excluding acquisition costs, JPMorgan would have earned $2.2 billion, or 60 cents a share. The average estimate of 14 analysts was 74 cents, according to Thomson Financial. –END-

Edgar Bergen must be rolling over in his grave with Treasury Secretary’s Snow's continued Charlie McCarthy puppet routine. It is beyond inane:

12:52 US Treasury's Snow repeats support for strong dollar policy --- Reuters
The US dollar is trading notably lower against the euro and the yen, with gold trading sharply higher. Snow declines to comment on the latest drop in the dollar
* * * * *

More bad news for stock market bulls:

Market Intelligence

10/20
The bulls jumped almost 5%, all the way up to 58.9%, while the bears fell to 22.1%, a drop of 1.4%. Historically, these levels have proved very negative for equities. It is hard pinpoint a single reason for this increased enthusiasm, with averages flat, or within 4%, of where they started the year, but virtually all newsletters do look for a break in the high crude prices.

There were just 19.0% in the correction camp. They are short term bearish but longer term bullish, viewing an expected pullback to be a buying opportunity.

We consider "normal" readings to be 45% for the bulls and 35% for the bears. The bulls had been well below that level mid-August, and markets rallied. The sentiment readings are used on a contrary basis.

The spread between the bulls and bears expanded to 36.8%, moving into the 35-40% range most often seen at the levels of index tops.

-END-

The real CPI story:

The King Report
M. Ramsey King Securities, Inc.
Wednesday Oct. 20, 2004 – Issue 3020 "Independent View of the News"

From the BLS on CPI: "Energy costs declined for the third consecutive month--

From the BLS on CPI: "Energy costs declined for the third consecutive month--down 0.4 percent in September--after advancing sharply in the first half of the year. Within energy, the index for household fuels decreased 0.9 percent, while the index for motor fuel rose 0.1 percent. The index for food was unchanged in September, as a 0.2 percent decline in the index for food at home was offset by a 0.3 percent increase in the index for food away from home." http://www.bls.gov/news.release/cpi.nr0.htm Please reread the BLS line about energy prices declining for the 3rd consecutive month. Who possibly could believe this crap? Yet we know many, particularly Wall Street shills and permabulls, do. You cannot make up stuff like this; it’s tantamount to Orwell’s "1984".

Here is more altered reality foisted on the uninformed and gullible. BLS has energy prices +6.7% y/y. On 9/30/03 oil was $29ish; on 9/30/04 it was $49ish, +69% y/y…And Fed clowns keep trying to sell the notion that inflation is tame. The way CPI is compiled, there can never be meaningful inflation.

Wait, the assault on one’s intelligence is worse than above. For the past three months, BLS has its CPI energy component DOWN 9.8%!!! (Check the table at above link to BLS) Thank you sir, may I have another! We’d love to administer a test to anyone involved in financial decision making that asks them that given the evidence of the past 3 to 4 months do they believe the BLS’s CPI, and in particular the energy component…BLS has the CPI energy component up only 18.6% for 2004.

In our letter on Monday, we noted the following increases over the past 3.5 months: "Oil is +50%; heating oil is +54%; gasoline is +24% and natural gas is +6.5%. But the increases have not shown up in PPI or CPI." So either this month’s CPI energy index must soar or the incorruptible BLS is full of it.

BLS has used vehicle prices down 1.8% y/y. Mannheim, which doesn’t sample but counts all transactions, has them +0.4%. But Mannheim does not employ hedonic adjustments. Mannheim explains the problem with BLS’s used vehicle methodology at: http://manheimvalueindex.com/c…4m3r1c4/comparisonCPI.php

There is more hilarity in other categories of the CPI release and tables, but we don’t feel the need to delve further to prove the obvious.

How come in BLS substitution policy, there is never upward substitution if prices fall? If steak prices soar, the BLS assumes people will ‘substitute’ ground beef; and then there is no CPI increase. But what if beef prices fall? Does the BLS assume people will substitute ground sirloin for hamburger? It’s just like hedonics – there never is an adjustment for worse service or anything that might raise the CPI.

Yesterday’s WSJ had some analyst downplaying hedonic adjustments. We love analysts and reporters that suddenly have to address issues like hedonic adjustments and the Biz B/D Rate when they have ignored or were not aware of it for years. Most Wall Street analysts loathe ‘doing the work’, so they ignore troubling details. If economists and analysts acknowledge the problems, they must ‘do some work’ instead of just plugging dubious data into their ‘models’ and/or making specious forecasts on spurious data…As we annually note, Q3 (July to August) CPI is one of the most massaged numbers because it is the basis of COLAs. And we are pleased that others now report that fact…We’d love to hear the WSJ’s reporter and his featured analyst’s explanation for energy in the CPI.

The Social Security Administration announced a 2.7% COLA for its more than 47m recipients yesterday. This is about $25/month for the average recipient. Higher Medicare premiums will cost $11.60/month. Ergo, the US government on the paying hand (BLS) says healthcare costs are up only 4.4% y/y, but on the taking hand it exacts a higher toll…Congress is complicit in swindling the elderly - by deed or ignorance

-END-

With the false/gimmickry reporting we are getting from the establishment and the present administration in Washington, along with the blatant rigging of the price of gold to calm down inflation talk, one can’t help but reflect on two of my favorite movies: The Matrix and The Stepford Wives.

The latest from Dennis Gartman. While, he still doesn’t get IT, DG deserves credit for at least acknowledging our camp, unlike the gold industry, whose disdain for us and negligent silence towards our evidence of price manipulation is inexcusable.

"Turning then to gold, we note that once again the $420-422/oz. level is material resistance, and it has been for the past several sessions. Gold has tried vainly to push upward through that resistance, but thus far has been unable to do so. It shall likely require a move by the EUR upward through 1.2550, which shall set up any number of stops there to push gold upward through that resistance, but at this point both seem reasonably likely. We note also that the "attack" upon that resistance level in gold is being done from a higher price than previously. Driving through resistance at $420-422 when the 'attack" is begun from a base at or near to $417-419 is far easier than when the attack is begun from $410-412.

"One might reasonably ask who the sellers are that are keeping prices from rising, and the conspiratorialists among us will readily say that it is a cabal of Wall Street firms who hope to defend short positions they have inherited over the years. We have listened to the conspiratorialists for years, and we actually find their "enthusiasm" refreshing even if their thesis ill-advised. What is important is that the price of gold is clearly trending upward; the sellers find their offers rather readily taken; support seems to come in at progressively higher prices and resistance is steadily material portion of that crude to the US."

Ill advised? Nothing in market history has ever been this obvious! Especially today. Gold opens $3 higher. From there on in the dollar fails to rally, oil goes berserk, silver closes not far off its highs, world stock markets have closed lower and the US market tanks early on. You call that normal market action with massive floor short-covering early as the DEC contract took out fierce $423 resistance on the opening? They have you on CNBC all the time to talk about gold. You would serve them better by expounding on Tiddlywinks.

This is more like it:

Dear Goldman Sachs, I have a question. I have been following the gold market now for a couple of years. I have noticed that on days when the gold price declines, there is virtually no limit as to how far it falls...$6, $10, even as much as $16 in a single day it will fall. This has happened many times in the past 2 years. This usually takes place on days when the dollar is rallying modestly to greatly. However, on days when the US dollar is in steep decline, gold will almost never rally more then $4-$6. Only twice in 2 years has this happened and on the day following these events gold went into a free fall.

Now my question is this, on the COT reports, I have noticed that on days when gold rallies on bad US economic news, when gold gets to this $4 to $6 rally, it is almost ALWAYS Goldman Sachs who becomes a huge seller instead of a buyer like nearly everyone else. Why do you sell so enormously on days when others are buying? In my mind, it makes no sense. Would you be able to answer this question for me. I would really appreciate it.
Wendell Leytham

Hi
We can't comment on our trading strategies, or anyone else's. But it is important to recognize that the vast majority of trading which is reported under the rubric of Goldman, Sachs & Co., our broker dealer, is in fact undertaken on behalf of clients, i.e where we act as a dealer for someone else's trade. Only that institution could explain why they are trading in a particular way.
Regards
GS Investor Relations
gs-investorrelations@gs.com

Those clients being The Gold Cartel and allies, of course.

Anecdotal gold supply input from Canada:

Talked to a bullion seller today who said a customer informed him there was a 3 week wait for receipt of Maple Leafs from Bank of Nova Scotia in Vancouver (Canada’s primary retail gold supply bank). The Bank claims they have to wait for delivery from Toronto. This type of wait sounds too long for just shipment. Maybe some of your other readers can confirm possibility of tightness for ML’s.
Cheers,
Dave

On Indian gold demand, which John Brimelow has so ably reported on over the years. His work blows away that of everyone else in the mainstream gold world:
[Business India]: New Delhi, Oct 20 : MMTC Ltd, India's largest bullion trader, has been witnessing robust growth in its gold handling business since rules were eased in February allowing bullion traders to directly import.

Prior to February, the government allowed import of gold only through 17 designated agencies, apart from exporters who could source the yellow metal for value addition and overseas trade.

"Despite expectations that the bullion traders would opt to source gold on their own, MMTC continues to play a big role in import of the precious metal. We currently have 25 percent market share in India," said Sanjiv Batra, director of marketing in MMTC Ltd.

"As against 82 tonnes of gold imported by us in 2003-04, this year from April to September we have sourced 81 tonnes of gold. We expect to double this during the fiscal," Batra told IANS on the sidelines of a week-long Festival of Gold hosted by MMTC.

The largest consumer of gold, India's overall imports during the last six months has been 330 tonnes…..

"Instead of investing in bank saving, people are again investing in gold for better investment returns. This is also seeing an increase in demand for gold," said Batra.

In fact, the imports have risen from 418 tonnes in 2002-03 to 569 tonnes in 2003-04 and it is expected to be much more this year, considering that in the first six months the imports have been 330 tonnes.

-END-

Some thoughts from Down Under:

G’Day Bill,
There appears to have beena "fundamental" change in the Markets last night/yesterday, "Times are a changing"??!!

Strong move in commodities last night, with the US$ Index , Dow etc showing extreme weakness.

Web links:

http://quotes.ino.com/
http://www.goldsheetlinks.com/kitco.htm
http://www.gold-eagle.com/editorials_04/ackerman101904.html

The critical support level for the US$ Index is 84.8, and the Dow at 9840 and 9600.
The critical resistance for Gold is US$ 434.
If and when either of these indices breaks, then "it" might be "on" for one and all. (Pigs can also fly??!!)
The other commodities are in a stage of consolidation, and therefore Gold should take priority in terms of project identification and pegging documentation.
Och baye,
Haggis

At least the gold shares closed on an upbeat note, finishing on their highs. The XAU closed at 101.82, up 2.87, while the HUI jumped 8 to 229.46. A move above 230 should send this index off to the races.

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

This is the third time gold has traded up towards $430 over the past year. The other two times, the price was pounded lower as The Gold Cartel held the fort by capping those rallies and then mounted a vicious counter-attack. Until they are sent to the cleaners with $430 taken out decisively, we will not be out of harm’s way. They must be buried. Let’s hear it for Murphy’s Law.

GATA BE IN IT TO WIN IT!

MIDAS

October 20 - Gold $423 up $3.10 - Silver $7.31 up 17 cents

Go GATA, Go Red Sox, Go Gold

The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty...Winston Churchill

GO GATA!!!

The following is from my 10/11 MIDAS: "Still a Red Sox fan. Love my old park. Unless you are a Yankee fan, hard not to root for the Bosox? Only question for me is who wins the day first? The Red Sox finally win the World Series again, or GATA defeats The Gold Cartel."

Only few days ago the situation for both the Red Sox and GATA was bleak. The Bosox were down 3 games to zip and The Gold Cartel had stopped gold in its tracks at $420 with the specs mega-long and almost everyone predicting a "Commercials" victory – because they always win (like the rich and powerful Yankees).

What a difference a few days make, days which are so supportive of the old adage, "that’s why they play the game!" The Red Sox, down 3 zip, have a chance to pull off the unimaginable if they beat the Yankees in tonight’s 7th game final of the American League playoff. The GATA ARMY has a chance to win the day versus the heinous Gold Cartel if gold takes out $430, surely thought unimaginable by cabal forces only last week.

That said, the orchestrated gold close today engineered by the cabal forces was dreadful.

Close, But No Cigar. In recent days I have mentioned what we needed was a $3 to sharply higher opening and then go from there to really get going. Got the $3 opening today to the penny, followed by almost perfect cooperation from outside market forces. Result: the aggravating Gold Groundhog showed up again with more of the same blatant Gold Cartel manipulation to cap the price of gold. Only the BRAIN DEAD could fail to spot this coordinated intervention.

Gold closed near its lows of the trading session and $2.60 off its highs even though:

*The dollar closed at 86.43, down .50, while the euro gained .68 to 125.84
*Crude oil soared to $54.93 per barrel, up a mere $1.64.
*The CRB advanced closer to making 23-year highs at 227.62, up 2.21
*World stock markets were much lower, as was a sharply lower US stock market before the PPT showed up.

From Houston’s Dan Norcini:

Hey bill:
See attached. Shows how the "gig" is played attempting to use the technicals to run the specs.
Best,
Dan

THAT, is THE CABAL in action.

The Gold Cartel is waiting for the dollar to rally a nano-tick to take gold back down below $420 and away from $430 danger. Bottom line: same stinking analysis. Until The Gold Cartel is blown up, gold goes nowhere. $423 gold IS nowhere after all these years, some $300 per ounce lower than where it should be.

The Working Group on Financial Markets and Gold Cartel were able to stave off disaster today by stopping the gold advance and propping up a sinking stock market. They have been messing around in US financial markets far too long and set up the most extraordinary imbalances. While one could say they prevented defeat today, their fate is sealed. The outcome of this Orwellian misdaventure is going to end VERY badly. They will not be able to control gold too much longer and the US stock market is going to fall apart as their financial resources are exhausted.

The gold open interest rose 2979 contracts to 305,2225.

A wild day in the silver pits. Silver popped early to the tune of about 15 cents after the opening, mega-short Morgan Stanley then bombed it, taking silver down on the session. Big mistake. Instead of attracting other sellers, the floor and other buyers ganged up on him. In a blink, silver was up almost 25 cents. Did I see it occur? No. Both Kitco and TheBullionDesk were too overloaded to obtain quotes.

The silver open interest gained 1479 contracts to 111,307. While the gold open interest is back to its highs of earlier this year, silver is more than 10% off its old highs. Plenty of room for the specs to pile in at these levels.

From the MIDAS last night:

An eerie message my friend Mahendra sent to his subscribers well before Comex opened:

Gold prices will then move in an upward direction from mid Tuesday till wednesday. DURING THESE TWO DAYS a big player will enter the market or big money will shift in metals from either the stock market or oil.

Why did gold jump today? According to the floor, "Some mysterious buyer showed up."

Something else eerie here, which I will explain tomorrow.

***

Here’s what happened. No more than 5 seconds after I had written about what Mahendra had sent out, he called me out of the blue. I almost fell off my chair. When I told him his ears must have been burning, he chuckled, saying this coincidence confirmed what he had sent out. It was the same sort of comment he made when we walked across the street in Dallas after our meeting/cocktail party for him in Dallas last May and the heavens opened up with rain. He said then that the deluge of rain confirmed what he came to Dallas to talk to us about.

Why did I save this? Because, like many ex-pro athletes, I am a bit superstitious and did not want to jinx things for today.

Spoke with Mahendra after the close again. I was ticked at today’s price management. He was laughing. Says the shorts have, and are, trapping themselves this time (taking the bait like animals do in the jungle). By the way, Mahendra’s calls on the markets continue to astound. Love to get him some media attention. If anyone out there can help, would be a great story for journalists of all kinds. They can go to:

http://www.mahendraprophecy.com/

Some key charts for your review:

December gold
http://futures.tradingcharts.com/chart/GD/C4

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

December dollar
http://futures.tradingcharts.com/chart/US/C4

Dollar weekly
http://futures.tradingcharts.com/chart/US/W

MIDAS

Appendix

http://www.washingtonpost.com/…004Oct18?language=printer

Bearish on Uncle Sam?
As Foreign Investment Shows Decline, Economists Keep Watch

By Jonathan Weisman and Ben White
Washington Post Staff Writers
Tuesday, October 19, 2004; Page E01

NEW YORK -- On Sept. 9, as it must frequently do, the U.S. government turned to Wall Street to raise a little cash, and Paul Calvetti bet that demand for $9 billion worth of long-term Treasury bonds would be "huge."

But at 1 p.m., as the auction opened and the numbers began streaming across his flat-panel screens, the head of Treasury trading at Barclays Capital Inc. slumped in his chair. Foreign investors, who had been voraciously buying Treasury bonds, failed to show up. Bond prices cascaded downward, interest rates rose, and in five minutes, Calvetti, 38, who makes money by bidding on bonds at one price and hoping market demand lets him quickly resell them at a profit, had lost $1.5 million.

"It's amazing," he gasped, after the Treasury Department announced that Wall Street traders, not foreigners, had been left to buy virtually the entire auction. "I don't think I've ever seen this before."

The most recent auction of 10-year Treasury notes may have been a fluke, a momentary downturn in one aspect of the massive world market for U.S. government and private-sector bonds, stocks and other securities -- a market so large and diverse that it has long been the world's safe haven. But a rash of new data, including Treasury Department figures released yesterday showing a net sell-off by foreigners of U.S. bonds in August, has stoked debate over whether overseas investors -- private individuals, institutions and government central banks -- are growing dangerously bearish on the U.S. economy.

It is a portentous issue. Foreign governments and individuals hold about half of the $3.7 trillion in outstanding U.S. Treasury bonds, for example, and the government has been heavily dependent on continued overseas bond purchases to finance the roughly $1 billion a day it has to borrow to pay its bills. Foreign lending and investment are also needed to finance the country's roughly $50 billion monthly trade deficit, while foreign capital has been a key prop to U.S. stock prices.

A turn in overseas attitudes toward the United States could ripple deeply through the economy, depressing the market, raising interest rates and pushing down the value of the dollar.

In August, foreign private investors actually sold $4.4 billion more in Treasury bonds and notes than they bought that month, the Treasury Department said yesterday -- the first time in a year that net foreign purchases were negative. That followed a 20 percent decline in July that shrunk net foreign purchases to $18.3 billion.

Bond purchases by foreign central banks also dropped sharply in July, falling 76 percent, to $4.1 billion. A rebound in August brought them back to $19.1 billion. The recovery was timely: Without it, the dollar may have taken a serious hit, said Ashraf Laidi, chief currency analyst at MG Financial Group in New York, who headlined yesterday's client newsletter, "Foreign Central Banks Save Dollar From Disaster."

Foreign purchases of stocks are off as well, going from net purchases of $9.7 billion in July to a net sell-off of $2.1 billion in August. Over the past 12 months, private foreign investors have purchased a net of $17 billion in U.S. stocks, compared with $30 billion in the 12 months before that.

Measuring the combined purchase of stocks, corporate bonds and government debt, overall capital flows into the United States fell in August for the sixth straight month.

Treasury officials said such data should not be overanalyzed. Net purchases of U.S. government securities may have been low in August, at $14 billion, for example. But foreigners still bought more than $807 billion in Treasury bonds, while selling $793 billion, in a month that is usually a slow one in financial markets, said Treasury spokesman Tony Fratto.

"These movements are taking place in a huge market," he said.

But the downward trend in capital coming to the United States is nevertheless worrying, some economists argue, with particular implications for U.S. government debt.

Foreign central banks and individuals rushed to finance U.S. government budget deficits over the past three years, buying $19.2 billion in Treasury bonds in 2001, $118 billion in 2002, and $279 billion in 2003. Lending from foreign governments in particular exploded last year -- to $109 billion, up from $7.1 billion in 2002.

The fear among economists is that those foreign lenders may grow concerned that their portfolios are too swollen with dollar-denominated assets.

The Chinese -- whose Treasury holdings have tripled since 2000, to $172 billion -- have already begun buying more euro-denominated assets, said Rebecca Patterson, a senior currency strategist at J.P. Morgan Chase & Co.

Earlier this year, both China and India diverted tens of billions of their dollar holdings to domestic projects, with China pumping $45 billion into its banks and India devoting $15 billion to infrastructure projects.

"China and India are no longer committed to open-ended dollar buying," Stephen S. Roach, chief economist at Morgan Stanley, warned clients yesterday. "At the margin this shift is negative for the dollar and for U.S. real interest rates."

As the big players begin to invest dollars domestically, the U.S. government is becoming more dependent on smaller nations, like Singapore and Korea, which may be quicker to sell off Treasurys and could demand higher interest rates, said Sung Won Sohn, chief economic officer at Wells Fargo Bank.

"The U.S. government will always be able to raise money -- well, at least in the foreseeable future," he said. "The question is, what will you have to pay and who will you get it from?"

The U.S. dependence on foreign capital concerns economists on both ends of the political spectrum. In a speech this March, Lawrence H. Summers, a Treasury secretary in the Clinton administration and now the president of Harvard University, warned of "a kind of global balance of financial terror," in which the economic well-being of the United States depends on the actions of foreign governments.

"There is surely something off about the world's greatest power being the world's greatest debtor," he said. "In order to finance prevailing levels of consumption and investment, must the United States be as dependent as it is on the discretionary acts of what are inevitably political entities in other countries?"

Desmond Lachman, an international economist at the American Enterprise Institute, writing for the conservative Web site Tech Central Station, cautioned that foreign central banks "now have considerable ability to disrupt U.S. financial markets by simply deciding to refrain from buying further U.S. government paper."

Patterson said that is not likely, comparing the situation to "a Texas standoff with two cowboys. . . . If Asia stops buying, the market will get wind of it very quickly, and they will rush out the door. And Asia will be hurt very badly."

To John Williamson, a senior fellow at the Institute for International Economics, that is cold comfort. The Chinese and Japanese central banks may maintain their huge reserves for defensive reasons, he said, but a smaller player, like Brazil or Singapore, could try to unload its dollar reserves, triggering a global sell-off. Like a mouse in a circus, even a bit player could cause the elephants to stampede.

"It's absolutely true that it wouldn't be in the interest of the world to do it, but any one country might think, 'I'll beat the crowd and diversify first,' " he warned. "I think that's the more likely scenario."

The John Brimelow Report

India: Connolly

Tuesday, October 19, 2004

Indian ex-duty premiums: AM $7.42, PM $7.50, with world gold at $418.15 and $416.90. Very ample for legal imports – this is true for all the cities Reuters reports. The rupee firmed to a 3-month high today because of foreign portfolio inflows: this facilitates gold imports.

Reuters carries the usual story from India today, citing India bullion dealers moaning about prices. Higher rupee prices certainly will constrain off take and increase scrap supply, especially in the short run. But it is significant that one of the most vociferous complainers noted that

"…jewellers had bought heavily last week when gold hovered around $414 an ounce"

which sheds much light of world gold’s refusal to fall below $414.90 in today’s very early morning sell-off attempt.

India of course generally acts as a stabilizer in the global bullion market, but this role has been accentuated recently. India is an oil-poor country; oil is the largest import item (gold is the second). This creates the situation, as today, that soft oil prices intra-day strengthen the rupee, and improve Indian bids: a paradox western dealers seem yet to grasp.

TOCOM opened today to find world gold some $4 below Japan’s previous close, $1 of which was due to selling after the Comex close. Although Mitsui-London asserts the public was a buyer, Mitsubishi reports virtually static Member shorts; open interest fell the equivalent of 1,551 Comex lots. The active contract closed down 13 yen and world gold went out $1.40 below the NY close. (NY yesterday traded 38,328 contracts; open interest rose 2,375 lots.)

In the words of UBS:

"Yesterday in New York gold ran into decent selling interest around the $420 level from a mixture of profit taking and speculators initiating short positions…triggering speculative selling all the way down to $417.00. Although the metal managed to stagger up to $417.75, this was only a temporary respite and further selling saw the metal base at $416.50 offered where the market closed."

A view seconded by ScotiaMocatta:

"Dealers were noted offers pushing the price back to the 418.50 level where it spent some time until locals decided to give up on their existing long positions. The metal gave back further ground, falling to the session low of 416.00/416.50 where it was met by light physical buying."

Exactly for whom the Dealers are acting for remains mysterious: for the third week running, the ECB announced a sale by one of its captive Central Banks, but the amount (less than 2.5 tonnes) is simply not enough to account for the powerful selling seen around $420.

On a pleasanter note for gold’s friends, it does appear that UBS was right in sensing short selling yesterday. The explosive $4 surge on the Comex open supports this view: as does the blatant effort to force gold down on ACCESS trade pre TOCOM last night – what kind of seller activates in the thinnest time of gold’s 24-hr day? Reuters quotes "a floor broker" this morning:

" "I think we saw a big short position in the market cover after we broke back above $419.00/50."."

Mitsui has been talking for a couple of days about a large buyer of Feb 400 puts.

Commercially-motivated short selling usually suggests a low in the short-term gold cycle.

AIG’s Bernard Connolly has produced a mind-numbingly complex discussion of gold with the congenial observation:

"the sudden change in the Fed’s stance at the end of 2000 began a period in

which market belief in the omniscience and omnipotence of the authorities has weakened again. PT 10 19In consequence, gold began rising in terms of the major fiat reserve currencies (USD, EUR, JPY, GBP, CHF). The current position, signaled by gold price movements, appears to be one in which "something has to give" soon: either central banks around the world succeed in "normalizing" interest rates or their inability to do so becomes more apparent, increasing the attractiveness of gold vis-à-vis fiat currencies."

JB

CARTEL CAPITULATION WATCH

The PPT really took a beating today. With decent quarterly reports last night from IBM and Texas Instruments, the US stock market took off early. Then, with Eliot Spitzer lurking everywhere and having the nerve to want Wall Street be honest in its dealings with the American public, the market took a dive, fearing Spitzer would uncover just how corrupt and anti-mainstream public this crowd really is.

I am sick of hearing how it is only a few bad apples from executives who show up on CBNC. For crying out loud, countless numbers of industries have been lambasted for the corrupt practices the past three or four years. It seems to never end.

Course the one which no one can see any corruption in is the bullion dealers in the gold industry, the same dealers who continue to be implicated in scandals in so many other industries. Mark my words on this one. We have a ticking time bomb when it comes to the gold world crooks.

The DOW, after roaring above 10,000, reversed course and closed near its lows at 9897, down 58. The DOG did finish on its lows, 1921, down 14.

A lot of pertinent news today:

18:08 Semi book/bill ratio 0.96 in September vs First Call 0.98
August was 1.01, revised higher from 1.00. The three month average of bookings fell (10.0%) to $1.36B; billings (5.2%) to $1.42B.

07:45 UBS chain store sales index (0.2%) in 10/16 week vs +0.5% in prior week
* * * * *

08:30 September CPI reported 0.2% vs. consensus 0.2%; ex-Food & Energy reported 0.2% vs. consensus 0.2%
Prior CPI unrevised at 0.1%; ex-Food & Energy unrevised at 0.1%.
* * * * *

(It’s good know energy prices are so tame)

08:30 Sept. Housing Starts reported 1.898M vs. consensus 1.95M; Building Permits 2.005M vs. consensus 1.95M
Prior Starts revised to 2.02M from 2M; prior Permits revised to 1.969M from 1.952M.
* * * *

08:56 Redbook chain store sales index (0.8%) in October through 10/16 week vs September
This is unchanged from last week's (0.8%) reading.
* * * *

09:00 Bank of Canada raises overnight benchmark rate by 25bp to 2.5%
* * * * *

11:06 Brokerage firms leveraged to derivatives trading lower
We note JPM, particularly, BSC, GS and C are trading lower on unconfirmed speculation that NY AG Spitzer may be focusing on the derivatives market in some sort of regulatory capacity. Unclear as to what type of regulation or scrutiny is being proposed, but that is not stopping the rumor mill, especially in light of the NY Post's report that health insurance may be next.
* * * * *

11:27 Financials move lower in sympathy with derivatives speculation
We note the unconfirmed speculation involving Spitzer and derivatives (see 11:06 comment) has had a negative impact on the financials, as noted by the decline in the BKX index, which has moved to 97.37 from an intraday high of 98.83 as of 10:06 ET. FNM and FRE, also heavily leveraged, have also moved lower.
* * * * *

U.S. Insurance Stocks Plunge on Concern About Spitzer Probe

Oct. 19 (Bloomberg) -- The plunge in U.S. insurance stocks widened to include companies such as UnitedHealth Group Inc. and Humana Inc. on concern New York Attorney General Eliot Spitzer's investigation of the industry will drag down profits.

Shares of Marsh & McLennan Cos., the insurance broker sued by Spitzer last week, extended its decline, slumping as much as 10 percent. The New York-based company lost about half its market value in the past four trading sessions. Spitzer accused Marsh of rigging bids and steering clients' business to property and casualty insurers that paid it the most fees.

MetLife Inc., the second-largest U.S. life insurer, and UnumProvident, the biggest U.S. disability insurer, said they received new subpoenas from Spitzer, raising the possibility that the probe is extending to sales of employee benefits such as life, disability and health insurance.

``It's hazardous to touch these stocks right now,'' said Thomas Wille, who oversees the equivalent of $200 million in U.S. stocks at Verwaltungs-und Privat-Bank AG in Zurich. ``Basically the motto is: `If Spitzer is around, sell.' Who needs the aggravation?'' …

-END-

Chuck checks in:

Bill:
I think that the market is ready to go. We might have an interesting close. I don't think it's going to hold up until the elections.

It seems as thought the cancer is spreading. Today Cigna dropped sharply, and looking at the charts, I can see the possible beginning of a rolling over of the other financial shares (banks and brokerage houses.) Since the financial stocks now comprise nearly 25% of the S and P averages it is certainly something to monitor closely. Even though there might be a correlation to commodities and some other factors, the primary driver behind gold, in my opinion, is the eventual fracture of the paper system, with its unserviceable debt and derivatives.

The apparent corruption in the latest scandals is not just an insurance phenomenon. You can be certain of that. If it can occur in a stodgy sector like insurers, then it certainly must be happening in other financial areas where there are more variables. Given the declining employment and the inability to service individual and corporate debt, one can assume that there are currently many desperate attempts secretly going on to keep the game going. And, on deck and batting cleanup is the bubble of bubbles, the insane world-wide real estate market. Because of the ramifications that will touch more people than even the dot-com mania, the real estate demise will be catastrophic.

Jesus said, "For those who have ears, let them hear." It is apparent that the complex with all of its lies and deceit is now cracking. Out of this will come a distrust in the current financial system that will continue to grow, and a flight into something immutable and out of the reach of the corrupt financial architects (gold) will eventually increase exponentially. Stay the course! Don't be shaken by the near-term manipulating of the gold and financial markets. There is a historic storm just on the horizon, and this event will unfold in plain view not just behind closed doors of the captains of industry. Chuck

On China and inflation:

Bill;
Guy I've known for years [based in London] in the shipping business for 30+ years contacted me yesterday. He was telling me about the state of the nation in his business. Here's [verbatim] a rundown of what's going on 'real time' from his perch in London England - a few highlights:

-Greek interests just last week paid 125 million on a 'resale' VLCC (tanker), 25 million more than record 100 million set two weeks ago for a brand new ship [newbuild]
-one year ago the same ship would have sold for approx. 60 million [increases largely attributed to increases in costs of steel - China]
-3,400 ships on order world wide, yards that build them are booked solid till 2007-2008 [all China related again]
Sectors [different classes of ships] trading within the Shipping industry:
Chemicals [transport] starting to Boom
Reefers [frozen goods] spotty but tightening
Car Carriers up & building
Forestry, spotty
Ferries, spotty
Handymax - steady under Panamax
Tankers - Volatile to the point of being dangerous
Cruise - big orders coming out of Europe
Engines for ships are in tight supply, prices rising on everything - Volatile as all get out
(Profiteering), some yards make nothing.....
When this crashes it will be a lot of high priced floating steel, but ports are congested in UK & LA

Thought you would find this interesting. Based on this assessment, anyone suggesting China might be slowing down at this point is likely as reliable as the 'clowns' that claim we have no inflation.
best,
Rob

On Chinese gold demand – no clue on this one, yet food for thought:

Hi Bill.
In yesterday’s John Brimelow report, he said:

"Shanghai ... is showing sharply increased [gold] discounts, in the $2-$3 range. Why China should show these discounts, in contrast to everywhere else in the world including eastern Asia, is an interesting question."

In other words, gold in Shanghai is being sold to the public for roughly $3/oz below the world market price. That seems reasonable to me, because the Chinese authorities, in recent years, have been creating vast quantities of yuan out of thin air, using them to buy
dollars in the open market, and then using the dollars so acquired to buy U.S. Treasury bonds. Two problems have resulted:

(1) By creating lots of yuan, they have boosted their domestic money supply, and now domestic prices in China are rising rapidly.

(2) By accumulating huge dollar balances, stored in the form of T-bonds, they have rendered themselves vulnerable to huge losses when the dollar begins to fall against the yuan, as it eventually must.

My guess is that the Chinese authorities are attempting to prevent further growth in unwanted dollar balances by using many of the incoming dollars to purchase gold, and that they are reducing the supply of yuan in circulation by turning around and selling the gold to private Chinese citizens. (A Chinese gold dealer pays the Central Bank in yuan when he buys gold from them, thereby removing those yuan from circulation.)

The reason for the discount, by this hypothesis, is that the Chinese authorities want to take yuan out of circulation at a faster rate than Chinese gold demand will support without the discount. In other words, the discount is a tool which the Chinese central bank is using to
control the rate at which yuan are taken out of circulation. Just as, when the Federal Reserve wants to take dollars out of circulation in the U.S., they sell T-bonds at a discount (known as interest), so when the Chinese Central Bank wants to take yuan out of circulation, they sell gold at a discount that serves the same purpose. Thus the purpose of the gold discount is to get the Chinese public to take the quantity of gold the Chinese authorities wish to sell.

If the above hypothesis is correct, then the Shanghai gold discount reflects unadmitted gold purchases by the Chinese Central Bank--purchases that will not show up on their books because the gold in question is being immediately offloaded into private hands.
Mitchell Jones

GATA’s message is gradually filtering out there:

I thought you would enjoy seeing this write up using GATA's findings. It is today's market commentary from a San Rafael commodity trading firm that has been soliciting me for business. Interesting how the GATA story is permeating into various out of the way places.
Best regards,
Jim

10/18 Currently the only short term force holding Gold down is the official central bank selling. The question is "how much do they have that they are willing to sell?" We believe that the widely accepted claim in the amount of 33,000 tonnes is, in fact, not true. We believe that as much as 15,000 tonnes was sold in forward contracts through 2001. This information will soon be updated with the BIS Triennial Survey data in November of this year. It will be interesting to see what turns up – or what doesn’t.

-END-

Freeport McMoran:

10:25 FCX comments on production for Q4 and for 2004
FCX, the owner of the world's largest gold mine, said Q3 profit fell 40% as copper and gold production declined. They operate the Grasberg mine in Indonesia which is the biggest gold mine and second biggest copper mine in the world. Output this year will be 1B pounds of copper and 1.45M ounces of gold (down from last year's levels of 1.3B pounds of copper and 2.5M ounces of gold). Q4 sales will be 410M pounds of copper and 625K ounces of gold (up from 163.5M and 273K respectively a year ago). Management indicates on the conference call that copper inventories are low and are dropping creating a tight environment. Demand is strong and any supply interruption would create very interesting situations given prices of copper at $1.30 and gold at $400. –END-
* * * * *

A staunch GATA supporter is on the right track:
Klondike Star Reports 47g/t Gold From Parallel Trenches At The Nugget Zone

SEATTLE, October 19, 2004 (BUSINESS WIRE) -- Hans Boge, President of Klondike Star Mineral Corporation (OTCBB:KDSM) is pleased to announce that grab sampling of previously untested trench intervals at the Nugget Shear zone has assayed 47.57 g/t gold, and 11.38g/t gold (see conversion table below) from a trench 50m west of and parallel to the trench identified in the press release from October 13, 2004 ("Klondike Star Reports 42.5 g/t Gold Over 4m From The Nugget Zone"). – END-

The gold shares continue to muddle around. They can’t seem to stand prosperity. The XAU gained .56 to 98.95, while the HUI could only manage a .10 plus session to 221.46.

The perfect storm continues to foment on the horizon. It could easily turn into a Category 5 Hurricane, one which blows the heinous Gold Cartel out of the water. The combination of a sinking dollar, high oil price, breaking down stock market and surging physical gold market just might do them in. If any of this combo kicks in tomorrow morning, gold and silver SHOULD BE off to the races.

Something else could do the bums in too. The Gold Cartel has been King of the Hill for nearly a decade. What Lola wanted, Lola almost always got. There is a good chance there are huge new buyers out there who smell blood in the water as far as the cabal is concerned. All they would have had to do to know how vulnerable The Gold Cartel is would be to have:

*Learned what GATA knows, all of which is in the public domain. If so they know how little available central bank gold the cabal has left to keep the price from soaring.

*Read the Sprott Asset Management Special Report titled, Not Free, Not Fair: The Long-Term Manipulation of the Gold Price

*Read the speech by Oleg V. Mozhaiskov, Deputy Chairman of the Bank of Russia at the LBMA Conference on June 4, 2004.

Maybe this is why we have received reports of massive Chinese and Russian gold buying entering the market?

Gold, silver and the shares remain THE historic investment opportunity of a lifetime.

GATA BE IN IT TO WIN IT!

October 19 - Gold $419.90 up $4.10 - Silver $7.14 up 19 cents

Gold And Silver In Surprise Surge/Cabal In Serious Trouble?

"The press is the hired agent of a monied system, and set up for no other purpose than to tell lies where their interests are involved. One can trust nobody and nothing." --Henry Adams

Gold came in slightly higher this morning as the dollar extended its losses against most major currencies, especially the yen (108.40 on the close). After a slew of US economic reports were released, it traded in a volatile, yet very tight, range above the unchanged mark. Each time the cabal forces tried to knock it down to influence the mega-long specs to pitch their positions, gold popped up 30 to 60 cents. THEN, it TOOK OFF, leaping higher and taking out $420 with a move to $420.40 (without any fluctuation in the dollar).

After selling off, gold gradually crept its way up, closing near its highs, but not making new ones. What is striking and most important is the change in pattern. Gold Groundhog crawled back in his hole and was not seen all day long. Of significance was gold rallied sharply without any outside influences, charging ahead on its own, while leaving many traders a bit stunned.

Our floor sources LOVED the buying which showed up in both gold and silver on the rally. Most of the time when gold and silver are bullied by funds, etc., those same sources hate it. Not today. Right off the bat, they liked what was going on and the strong close confirmed their early analysis. Some other notes from our top quality floor sources:

*Last week some of the cabal types bought the Feb 400 puts and sold silver. They were stuffed. Our guys on the floor went with them last week, but not yesterday, smelling a trap.

*There has been a good amount of call buying the past week to ten days that is gradually building.

An eerie message my friend Mahendra sent to his subscribers well before Comex opened:

"Gold prices will then move in an upward direction from mid Tuesday till wednesday. DURING THESE TWO DAYS a big player will enter the market or big money will shift in metals from either the stock market or oil."

Why did gold jump today? According to the floor, “Some mysterious buyer showed up

Something else eerie here, which I will explain tomorrow.

The battle for $420 gold:

http://futures.tradingcharts.com/chart/GD/C4

The gold open interest rose 2365 contracts to 302,246. It’s the specs and the physical market versus the crooks.

As well as gold performed, silver was the star of the trading session. It exploded coming out of the box, set back, and then made new highs late in the day. Morgan Stanley’s man is still mega-short and there is a strong possibility he is going to get his head handed to him. The bad news for Morgan Stanley is the entire floor knows how vulnerable their trader is. Should silver take out $7.25, we could see a stampede to the upside as he attempts to cover and the floor tries to bury him.

The silver open interest moved up another 1169 contracts to 109,828.

Silver didn’t give the shorts any real chance to cover this morning as it left a 5 cent gap from last night’s close. More often than not, especially today, a gap such as that would have been filled. As such, silver remains explosive:

A very healthy December silver
http://futures.tradingcharts.com/chart/SV/C4

Not ONE of my colleagues and friends (save Samex CEO Jeff Dahl) expected gold and silver to rally today. Put me in the same camp. Year after year The Gold Cartel has attacked on days like this with gold and silver so vulnerable to spec liquidation. At the same time, I would like to put some consistent and recent MIDAS thoughts back on your front burner:

10/14 "As these crooks, colleagues of AIG, capped gold during this session, the odds are for a trouncing tomorrow. However, I am still betting against those odds in the near term. The reason is we already know The Gold Cartel will always be up to their old tricks until they are carried out. My guess is that will occur when they least expect it. Surely, they are all systems go at the moment as their market manipulations have worked for so long. However, with collective pressure building and building on them because of the surging oil price, dollar weakness, stock market softness and a stout physical bullion market, they are likely to get caught with their pants down."

10/15 "What to think here? Sure hard to say. We know what The Gold Cartel wants to do. Can they pull it off? I think not this time (probably the kiss of death for our camp). The reason is the physical market. JB points out the Indians are willing to buy at these levels and they need a lot of gold. Then, we know the Chinese are out there buying in size. Throw in some substantial Arab oil money on top of that and it will make the bad guys' task of burying the specs somewhat difficult."

10/18 "Sure we know The Gold Cartel is going all out to prevent gold from moving higher, wants to kill it again, and the odds are in their favor. However, we also know this is just how gold will look before the price goes berserk as the crooks loose their decade-long grip on this way undervalued market. A Commercial Signal Failure is coming, whether it is on this open interest build-up, or on the next one."

The jury is still out on how the battle for $420 will resolve itself. Yet, today’s in your face move up with so many in the gold world expecting gold and silver to be trashed, was a HUGE plus. I still believe we need a substantially higher Comex opening and then a run to break out from here. NO REASON we can’t get one right now.

Supportive factors which should have blown gold through $430 already:

*The dollar has taken out key 87 support and completed a massive top. It closed at 89.93, down .22.

*Crude oil remains above $50 per barrel. It finished the session at $53.29, around last nite’s late finish.

*A weakening US stock market having to deal with a soft US economy and increasing scandals in and around the Wall Street sewer.

*A very firm physical market with buyers willing and needing to pay up. These buyers include the Chinese, Russians and Arabs.

One other positive is how little investor interest there is in the gold and silver markets with prices where they are. The Gold Cartel’s droning down of the precious metals has taken its toll and, of course, set up this extraordinarily bullish situation.

The Café Sentiment Indicator is only around a 4 or 5. Membership is going fine. However, new trials and hits on the site are around the same as when gold was $120 LOWER. Unreal the lack of excitement over gold and silver emanating from the public domain. Of course, this is very constructive, as massive herd buying is till to come. Gold has been creeping up, only $13 from 19-year highs, and the public could care less.

The insightful Richard Appel explains to his subscribers some of the reasons behind The Gold Cartel’s success of keeping interest in gold so minimal:

F I N A N C I A L
I N S I G H T S

November 2004 Issue

Volume X Number XI

© October 17, 2004

A commentary on finance, gold
and international resource companies
by Dr. Richard S. Appel

GOLD AND GOLD STOCKS
APPEAR READY TO SOAR

….I digressed, again. A number of unusual events have repeatedly occurred in the gold market for at least the past few years. These go against all of my experience following the gold market, as well as the laws of probability. First, gold has rarely traded higher than $6 on any given day. Each time that it begins a session sharply higher or trades to this level above its previous closing price, a substantial amount of selling has appeared. Bill Murphy (Gold Anti-trust Action Committee, GATA.org) was the first person to note these incredible recurring incidents. I sensed that something was wrong for quite some time prior to his observation, but it was his bringing my attention to it that first stopped me in my tracks.

He rightly pointed out that this action has helped prevent drawing undue attention to gold after it began its tortuous, rising, bullish path in 2001. Second, often when the great metal was either leaving a base or when it suddenly shot higher, it would meet a wall of selling. The last several days are a good example. Gold, after trading just over $6 above the prior day’s close last Friday, was not only stopped dead in its tracks, but it moved sideways on Monday, only to be whacked on the following day when it gapped down $6, before posting a $7 loss. In the old days, when gold exhibited an explosive break-out or a sharp run-up, the momentum typically followed through for at least several days before a set-back occurred. Now, almost like clock-work whenever gold trades strongly higher selling mounts, and the wind is immediately taken out of its sails.

Appendix

A change of pace:

Forget Unemployment, Think! By R.W. Steele© of PRE PAK PRECIOUS METALS

Am I the only one that gets tired of hearing all the whimpering about jobs, labor, unemployment and out-sourcing? It is a real pain.

It all starts in our modified slave system called school. Most teachers teach us how to work for someone else because they themselves don’t seem to understand that this country has actually thousands and thousands of opportunities that have nothing to do with working for someone else. It is almost a joke if it weren’t so serious. If you want to be an engineer, school is great. The key word is "want". The information in school is excellent but do not let it program you to work for someone else if you don’t want to.

Think! You really never have to have a wage or a salary. It is actually better not to get one, but that is another story.

In 20 minutes I could come up with 20 ways to do something that would pay me enough income to support a family. Do you really understand what this Constitution does for us?

Think! Stop hiding. We have the absolute right to fail as many times as it takes.

I could sell oranges or newspapers on a corner, I could sell fire wood on consignment, I could get a commission selling door to door, I could get an option to sell a business, I could teach English to the Spanish, I could teach Spanish to the English, I can learn any subject free at a library, any subject in the world and it is free, I could go (hitch hike if necessary) to any place in the country to do what I want to do, I could buy a piece of real estate for nothing down and resell it, I could start an airline or produce and act in a movie, I could find any kind of a problem and solve it and there are at least 10 problems on every block. There are thousands of boats bobbing at anchor deteriorating right now. See these things as opportunities. Solve one.

Think! You can live any place and do anything you want. You are free. Do you really know what it means? Use it.

A young boy was selling books on a corner and was doing extremely well. A man watching him was fascinated by the number of books he sold. He approached the boy and engaged him in conversation and commented that maybe if he went back to school and with his ability he could probably earn $100,000 a year. The boy looked at him and said," I’m making $250,000 now. Would you like to buy a book?"

Think! What does "Land of Opportunity" mean? Are they just words for other people?

How can you be lazy if you’re excited? How can you be in a gang or make a habit of drugs or drink when doing something positive makes you feel positive. If you’re black, white, orange, crippled, male or female it makes no difference unless you think it does in your own mind. It makes no difference. "Would you like to buy a book?"

Think! Let’s have some pride. We have a country that we could make great again. Think!.

The only way I can explain this conundrum:

*The Not Invented Here Syndrome is alive and well as far as these gentlemen are concerned.

*While they speak their own minds and often purvey contrarian views, they are very establishment oriented and don’t want to risk alienation from the establishment by validating GATA, whose name is mostly not allowed to even be mentioned by the US financial market press (not once in 6 years by the WSJ, Washington Post, Bloomberg and Barron’s).

*Too much work. In addition, the validation of the proof of the price-fixing requires a great deal of space, time and effort and is not easy to do with sound bite commentary.

Taking all of this into account, the reporting on what the gold market is all about these days is laughable. Gold may be the worst reported-on market in history. For example, the esteemed Richard Russell’s comments on the gold action Friday defy the common sense of Café members who know the real score. He wrote:

I want to write something about gold now. Here's the Dollar Index today breaking to its lowest level since last March. And what does gold do? Nothing. Why? What's going on?

People aren't looking at gold correctly. Gold is eternal money. Gold is the only money not a product of debt. Gold is pure intrinsic wealth. But when it comes to trading, as long as traders and speculators can make money buying and selling dollars or euros which pay interest, why should they speculate in pure direction by buying or selling gold. The answer is they shouldn't -- and they won't.

Wealthy investors don't buy gold because they believe gold will move higher. Even if gold moves higher these people aren't going to sell their gold. Wealthy people hold their gold until they're near death, and then they'll pass it on to their kids and their loved ones. Gold is wealth, paper money is a unit of exchange. Paper money does not hold its value.

Investors who have held gold for decades have learned this about gold. Gold can sit still for months, even years, and then it may make a huge move in a matter of months. And then it sits for more months or even years -- before making its next move.

In the 1970s gold sat on its fanny for years. Then in 1976 gold started up, and during 1978 and 1979 gold exploded higher. Following the early-1980 peak of 850, gold went into a bear market that lasted to July 1999, at which time gold hit a final low of 256. Gold hit a second n bottom in March of 2001 at a price of 257. From March of 2001 to March of 2004 gold rose from 257 to 436, a rise of 70%. Which is roughly where we are now.

So if you're buying gold here for a quick profit, forget it. You're buying for the wrong reasons. But if you're buying gold as a store of value, as pure wealth, that makes sense. You may sit with your gold for six months, a year, five years. Get used to it. At the end of five years your gold will still be wealth. The stock market may have collapsed, the dollar may be in smithereens, your house may have been destroyed by termites, your spouse may have left you -- but your gold will still be wealth.

Gold stocks are another story. Gold stocks are stocks. Many are leveraged vehicles. If the price of gold goes up, the mines' costs will stay roughly the same, but the profits of the mines will surge. So when you buy a gold stock, you're buying a different animal. Gold is eternal wealth. A gold stock is a speculation on that stock rising exponentially IF gold goes higher.

-END-

"What's going on?" Are you kidding me? Good grief!

On a different note, this Robert Prechter gold commentary doesn’t cut it either. Years ago he said something like if gold closed above $376, it would invalidate his analysis and he would turn very bullish. Then, I think his stop out point rose a bit to $409 or so? Ah, here is a bit on this – from John Brimelow’s twin brother:

Another bear digs in -- deep
By Peter Brimelow, CBS.MarketWatch.com
Last Update: 12:42 AM ET Oct. 22, 2003

………But Prechter does say that there's something odd about this market breakdown: the "incredibly long time" it's taken for the bears to come home to roost:

"Three hundred years of stock market data show nothing else like it. Extreme technical conditions that used to be reconciled in weeks have taken months, and those that used to take months have taken years."

Accordingly, he still allows as how the Dow might well get above 10,000.

"So the specific resolution of this environment remains open," he writes, "but the environment itself remains certain."

Something of the same is presumably going on with Prechter's gold thinking. He's long argued, breaking with his former gold bug allies, that gold is still in a primary bear market. Although, after it's over, he does expect an ultimate gold Gotterdammerung, with paper money becoming worthless. (See my Aug. 25 column).

However, Prechter has also long said that he would concede gold was in a primary bull market if gold rose above a certain point.

When I last checked, this certain point was around $380. But recently he's been saying he "will be comfortable" with his bearish interpretation of gold if the current rally "ends somewhere between here and the low 400s."

Hmmm.

-END-

"Odd" Mr. Prechter? Not at all. Not when you know what The Working Group on Financial Markets (PPT) has been up to. Not at all odd. It’s now A YEAR since your commentary and still nothing has changed.

With all due respect to the legendary Robert Prechter, he and I have spoken at conferences in New Orleans and Georgia for five years and he told attendees to be out of gold at every one of those conferences. The attendees all missed the gold bull market of the last three years if they went along with his analysis. Some of his latest below. Now, I am not trying to disparage either of these legendaries on their acumen, JUST on their pigheadedness about the real gold market story.

From Mr. Prechter’s latest:

An Interview by Chris Oliver, Money Editor, The South China Post

Q: Can the Federal Reserve prevent deflation?

A: No. We have a huge bond market of $30 trillion, which is debt already created. If bond investors came to believe that the Fed would begin printing money and throwing it around, what would they do? They would sell every bond they have got, which would lead to a decrease in the supply of credit because bond prices would fall and interest rates would rise. So there aren’t any alternatives to deflation.

Q: What will be the outcome of deflation?

A: The ultimate result is going to be a worldwide depression. There were deep depressions in the 1790s, the 1840s and the 1930s, and I think the next one is already underway. It started in 2001. We’ve had one or two every century, and we are headed into one now.

Q: Gold bugs say we are in an inflationary era and that this is backed by the rapid rise in the price of the yellow metal from $250 an ounce in 2001 to above $400 recently.

A: They didn’t say it at the low in February 2001, when gold was a buy at $250. The fundamentals were all bearish then, and even gold mines were hedging for further decline, which never came. Fundamentalist arguments don’t get you in at a bottom or out at a top. They often set traps so you’ll do the wrong thing.

Q: But doesn’t the gold rally predict inflation?

A: Think about this: Gold is trading exactly where it was in 1996 despite massive credit inflation over the past eight years. Why is that? I think the gold market understands the difference between credit inflation and currency inflation. A reversal in credit expansion . which is inevitable, will crush prices for everything, and the gold market knows it. The gold bugs. theory is that an increasing money, actually credit , supply should be bullish for gold and silver. But it hasn’t been bullish for 24 years, so why is it bullish now? Look, I might be wrong on my current outlook for gold. In 1995, in At the Crest, I called for the bear market to end about New Year’s Day of 2001, and it ended that February. So I’m somewhat conflicted. But that doesn’t mean that the bull’s arguments are any good. We have heard them at every gold top since 1980 and opposite arguments at the lows. People have a psychological imperative to come up with reasons to be bullish at tops and bearish at bottoms. Market analysis is a subtle and difficult craft. You can’t just look out your window and assume the obvious. That’s not to say the obvious never happens, but when it does, it’s luck.

Q: Many contrarian writers are at odds with your views on gold and deflation. How do you account for the discrepancy?

A: They believe that the 1970s will repeat. People in the early 1930s initially thought the .teens would repeat, but they didn’t. Many commodities have collapsed 30%-50% this year. Does that sound like runaway inflation to you?

Q; Despite your bearish outlook on metals, you still believe investors should own them?

A: In 1993 when silver got down to $3.50 an ounce, I said to go out and buy bags of silver as a long term insurance policy against the collapse of the banking system. In February 2001 at the bottom for gold, I put out a bullish analysis on it. Sure, you should buy the metals, when the time is right. Right now I think there’s a lot more money to be made being short the stock market.

-END-

From ABN AMRO (Australia) today:

Gold a beacon in the darkness!

Gold has firmed through the year in US$ terms, but we believe that more of the moving parts for gold support are turning positive and we remain firm bulls on the outlook for gold into 2005.

BOE US$ Index Gold bullion - inverted (US$/oz - RHS)

Source: ABN AMRO, Datastream

So if, like us, you think that the USD is going to struggle in 2005 and further weakness is to be seen, then gold is the place to be. Our bullish gold argument is not just dollar-related; indeed a number of issues lend weight to the argument:

Price elasticity. Demand is returning following the rise in the gold price. consumers are now more comfortable with US$400+/oz price.

Gold is being viewed as a platinum substitute. Platinum jewellery had a surge in popularity, but with the price at more than US$800/oz gold is taking back some of the market, with white gold becoming a popular substitute for platinum.

Gold remains popular as a store of wealth during times of geopolitical instability. Rather than diminishing, global terrorism appears to be moving from localised to more diffuse.

Central bank sales remain limited, with the reinstatement of the Washington accord to cap sales at 2500t and potential for the Asian central banks to increase gold reserves.

Production constraints (reduction). South African production has been under severe pressure because of the strong rand and mine development has been limited. Newmont forecasts a decline in its production from 7.4Moz in 2003 to 6.75-7.0Moz in 2004, and potentially lower in 2005/06.

Producer hedging remains unpopular with US investors and many boards, particularly in light of the issues faced by Sons of Gwalia earlier this year.

The season of demand is fast approaching. Chinese new year typically represents a period of solid demand, which could be augmented by the growing popularity (and accessibility) of gold purchases in mainland China

Potential for another oil price shock (or at least high oil-price-induced inflation). Weather-induced production curtailments are not predictable, but are generally recoverable. Specific acts of sabotage on the global supply of oil are arguably less predictable, with an indefinite period of outage, and the resulting market nervousness continues to exaggerate news flow.

-END-

A heads-up for interested Café members:

I did a video interview at the TORONTO Resource Investment Conference, which can be viewed at:

http://www.smartstox.com/interviews/gata4.html

-END-

London’s Peter Hambro received some nice press. Good to see:

Peter Hambro: He's never been to Harrow, he can carve a ham and he's struck gold in Russia

After 40 years in the City, the mining entrepreneur and scion of the Hambro banking dynasty has a tale or two to tell Jason Nissé
http://news.independent.co.uk/…es/story.jsp?story=572856

-END-

GATA’s Chris Powell’s doing:

Hi Bill Murphy
Good Morning Bill Re: Harmony/Goldfields Nice move, you got the news before it showed anywhere else. It showed as a breaking news item on comedy channel (aka CNBC) at 7:45am UK time this morning, but they put the offer at 1.25 new Harmony shares for 1 Goldfields share. This is incorrect. I attach a copy of the official Harmony announcement. As I am sure you know there is a lot of boilerplate stuff goes in these announcements, but the offer is based on respective share prices as at last Thursday\'s (14 Oct) close. Harmony closed at 84.41 SAR that day, which makes the offer for Goldfields shares worth 107.62 SAR, or $16.76 per share. However, Harmony shares fell 3% in US trading on Friday.
Best wishes Ian

The significance to me here is the Russian connection. They want as much gold exposure as they can get. Word came to me late today from my STALKER source (from his London bullion dealer connection) that Russia is expected to enter the gold arena in a very serious way and do some SIZE buying between now and year-end. That is a big plus, knowing what we know about the Chinese too. Let them take cheap bullion from the dummy Western central bankers and the crooks who are digging themselves into a big hole.

My most substantial holding, Golden Star Resources ($4.84, down 36 cents), was clocked today and continues to trade poorly. Seems panic set in that GSS will attempt to take over IamGold once more as a result of the Harmony/Goldfields development. The GSS takeover attempt was the main reason its share price began to act so poorly these past many months. "Not again," investors were thinking this morning. The facts:

*Golden Star’s "standstill agreement" prohibits them from doing so for next couple of years since they walked away from their bid.

*The reverse is more likely. IamGold, whose share price is very elevated vis-à-vis GSS as a result of the Goldfields bid, could go after Golden Star, especially if new funds come their way.

This is becoming more than aggravating. However, Golden Star should regroup and take off from here and become a leader again on the next gold share tear to the upside.

The gold shares were tagged as the XAU fell 1.80 to 98.39 and the HUI sank 6.11 to 221.36, but well off its lows of 218.98.

Short-term the outlook is extremely bleak for the price of gold and silver over the next couple of weeks. The specs are EXTREMELY vulnerable to the crooks because of the enormous spec long positions. Gold is a dead duck for now unless we have some sort of extraordinary event which blind-sides the creeps and they are blown out of the water when they least expect it.

Which is the main reason I won’t step aside - a point I cannot stress enough as it relates to recent MIDAS commentary. The downside in gold is probably $20 to $30 from here. The upside is $300/$400+. This is why I don’t mess around with getting in and out of gold and the shares at these levels. Rarely will investors see the opportunity which lies ahead, an opportunity with SO MUCH GATA evidence to support this line of reasoning.

Sure we know The Gold Cartel is going all out to prevent gold from moving higher, wants to kill it again, and the odds are in their favor. However, we also know this is just how gold will look before the price goes berserk as the crooks loose their decade-long grip on this way undervalued market. A Commercial Signal Failure is coming, whether it is on this open interest build-up, or on the next one.

GATA BE IN IT TO WIN IT!

MIDAS

Late last night:

The King Report
M. Ramsey King Securities, Inc.
Monday Oct. 18, 2004 – Issue 3018 "Independent View of the News"

August PPI rose only 0.1% because BLS has energy prices down 0.9% for the month due to a sharp drop in the last week of August. This violates the BLS pattern of sampling for energy prices between the 10th and 14th of the month. Prior to August, there have been several months were energy prices slumped early in the month and soared later. But the price increases never showed up due to the 10th – 14th sampling pattern. Now all of a sudden the BLS samples during the last week of August when there has been a sharp decline. We’d love to hear the ‘official’ explanation.

Over the past 3.5 months (since Q2 ended on 6/30), oil is +50%; heating oil is +54%; gasoline is +24% and natural gas is +6.5%. But the increases have not shown up in PPI or CPI.

Ford’s debt of $108B is almost at junk status, and its sales are shrinking. Both GM and Ford will suffer further because higher steel prices have worked their way through the system. Suppliers will no longer eat the increases…Both GM and Ford have been making money via their finance operations. GM’s recent earnings of $440m were derived entirely from GMAC’s $656m in earnings. On Tuesday, Ford will report. Bloomberg’s David Pauly notes, "In the first half of 2004, Ford Motor Credit Co.'s business was subsidized by Ford auto to the tune of $1.67 billion in what Ford Credit calls ``interest supplements and other support costs.'' The finance unit's profit for the period was $1.59 billion." With the finance bubble threatening to burst, where will GM and Ford turn for profits? Who will first seek the bailout?

Al (What, me worry?) Greenspan says soaring oil prices don’t concern him because the global economy will adjust to higher prices by boosting exploration and increasing fuel efficiency. "Road hog!"

-END-

GATA’s Mike Bolser with an important finding:

Hi Reg:
Much has been made by Richard Russell and others regarding the odd rise of the DOW transport index (DTX) at a time of skyrocketing fuel prices and a flat DOW.

I normalized the DTX historical data (Placed on the right axis now with the DOW), inserted a 30-day moving average (Blue) and compared the Repo Pool's red 30-day moving average with the DTX.

You be the judge if there are similar patterns in the moving average of the Repo Pool and the DTX. Indeed, examine the slight lag in the pool's 30-day ma and the DTX ma in December, however today with a far larger and more robust pool size the reaction time between the pool and the DTX is now without delay.

I think this may explain why the DTX is rising at a time when by all logic it should be falling.
Best,
Mike

PS: Mike has not been missing in action. He has his own website: http://www.interventionalanalysis.com.

Chuck checked in on Saturday:

I thought I would send this to both of my friends. I have attached the chart of Marsh McLennan and its reaction this week. I have always considered MMC to be a stodgy insurance stock above board, etc. Look at the tremendously low volatility over the past few years and there is no warning of the crash. Not only that, this news although bad shouldn't have the effect that it had. Now, if you have time, look at the other financial charts-C, JPM, MER, GS, and the like. They have similar patterns the past few months-just a small rally with a turning down pattern.

Now look at the dollar chart that I am going to send you. It is possible that if the financials collapse, the dollar might rise but the greenback also has a very ugly look to it and these scandals might finally break the back of the rigged corruption that has given our markets the look of supreme serenity.

The proverbial cat is coming out of the bag, and soon, it will be "every man to his own house." Judges They are going to have to build new and larger jails for the white crimers.

The other thing is that financials today comprise about 25% or more of the averages. That's even higher than the high techs before their collapse.

Isn't it interesting that the two financial companies so far FNM and AIG that have been caught have fine reputations in the mainstream press. Who would have thunk it. SOON!
Chuck

I brought ENRON to Chuck’s attention and he came back with:

True:

But I think the most blaring point is how a stock with such low volatility could plunge on such news. Enron was know as a gambler and had much higher volatility. What this probably means is that there is a large fissure in the financial stocks and since the other charts have the same look as MMC, we might conclude that this the trumpet blare. I always assume that everyone is in bed with each other since it has been such an obvious collusion. If so, we should see some other cracks soon.

***

The significance of what the ever-so-important JOHN BRIMELOW has been pointing out to Café members for the entire major gold up move kicks in even more - as SOARING gold demand is The Gold Cartel’s worst nightmare:

THE DAILY STAR (India)

October 17

Gold glides to all time high
Reaches Tk 10,000 a bhori
Sarwar A Chowdhury

Gold price yesterday hit all time high at Tk 10,000 a bhori (11.66 grams) in the local market, showing an increase trend of Tk 1,000 each year.

Industry people attribute the price hike mainly to international price rise coupled with the rising domestic demand.

-END-

Input keeps pouring into The Café from all over the world why the gold price eventually IS going to soar – from an Aussie Café member:

Inflation masking?

Dear Bill
It often escapes the attention of busy mere males (and females) but there are lots of ways of masking inflation, particularly when official published statistics lack important background data.

The corporate sector is often fully complicit in this masking but can claim an ‘out‘ through the vagaries of ‘innovative marketing‘. For instance: in competitive markets manufacturers often reduce the weight or measure of a product to alleviate the necessity of a price rise. It is commonplace here in Australia to find a 250 gram product reduced to 230 or even 200 grams but still sold at the same price in the shops (after a few weeks 'on special'). The practice cuts across most products and has been on the increase of late, particularly when related to products derived from raw commodities.

Other ‘innovative’ techniques used by the conglomerates to ‘sell’ more product include increasing the diameter of the nozzle on a tube of toothpaste or deodorant to induce faster usage. Examples are numerous but most people are just too busy to notice.

I would be interested in comments from other café readers in other markets/countries.

Keep up the good fight – your day is drawing closer.
Martin Hastings
M18105@westnet.com.au

There are four people in the mainstream investment world who have EARNED the esteem of that world even though they are, for the most part, of a contrarian nature and are known to take on the prevailing views of the establishment/Wall Street. I am speaking of Richard Russell, Robert Prechter, Bill Fleckenstein and James Grant. They have earned their kudos and have basked in them many times over. They are for the most part well deserved. Each has earned distinction in the public investing domain for valid reasons. Many Café members subscribe to one or more of their services.

However, I take exception with ALL of them regarding what the gold market is really all about, and their public pontifications on such. All of them refuse to acknowledge the obvious; that the gold market is manipulated and the price has been artificially suppressed by a Gold Cartel, not unlike the rigging of prices in the insurance, oil, diamond, copper, vitamin, graphite electrode, citric acid and lysine businesses.

They will tell you they don’t believe bullion banking institutions in the establishment conspired to rig the gold price this past decade. Although, I don’t think even they will go so far as Dennis Gartman’s inane quote of September 14, 2004: "Conspiracies rarely exist." What is annoying is none of them will deal with the specific evidence and facts GATA has assembled which reveal exactly what The Gold Cartel has done and how they have done it. In this regard, they ALL go silent, just like the gold market establishment does. Not even the tribute the Russian Central Bank sent GATA’s way by mentioning us in their stunning presentation at the LBMA Conference in London on June 4, 2004 dents the way these folks think. You would think the fact the Russians went out of their way to send us an English translation of Deputy Chairman Oleg V. Mozhaiskov’s keynote address, and that Mozhaiskov covered some of GATA’s key points (regarding the derivatives situation, etc.), would make some sort of impact. Nope. Nada.

The John Brimelow Report

A message from Shanghai?

Monday, October 18, 2004

Indian ex-duty premiums: AM $7.42, PM $6.83, with world gold at $418.15 and $419.15. Ample, and adequate, for legal imports. This somewhat understates India’s access to world gold this morning, as the rupee was significantly stronger in the middle of the day: it is being bolstered by favorable capital flows.

MMTC, the Indian para-statal minerals importing arm, said today it hoped to import 130 tonnes of gold this year, up 20%, and thought the country as a whole might import 880 tonnes, up 10%. Since MMTC imports were only up 15% at the interim, this implies an acceleration. The world’s biggest gold importer is creating a major problem for the Bears.

Premiums from the Gulf, derived from Standard-London’s website, appear to be indicative of on-going physical demand.

Shanghai, on the other hand, is showing sharply increased discounts, in the $2-$3 range. Why China should show these discounts, in contrast to everywhere else in the world including eastern Asia, is an interesting question. The Chinese Central Bank is reported to be the largest single factor on the Shanghai Exchange. Increasingly the impression is forming that this discount is a comment on where the Washington/Peking axis wants gold to be, as much as anything else. How domestic demand is managed remains obscure.

TOCOM ducked. Volume fell 16% to equal only 13,792 Comex lots; open interest was static (+231 Comex); the active contract closed up 2 yen and world gold went out 25c above NY. (NY on Friday traded 48,110 contracts; open interest rose 3,690 lots.)

That someone has a deep objection to gold over $420 is common cause amongst commentators. ScotiaMocatta said of Friday in NY

"The metal seemed to run into a brick wall in front of 421.50, as even a

EURO of 1.25 could not help gold’s cause. The metal then backed off on end of week position squaring, finally finishing 418.60/419.10."

Standard London observed:

"Despite an increasingly strong oil price, firming Euro, notable Japanese buying interest in Asia followed by a wave of investment bank bids in Europe, the market remained capped at $420.00."

The UBS version was

"Gold hit highs above $421.00 but ran into good selling from a selection of customer types"

Refco Research, prudently smelling the coffee, sold its long Dec gold – bought at $414.20 with a $428 objective – on the opening on Monday.

This perception being valid was, of course, borne out by the open interest data. An 11.5 tonne (3,690 contract) open interest increase could only supply a 60c gain to gold.

Consequently it appears that gold is sandwiched between broad-based buying interest, and selling interest which although strong, is probably fairly narrow.

JB

CARTEL CAPITULATION WATCH

The DOW rallied late, as is its custom, after being down over 60 points. It finished at 9956, up 23, while the DOG gained 25 to 1937.

Just as gold is not allowed to go above $420 for now, the DOW is never allowed to be hit hard, which might panic the public about staying invested. It has been this way all year long. Whenever the DOW is about to tank, it miraculously turns right around, either in a given day or after a few days of sustained losses. It constantly does so without any news which could be considered significantly constructive.

Can anyone give an explanation other than one expected from the GATA camp why the US stock market rallies late in the day so often and gold makes its highs in the first 20 minutes to one hour – over and over and over?

Can anyone offer and explanation other than one expected from the GATA camp why gold has failed to follow the dollar weakness the past two days and not been allowed to close above $420?

Unfriendly dollar news:

WASHINGTON, Oct 18 (Reuters) - The pace of foreign investment in U.S. assets slowed only marginally in August, according to a Treasury Department report released on Monday.

Net inflows of capital totaled $59.0 billion in August, down from the revised $63.1 billion in July. Previously, July net inflows had been reported at $64.0 billion.

Purchases of net domestic securities, a narrower measure that excludes transactions between U.S. residents and foreigners in foreign stocks and bonds, dipped to $60.2 billion in August from a revised $79.2 billion in July.

Foreigners were net sellers of U.S. stocks in August, according to the report, selling a net $2.1 billion in stocks in August, a reversal of the net purchases of $9.8 billion in July. Foreign investors have been net sellers U.S. stocks in four of first eight months of 2004.

Interest in U.S. government bonds and notes also waned. Foreigners bought a net $14.6 billion in August, down from $22.4 billion in July and the lowest monthly total since October 2003, when net buys amounted to only $11.8 billion.

Market participants watch the Treasury International Capital Data for signs of foreigners' appetite for U.S. assets.

-END-

More bad news:

NEW YORK, Oct 18 (Reuters) - The U.S. technology sector suffered another round of widespread layoffs during the third quarter, with computer firms slashing jobs most aggressively, a report said on Monday.

"High-tech job cuts are on the way up as the end of the year approaches," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. "Behind this trend is the fact that technology companies have virtually no pricing power,"

Job cuts in technology jumped 60 percent between July and September to 54,701, compared with 34,213 layoffs in the second quarter. Computer companies alone saw job cuts jump 127 percent, to 30,624.

Manufacturers in the sector are having trouble making money since they have been forced to lower prices in order to attract consumers, Challenger said. So they end up firing workers in order to maintain healthy profit margins.

Worse yet, the growing number of layoffs is not being countered by any move to hire, Challenger added.

-END-

October 18 - Gold $415.80 down $2.60 - Silver $6.95 down 13 cents

"Even The Groundhog Is Bored With This BS"

Champions aren't made in gyms. Champions are made from something they have deep inside them: A desire, a dream, a vision. They have to have last-minute stamina, they have to be a little faster, they have to have the skill and the will. But the will must be stronger than the skill...Muhammad Ali

Hi Bill:
Even the groundhog is bored with this BS.

One word: AAARGH!!!! The PMs markets and others are so obviously fixed, only the intentionally compromised refuse to recognize it. But we just belabor the point while the authorities do NOTHING. When they finally go off, gold/silver will be like nothing ever experienced imo, and we surely deserve it after being serially abused for years, just for the politically incorrect desire to protect ourselves from the thieving, lying bankster cabal. Keep giving 'em hell in your column. These scum are beyond corrupt and deserve as much scorn and derision as can be publicly heaped on their sorry, corrupted carcasses.
Tom K

(One of many emails sent my way today with a similar tone)

Not much else to talk about when it comes to gold Tom. The farce continues. The dollar . . . oil . . . nothing matters when it comes to this crooked market. Goldman Sachs and JP Morgan Chase were seen loading up on February 400 puts this morning on the early firmness. That will give you some idea what The Gold Cartel has in mind. For years I have noted how the cabal USES the dollar action for their gold trading scheme. Cap, cap, cap on dollar weakness; let the specs pile in. Then, when the dollar strengthens, they attack with full fury, bringing the locals in with them on the short side and go all out to puke the spec longs out. This type of obnoxious repetitive trading pattern is how Gold Groundhog Day came into being.

Goldman and JP also bought November 675 silver puts early on, which expire shortly. For the second day in a row it was time to turn off the computer before the first hour of gold trading was over with as it was clear, and par for the course, The Gold Cartel was not going to allow gold to take off above $420. The dollar had taken out 87 and the euro was up 50+ and still, the bums wouldn’t let gold above $420. They are THAT petrified of the ramifications of such an occurrence. Of course $420 is not really the big deal for them. It is $430. However, they have decided to make a stand at $420 and that message is out to all their allies. Their fear is if this key resistance is violated decisively, it could spook other shorts into some panic covering and leave the market vulnerable to an unexpected event.

The cabal’s defense of $430 is obvious to all veteran gold watchers. There is no telling what the price could do if that key level is taken out convincingly. The battle for $420 to $430 is the key to understanding the gold market itself. The establishment says the central banks have 28,000 to 29,000 tonnes of central bank gold in their vaults. The GATA camp, using three independent methodologies, says there are only 16,000 tonnes left, maybe less. The difference between the two assessments is central bank gold surreptitiously fed into the market to suppress the price. It is the essence of GATA’s findings and argument that the gold world establishment not only has it all wrong, they are complicit in keeping this information from the investing public.

Supporting GATA’s contentions are the gold derivative numbers at the BIS which have increased over the past couple of years instead of contracting as gold producers reduced their forward sale positions. These gold derivatives therefore have to be tied to this clandestine central/bullion bank gold lending, or to the short side of the market. As such, a fair amount of them are exposed should the price of gold take off with most everyone citing $430 as a trigger point. You would think the gold industry would want to know everything GATA has come up with because the ramifications of our findings are extraordinarily bullish. Instead, they refuse to engage us or comment on the blatant contradictions we have found.

This lack of professionalism on their part is an outrage, especially for gold shareholders, because the fair price of gold today is around $750 based on inflation measures, the price of oil, etc. The difference in the prices of the gold shares you own is like night and day. All GATA can do is press on and gradually gain allies as we have done over the years – allies such as the Russian Central Bank and Sprott Asset Management.

The dollar fell though key support this morning at 87. Gold popped to $419.90 (AGAIN) when The Gold Cartel said "NO MAS." That was it for the day and, like always, gold made its highs for the day before the first hour of trading was up. By the end of the day the dollar closed at 87.15, down .07, while the euro finished at 124.94, up .22, after making a high of 125.33.

The gold open interest rose 3680 contracts on Friday to 299,881, as the specs continue to pour in and The Gold Cartel sells to them. The silver open interest rose 525 contracts to 108,659. Silver was weak all session long as the trade is eyeing the COT numbers and drooling over a monstrous spec washout, the kind which has occurred so many times over the past decade.

Crude oil, after reaching $55.33 per barrel overnight, fell to $53.24 by the end of the day's trading.

Hallo Thai,

ich lese Deine Beiträge immer mit Grossem Interesse.
Bleib doch einfach relaxed wenn so Leute wie Lupo hier ankommen.
Der Beste Umgang mit sochen Personen ist stehen lassen und nicht beachten.

Mach doch bitte einfach so weiter wie bisher - denn das war wirklich Super.

Es wäre schade wenn dieser Thread so verkommen und auf so ein Niveau absinken sollte.

Grüsse,
Silversurfer

Hallo Odin,

ja das hat er gesagt.
Die Performance von M. ist nich schlecht.
Ich denke wirklich mit technischen analyse ist das schon eine feine Sache.

1600 USD - Zwar nicht für dieses Jahr aber für die Zukunft:
Siehe unten:

:: Gold $1600.. ::

From: 8th August 2003
To: Century
Time: 15.00 Gmt

I still remember on the 9th September 2001, in an interview I made at 1.30pm at SABC TV in Johannesburg. There were five most important predictions that I made on that day:

1. South Africa economy will rise because of the Gold rise.

2. Extensive terriorist attacks against the USA.

3. Collapse of US dollar - Major scandal will come out on counterfeit of the US dollar note; this would be one of the reasons the dollar will collapse in the international market.

4. Aids cure will come by the end of the year 2003.

5. Last but not lest, and the most important prediction was; gold will rule this century and the prices of gold will rise for the next 51 years.

Many other predictions I made on that day in the interview I have them videotaped. Whenever bear cartel of gold they confuse me, same day I play repeatedly that videotape, I mostly watch that part about the gold and I try to read again in that tape; my body language, eyes movements and my voice the way they were responding it was in a unique way. That was the message and calculation is astrology.

One more thing that I want to openly share with you is a very personal experience that I had on my 23rd birthday in September 1991, I was seated with a good friend of mine in his home having a cup of tea at around 7.00pm and I suddenly told him that I think I have a unique relationship with gold and that a time will soon come when I will be predicting on gold and Gold would move with my thoughts accordingly.

On the day of the interview I wanted to speak much more on gold but time was not on my side since there was a time limit of 30minutes only, so I had to give maximum information in brief words (I wanted to explain in full details why I said gold would rule this century and what the future holds for gold and why it would remain strong.)

My sentence was “gold will rule the century”, it will be rising soon and bottom-out on 27th November 2001, gold companies and investors will make fortune in long terms. Prices of gold will reach $1600 in a few years time. This was what I said in the interview but let me explain more on what I wanted to say and why I recommended my closest people and public to remain invested in gold. This century started with Jupiter. Jupiter has a unique relationship with gold but there are negative planets which give negative impact for short term, like in our life time is not always the same, even the brilliant people, technical analyses or knowledgeable speculators also make losses in the market. Whenever the time is negative, gold prices come down for short period.

I have been watching and reading closely the movement of gold for the last 18months, gold is trading very strongly above $300, that shows a very strong strength in prices and future trend, also the gold stock are performing well and the mostly gold investors have made money and mighty few have lost because of bad luck in chart. I still hold my prediction for gold to cross $400 and Silver to cross $6.00 soon. Next week major price movement will come in gold and silver, at the time I am writing this article gold is trading around $353 and silver $5.03, I am expecting major rise next week.

Changes of Jupiter from the 3rd week of July 2003 are giving signals for gold/silver prices towards the up-ward movements. Time changes peoples’ minds i.e. after 1996 many started investing in technology because of Saturn pulling power (but stayed for short period) and now Jupiter is doing for gold and good news is that it will do for long period. Like 18months before people were very optimistic on gold and gold stocks but slowly the gold prices moved up and people were slowly joining the crowd, more people will join in the crowd to come and put their money in a safe place, and that’s in gold.

Big and small investors will join in the crowd this will make gold reach $1600 and ounce, then there will be a drastic fall because the energy has to divert, after sunshine the sun has to set, prices will come down to around $1000 ounce and the future range of gold will be $1000 to $1600 from the year 2010 to 2018.

I dont want to write a lengthy clarifications, I know some people from gold community are still optimistic about my gold and silver predications.

Some thing off track, I am writing here because I felt it. I think each human should respect each other because in each human being there is a God. I think everyone has a unique ability we better develop a good path we all know ourselves better and I am sure the day we all know ourselves fully we will do something good to the community and the world, I want to continue my life towards astrology, the great signs of astrology and whenever I get a message I pass it on to you. If one has lost money through my advise, I sincerely ask for their forgiveness because I want to remain your friend for the remaining days of my life.

God bless.

Yours,

MAHENDRA SHARMA.

... aber was Mahendra recht gut gemacht hat das TOP ende März bestimmt, und zum Verkauf von den Edelmetallen geraten.
Des weiteren hat er recht gut den Ölpreisanstieg aurausgesagt.

Ich zahle dafüre nicht sondern besuche seine Webseite um die kostenlosen News zu sehen.

Schau Dir die Preise von Gold und Silber an.
Sieht doch gut aus oder?

Ich denke Mahendra in kombination mit technischen Chartanalyse ist ne feine Kombination.

Grüsse,
Silversurfer

Hier eine Nachricht von Mahendra:

Dear Members,
As all you know that I am counting too much on tomorrow for gold and silver to rally crazily. I am sure that finally it will going to happen tomorrow (Tuesday).
I will be with you in this victorious period. Time for celebration in few hours and this might continue for few days for metal investor's.

Also US Dollar is ready to collapse.

Note - TUESDAY MUST WEAR RED OR YELLOW COLOUR SHIRT OR T-SHIRT. MUST GIVE DONATION OR PROMISE YOURSELF TO DO SOME THING FOR HANDICAP PEOPLE OR HOSPITAL.
WATCH MAGIC OF MARS FROM 7 TO 9 DEGREE FROM TUESDAY TO FRIDAY.

Thanks & God Bless
Mahendra
http://www.mahendraprophecy.com
Monday 17.30 Santa Barbara

SORRY der Bericht ist in englisch, aber die Message ist recht klar.
GOLD und SILBER wird kommen - wenn möglicherweise erst im September, aber die fette Lady wird bald tanzen.

Dear Members,
Just started computer in morning and saw metals and metal stocks trading down so I decided to write. GOLD & SILVER SHOULD MOVE UP WITH IN NEXT 28 HOURS VERY STRONGLY, IF DON'T THAN I WILL UPDATE YOU. Still I am sure (100%) we are just few hours away for major fire work which, will take GOLD, SILVER and PALLADIUM prices sky rocket.
Final opportunity to buy metal stock and metals.
I want all my members to perform well financially and I don't want you to lose this great opportunity of buying. Don't get confuse - you are on right path.
I will update soon again.
Thanks & God Bless
Mahendra
Dated 17August
****************************************
Here is this week newsletter, which I am putting for my website visitor's to see that they won't regret if they subscribe my newsletter: This is what my members get on Sunday every week. Yes, astrology has a role to play to guide investors on right path because I still feel that investors has always been misguided by manipulator's or newsmakers.
Dear Members,
Last Friday metal prices went up again. I am really excited about Friday’s closing because this was the second Friday in which metal prices closed up strongly. If this happens again during this week, then it will be a clear indicator that gold and silver prices will go crazy for the next 14 months without any downward trend.

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

Yes, what my friend Bill Murphy mentioned in his commentary on our communications in GATA is 100% right because I feel that metal investors have waited 50 to 100 years to see a rise in gold and silver prices. When a great rise is on the corner and nearly approaching but some feel that they should exit, it is only an unfortunate part on their side or the planetary positioning in their birth charts is bad. Astrology can guide or be very helpful in the bad periods and in situations where you are very confused. So my advice is NOT to get out from the metal market. Play safely because rises will be so strong that a small quantity of contract will give you great returns. Please also don’t forget to buy silver options for September and December 2005.

Without writing too much, let us now see what is hidden for this week, 16th to 20th August:

GOLD

Last week I was wrong once again about gold prices crossing the $400 mark, but may be it’s forming a strong base since it has to rise and rise very strongly. During this week from Monday evening before closing or Tuesday gold will say bye-bye to $400 for the next few years. I think that this is great and exciting news for gold investors. I also have very good news for gold stocks as I see the current prices for metal stocks being history.

Jupiter will be changing house and this will bring great news for companies like DROOY, PAL, PMU, HMY, KRY and PAAS. All other gold stocks will also have a great run similar to the one for technology stocks between 1996 to 1999. I feel as I did back then in 1996 when I predicted and advised my clients to buy technology stocks, just as I am now advising in regard to metal stocks.

SILVER

You all know that silver is my favourite commodity for the year 2004. Any downward trend in silver on Monday should be taken as a buying opportunity. I don’t see silver prices going below $6.62 for rest of the year and so I think that silver is sitting on the bottom at this level.

Silver stocks will also do extremely well.

In the month of September silver prices could go towards a new high.

PLATINUM & PALLADIUM

Prices of platinum performed the way I saw during the last week BUT palladium traded at around the same prices. I see palladium rising up to 50% in the next six weeks. I also still recommend PAL stocks. For Platinum, prices will trade at around the same level.

COPPER

During last week it did, and will give strong performance continuously. I hope you remember regarding my advice not to short copper, silver and now gold.

Note: Monday morning don't sell if any uncertainty comes in metals market.

OIL

The second item on my investment list has really performed well. However, I see a sudden drop in oil prices during this week and Monday or Tuesday will be the right time to get out from oil. I see a 10 to 15% drop and you should not be in a hurry to get in again. I shall update concerning this in due time.

CURRENCIES

Last week the weakness of the dollar prediction was spot on. Remain in the sell position because I see the Dollar going down continuously.

The Euro, Pound and Franc look strong but the Japanese Yen will rise strongly, surprising everybody on Friday.

The South African Rand has started its downward journey and therefore don’t buy.

The Australian Dollar and the Canadian Dollar will also gain.

STOCK MARKET

Stock markets are emitting a weak signal as I saw last year and since than I have been alerting investors to get out from stock market from buying position before 21 June 2004. I was expecting a weak trend last week and it came. During this week, I see a small rebound in major indexes but don’t get into it: just cover your short or wait for a rise and sell on Friday in the hot market.

The day in which the DOW will crash 500 points will be the first day starting of the worst down ward trend in the 150 years of the US stock market history. During the crash, the DOW will go down more than 5000 points. Current indices and stock prices will be history.

OTHER COMMODITIES

SOYBEAN: During last week Mercury gave a good signal to buy Soybean. One can still can buy at this level or hold Soybean for this week.

WHEAT and CORN: Both these commodities will have a rise of 7% in the next two weeks and one can therefore enter.

SUGAR: The last week of August will be the right time to accumulate sugar because in September sugar prices could rise 20%.

COFFEE – My predictions in coffee have been off track since the second week of June, after touching a high at the end of May. I see a rebound from the current level and so I would like to wait and watch the price movements. Coffee prices should go to $98 as I predicted and my book says at the year’s end.

WORLD EVENTS

I have been saying for the last 12 years that the world is ignoring nature. The world does not know what nature can do and there is no politician or religious leader that can save the world from nature if nature is angry. We last saw a small example of angry nature in Florida. Peace, love and happiness make nature happier. As I have said in the past, THIS MONTH IS NOT GOOD.

If you read my book on page 19 second paragraph:

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

I was watching the news and President Bush was saying that no one can predict nature. We are however wrong because if we give more importance to this subject and research its details, we can foretell. This would be quite helpful to how we conduct the affairs of this beautiful planet in which we live and enjoy everything free like water, air, sun light etc…courtesy of Mother Nature.

I hope that as people we will think of giving some thing back to the nature.

Thanks & God Bless

Mahendra

15 August

http://www.mahendraprophecy.com

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

Bitte noch mehr so positive Berichte.
Die Silber und Gold Elliot Wave Analyse - sieht super aus.

Weiter so Kalle!!!