Beiträge von Schwabenpfeil

By that evening and week's end, I was ready to relax and did so with two friends of Daan Joubert. Both are very successful businessmen who knew the gold market well. One of them owns the last private elephant farm in South Africa. They took me to Baccarat, restaurant extraordinaire, for some crocodile and ostrich. We had much fun and plan to meet up again.

On Saturday it was time to set sail for Cape Town and the INDABA 2001 mining conference. Soon after my arrival, Peter George, who is well known in South African gold circles, came by to take me for a climb up Judas Peak - high above the geographically spectacular Cape Town.

It was an hour trek to reach our elevated destination and some flowing water to drink. "Be careful, it is slippery," Peter warned. About 20 seconds later, I fell anyway and started to go down the mountain, but managed to grab on to a thorny bush. In a bit of a dither, I tried to pull myself up, but fell back and further down. This was becoming rather scary and I looked up for Peter's help. Instead, he looked down at me and blurted, "I told you it was slippery."

If that was not bad enough, I could not bare to tell him I am afraid of heights. A relieved me was happy to make it back safe and sound to his wonderful home overlooking the Atlantic Ocean. Peter was a most gracious host and became a new friend for life.

Sunday we took a drive to vineyard country - called Franschhoek. It is spectacular countryside. One of the vineyard owners organized a luncheon at his vineyard restaurant to hear about the gold market. When they heard that press coverage of my trip was going well except for the mainstream Business Day (the Wall Street Journal of South Africa), they said, "we will fix that." Within 20 seconds, the attendees at the lunch pledged $50,000 for a full page ad in Business Day. They said you write it, we (the instantly formed 'South Africans for a free gold market') will pay for it. The money was collected and in the till by Monday noon.

That conversation presaged a trip to Lordium in the South African countryside for a Moslem radio station interview. It struck me that when I walked into the Moslem radio station, the interviewer said that he saw me on television the day before. I thought to myself: now we are getting someplace!

Listening to the show in Cape Town was Professor Umar Ibrahim Vadillo, Founder of e-dinar, who is urging that Muslims all over the world buy dinar gold coins. We later met in Cape Town and I learned a good deal about the movement of this worldly Spanish professor who resides in Scotland.

Early on Friday I met with the South African Chamber of Commerce, followed by a meeting with Bheki L. Sibiya, Executive Director of Transnet and Chairman of South African Airways. Bheki is a leader in the South African business community and grasped the Gold Anti-Trust Action Committee findings very quickly.

That afternoon was spent on the phone talking to prominent South Africans and then I set out for downtown Johannesburg to do the Alec Hogg Classic Business radio show. That was almost a disaster as my driver's car broke down 1/2 mile from the interview and I had to run the rest of the way - right through the area one is not supposed to be as evening sets in. Made it with 7 minutes to spare.

Tuesday late afternoon I headed to the airport for a trip to Durban (by the Indian Ocean). Rhoda Fowler of Media-Link did a marvelous job scheduling a Wednesday morning breakfast meeting with the Durban press and business leaders in the community. After the meeting, there was a 3 1/2 minute TV interview that was aired all over South Africa during the day.

While waiting for a scheduled meeting with Zulu King, Goodwin Zwelithini, Rhoda, her helpful brother James Stock and I went up the Indian Ocean coast to Umhlanga for a relaxed seaside lunch. The King was delayed, but eventually we had a very special two hour meeting over dinner that lasted until 10:30 in the evening. That meant another sleep over in Durban ahead of an 8:30 press interview back in Johannesburg the next day.

The King was very sharp, lamenting that the Rand had weakened ever since the new government came into power and that the price of gold had not rallied at all with the price of oil. Many of his Zulu subjects are gold miners and have been very negatively effected by the suppression of the gold price. At the end of the meeting, he asked his aide, Moses, to call Deputy-President Jacob G Zuma, who is also a Zulu, on our behalf. The Zulus are one of the many tribes in South Africa.

A wee bleary eyed, I just made it on time for a meeting with Curt Von Keyserlingk, Business Editor of Rapport, the well read Afrikaner newspaper. Also attending was superb technical analyst Daan Joubert, who often presents his work at Gold-Eagle.

Then almost two years later with gold at $256:

2/15/01 GATA's Journey to South Africa

GOLD ANTI-TRUST ACTION COMMITTEE

GATA's Journey to South Africa

There is no way I can do proper justice to my trip to South Africa, but I will cover it as best I can. While it would have been better to write details down as the days went by, there was little time to do so. It is from fond memories that I now relate my hectic adventure to you.

The South African countryside is very beautiful and I was fortunate to meet many wonderful people, but of most importance was the fact that GATA's revelations of the manipulation of the gold market were publicized by the SA press and were personally presented to important SA officials.

My first meeting was an enjoyable one with Chris Thompson, Gold Fields Chairman, who listened very attentively. That was followed by a lunch with newsletter writer Aida Parker, who had just written a piece called "Gold Price Manipulation." Aida is quite the character and one tough babe as she was a war correspondent during the Arab/Israeli war. Reg Howe was very impressed with her insightful coverage of his Complaint.

That afternoon I met with Nick Goodwin, South African gold guru analyst, and Johann Blersch, Managing Director of Ings Barings Bank. That meeting went well and Nick arranged a meeting with ten of the senior gold analysts in Johannesburg the next day in his office to listen to a GATA presentation. It amazed me that Nick could corral so many of them on such short notice. Tuesday started out with a David McKay MiningWeb interview.

It was stressed by me that almost no one thought there could be a Long Term Capital Management either; that even the Central Bank of Italy invested in Long Term because of the supposed lack of risk in investing with them. The biggest and the best invested in Long Term. "And look what happened," I told Jim. I then pointed out that it is these same "biggest and best" that are borrowing gold at 1% interest rates and are thus, in effect, short gold to a staggering degree. In essence, they are investing all over the place for practically free (as long as the price of gold does not go up). I asked him if he would like to be able to go his bank and take out virtually an interest free loan? Did he think his investment performance would look pretty good if he could do so? That is what I told him I felt was behind all this IMF gold sale talk spewed forth by our administration, the bullion dealers, Wall Street and anyone else whose arm they can twist. I do not think it proper to recant any of his conversation, but I think I can comfortably say that he has a great smile.

All 3 committees want to very much hear whatever more we have to convey on this matter.

-END-

"This legislation will end the legacy of secrecy and obscurity at the ESF," Saxton said in his press release. The ESF was established in 1934 at a time when the dollar was pegged to gold, but has survived into the current era of flexible exchange rates despite its lack of clear objectives and its secretive operations."

"This legislation will end the legacy of secrecy and obscurity at the ESF," Saxton said. "We need this kind of secrecy in our nuclear weapons programs, not in our international economic policy, but most Americans have never heard of it. The American people have the right to know how billions of their tax dollars are being used. Excessive secrecy is part of an even larger problem: the lack of accountability to Congress or the American people."

I told Jim that GATA was concerned about the lack of transparency in the gold market too and that we felt there were many shenanigans occurring in the gold arena. GATA applauds his efforts, and intended legislation, which could cut off another potential source of manipulation of the gold market.

Most of the discussion was about: 1) what GATA felt was the real reason behind all the IMF proposed gold sale P R commotion and 2) GATA's opinion that gold loans had become so large that they had become a danger to the U.S. banking and financial system.

I went on to say how large we felt the gold loans had become and that if something were to happen to cause the price of gold to rise sharply, and the gold borrowers wanted to get out of their gold loans and pay the gold lenders back with physical gold, that it would be impossible for them to do so in a short period of time without the price of gold skyrocketing. With 1998 mine supply at 2529 tonnes in 1998, it just cannot be done. I followed with what I had told the Senior Counsel of the Banking Committee, that I felt the resulting turmoil could produce 10 "systemic risk problems", not just the 1 that our Fed had with Long Term Capital Management. What would the Fed do in that case?

I told him that I was here today to alert the Banking Committee to this potentially very serious problem and that this situation could be likened to the Savings and Loan crisis. After the Savings and Loan crises erupted, it was queried by many as to why someone did not do something about it before it became a crisis. I told the Staff Director that there is no reason for history to repeat itself. NOW, is the time for the Banking Committee to ask the bullion dealers and major financial institutions what their gold books look like; ask them to reveal the gold books (confidentially) to a banking or economic committee. If they will not do so, ask why? If they do and we are we are right, somebody had better blow the whistle. If we are wrong, then it was a waste of just a little time and a few phone calls.

We discussed the gold loans issue in great detail. You know much of our reasoning and evidence, so there is no point going into all that. What is important is that at the end of the meeting the Senior Counsel got up grinning and said, "Geez, got a small order here, have to save the banking system."

The next meeting was with Jim Saxton, the Staff Director of the Joint Economic Committee and their senior macro economist.

Jim Saxton is one class act. We had some fun talking about my cousin, Bobo Sullivan, who also has been a force in New Jersey Republican politics for many years as he ran the election campaigns for Bush and Reagan in that State. Jim just got back from a fact finding mission in Yugoslavia and now is also preparing legislation to reform the Exchange Stabilization Fund by introducing the, ESF Transparency and Accountability Act.

April 28, 1999 - Spot Gold $282.70 up 70 cents - Spot Silver $5.25 up 8 cents

Feedback to the Café about my trip Washington and meetings with Jim Saxton, Chairman of the Joint Economic Committee, the Staff Director of the Joint Economic Committee, the senior macro economist of the Joint Economic Committee, the Senior Counsel of the House Banking and Financial Services Committee and the Staff Director of the Capital Markets Subcommittee

Washington is in full bloom this time of year and it is extraordinarily beautiful and bustling with activity. One cannot help but be inspired walking around the Capitol while gazing at its majestic buildings and thinking of what they stand for. It is one great country we have here, with all its flaws, and an awesome, proud feeling came over me as I traversed from the Capitol building to the Rayburn Building, to the O'Neill building, etc. America is special because anybody can do anything here. It is a land of individuals and we are very lucky to be living in such an environment. I thought as such as Mitch McConnell, Barney Frank, and other House of Representative Members sauntered by - all just part of the crowd.

My first meeting was with the Staff Director of the Capital Markets group that is investigating Long Term Capital Management. I cannot get into too much about this one, but I can tell you that I almost fell off my chair when he told me that they were investigating Long Term Capital Management for "anti-trust" violations. It was not my place to probe further. But, now we understand why Long Term Capital Management has reacted so expressively to the Gold Anti Trust Action Committee and is sending our attorney a letter. I am sure that we are just a coincidence that happened to show up at the wrong time for them, but no one I have spoken on Wall Street had heard that anti-trust activity is the reason a Congressional subcommittee is looking into their previous operations.

Later on, the Senior Counsel of the House Banking and Services Committee came by and we had a long session about the "the sizeable gold borrowings". He took copious notes. I stressed to him that it was our opinion that a danger had been created by speculative gold borrowers who had become so greedy that we believe that there are now about 3,000 tonnes of these loans out there. And, that the total gold loans may now be 8,000 to 10,000 tonnes. I stressed that the borrowers were making a fortune with virtually interest free money! But, in doing so, they have created a potential banking disaster. If the price of gold were to unexpectedly shoot up and go sharply higher (like the price of oil did the past two months), the gold borrowers could not find 3,000 tonnes of gold to pay back their loans, even if they wanted to. Panic could ensue. Major banking defaults may occur and they could have 10 Long Term Capital type, systemic risk problems on their hands, all at once!

I would like to receive names and numbers from every Café member who owns gold shares. I hope that some gold company CEO’s are called 25 times. Right now GATA is the only organization openly supporting them and their shareholders. It is time to start making things happen. It can be done and you can help. Rather than sit there and stew about what The Gold Cartel is doing to your investment portfolio, be a part of the GATA ARMY and help us win the day for YOURSELF.

Round and round we go. GATA first went into action when IMF gold sales were first proposed in 1999. Therefore, I have appended the commentary below from my trip to Washington almost 6 years ago to counter those sales. It is fascinating to me to review what GATA said back then and then to follow what happened over the years. Our warning to Congress about a potential disaster should gold shoot up suddenly is EXACTLY what occurred after the Washington Agreement announcement in September/October of 1999.

Bank of England Governor Edward George in October 1999:

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, to manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K."

Gold monthly
http://futures.tradingcharts.com/chart/GD/M

Appendix

From yesterday’s MIDAS:

Remember Mel Gibson's "The Patriot"

Keep up the fight and lets get more proactive. You use to be more so a few years ago and maybe that is what this GOLDRUSH 21 is about?..
David

***

Yes David, that is exactly what GOLDRUSH 21 is all about. What The Gold Cartel has thrown our way via the latest IMF gold sale nonsense accentuates why it is so important for a number of movers and shakers associated with the industry to meet to discuss an action plan to counter those who have maligned gold in a devious fashion with little opposition for so long.

Our focus is mainly on attracting gold producer executives and gold fund money managers who have an interest in leveling the gold playing field. We are in the process of sending out our invitations. Thus far 4 money managers and 7 gold company CEO’s have told us they will be in Dawson City in the Yukon, Canada on August 8th and 9th.

To host a conference of this caliber is going to take an enormous effort, which we are gladly willing to undertake. As is, we have been quietly making basic preparations for two months. Over 100 rooms have been reserved in the resort town of Dawson City. Our project coordinator, Janet Lee in Whitehorse, Canada is top notch and we are in the process of ironing out travel plans to Dawson City; organizing the flow of the conference itself; planning for individual needs of various participants, coordinating post conference vacation trips, soliciting gifts for the attendees, etc. Getting a large number of people to Dawson City is not like bringing them to LA and that will be part of the appeal. It will be a once in a lifetime adventure as well as a significant event in the history of the gold market. Three Mr. Golds (John Embry of Canada, Peter George of South Africa and Ferdi Lips of Switzerland) along with one Mr. Silver (Hugo Salinas Price of Mexico) will congregate in the same place for the first time.

We are not looking for bodies, only those who have an interest in listening and then be willing to take some action should they be so inclined. To assist us, GATA requests your assistance by sending us names of those gold CEO’s, gold money managers, other important figures in the gold world, etc., you think we should invite. The ideal would be for YOU to call them up and explain in general what this is about and ask them if they would be interested in learning more about what GATA is up to. That’s all. Then send me the pertinent details of where to send the invite along with their phone number (for me to follow up). To familiarize yourself with the basics of our conference, please go to http://www.GOLDRUSH21.com.

First thing I saw on the site was James Turk’s book, "The Coming Collapse Of The Dollar And How To Profit From It."

This may be very good news indeed. Clinton and Rubin were the masterminds behind the Strong Dollar Policy and sucking 10,000 plus tonnes of gold out of the central banks in clandestine fashion. If anyone knows the gold isn’t there anymore in sufficient supply to keep the price from exploding, it is BILL CLINTON!

The gold shares recovered a tad with the XAU picking up 1.01 to 89.65 and the HUI gaining 2.91 to 195.55.

Gold and silver are due for a huge bounce. However, The Gold Cartel has gone out of their way to keep gold under pressure. Tomorrow should be VERY volatile.

GATA BE IN IT TO WIN IT!

MIDAS

Here is a fun one. From former President Bill Clinton’s website:

Tuesday, February 08, 2005

Happy Chinese New Year!

This year, 2005, is the year of the Rooster, specifically the Green Wooden Rooster.
This means good fortune, good business and a good year for gold. I hope I can catch the last few days of the Lantern Festival celebrations, when I visit Asia later this month.

http://billclintondailydiary.blogspot.com/

-END-

A bunch of queries came my way about Aflease and the change in their share price. The latest:

Aflease - Aflease Ads Ratio & Nasdaq Symbol Change

Release Date: 09/02/2005 16:50:02 Code(s): AFL

Aflease - Aflease ADS ratio & Nasdaq symbol change
AFLEASE GOLD AND URANIUM RESOURCES LIMITED
(Formerly The Afrikander Lease Limited)
(Incorporated in the Republic of South Africa)
AFL (JSE) AFKDY (NASDAQ)
(Registration number 1921/006955/06)
ISIN: ZAE000061461 Share Code : AFL
("Aflease" or "the company")
AFLEASE ADS RATIO & NASDAQ SYMBOL CHANGE
Johannesburg, 9 February 2005.

The name of the company changed from The Afrikander Lease Limited to Aflease Gold and Uranium Resources Limited with effect 25 January 2005. As a result, the NASDAQ trading symbol has been changed from AFKDY to AFLUY to reflect the name change of the company. In addition, Aflease Uranium and Gold Resources Limited has announced a ratio change of its American Depositary Shares ("ADSs") so that one ADS will equal 10 ordinary shares. The previous ratio was one ADS to one ordinary share. As of close of business on 8 February 2005, current ADS Holdings will be changed to reflect 10 ordinary shares for every 1(one) ADS currently held. As a result every 10 ordinary shares is equivalent to 1 ADS. For those holding American Depositary Receipts (ADSs) via their brokers, they must request their US brokers to tender their existing ADSs and exchange these for the new ADRs.

For those with ADSs holding physical instruments, they should tender their ADSs and request their exchange by contacting:
The Bank of New York
Tender and Exchange Department
101 Barclay Street
New York
NY10286

It should be noted that the holders will NOT be charged any fees for this tender and exchange.

-END-

From my friend Mahendra to his subscribers on the silver scuttlebutt:

Last night I received many emails concerning some negative news on silver.

My advise - NEVER BELIEVE IN RUMOURS, JUST BELIEVE IN WAVE OF NATURE OR THE TIME. IN LAST HUNDRED YEAR MARKET NEVER MOVED UP OR DOWN IN MEDIUM OR LONG TERM ON RUMOURS BASIS, RUMOUR CAN IMPACT ONLY FOR FEW HOURS.

You all you are educated and intelligent people, so delete next time rumours email and first talk to yourself. Nobody gains in this world financial market on rumours, infect rumours divert your focus.

WE ARE VERY NEAR TO TURN AROUND PERIOD FOR METALS (must remember your investment should be 60% in silver, 10% corn, 10% cotton, 10% Palladium, 5% bonds, 5% Gold and rest in other area).
THANKS & GOD BLESS
MAHENDRA
http://www.mahendraprophecy.com/

The silver mugging comment from my STALKER source created somewhat of a furor. I received a number of phone calls and it elicited a great deal of speculation.

Hi Bill:
With regard to your mention of the possibility of a group taking silver down, when last week they were going to take it up, look at it this way:

1) You had 843 million US dollars.

2) You heard of and then studied the possibility of once again cornering the silver market... and found it a cinch.

3) With wisdom you do not want to risk too much so you find a group of friends in your neighborhood or country. Besides reducing your financial exposure, more participants will serve to obfuscate any cohesion in the group's activities. Being a betting country, you find more people willing to bet on the story than the market will support, even at the minimum amount disposable to each participant, given the additional demand at current prices.

4) To make the deal better and in order to meet quotas, of course, and given the resources at your disposal, you decide to force the price down using a triangular trading operation (ask Jim Sinclair about that, though I am sure you already know).

5) Then buy without mercy.

6) Imagine 30 people somewhere untraceable doing this....in physical and futures, probably buying carefully physical scale down while bashing futures hard, then ceasing physical purchases while beginning to cover futures, then buying both hardd. Only so would the group manage to fill each participant's quota at a "satisfactory" price, given the risk of course (maybe that should be "lack of risk"?). Sharks is sharks.

What you hear coming out of London fits the above scenario.

Been here, seen this before.

Can it happen again? Each of us must answer that for him(her)self.

The supply/demand fundamentals, as you know, are not changing, actually getting worse (more bullish for price). The political climate has warmed with the Palestinian and Iraqi elections (I must applaud sincerely these efforts), but we are looking down the barrel of Syria, Iran and Lebanon (insert:I almost forgot about North Korea, continuing violence in Iraq...etc.). The possibility of the warm getting explosive is huge. But frankly, it seems to me that the generational bull market in gold has little to do with the war(s). After all, the rally in gold began significantly before 9/11. Massive world debt, over capacity, huge liquidity, escalating US deficits, Gold/silver supply deficits (also escalating in production terms), overblown bubble in real estate in US, UK and others, are the front line items. The Middle East and N Korea only help, not lead.

I had fun writing that! Sorry I went on a bit. At least it has shored me up for a couple of weeks, during which time I expect a firming, even if a swift downdraft is in the air.

Stamina is the game today given the fundamentals. Focus, focus, focus.
All the best,
David.
PS: The seed HAS been planted.

Bill,
After hearing another Gordon Brown terrorization of the gold longs I have come to an understanding regarding any and all gold commentary. It defies human nature to not want to maximize profit on ANYTHING you own, gold included. Therefore, if you actually OWN gold outright you are naturally bullish. If on the other hand you have sold gold, leased gold, sold short gold derivatives, own or sell paper interest that competes with gold, borrow money from paper entities that restrict gold ownership, forward sold "hedged" gold, disseminate information for a living that competes with gold, make jewelry from gold, or wish to acquire (more) gold by human nature you are bearish. Brown's very public opinion clearly is a man that represents people who do NOT own gold. His human nature reveals such. It's only a matter of categorizing the cause of his bearishness. Does he see the 3,000 ton IMF hoard as the last holy grail of suppression? Does he represent interests desperate to get the liquidity into an explosive market fast? Are BB's so way off sides on lease scams that it only clears the existing dilemma and not address demand? Is the IMF getting strong-armed? (Remember Kuwait dumping gold before being sold more weapons or the Catholic Church scandal that broke after a few "official visits"?) Are the shelves empty down at the GLD ETF shop and even the SEC doesn't want this herring smelling on their front porch? Any way you look at it, Brown desires a lower, not higher price.

A man who was bullish and actually cared about debt relief would talk of gold's historic undervaluation, would say in fact he thinks $1,000 might be closer to its true price, and lay out a plan that would contribute say $3 for every $10 in the rise in price. He would further add this is a double win for impoverished mining countries, who also benefit from the rising price. He would then call for the IMF to ADD, not sell gold reserves as a way to boost price. Just the announcement of this should send gold upwards by hundreds of dollars, providing immediate relief to indebted nations. That's the way a gold bull would think. A gold bear thinks precisely like Gordon Brown. I am a gold bull. I own it and desire a higher price. It's just my human nature. It's GATA's nature too, and to play a game that isn't rigged.
James McShirley

JUST IN: "Greenspan's Appearance On Fox News":

http://jessel.100megsfree3.com/treasurysecy.jpg

Well presented emails from two knowledgeable Café members on the IMF flap:

Bill:
In the face of the IMF's twaddle du jour, a bit of historical perspective may be in order. It was after all, Bretton Woods that marked the end of the gold standard but of significance, it was the International Monetary Fund and the World Bank that was born at that 1944 conference in order to facilitate the implementation of the mastery of fiat over gold. So it should come as no surprise when the IMF suggests the sale of bullion or any other corollary action, in order to depress its price; the IMF is after all, only protecting its franchise. Acting under the pretense of lender to the poor, the IMF sets about implementing its true agenda, while bathed in virtuous rhetoric. Edward Griffin, in his superb work, "The Creature from Jekyll Island" discusses this point and the IMF's surreptitious activities and I thought it would be worth my appending some excerpts from Griffin's work for Cafe members:

"The method by which gold was to be eliminated in international trade was to replace it with a world currency which the IMF, acting as a world central bank, would create out of nothing....If the IMF were to function as a true world central bank with unlimited Issue, the dollar had to be broken away from its gold backing...As such, [the IMF] has become the engine for transferring wealth from the industrialized nations to the underdeveloped countries. While this has lowered the economic level of the donating countries, it has not raised the level of the recipients. The money has simply disappeared down the drain of political corruption....the IMF has presided over more than two hundred currency devaluations. In private industry, a failure of that magnitude might be cause for going out of business, but not in the world of politics. An honest reading of the record shows that the IMF[] has been an engine of social waste and a fountain of abundance for the corrupt leaders who rule."
Go Gata!
Jeff

The Bush Administration has talked a good game as far as bringing the US budget/fiscal problems under control. The reality says the talk is just that…talk.

The New York Times
February 9, 2005
New White House Estimate Lifts Drug Benefit Cost to $720 Billion

WASHINGTON, Feb. 8 - The Bush administration offered a new estimate of the cost of the Medicare drug benefit on Tuesday, saying it would cost $720 billion in the next 10 years.

That is much more than the $400 billion Congress assumed when it passed legislation creating the benefit in late 2003.

But administration officials said the numbers were not comparable. The original estimate was for the years 2004 to 2013. The new estimate covers the period from 2006, when the drug benefit becomes available, to 2015.

The higher figure, which provides the first glimpse of the true cost of the drug benefit, could touch off a political uproar in Congress, where conservative Republicans were already expressing alarm about the costs of Medicare, including the drug benefit….

Lawmakers said they were shocked to see that number because it was close to the $400 billion figure they had previously been given as the price tag for a full decade. Estimates prepared by the chief Medicare actuary show that the spending for the prescription drug benefit will total $1.2 trillion from 2006 to 2015, before taking account of income that will offset some of that cost.

-END-

CARTEL CAPITULATION WATCH

The US stock market was hit fairly hard today. Bout time reality set in. The DOW lost 61 to 10,664, while the DOG barked 31 lower to 2052.

What is the bond market action telling us? Robust economy ahead? Don’t think so.

March bonds (117 6/32, up 14/32)
http://futures.tradingcharts.com/chart/TR/35

Word is the main reason for the bond rally is a short squeeze "convexity" trade. Perhaps, however, my smeller tells me something more significant is at play here.

An important US trade number to be released tomorrow morning. Estimates are for a reduction to $57 billion. Important? So was the jobs number, yet thanks to intervention the dollar and gold market went the opposite way of what EVERYONE would have told you prior to the disappointing report.

The dollar fell .07, with the euro rising .26 to 128.07.

US economic news.

10:00 Dec. Wholesale Inventories reported 0.4% vs. consensus 0.9%
Prior reading revised to 1.2% from 1.1%.
* * * * *

10:30 DOE reports crude oil inventories (1M) barrels vs. consensus +700K barrels
Gasoline inventories +500K barrels vs. consensus +1M. Distillate inventories (3M) barrels vs. consensus (2M) barrels. March WTI crude is trading higher in reaction.
* * *

10:45 API reports crude oil inventories (4.2M) barrels
Gasoline inventories (232K) barrels, while distillate inventories (4.2M)barrels. March WTI crude remains in the upward trend, rallying to a session high of $46.10/barrel in reaction.
* * * * *

Oil was all over the place – up $1, then down 50 cents. March WTI closed at $45.46, up 6 cents per barrel.

To my memory, this has never been seen before, even in the market low in mid 1999.

TOCOM slumbers on, with dealers complaining about the absence of the New Year celebrating Chinese. World gold went out 10 c below the NY close, volume slipped 13% to only equal 10,420 Comex lots; the active contract edged up 4 yen. Open interest was down the equivalent of 166 Comex. (NY yesterday traded 47,154 contracts; open interest rose 3,572 lots.)

An effort to rally gold in the early NY day was blocked, and an aggressive counter attack took gold to new lows on this downswing before another rally attempt erased most of gold’s loss – April closed down $1.10. Since it took a net increase in open interest of 11 tonnes to achieve this, it would appear that a serious seller is capping the market. Optimists would hope the lows were made on short selling, of course. We will find out on Friday.

Sometimes one wonders if one is watching the same market as the Bullion Bank commentators. Barclays this morning claims

"Although much has been made of the recent negative influence of discussion the possible sale or revaluation of IMF gold to fund debt relief of heavily indebted nations, the reality has been that gold has, in line with the correlation seen almost entirely throughout this rally, followed the euro."

A glance at the Euro chart of gold in the past few months – for instance at
http://www.the-privateer.com/chart/g-multi.html
reveals that this is just not true. Gold peaked on November 22 just under E345, staged an ugly sell off to January down to just over E320, rallied to the upper 320s by the end of the month, and has been knocked back down to the low this month.

A puzzling error.

Much more accurate today is the Gartman Letter, which displays a chart designed to convey that gold is still in the up channel which started in 2001 and remarks:

"We've not sold gold short, and some have taken us to task for our "indecision" in this matter. However, this still appears to us to be a very long term bull market, and in very long term bull markets one can have only one of three positions: Very long; modestly long, or neutral. We've chosen the latter."

JB