Beiträge von Schwabenpfeil

The John Brimelow Report

Maybe this '99 - but Spring or Summer?

Friday, February 04, 2005

Indian ex-duty premiums: AM $7.86, PM $8.67, with world gold at $415.65 and $416.20. High: ample for legal imports. The rupee weakened slightly today and the Reuters wrap up unprecedentedly attributed this to increased gold demand:

"The rupee ended weaker on Friday as …demand for dollars from gold importers weighed the Indian currency down…(a senior dealer at a foreign bank said): "There was some gold-related dollar demand as gold prices have fallen quite a bit and this also dragged the rupee (down)."

This is quite plausible – gold is India’s second import item after oil – but I have never seen it said before.

Gold’s fall in NY yesterday did elicit some response from TOCOM, albeit not very decisive. Volume jumped 52% to the equivalent of 18,219 Comex lots, and open interest rose the equivalent of 1,083 Comex (to the equivalent of 109,988 Comex). But Mitsubishi says the public was a seller and reports their long slipped very slightly (279 Comex lot equivalent). The active contract was down 11 yen and world gold stood 70c below the NY close at the end. (NY yesterday traded 59,831 contracts – 42% above the estimate. Open interest rose 1,121 lots.)

At the Shanghai Gold Exchange, premiums over world gold have now reached $4.04 -$4.47, with world gold at $415.65 this morning. This could be seen as a comment on the cheapness of $US gold; or as a statement of mounting confidence amongst the Chinese business community that G-7 efforts to curtail the Yuan undervaluation gravy train will fail. (The latter is my interpretation.) Premiums were last here at the bottom of gold’s downswing in May of last year.

The open interest data suggests that at least part of yesterday’s persistent selling pressure was shorting; although stop-loss selling was also detected. Gold’s weakness yesterday was not just a case of the market automatically adjusting to the flow of malign Official Sector comments: there was significant selling, especially in Europe.

This IMF gold sales saga has created an unusual situation amongst commentators. Three significant bullion banks, UBS, Royal Bank of Canada, and HSBC have now published analyses concluding that IMF gold sales (as opposed to market-benign revaluation) are impractical for reasons derived from the IMF Constitution and irrational from the point of view of debt relief. All three are making bullish noises:

UBS:
"We believe that selling gold for debt relief of poor countries makes no sense, as it is neither practicable nor necessary…we expect the market to snap back once revaluation and its implications are accepted by the market."

HSBC:
"…we doubt that anything material has changed in the bullion market to justify such huge swings in the long gold/short dollar positions and look at current price levels as an increasingly attractive buying opportunity"

(HSBC says of this afternoon’s CFTC report:
"had the data been collected at the close of yesterday’s trading rather than Tuesday’s the market could show a net short position for the first time since December 2001."
Remarkable!)

RBC:
"We feel the market has overreacted to Brown’s comments, and that gold is oversold… gold’s current weakness presents a good buying opportunity."

The problem with all this is, as remarked yesterday, extremely painful experience ’96-’98 taught that if the Official Sector is involved, being rational is very dangerous. This is because their objectives may simply not be what a business-oriented mind assumes.

In this respect it is ominous that the apparently casual remarks by US Treasury Under Secretary Taylor that the US was "not convinced of need for IMF Gold Sales" (as the Reuters news flash put it) was countered within half an hour by a UK briefing asserting "UK has G7 majority backing on debt relief".

Something is clearly stirring here.

If it involves gold, the physical market is behaving like summer ’99 (e.g. at the bottom) the noted gold bear, and for that matter the Gartman Letter with its Hedge Fund informants, while enjoying the spectacle, seem disinclined to go short.

JB

The gold open interest rose 1121 contacts to 254,051.

Silver continues to hold up well. I have been so wrong in the short-term lately, I hesitate to jinx silver. However, it is trading like it wants to climb over $7 fairly soon, once gold gets its bullish act back together.

The silver open interest dropped 32 contracts to 96,721.

The March dollar finished the day at 84.45, up .42. The yen rose to 103.93 and would have closed much higher if not for the euro rout.

Jesse later on after doing some serious homework:

Just going back to April 2003 which is as far as I have accurate records of my own, the BLS added a net 209,000 jobs into December in this revision.

This gives them the plus 146,000 that they achieved in January. It basically allowed them to overcome the adjustment in the Birth Death model which was 280,000 and even that was a bit light because they revised that back to April 2003 as well.

The bottom line is that we had a loss of jobs in January, and the non seasonal number was a shocking loss, but those numbers tend to vary quite a bit. However, just comparing january 2005 to january 2004 non seasonals we lost an additional 430,000 jobs in January 2005.

***

Back to the market. The Gold Cartel (trade) capped the price early, sold a little more when the dollar reversed… then watched the funds unload as the euro collapsed. When gold dipped $2/$3 on the day, they turned heavy buyers. Same drill as yesterday. More profits for the crooks (Goldman Sachs, JP Morgan Chase, etc.) and more losses for the bewildered little guy investor.

This is not sour grapes. It is fury over what is going on here. Day after day we receive commentary from all over on how solid gold demand is. We hear from veteran gold investors how pleased they are with the new gold EFT’s and what a significant plus it is for the gold market. Some say the biggest deal in 20 years. Horse Manure. The only thing that counts is whether The Gold Cartel can be beat. Until they are carried out on stretchers, nothing will matter.

This is why GATA is going through an extraordinary effort to host GOLD RUSH 21 (http://www.goldrush21.com/ ) in the Yukon. Enough is enough. As long as we are focused on the gold sector, we might as well do what we can to stop being pushed around by a bunch of arrogant bullies. On that note we have begun to send out our invitations.

This is not sour grapes either…from Jesse this morning:

First, I will be putting something on this out later, to show what happened, but the BLS went back and revised the jobs to MARCH 2004 to dig up enough jobs to make January look 'good' enough to pass, and keep December from dropping too much to make things look bad and keep Bush from being the first president to lose jobs in his first term since Hoover.

So bonds are up and stocks are up and the dollar is holding its own.

Does anyone care what is 'real' anymore? Does anyone actually concern themselves with anything except the last trade and next one, whether they are based on anything but falsehoods anymore.

I can honestly say this is the FIRST time I have ever really been discouraged about things. The sheer hypocrisy and willingness of the financial press to accept these falsehoods is just .... almost too much to bear.

***

Oh wait, just in – here is a reason for the dollar to take off against the euro this morning:

Moscow News
Friday, February 4, 2005

http://www.mosnews.com/money/2005/02/04/currencybasket.shtml

Russia's central bank said on Friday it had begun targeting the ruble's nominal exchange rate against the euro as well as the dollar, the Reuters news agency reports. The shift is meant to bring currency policy more in line with trade flows.

The Bank of Russia said in a statement it had begun targeting a dual currency basket -- made up of 90 U.S. cents and 10 euro cents -- as of Feb. 1 and would gradually raise the weighting of euros.

"Increases of the weighting of the euro in the twin currency basket, to a level appropriate for the task of exchange rate policy, will take place step-by-step as market players adapt," the statement said….

-END-

No matter. The Orwellians were ready to turn the jobs report lemon into lemonade via dollar intervention. They would use Greenspan’s comments to turn the dollar around and get the currency traders onside. It worked. Since PRICE ACTION MAKES MARKET COMMENTARY, the spin by the pundits would focus on how right Greenspan is.

This has become The Twilight Zone, worsening from The Stepford Wives/Matrix Syndrome. Facts mean little anymore. Spin and market manipulation rule the day.

As anecdotal evidence of how trumped up today’s dollar action was, we need only see what the 30-year bond did:

March bonds, 105 29/32, up 1 3/32
http://futures.tradingcharts.com/chart/YH/35

Good grief. Taken by itself, the bond market move to new low yields suggests a massive recession coming down the road. Some will say it portends deflation and rightfully so.

That will be open to various interpretations. Yet, was does not jibe is the action of the dollar (euro) vis-à-vis the bond move. Had the bonds collapsed signaling much higher interest rates, one could understand the dollar going much higher. However, that is not the case at all.

Huh? What a joke! He said nothing. There is zero evidence of any improvement in anything on the US scene to alleviate our growing fiscal problems. As a matter of fact, there is actually evidence the situation is worsening:

NEW YORK, Feb 4 (Reuters) - U.S. inflation pressures rose in January as a result of faster growth in loans, but that was offset by slower growth in input prices, a report said on Friday.

The Economic Cycle Research Institute's Future Inflation Gauge, which is designed to anticipate cyclical swings in the rate of inflation, rose to 120.0 in January from an upwardly revised 118.7 in December, the research group said.

The index's annualized growth rate, which smooths out monthly fluctuations, rose to 4.5 percent in January from an upwardly revised 3.4 percent in December.

"The index is designed to signal the future direction of inflation, and it is clearly telling us that there is no downturn or easing of inflation in sight. This is at odds with the market's initial response to today's weaker-than-expected jobs report," said Lakshman Achuthan, Managing Director of ECRI.

-END-

08:46 Greenspan says that market pressures may reduce the current account deficit
Greenspan notes that US exports are increasing, and a drop in imports may be approaching as import prices have been rising. The Fed Chairman's comments were made at a speech in London.
* * * * *

LONDON, Feb 4 (Reuters) - Federal Reserve Board Chairman Alan Greenspan said on Friday market forces and likely action by Washington to cut its budget deficit "appear poised" to stabilize, and perhaps cut, the record U.S. trade gap.

"Besides market pressures, which appear poised to stabilize and over the longer run possibly to decrease the U.S. current account deficit and its attendant financing requirements, some forces in the domestic U.S. economy seem about to head in the same direction," Greenspan said in remarks prepared for delivery at a conference hosted by the British Treasury.

"The voice of fiscal restraint, barely audible a year ago, has a least partially regained volume," the influential Fed chief said in an apparent nod to the Bush administration's pledges to hold down government spending.

Analysts have said a fall in the value of the dollar over the past 3 years had partially reflected nervousness over record U.S. budget and trade gaps.

Greenspan said the willingness of overseas businesses that export to the United States to accept lower profits, which has helped hold down U.S. import prices, may wane if the dollar falls further.

"We may be approaching a point, if we are not already there, at which exporters to the United States, should the dollar decline further, would no longer choose to absorb a further reduction in profit margins," he said.

Greenspan said higher U.S. import prices would cut the volume of imports "but leave the resulting value of imports uncertain."

-END-

As has been the case for months for US economic statistics, the number came in weak with the previous month’s job number revised lower to boot:

08:30 Jan. Nonfarm payrolls reported 146K vs. consensus 200K; unemployment rate reported 5.2% vs. consensus 5.4%
* * * * *

08:30 Jan. average hourly earnings 0.2% vs. consensus 0.2%; average weekly hours 33.7 vs. consensus 33.8
* * * * *

08:30 Dec. Nonfarm payrolls revised to 133K from 157K
* * * * *

This very disappointing payroll number sent the dollar reeling. The euro rose .8 and the pound and yen took off. Yet, an oversold gold could only go up 20 or 30 cents. The gold action was beyond terrible. I sat there starting at the screen uttering, "Uh-oh, something is up and it’s not good….gold should have popped $3 easily on the news."

No sooner had those words come out of my mouth when the dollar made a sharp u-turn. The March euro went from 130.42 to 129.13, rallied, then plummeted to 128.83, down .92. Gold dropped $3. Obviously, for the second day in a row, The Gold Cartel traders knew intervention was soon to hit the market, so they sat on the gold price, waiting to rip off the unsuspecting public who went long on the lousy jobs news. What was it, I wondered, that could move the dollar so much, so fast? When I found out it was a big fat zip nothing, I almost fell off my chair:

February 4 – Gold $414 down $2.20 – Silver $6.61 down 5 cents

The Twilight Zone / Greenspan On Gold In 1981

Obstacles are those frightful things you see when you take your eyes off your goal..Henry Ford

GO GATA!!!

The nightmare rolls on and the patsies in the gold industry maintain their Tweedledee Tweedledum silence over the glaring manipulation of the price. (Emphasis on dum).

From yesterday’s MIDAS:

"Once again, gold broke first, followed later by an UP move in the dollar. The Gold Cartel traders get their heads-up before the rest of the market participants and get in their money-making licks ahead of time. Let’s hear it for democracy and our free markets."

Well, the Orwellians swung into action for the second day in a row with even more blatant price managing today. First, firm physical demand supported the gold price in London with the AM Fix coming in at $416.50, up from the Thursday Comex close. However, by the open this morning, gold (as usual) came off that Fix to come in $1 lower. All eyes were on the pivotal US jobs number.

Natürlich muss man sich immer Gedanken über die Ziele der Investion machen. Sowohl bei FE als auch MP bekommt man die 10 oz Lunar's für etwas über 80 EUR.

Gruß
Schwabenpfeil

Als Aktionär würde ich die Schliessung der südafrikanischen Minen begrüssen. Es macht keinen Sinn, zu diesen Randpreisen Gold aus dem Boden zu holen. Für die südafrikanischen Minenarbeiter wäre der Schritt aber brutal ...

Gruß
Schwabenpfeil

Eure Vergleiche sind m.E. "schief". Fängt damit an, dass Ihr die Preise für aktuelle Jahrgänge der Maples mit älteren Jahrgängen der Lunar Serie vergleicht und dabei offensichtlich die günstigeren Quellen für Lunars gar nicht kennt. Kein Wort auch über 10 oz Lunars, die bspw. auch relativ nah am Materialwert zu bekommen sind ...

Gruß
Schwabenpfeil

Appendix

Feb. 3 (Bloomberg) -- Oil, metals and even aircraft may one day be priced in euros, not dollars. Dream on?

As the dollar stays weak on foreign-exchange markets, with little sign of a sustained recovery, there is speculation that at some point commodity prices will drop the U.S. currency. If that happens, it would herald a wider realignment of the global financial system -- and would indicate that the dollar's reign as he world's reserve currency was coming to a close.

It is too early to conclude the dollar is finished. Yet the challenge is real and growing. The world may well be set for a period during which the dollar and the euro compete for reserve status -- hardly a promising situation for global stability.

The dollar is being shunned for obvious reasons. The trade deficit grew to a record $609 billion last year, and George W.Bush's administration expects the budget shortfall to reach arecord $427 billion in the year ending in September. The New York Board of Trade's Dollar Index, which measures the dollar against a basket of six currencies, has dropped 18 percent since the end of 2001.

There are three key responses to the changing status of the dollar in the global financial system. Central banks may shift their reserves out of dollars. The Asian currencies could endt heir pegs to the U.S. currency. And lastly, we could witness a breakdown in the pricing of commodities in dollars.

Central banks are already slowly raising the proportion oftheir reserves in euros, and reducing their dependency on dollars.That is likely to continue. Yet it will be a slow process -- not least because no central bank will want to dump dollars into an already fragile market.

Asian Pegs

Asian nations may or may not end their dollar pegs. Politics as much as economics will play the main role in those decisions.

That leaves commodity prices. If the dollar's unique status is indeed coming to an end, that is where we will see it first.

``It is crucial to the dollar's dominant role as a reserve currency that dollar pricing of oil should continue,'' notedStephen Lewis, economist at Monument Securities Ltd. in London, ina recent analysis of the currency.

Is there a realistic chance of oil or any other major commodity switching its pricing into euros?

Last month, Hamad al-Sayari, the governor of the SaudiArabian Monetary Agency, caused a ripple in the market with comments that he thought the role of euros in central-bank reserves would increase in the future, according to the Jeddah,Saudi Arabia-based English-language daily Arab News. Morepertinently, he said it didn't matter much whether oil was pricedin dollars or euros.

A Bookkeeping Matter

It might not matter to him, yet it does to everyone else.

Take a look at the issue from the perspective of an oil producer -- or a producer of any other major commodity.

At one level, which currency you price your products in is largely a matter of bookkeeping. The Saudis can price their oil indollars, or the South Africans their gold, or the French all those new Airbus SAS aircraft, without it making much difference to their actual income. As soon as the dollars come in, they can sellthem for whatever currency they want. If you are uncertain about the future price that your product is likely to command, then youcan buy and sell currencies in the futures market.

Just because you price a product in a currency, you aren't compelled to hold that currency.

In the medium term it does matter. The producers of any product are looking for high and stable prices. If your product ispriced in a permanently weak currency, then you have to keepraising the prices. That is far from satisfactory. At some point,the temptation to switch to a stronger currency will become irresistible.

Who Will Break Ranks?

Next, commodity pricing matters to the currency markets. The fact that commodities are priced in dollars is one of the key sources of that currency's strength. Everyone buying big-ticket items such as oil, metals or aircraft must buy dollars for theirpurchases. That is a major source of demand for the currency.

Who will be the first to break ranks? Right now, that is no more than speculation. Russian oil must be one candidate -- most of it is sold in Europe anyway. Airbus aircraft must be another candidate -- the bulk of its costs are in euros, and it has the luxury of now being the dominant producer in its industry.

Nobody should hold their breath. ``Maybe one day,'' saysAirbus spokeswoman Barbara Kracht in an e-mailed response to questions. ``The point is that it is the customers who decide, and for the time being they are asking for quotations in dollars.''

Decline or Rout?

True enough. You need to hold a very strong market position to impose a new currency on your industry.

Much depends on the future path of the dollar. It has been weak for about three years now. So far, producers have responded with higher prices. Two more years of dollar weakness, and they may well decide to take more radical action.

It will only take one commodity producer to break ranks, and the move will be widely imitated. At that point, the dollar's decline could well turn into a rout. Commodity pricing is now the weakest line of defense for the dollar.

The HUI finally took out 200 closing at 198.76, down 4.70. The XAU gave up 1.32 to 91.02.

My short-term analysis has been off. This is the difficulty in using normal fundamental and technical analysis in a rigged market. Whether my view of the market in the short-term can be rescued should be known shortly. It is one ugly gold chart, with a breakdown occurring after a sideways basing pattern.

The ideal situation would be for today’s orchestrated gold action to become an island, a blow-off bottom. In other words gold comes in higher tomorrow, shrugs off the US jobs number in the morning, and then quickly moves back above $420. From a share standpoint, it would be classic for the HUI to open above 200 and keep on going.

That is not a prediction, a HOPE trade. Regardless of what the cabal sent our way today, the technicals (market makeup component only) and fundamentals are very bullish. This is a storm to be weathered.

GATA BE IN IT TO WIN IT!

MIDAS

An FYI for you:

Bill,
The title of yesterday's "Midas", 'Stalemate Everywhere', was right on, and perhaps more than most realize.

As the intervention policy ages and continues violating the natural law of supply & demand, not only must market interventions increase in frequency, size, and become more direct (blatant), policy must be also be expanded to more and more markets to keep them under control.

As a result, more markets are simulating the fraudulent trading action (action contrary to underlying fundamentals & unhampered market action) of precious metals, copper, the dollar, stock indices and bonds. The most recent addition additions, from what I have observed, are coffee and sugar. This isn’t too difficult to fathom considering the equal weighting of commodities in the CRB index.

In coffee in the past month has had several outside trading days to the upside (potentially a powerful signal). These powerful signals have been negated the following trading day as if they never occurred. This mirrors the market action of gold and oil, where the market is almost always stuffed the day after one of these 'potentially powerful upside signals'.

In both coffee and sugar, where the fundamentals are getting more bullish every day, the upside movements are limited and appear to have the same capping characteristics of gold and silver. Also, when there is a day of upside volatility, rarely is there a second consecutive day of upside volatility.

Which will be the next commodity to mirror the trading characteristics of gold and silver? What will be the next step taken when current interventionist techniques no longer are effective?
All the best,
Raymond

WHY THE BUNDESBANK WILL NOT SELL GOLD

Better news for gold investors came from Germany, when Germany’s central bank sasid had decided not to sell gold for the 12 months to this October at least. But what was behind this?

Most people think that this was just a show of independence by the Bundesbank, which was threatened by the public demands of the finance minister, Hans Eichel, that it had to sell the 120 tonnes a year for five years allocated to it under the current European central bankers’ gold pact. Eichel needs the money desperately to help fill a yawning budget black hole. So he piled on the pressure. After all, he must have thought, I appointed Weber to be Bundesbank president less than a year earlier – the least the chap could do is pay back the favour!

Well, there may be some truth in that so far as it goes. But in fact Newsmakers understands that the Bundesbank would not have sold the gold even if Eichel had kept his mouth shut – Eichel’s intervention just made it easier for its board, which had been dithering on the issue, finally to make up its mind.

The Bundesbank had always made clear that it would not sell just to finance the current expenditure of Germany’s federal government. Board members felt that to sell an asset to plug a hole in the government’s finances would have further undermined business confidence in current economic policies (currently at an all-time low) and in the Bundesbank as an institution. So the board came up with some reasons for not selling like "gold is of great symbolic value" and so on, which pleased the gold bugs no end.

WEBER’S STAND

The new boss of the Bundesbank knew he had to make a stand, like Thomas a Becket in 1170, against the politicians. But he had his reasons. It would not be surprising if his views on the impropriety of financing current government deficits by asset sales exactly coincided with those of the ECB’s boss, Jean-Claude Trichet himself. If the ECB could let Germany get away with selling gold just to finance a budget deficit, all hell would break loose – why, all European governments would start doing it! Goodbye to ECB independence! (Of course, France is selling, but then, France is different, isn’t it?)

One should also remember that Weber, an academic economist who was only appointed last year when his predecessor, Hans Welteke, was sacked in a scandal also connected with gold, is still very much the new boy in the august company of Europe’s central bank governors (NB to Britain’sGordon Brown – keep away from gold for the sake of your own health).

Weber hardly wanted to be given the cold shoulder from fellow governors for "rocking the boat" at his next ECB council meeting. Far better to offend his old pals at the finance ministry than his new ones at the ECB. You can imagine Eichel muttering, like Henry II of England, "Who will rid me of this meddlesome priest?"

Newsmakers nervously awaits news of Weber’s current health.

-END-

GORDON BROWN EYES IMF GOLD

He is at it again. Having upset the gold market back in 1999 through his action in dumping of some of Britain’s gold stock, the British chancellor now wants to "use" the IMF’s gold for his pet political project of debt relief – going after other people’s money in order to cover himself in glory as the friend of the poor. This weekend he will be drumming up support among the finance ministers and central bankers attending the G7 summit for his proposal that the Fund should either sell or revalue its gold to finance debt relief. This could stir up the whole question of official gold sales all over again, just when the central bankers thought they had got it all nicely under control and out of the news. Trichet and other European central bankers didn’t welcome Gordon Brown’s initiative in 1999 and they will like his new proposal even less. It will probably eventually get kicked into the long grass by the Fund and the Europeans. Gold always causes politicians problems but they just can’t keep their grubby fingers off the stuff.

An interesting heads-up from one of your fellow European Café members:

Hi bill,
here the gold topics from central bankers website.....
In the latest topic(weber's stand) states: "Hans Welteke, was sacked in a scandal also connected with gold"....cant remember this one, do you?
greetz
mihaly

Subject: NEWSMAKERS - CENTRAL BANKERS IN THE NEWS
NEWSMAKERS - CENTRAL BANKERS IN THE NEWS

Central Banking Publications
-- 2 February 2005 --

Previous issues of Newsmakers can be found at http://www.centralbanking.co.uk/newsmakers/index.htm

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

Newsmakers deals with aspects of central banking that are frequently neglected. Daily coverage of general central banking developments is available to subscribers through our website CentralBankNet.com http://www.centralbanknet.com/

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

Bill;
Don't want you or anyone thinking that I am necessarily a huge fan of Al Jazeera but please do look at this article:

http://english.aljazeera.net/N…666-9014-2209F872A840.htm

Kurdish party says self-rule inevitable

Kurdish self-rule is inevitable if not imminent, according to Kurdistan Democratic Party chief Masud Barzani.

Commenting on an almost unanimous vote for independence in an unofficial referendum held on 30 January, Masud Barzani said on Wednesday that "when the right time comes it will become a reality"........

I follow the news on CNN and CNBC, CBC and the major papers quite closely most days. For the life of me I cannot figure out why I was completely unaware that the Kurds were simultaneously holding a referendum on independence whilst Iraq was having their much celebrated National Election? The Kurds are apparently railing for self determination and the annexation of strategic oil producing areas [like Kirkuk] in the North of Iraq. And people are actually surprised that there was a large turn out in Kurdistan in the North? Seems like there might be a plan Stan, to carve this puppy up and piece it off to cronies. I'm not saying I blame the Kurds for any of this but coverage on this election by western press appears shameful. Can't say I'm surprised.
best,
Rob

Unfortunately, the real Iraq story is going to wreak havoc on US financial markets as the year progresses.