Beiträge von Schwabenpfeil

The John Brimelow Report

Could this time be different?

Friday, March 18, 2005

Indian ex-duty premiums: AM $6.49, PM $8.23, with world gold at $439.20 and $436.40. Adequate, and lavish, for legal imports. This is basis Bombay, usually said to be the biggest bullion entry point for the country. The other cities Reuters reports were not quite as exuberant (possibly because world gold was volatile during the Indian afternoon) but were generally quite conducive to importing. It appears India is a serious bidder for world bullion below $440.

Japan’s response to gold’s drop yesterday was minimal. On virtually unchanged volume equal to 13,428 Comex lots, open interest did edge up 422 Comex lots equivalent; Mitsubishi’s data implies the public added 1.1 tonnes to their long. The active contract closed down 8 yen, but world gold stood 65c above the NY close at the end. Japan is closed on Monday. (NY yesterday traded 82,581 lots - heavy, even netting out 10,580 for switches. Open interest slipped 398 lots to 335,132.)

Shanghai, if the data is to be believed, responded with more enthusiasm than Japan. Premiums of $3.32 - $3.50 were $2.50 or so above yesterday, with world gold $4.90 lower. Yesterday, of course, saw a serious assault on gold. As Rothschild reasonably remarked:

"Having failed to break through resistance at US$445 traders became weary of remaining long and took profit."

Scotia Mocatta’s version was:

"Funds and dealers were both sellers of the metal and there were very few bids around until we saw the 440.00 level. Gold found some support in this area, but soon broke through with stops being hit. From here, it traded down to a low of 437.10/437.60 with some decent physical buying going through."

Mitsui-NY explicitly says

"Yesterday the broker who was the featured buyer a weak ago turned seller of 2,500 contracts on the Comex."

The fact that open interest fell so little with such extensive (and plausible) talk of stops being hit suggests that, as suggested yesterday, predator funds were shorting in reaction to the large scale seller detectable this week c. $443. No doubt some longs were faltering too. Refco Research observes:

(Gold’s) "failure to pierce 445 resistance and subsequent retreat through 440 support suggests fund interest has waned for the moment in the face of some determined dealer selling."

All this being so gold’s recovery in the face of the dollar’s rally this morning (which followed a softening in gold in a pattern noticeably common nowadays) is rather surprising. Could it be that the cycle of liquidation which normally follows the re emergence of the resolute seller has been short-circuited? Reuters found a London trader this morning who appeared to think so:

"Yesterday fund liquidation took it down, but there were funds buying it as it came down. We're seeing a repeat of that …"

2005 seems likely to be a year to remember.

JB

To give you some idea how aggressive The Gold Cartel selling has been, the large specs increased their net long position by 40,645 contracts and that was prior to Wednesday when they stopped the price rise dead in its tracks. This is the same fund buying which sent oil and soybeans soaring. But not gold, for it is a corrupt managed market.

We shall see on all this. All I know is you couldn’t pay me to be short gold.

OL' FOGGIE gives us some idea what kind of risk the gold shorts are looking at:

Bill;

Your median Gold price comparison $620, (1980) with CRB converted to the equivalent to today’s inflation adjusted labor dept. gold price would be $1434. We are being beat out of approx. $1000 on each ounce of gold we might own. Yikes!
OL' FOGGIE

The Gold Cartel is going to go all out to wipe the funds out again. For that not to occur, gold must clear $440 quickly and then take out $445 soon thereafter.

This is not going to happen. Yet, it gives you some idea of the magnitude of the problem the major gold shorts have. A substantial portion of the gold shorts are tied to derivatives in some manner. Should a derivatives neutron bomb go off somewhere in the financial world, it will have to affect entities carrying gold derivatives who have upside gold exposure. If even a small portion of the shorts try and cover, along with new investment demand around the world, the gold price will go bonkers, increase the gold option volatilities, and set off the Gold Derivatives Neutron Bomb. It is for this reason The Gold Cartel instituted their $6 Rule years ago. IT is their worst nightmare.

In my Wednesday MIDAS I stated:

"The gold price is rigged. The upside, until The Gold Cartel is sent to a firing squad or the gold derivatives neutron bomb is in the process of going off, is nil at present."

Gold then dropped $5 like a stone on Thursday. Certainly, while disappointing, it was no surprise. It was clear The Gold Cartel was not going to let the price go up no matter how high oil went, how high the CRB went, how low the dollar fell, and how much the funds were buying.

The investment world is aware of our fiscal deficit problems, consumer debt levels, soaring commodity prices (led by oil), etc. However, most are unaware of the enormous level of market rigging undertaken by The Working Group on Financial Markets. Without getting in to all that again, the result of the market manipulations have been calm, steady US financial markets. Downside volatility in the stock and interest rate markets has been reduced so much that market participants cannot conceive of a calamity anymore. They have been set up for one like never before. When it comes, the surprise will be greater than in 1929. It will be like the Titanic hitting and iceberg and going down. The unthinkable.

One of the great shocks will be what the price of gold does. As the GATA camp and Café members know, the price has been managed and kept artificially low for more than a decade. To achieve their mission the crooks have lent/swapped more than half of the central bank gold the world thinks they have. That half is gone and they cannot get it back – or I should say, at this point they can’t get it all back any price less than say $1500 per ounce. These haughty central/bullion bankers would have to be bailed out by the peasants of India turning in their investment jewelry in the form of scrap. Even then it would take months, years to refine it all.

Why that title today:

It doesn’t mean someone won’t make money on the downside in the near term. What it does mean (IMO) is the risk of being short now versus the upside potential is beginning to go off the charts. Gold could potentially drop another $10 to $30. However the upside risk for shorts is $100 to $300, or more.

The reason for stating this is the increasing likelihood of a derivatives neutron bomb going off in the weeks and months ahead. There are signs here and there one could be brewing – the most visible ones being the collective crummy action of derivatives-laden corporations like Fannie Mae, AIG, and GM. Then you have the lousy stock market action in general (new DOG lows for 2005 were hit today) and the gargantuan effort of The Gold Cartel to prevent gold from taking out the $445 level. This highly visible effort by the cabal suggests something is very wrong behind the scenes and that they are petrified a soaring price of gold could exacerbate some big problem out there in financial land.

Bombs, such one that might be brewing, are not announced in advance. They just go off. Most all market participants are caught unaware and are shocked, after efforts to solve the problem behind the scenes fall apart. Usually, it then precipitates some kind of market panic.

March 18 – Gold $438.80 up 70 cents – Silver $7.35 down 1 cent

You Have To Be Out Of Your Mind To Be Short Gold – Either That Or Clueless

"Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket." - Michael Belkin

For the second trading session in a row, the action in the gold market was unusual and could bode well for its price in the near future. Yesterday, it was the senior shares coming back to the unchanged level with gold down $5. Today, it was gold’s ability to bounce back when the dollar was sharply higher. When the dollar was down .60 and the euro up over a full point, gold could have collapsed with the funds as long as they are. Instead it turned around after slumping to $435, down $3. Gold recovered first, then the euro followed to eventually close down .55 to 133.43. The dollar rose .29 to 82.10.

You Have To Be Out Of Your Mind To Be Short Gold – Either That Or Clueless

@ Freunde der Le Metropole-Texte:

Ab nächste Woche am Dienstag muss ich für ca. 2 bis 3 Wochen beruflich ins Ausland und werde in dieser Zeit keine Möglichkeit haben, die Texte aus dem James Joyce Table hier zu posten.

Sollte jemand die Möglichkeit und die Zeit finden, sich in dieser Zeit vertretungsweise (bspw. per Testabo) im Le Metropole anzumelden und den "Service" weiterlaufen zu lassen, wäre es sehr schön ...

Viele Grüße
Schwabenpfeil

Appendix

New French gold site:
HI,
Dear Bill and REG, here is a new french instrument for GATA supporters =>

I am glad ( and proud) to present you our creation...

The only french Gold, silver and mines website...it's not a personal page anymore, but a real site, (with several private forums inside)....and it is a pro GATA one...!

HARDINVESTOR

http://000999.forumactif.com/

As you'll be able to see, we (mary and me) have put several direct and indirect links which lead to gata and gata supporters...goldensextant, etc...

we are not used with html programming, so it's been a very hard work for both of us two.

We hope it's worth the energy we spent...feel free to comment .

I dared put lemetropole and goldensextant in partner sites, we hope it's not a problem for Reg or for you, if it is a problem, feel free to signal it.

There's a part of our posts which are in free access...for example our initiative to relay GATA's campaigns... as the letter to send to mines board about your Klondike's conference, news about Banchard vs barrick and jpm, etc...

It's an evolution of the private gold forum of actibourse that we left in february 2005...

It's very hard for us to promote our site in France (and gata's thesis) ; because of the censorship and sabotaging we are exposed to on the main financial francophone site: boursorama.com

So, if you consider that our new site is credible enough to be add in the list of your partners, it would be a great honor for us.
------------------------------------------------------------------------------------------------

If you decide to accept, here's our logo:

http://img29.exs.cx/img29/650/vraihardlogopourmidas6fr.jpg

the presentattion text should be both in french ( for the canadian quebec cousins) and in english:

" Hardinvestor est un site français gratuit fondé et animé par des passionnés qui supportent de longue date des theses du GATA. Ce portail en français comporte plusieurs forums thématiques (dont une partie est en lecture libre) consacrés principalement aux métaux précieux, mines et physique, mais aussi OIL et Gaz. L'acces aux forums privés s'opère uniquement par parrainage".

Hardinvestor is a french free site, founded by some old gold and silver bugs who share a real passion for the GATA's thesis. This portal contains several thematic forums ( with a part in free reading without membership request) about PM's (mines and physical), but also OIL and Gaz. The access to the several private forums is possible only by the sponsoring of a veteran member."
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Wathever will be your decision on this topic, we will, off course, continue to promote your marvelous and impressive work, and to support the camp of truth.

Best regards and congratulations.

GO GATA...Bury the Cabal...GO GOLD...!!!

If there was any good news on the gold/silver front today, it was how well the shares held up under The Gold Cartel onslaught. The XAU actually rose .16 to 101.60, while the HUI only lost .06 to 220.15 and closed above 220 key support. No doubts about it … superb action.

What could be the reason? You never know for sure. However, I am sticking with my gut. The problems out there in US financial land are staggering. The likelihood of severe stress hitting our markets in the near future is highly probable. Long lost fear of loss of capital will return to the average psyche.

The Fed is in a dilemma. With commodity markets and real US inflation on fire, they should raise rates sharply. However, if they do the US stock and real estate markets could get severely whacked. And if the action of AIG, GM and FNM are telling us what I think they are, there is a derivatives debacle brewing. To raise rates sharply could set off the derivatives neutron bomb, just as a soaring gold price should. Thus the Fed is in a pickle.

However if markets unsettle further and fear takes over from greed as the investment emotion of the day, more and more investors all over the world will run to gold – especially with commodity markets as a group on such a run.

My guess is The Gold Cartel knows this and has begun to buy gold shares again. It is either them or others who see what I see in the markets. If all heck breaks loose as I believe it will, the cabal will probably lose control of their fraudulent price-capping scheme. At that point gold could rally $100 per ounce in a week, overnight maybe. The gold and silver shares will go ballistic.

This is why it is so important to keep in mind:

GATA BE IN IT TO WIN IT!

MIDAS

ECU Silver (33 cents Cdn) news:

ECU Silver Mining, Inc.: Press Release-Completion of Phase II Mill Expansion and Initiation of Phase III Program

The Company also wishes to state that it is active in pursuing large acquisitions in the area, designed to eventually gravitate the Company to becoming a mid-sized producer.

http://biz.yahoo.com/ccn/05031…3ac2c8b4d085194739_1.html

-END-

My kind of guy:

hi again bill, these guys running "our" gold mining co. are like "deer in the Headlights" when it comes to understanding that a cartel is controlling the price of gold and silver!!!! i mentioned to the cfo of ========= mines, that anyone in his business who did not understand that precious metals have been manipulated for years, had a brain, the consistency of hot oatmeal! I was being generous! further, as i was a significant shareholder in his establishment, i recommended that he get his goggles, snowshoes, and santa outfit, and head for dawson city, yukon, as it was a stones throw from where he parked his fat butt. i further gave him the gift of light and understanding, by suggesting he click on lemetropolecafe, where bill murphy and friends would educate him on matters of suppression!!! i further told him that if his name was not on the attendant list of bright eyed and bushy tailed guests at "gold rush 21", he would find out what suppression felt like, when i sold my #%&%#** shares in ========mines!!!!!! i further assured him, that his next accounting job would probably be counting sheep in the australian outback!!!!! last i heard he was starting up his snowmobile heading your way!!! look for the brown trail! best to us all,

Why betting on sound gold exploration companies will eventually prove to be a mega investment winner:

Hi Bill, trust you’re doing well.
I just wrote a piece yesterday to a couple of petro-geo friends of mine about these topics! There are very few "giant" undeveloped gold and silver deposits out there today, and these are what the big companies are looking for. A case in point is Barrick’s Pascua deposit in Chile/Argentina (ore in Chile; waste dumps in Argentina). It’s a big deposit, but a large engineering firm gave them a cap cost estimate of something like $1.4B to put it into production. Too much money to fund at the time. Does one want to put the entire company in jeopardy for the sake of one mine? Barrick never made any real money on Pierina, despite the hype and moderate gold grades; too much money paid out in stock to buy the property. Ironically, certain of the exploration plays are really where one should put money to work. For certain of these companies are focused on finding high-grade metal deposits, the only ones that will have "real" profit margins. One just has to do more work to find those exploration companies!
Best regards, Rick

Some insight into Asians and gold, as well as the Chinese economy:

Thanks Bill,
I'll do my best on Gold Rush 21.

By the way, I recently moved to Singapore to pursue an MBA in International Business. Talking to other students (mostly Indians and Chinese) and regular people here, it's incredible how many of them are totally convinced of the precariousness of the whole financial system. Most of them hold physical gold, and those who can't afford it, say that they will as soon as they have some savings (you have to imagine that most people in Singapore have 2 low-wage jobs just to stay afloat). Gold is regarded as the ultimate wealth safe-box.

The Indians laugh at me when I ask them about the paper-gold idea.... I had a long taxi ride with a Chinese driver who knew more then me about the whole gold manipulation issue. That was really satisfying, after several years of total indifference in Europe.

Regarding the Chinese economy, all seems well, except for the fact that most big companies were State Owned Enterprises, and today still hold the burden of many decades of free loans and mismanagement. The economy will keep expanding, but the stock market is extremely dangerous (this was suggested also by several professors I know). The point is that the equity structure is pretty complex for every company, since there are several types of shares, of which most are not tradable. The Government aims at further relaxing the regulation, at which point some of those shares will hit the markets resulting in a crash. This has happened already a couple of times before and will certainly happen again. Another point is that most firms cooked the books in order to have a good IPO, and now they can't show growth anymore. It's a dangerous place... I would leave it to the Chinese pros... Well, as Richard Russell says, let's see what tomorrow brings. Cheers Chris

Love this one re India and gold:

Hi Bill,
thanks for publicising the Indian paper-gold story

http://www.iht.com/articles/2005/03/15/news/gold.html

I have it on reasonably good authority now that Indians will laugh this one out of town: I passed this article by my Indian housemate, who has been in Sydney only for a year and is still very connected to Indian culture, and she says no one is going to fall for this. She filled me in about Indian marriage rituals: the bride's dowry is, per a new Indian law of maybe 5 years ago, hers for life, and if the marriage breaks up, she'll get to keep all of it.

Traditionally the bride and groom perform a kind of dance around a fire, the central piece being seven steps, on each of which the bride is being gifted a piece of jewellery - imagine a change of tradition: here's a gold certificate my dear child - and here another one - ... ain't gonna happen. And this is all new gold, since a woman very rarely gives her jewellery away. It is for a reason that the gold market watches the Indian marriage season (October through February). Also, in the olden times, both families donated gold, which was melted together to make the marriage rings - isn't that wonderful!? These days the families donate money and the couple goes and buys - jewellery. So the physical metal demand increases even more.

The whole paper-gold idea may be just another case of Western cultural insensitivity and hubris, and the naïve and desperate belief in another "liberation" effort. We'll see how this flies, or crashes.

My housemate was only surprised that there are supposed to be $200 bn worth of gold in private Indian hands - but then that converts to just 0.6 ounces per head, at today's prices. That does sound realistic.

I wish you guys much success for the Gold Rush conference, and, as I've written to Ed Steer before, look after yourselves and don't get yourselves blown up or something - because you know how powerful and ruthless your adversaries are, and the headwind is going to get stiff as GATA really gets rolling and people start paying attention.

Cheers,
Jan Burke in Sydney

Adrian wasn’t alone:

Bill,
As I woke up today I had a secret bet with myself. I said "I bet they’ll drum up a wildly bogus employment number and goose the DJ back up after yesterday’s drubbing and hit gold and boost the dollar" Lo and behold it was exactly as I thought….except there was no bullish reason. The employment number was slightly worse than expected but oil prices had soared over $57!!!!

I scanned the news for the bullish news I had maybe missed…then I found it….Martha Stewart had appeared before an appeals court!

I believe we are very close to the abyss in the financial system for any manipulator to make markets move in a direction that doesn’t make sense. The smart money will seize the opportunity.
Cheers
Adrian

Neither was Tom:

Lord almighty Bill these are the strangest days I can remember. The PMs are under relentless attack, and the financial "experts" cower and shrink from this subject and the growing disastrous financial news like the craven sycophants they are.

Oil is rampaging - no problem! Budget and account deficits are soaring beyond historical precedent- no problem! "Hedonically-adjusted" employment and inflation indicators are engineered to deceive with impunity - no problem! Foreign central banks desperately want out of the US$, endangering its (now undeserved) international currency reserve status, with dire implications for Americans - no problem! Massive derivative structures, allowed to grow unhindered and unregulated like financial cancers, cheered on by Secretary of Inflation Greenspan, may threaten the whole economy - again, what's the problem?!

None of these crises ever appear to be much of a problem to the "see no evil, hear no evil, speak no evil" pretty-faced, airhead, bought-off news media. They chose to focus solely on manufactured marionette financial indicators that the puppeteers have conspired to control.

This farce is all going to end very, very badly. I continue to believe the PMs, vis a vis overwhelming and relentless physical demand, can and will break free of their blatant price-fixing and provide some relief to the people who seek them as a refuge from the depredations of the financial elites, who by their unconstitutional, lawless actions appear to be attempting no less than to prop up a corrupted system of imperial privilege, and in so doing, destroy much of what is still good in America. Tom K

The rumor below is all over the internet. I was bombed with it yesterday and held back from bringing it to your attention for various reasons. However, it is gaining SO MUCH exposure you should be aware what is out there. Ironically, it coincides with what I have been ranting about for months:

Morning Bill - more from George Ure's website called UrbanSurvival. You know this rumour would also explain why the net foreign security pruchases at $91.5bn for January were so far above analysts estimates - and as usual this artificially props up the USD and keeps the pressure on gold. Nothing is beyond belief these days.
Cheers, mark.

A Serious Rumor

We have an unsubstantiated report from some of our usually highly reliable sources that there are some posts surfacing on financial web sites in Europe that are wondering aloud whether the U.S. government has now set up a new mechanism to in effect buy our own bonds. According to the report, the way the process works is this: The US fronts a big pile of money to a cooperating bank (most recently, alleges one post, a Caribbean bank) about a week before the US bond auction. Then, along comes the auction, and the US funds are used to buy up the US debt.

While we don't have any confirmation of the report, it's the kind of assertion that could cause immediate - and serious - repercussions should it start making the rounds in the more mainstream financial media.

Obviously, it would be like a Ponzi scheme, when Ponzi in addition to running the pyramid, would be printing up money to give to potential investors. Our concern is, that if true, it could be viewed as a major reason for the "powers that be" to quickly invent a massive public "emergency" in order to blame shift and hide what is in effect a financial circular reference in the money markets. Thus, we are on high alert now for a major "event" out of left field because such a ploy - again IF TRUE - would be an unsustainable end game. Ergo, the demand is quickly rising for a "blame shifting" event. Watch the headlines.

-END-

Let’s hear it again for the two Finance Minister Gold Cartel sycophants, Brown of England and Manuel of South Africa, who are spearheading the effort to have the IMF sell gold to help the poor. One minor detail and problem with their scheme. Just talk of IMF selling gold is hurting the price, which is too low already, and SA gold companies are laying off workers, which is hurting the poor badly and could potentially become a "crisis":

http://Www.Iafrica.com

LABOUR
Nearly 20 000 jobs on the line
Posted Thu, 17 Mar 2005

Nearly 20 000 people could lose their jobs in the next two months, according to trade union Solidarity.

"We regard this as an employment state of emergency," said Flip Buys on Thursday, the union's general secretary .

This trade union is currently negotiating with 25 companies against the retrenchment of 18 293 workers, mostly in the mining, chemical, telecommunications and metal industries.

A further 1500 jobs were threatened in individual cases, said spokesperson Dirk Hermann.

Strong rand hurting companies

He said Solidarity had appointed a commission of enquiry into the economic rationale behind the retrenchments, which the companies concerned were blaming on the strong rand.

The commission would also look into possible ways to "lessen the impact of the crisis".

Solidarity is arguing that something must be done to lessen the damage wreaked on thousands of families by the effects of a strong rand.

"If a natural disaster causes economic disruption to 20 000 people, a state of emergency is declared. We accept that certain underlying economic factors cannot be altered, but I have never heard anybody say that because a natural emergency cannot be averted nothing can therefore be done for the victims", Buys said.

Major retrenchments in mining

The major retrenchment would be in the mining industry, Hermann said.

At Harmony Gold mines, 4914 workers might be laid off.

DRDGold has said that the jobs of 6513 workers are at stake….

http://business.iafrica.com/news/817120.htm

-END-

Each mine worker supports 10 to 12 others. Nice work Brown and Manuel.

Rhody on leasing:

Hi Bill:
Gold lease rates are back in backwardation, not because the near terms rose, but because the middle terms fell slightly. The elevated near term gold lease rates persist, indicating high levels of leasing. Leasing in the near terms means spot price repression.

Silver lease rates jogged back up again in the near terms while also falling in the longer terms. Again we have persistent pressure against the silver spot price.

Both gold and silver lease rates are still low from a historical perspective.

This suggests abundant liquidity. Although abundant physical supplies may be true for gold, it hardly applies to silver. There are increasing signs of a chronic bullion supply tightness in United States and European dealer sources. In fact, bar silver cannot be purchased in size, nor do many coin/bullion dealers even carry physical in bullion form. So where is the silver coming from to maintain these low lease rates? I don't think it's China. The only central bank that has any silver in size is the central bank of India with 86 Moz, but they are constitutionally forbidden to dispose of it.

The only large hoard of physical silver left on the planet is COMEX stockpiles.

Could COMEX stockpiles be leased? I know that COMEX vault storage fees are the world's highest and I know that leasing is a common way to offset vault fees in other storage providers. It is logical to speculate that COMEX silver, at least the eligible stocks may be the source of leased silver. If this is true, and I was an owner of said silver, I would be pulling my metal out of COMEX as fast as I could make the arrangements, because in a structural deficit, there is little chance that leased silver can be returned. What owners of eligible COMEX silver need to ask themselves is whether they really want to be cashed out of their silver at well under $10 per ounce.
Regards, Rhody.
http://www.kitco.com/market/lfrate.html

On naked shorting:

Bill, I'm a GATA member. I have a friend in San Diego, who asked me today to read an article by Patrick Byrne, PhD, CEO, overstock.com. at http://www.ragingbull.com/ , stock: rstg, posting #2217. In this posting is info about Patrick Byrne's attempt to get info from Depository Trust & Clearing Corp (DTCC). He was seeking info not only about naked shorting of his company, but about the extent and magnitude of the total amounts of naked shorting as such relates to the reporting requirements of Reg SHO. He discusses the collusion between Hedge Funds and DTCC, the allowance of Hedge Funds to continue to operate illegally while the DTCC turns its head, etc. You might want to take a glance through this. It ties in to all of the other manipulative practices currently going on by the SEC, et al.
Ken Kemp

I have heard Patrick Byrne speak on the radio. Very impressive fellow.

One reason oil is trading the way it is:

Hi Bill,
An intervention rule, which doesn't allow 2 consecutive upside days of volatility where the 2nd day is either muted or a reversal day, appears to be in full force in the crude oil market. Although it is still early, oil may be allowed to rally this afternoon if the interventionists are able to support the stock market.

When oil trade decisively above $40 last year, it should have become a runaway market. However, that didn't happen due to the interventionists. Now with yesterday's upside breakout, crude should again become a runaway market. We will see what happens this time, however, I don't believe the interventionists will allow this.

Why should crude oil become a runaway market?

Because most of the major producers that were able to sell future production forward, probably did so to the limit and then some.

I don't believe any energy executives predicted +$40 crude oil last year and certainly didn't predict +$60 this year with the potential for +$90 this year or next. As of January 2004, I believe every major oil company was looking for oil below $32 and most looking for oil below $30. As a result, all forward production that could be sold, probably was sold at $40.

When major producers have sold forward substantially, they have less to sell in the cash and futures markets going forward. This results in runaway markets when a market trades at new all-time highs. And this is without consideration of the demand side of the equation, which is substantial. So, when you see crude oil drop $1 in a matter of minutes without news, it is unlikely that big oil is doing the selling. It is most likely the interventionists.

The 'talking heads' appear to be puzzled that crude oil prices continue to increase with each OPEC announcement of production increases. What these 'heads' fail to realize is that these OPEC announcements are probably baloney, like the inventory numbers and are nothing more than cover for market interventions. Additionally, it appears that traders are coming to this conclusion buying on the bad news.

All the best,
Raymond Green
RGreen@ilnk.com

PS - I notice oil rallied to the highs of the day only to be hit for $1 in the last minutes of trading. Looks like the interventionists will not allow a runaway market. If it were, historically, crude oil would be above $100 in a couple of months.