Beiträge von Schwabenpfeil

Gold rose to right below its downtrend line formed at its highs set late last year. As usual, most of the gains were made early in the day with the $6 Rule coming into play later on. The activity of The Gold Cartel is so obvious most traders stop buying after gold climbs above $5 on the session. Certainly that is the case with the bigger locals. Why buy for a trade when your proven upside is negligible?

The gold open interest rose 2663 yesterday. After the initial cabal capping, funds were seen on the sell side. The floor thought it was longs exiting rather than rolling over into April. If it’s new spec shorts, it is a positive.

Feb gold
http://futures.tradingcharts.com/chart/YG/25

Not much to bring your way on silver except the fundamentals remain very positive.

March silver
http://futures.tradingcharts.com/chart/SV/35

This is horrendous. What seems most egregious are the efforts by the Administration to exclude the costs of the Iraq War as part of the acknowledged budget – as if that money is spent differently than what is spent in other areas. Then again what can we expect? What we have here is another par for the course maneuver – like not counting energy costs in the real (so-called core) US inflation numbers because they are too volatile. Denial and spin rules the day. Anything to keep the public focus off of what is actually transpiring in the US economic/financial scene.

Certainly the budget news is dollar bearish/gold bullish, which is what made yesterday’s market action so perplexing, unless you take the PPT into account. Thus it was no surprise to me to see the dollar and gold reverse course today. Once the market works through the fact the US will do nothing to deal with our serious financial issues, foreigners are likely to run for the hills.

The US dollar closed at 83.38, down .69. The euro rose .94 to 130.38, while the yen jumped to 103.04.

One other item the dollar players are watching is what China might do. Yesterday they weren’t going to discuss the yuan at the upcoming G-7 meeting. Today it was partially back on the table. For months yuan watching has been a tedious and time-wasting exercise.

The CRB weekly is a fine looking chart. Seems commodity prices have built a substantial base and are gathering to make a surge through CRB 300. If the grains come to life, that prediction is a done deal.

Weekly CRB (287.83 close today, up 1.31)
http://futures.tradingcharts.com/chart/CR/W

January 26 – Gold $426.90 up $4.80 – Silver $6.77 up 10 cents

Gold Pops Right Back, Set To Challenge $430, "China Loses Faith in Dollar"

Prosperity is not without many fears and distastes; and adversity is not without comforts and hopes...Francis Bacon, essayist, philosopher, and statesman (1561-1626)

GO GATA!!!

What a difference a day makes. Yesterday made no sense. Along with Iraq, the concern of US's foreign creditors over our fiscal deficits is the main issue on the front burner when it comes to the financial markets. At least you would think it would be.

These creditors have been demanding we begin reducing the deficits in order that they continue to send money our way. Charlie McCarthy Snow has insisted this is just what the US intends to accomplish. Yet:

1/26 WASHINGTON (AP) - The White House says its drive to halve federal deficits by 2009 remains on track, though it projects that the cost of wars in Iraq and Afghanistan will help drive this year's shortfall to a record $427 billion.

The figure, provided by a senior Bush administration official who briefed reporters on condition of anonymity, was among a flood of numbers released Tuesday that underscored a gloomy budget picture.

The nonpartisan Congressional Budget Office said projected deficits for the decade ending in 2014 had grown $503 billion worse than it calculated in September, excluding war costs. The deterioration was chiefly due to tax cuts and hurricane aid enacted since then…

-END-

Natürlich kann man sich nicht 100 % sicher sein, wie die Abverkaufsmöglichkeiten in der Krise sind ...

Aber zwei Punkte sind für mich erwähnenswert:

Schon allein die Wertaufbewahrungsfunktion von Gold ist ein unschätzbarer Vorteil gegenüber Papiergeld

Mein Großvater hatte mir (nachdem er persönlich Krisenerfahrung sammeln musste) Krügerrands geschenkt. Er hat mir damit wohl eine Art Erfahrungsschatz weitergeben wollen. Obwohl ich die Krügerrands damals für das 1. Auto verhökert hatte, ist sein Tun trotzdem langfristig auf fruchtbaren Boden gefallen

Gruß
Schwabenpfeil

Bin dabei !

Gruß
Schwabenpfeil

OUTSIDE THE BOX

The end of Bretton Woods II is near
Commentary: The problem is China, not the dollar

By John Brimelow
Last Update: 12:01 AM ET Nov. 22, 2004

Editor's note: John Brimelow follows gold and international equities for Aegis Capital Corporation in New York. He is the brother of Peter Brimelow, a CBS MarketWatch columnist.

NEW YORK (CBS.MW) -- The bad news: the world is drifting into a major currency crisis like the collapse of the Bretton Woods agreement and the subsequent inflationary upheavals of the 1970s. The good news: it can be handled -- if the market is allowed to work.

According to the deluge of commentary on the dollar, America has a balance of payments problem and the world has a dollar problem: a major dollar decline will have to be accommodated.

This is quite wrong. What everyone has is a massive Chinese undervaluation problem. Any exchange rate discussion that fails to start with this fact is fatuous.

In 1993, China fixed its currency, the yuan, at $1 = Y8.28.

Since then, capital and technology have poured into China. It has built up foreign exchange reserves more than ten-fold, to almost $500 billion, an expansion almost unmatched in history.

Yet the decline of the dollar in the past two years has effectively dragged down the pegged yuan another 35 percent against the major currencies -- exactly the reverse of what should have happened, given China's exporting success.

"Economic Miracles" like China's are actually not unprecedented. Germany had one in the 1950s. But accommodating "Economic Miracles" in a fixed exchange rate system invariably causes problems. This is what eventually destroyed the Bretton Woods system of fixed rates, negotiated after World War II that lasted almost 30 years.

China has been allowed to operate on a covert Bretton Woods system since 1993. By keeping its currency artificially low, it has been practicing "exchange rate mercantilism" -- concentrating productive capacity in its own hands to the detriment of the world economy (and ultimately its own consumers).

It is time to recognize that this must be ended.

Otherwise, any decline in the U.S. dollar simply gives further advantages to Chinese exports. This is now causing serious problems for other countries, particularly in the Third World.

Under the various types of gold standard, of course, this distortion could not have happened. The huge inflow of resources would have inflated the Chinese economy and eroded its competitive advantage.

Under Bretton Woods, distortion didn't happen either. When a "fundamental disequilibrium" developed, vigilant statesmen in the other counties took action to force adjustment.

Why this has not happened this time in the case of China is an interesting question.

Partly, it is because most economic theory in the English-speaking world developed under fixed rates. Furthermore, the English speaking countries did not generally practice predatory currency policies.

Some countries did, of course -- Japan spectacularly undervalued its way out of the 1930s slump. But they were minor cases, not on the policy radar screen.

My pet conspiracy theory: the Chinese have been extremely successful in co-opting elements of the American economic establishment.

The Treasury likes a reliable buyer of U.S. paper. So does Wall Street. Importers of Chinese goods are happy. American businessmen with plants in China resist change. Buyers of Chinese consumer goods do not complain. American diplomats dislike offending this powerful and notoriously touchy country.

But now, China's policy is harming countries, in Europe and elsewhere, where the leadership really cares about the overall national interest.

These foreign leaders will provide the political will that U.S. leaders have not. The Chinese perpetual motion machine will be confronted and contained.

The beneficiaries of the Chinese undervaluation free lunch had better prepare for change. That means importers and distributors of Chinese goods (think Wal-Mart (WMT: news, chart, profile)), sellers of paper (think U.S. Treasury) and anyone who likes stability (relative prices will shift -- possibly triggering inflation, depending on the Fed's reaction.)

The collapse of the Second Bretton Woods system will be sweeping and disruptive.

But ultimately it will be beneficial for the world at large -- and U.S. manufacturers in particular.

Gold coin news:

Hello,
I went to the Kitco office today ( January 24 ) and I bought 2 gold maple and 100 silver maple and you know what ????? They have been made in 2005 ..... What does it mean ?????? Old coins ( 2004 ) are already gone ....
Go GATA
Mario Tousignant

What a disgusting day! The gold shares are trounced while the general market soars. Meanwhile the news out of Iraq continues to be catastrophic. This is one to get behind us.

GATA BE IN IT TO WIN IT!

MIDAS

The latest on The Gold Cartel:

Hi Bill:

Don’t know if you’ve seen this. It’s a wake up call for all those morons out there who still insist that the markets aren’t manipulated. At least the German’s have the pluck to call some of these bond manipulators to task. When the manipulation of the gold market gets the same kind of exposure, the guys who called you a crazy conspiracy theorist will be calling you a prophet. Wouldn’t that be fun?
Meg

Paper: Citigroup Said to Manipulate Market
1/24/2005 10:32:00 PM

NEW YORK, Jan 24, 2005 (AP Online via COMTEX) -- German regulators say they've found evidence that a large bond trade last year by Citigroup Inc., the world's largest financial institution, resulted in market manipulation, according to a published report.

The regulatory agency, BaFin, has turned the case over to criminal prosecutors in Frankfurt, The Wall Street Journal reported Monday night on its Web site.

BaFin opened an investigation in October of the early August transaction. Citigroup Global Markets sold some 11.8 billion euros ($15.67 billion) in European government bonds on 13 different trading platforms in 11 different markets, causing prices to fall across the board.

The bank then bought back roughly 4 billion euros ($5.31 billion) in bonds at lower prices an hour later.

"There are indications that market manipulation took place in connection with Citigroup's bond trade," BaFin spokeswoman Sabine Reimer told the newspaper.

In a statement e-mailed Monday to the Associated Press, Citigroup said it would continue to cooperate with regulatory authorities.

"We are disappointed that the BaFin has referred to the prosecutor the question of whether action should be brought against individuals involved in the ... matter," the statement said.

In October, Citigroup CEO Charles Prince told the newspaper the trading by the company's London desk wasn't illegal "as far as we can tell." But Prince called the trade "a completely knuckleheaded thing to do," the Journal reported.

-END-

Updated: 04:47 AM EST

Bush to Seek About $80 Billion for Military Operations

By Adam Entous, Reuters

WASHINGTON (Jan. 24) - The Bush administration will announce as early as Tuesday that it will seek about $80 billion in new funding for military operations this year in Iraq and Afghanistan, pushing the total for both conflicts to almost $300 billion so far.

Administration and congressional officials said on Monday that the new request would come on top of the $25 billion in emergency spending already approved for this fiscal year. That means funding for military operations in Iraq and Afghanistan will total nearly $105 billion in fiscal 2005 alone -- a record amount that shatters initial estimates of the cost.

In addition to money for troops in Iraq and Afghanistan and for new Army equipment, up to $650 million is expected to be earmarked for humanitarian, reconstruction and military operations in Asian nations devastated by last month's tsunami, congressional aides said. The administration is considering debt relief for Indonesia, the hardest-hit country, they said.

The funding request comes as the U.S. Army said it is now planning to keep at least 120,000 troops in Iraq for the next two years to train and fight alongside Iraqi forces against insurgents. The Army total is part of a force of 150,000 American soldiers, Marines and other troops now in Iraq.

John Pike, a defense analyst, said the Pentagon might need even more money later this year ''because we just don't know the rate at which the insurgency will grow or subside, and we don't know the rate at which the Iraqi security forces can be stood up.''

White House officials declined to comment on the size of the package or when it would be unveiled. But administration and congressional sources said they expected a White House announcement on Tuesday.

The funding request is expected to be formally submitted to Congress after President Bush sends up his fiscal 2006 budget on Feb. 7.

Democrats have accused Bush of excluding Iraq-related costs from previous budgets to meet his deficit reduction goals, a charge the White House denies.

But congressional sources said they expected the White House this year to incorporate the spending request into its budget deficit projections.

The White House is bracing for a backlash from Democrats and some Republicans. At nearly $105 billion, total funding for military operations in 2005 would be more than 13 times larger than Bush's budget for the Environmental Protection Agency and would be nearly as big as the state of California's annual budget.

In addition to money for military operations, at least $780 million in the package would go to combat the drug trade in Afghanistan…..

Administration and congressional officials had initially expected this year's supplemental spending to total closer to $50 billion. But cost estimates skyrocketed to as much as $100 billion as the Iraq insurgency intensified.

Critics have long accused Bush and his advisers of understating the costs. Before the invasion, then-budget director Mitch Daniels predicted Iraq would be ''an affordable endeavor,'' and Deputy Defense Secretary Paul Wolfowitz assured Congress: ''We are dealing with a country that can really finance its own reconstruction and relatively soon.''

Not including the new funding request, Congress has so far approved $120 billion for Iraq and another $60 billion for Afghanistan. Last year it also approved a $25 billion contingency fund for the Pentagon.

Yet only a fraction of the $18.4 billion set aside for rebuilding Iraq has been spent. The White House blames the insurgency for the slow pace of reconstruction.

-END-

How long can spin rule the day in the US? Over and over again foreign US creditors are demanding American fiscal responsibility in order for them to remain at the table. Meanwhile, Treasury Secretary Snow continues to reiterate the US is serious about reducing our deficit. Yet the reality is we are going the other way:

CBO sees 2005 U.S. budget deficit at $368 billion

WASHINGTON, Jan 25 (Reuters) - The U.S. budget deficit will reach $368 billion this year, the Congressional Budget Office said in new forecasts on Tuesday, a source familiar with the numbers said.

The number is worse than the CBO's previous $348 billion forecast for the 2005 fiscal year that began on Oct. 1. Due to a technical quirk, the latest number does not include billions of dollars in expected war costs and analysts said these must be added in to get a true picture of the red ink.

-END-

A technical glitch? How about bogus reporting?

The truth counts for nothing with the Bush Administration. Remember when Lawrence Lindsay was fired for having the audacity to speak the truth about what the war would really cost?

CARTEL CAPITULATION WATCH

US economic news:

09:08 CBO sees f05 budget gap at $368B vs. prior forecast of $348B -- Reuters
* * * *

10:00 Dec. Existing Home Sales reported 6.69M vs. consensus 6.8M
Prior reading revised to 6.92M from 6.94M.
* * * * *

10:00 Jan. Consumer Confidence reported 103.4vs. consensus 101
Prior reading revised to 102.7 from 102.3.
* * * * *

WASHINGTON, Jan 25 (Reuters) - Factory activity in the U.S. Central Atlantic region edged higher in January as new orders saw a healthy gain, a survey showed on Tuesday.

The Richmond Federal Reserve Bank said its composite manufacturing index rose to 2 in January from 1 in December. This new index draws from the shipments, new orders and employment indices long published by the regional Fed bank.

The Richmond Fed said its shipment index came in at -7 for January after a flat reading in December, but its reading on its employment index gained to 4 from December's 2 and new orders rose to 7 from zero. It was the fastest pace of new orders growth since last September.

In addition, the survey found the backlog of orders at factories continued to shrink while the workweek lengthened, and the amount of manufacturing capacity being used increased for the first time in months….

-END-

The John Brimelow Report

Blocked! A rescue from China?

Tuesday, January 25, 2005

Indian ex-duty premiums: AM $6.65, PM $$7.84, with world gold at $427.30 and $426.05. Adequate and ample for legal imports. The rupee was soft today.

TOCOM continued non-committal, and was clearly not the cause of gold’s slight firming in early Asian hours. Volume fell 19% to equal 15,705 Comex lots, the active contract closed down 1 yen, and world gold went out down 10c from the end in NY. Open interest inched up (by the equivalent of 323 Comex lots). Mitsubishi data implies that the public added 3.4 tonnes (1,093 Comex lots) to its long. (Gold in NY yesterday traded 81,706 lots -12% more than estimated – or about 48,000 net of switches. Open interest declined a modest 2,764 lots.)

Two ECB captive Central Banks sold 61Mm euros of gold last week, about 5.9 tonnes. This represents a slight acceleration. Yesterday, of course, the German Finance Minister made a point of not wishing to pressure the Bundesbank on the question of gold sales, but in the prevailing diplomatic/cultural climate, sale of the full WA quota from some source or other is to be expected.

Yesterday, with the startling news that speculators were much shorter than expected, and the physical market was tolerating Friday’s sharp rise in world gold, all the ingredients for a short squeeze were present. It did not happen, in Scotia Mocatta’s words:

“Dealers were happy to sell into the rally keeping the price from taking off to the upside.”

Effectively, a successful defense of the 100 day Feb gold MA was mounted. This resulted in the curious outcome, that, as Standard London put it,

“Gold had its narrowest trading range of the year to date with just 80 cents between the best bid of $427.80 and lowest offer of $427.00”

Very odd, given the news mix.

Today, China’s refusal to get off the Yuan undervaluation gravy train has triggered a $US/Financial Asset euphoria, not irrationally in view of the clear corollary benefit to the Bond market. Interestingly, this was presaged not only by a series of articles from the servants and groupies of benefiting financial institutions – HSBC, the “Economist” Bloomberg’s Caroline Baum, the Gartman letter – but also by the Shanghai Gold Exchange. There, gold traded at a discount to world gold from August to November, but then, with world gold moving to a 16 year high, started trading at a premium, which it retains. Clearly the local gold market knew that no local-gold price damaging revaluation would occur.

How severe the distortion caused by Washington’s connivance at this arrangement is appears from a remark in a column today by the FT’s Lex;

“China's reserves increased by 50 per cent in 2004 to reach $610bn and Beijing overtook Japan as last year's biggest buyer [of $US –JB]. This reserve accumulation, the vast bulk of which is held in dollars, equated to almost a third of the US current account deficit.”

When China fixed against the dollar, in 1993, it had reserves of some $50 billion.

This rate of change, and aggregate magnitude, means China’s apologists are essentially arguing that a Dow Jones constituent earning 200% on its equity is running a normal business.

Comforting to gold’s friends is that distortions of this type invariably end in shattering financial disruptions and confidence loss. My CBSMarketWatch discussion of the China problem is in the Appendix.

JB

January 25 - Gold $421.90 down $4.70 - Silver $6.79 down 16 cents

A Disgusting Day

The really tough thing about humility is you can't brag about it... Gene Brown

GO GATA!!!!

After a day like today, it becomes so apparent why what GATA is doing is so important. As January fades into the history books, the PPT comes to the rescue to salvage what they can during the last week of the month. Yes, the stock market was due for a bounce. However, to see it soar on news the budget deficit is worsening, even as Treasury Secretary Snow continues to pontificate how the US is serious about reducing it, is a bit hard to take. Especially, since The Gold Cartel seemed determined to clobber gold.

What is particularly galling was to see gold trashed after the gold shares were hit hard yesterday for no apparent reason. We had many conversations in Vancouver the past several days on this sort of thing. The Gold Cartel plays the gold market like a fiddle. They know where they are going to take the market and when, cleaning up in the process. No wonder Goldman Sachs reports such wonderful profits. Not that hard to do when you know what kind of cards will be played and what sort of hand you are going to deal others in the game. Over the years the gold share action has telegraphed the action the next day in the bullion market time and time again.

Spent the last few days on our GOLD RUSH 21 conference, thus am still out of the loop as far as my normal gold due diligence routine. Out of here in an hour to head back to Dallas.

The AM Fix was $426.20. As happens so often, the damage to the gold price kicked in during the Comex trading hours.

The dollar was last at a tad over 84. Makes no sense for it to rally on this budget news.

Oil is over $49 and headed for $50. Who knows, maybe $60?

Samex’s Los Zorros is heating up!

EXPLORATION DRILLING UPDATE – EXPLORATION AREA II - LOS ZORROS PROPERTY, CHILE

Follow the link for the full text; http://www.samex.com/news/aa-news-2005/NR1-January21-05.html

***.

The gold shares followed the general market lower with the XAU dropping .78 to 94.28. The HUI lost 2.02 to 207.88.

Short-term the gold/silver shares could do anything. However, what great buys out there. The risk/reward ratio is superb.

GATA BE IN IT TO WIN IT!

MIDAS

From Richard Russell this evening:

STOCKS -- My Most Active Stocks Index was down 5 to 395, and this Index is breaking down.

The five most active stocks on the NYSE today were -- LU down .06, PFE down .19, NT down .05, GE up .13, and MOT down.36. And Delta Air down 11.8% to 4.41.

VIX creeping up now -- up .29 to 14.17. The first inkling of concern among investors.

McClellan Oscillator was down 27 to minus 138 -- market staying oversold.

CONCLUSION -- I like this market action less and less. From its December 28 high of 10854.54, the Dow has now lost 486 points, and I don't hear any alarm bells ringing. For that matter, I don't sense any great concern. "Aw, it's just a correction; the market just got a bit overbought."

But I most definitely do not like this market action. I've seen markets like this dribble away and when investors finally become concerned the market finally falls apart (I believe they call that type of action "a crash").

My advice -- Be mostly in cash and golds, and for gold, mostly the actual metal. Hold stocks (such as utilities) that pay good dividends, but have stop losses under all your stocks. There appears to be a secret frenzy to buy income, as seen in the new highs in the long bond.

Frankly, it would not bother me to have almost all my liquid assets in cash and actual gold.

THERE'S SOMETHING VERY WEIRD ABOUT THIS MARKET. IT'S POSITIVELY CREEPY THE WAY THEY DIDDLE AROUND WITH IT ALL DAY -- AND THEN UNLOAD STOCKS AT THE CLOSE.

And every night, almost without fail, the S&P is higher. Who's trying to keep this market afloat? And why? And who's kidding who?

As I write this, half an hour after the close, the S&P is up 70 points. "Gosh, Mr. S&P, I feel so much better when I see that you're higher! Guess I'll hold my stocks for a little while longer."

And so we say good bye to Morbid Monday. Maybe Tuesday will look better.

-END-

Snow says US 'deeply committed' to cutting deficit

WASHINGTON, Jan 24 (Reuters) - U.S. Treasury Secretary John Snow said on Monday the Bush administration was committed to cutting huge U.S. budget and trade deficits, and said there should be no delay in overhauling Social Security.

However Snow, appearing on CNBC television, declined to say whether Federal Reserve Chairman Alan Greenspan is pressing the Bush administration for swifter action to ratchet down deficits.

"I won't get into our discussions with Chairman Greenspan, that wouldn't be appropriate," Snow said. "But I will say that this administration is deeply committed to fiscal responsibility, to controlling spending and to bringing the deficit down."

He said it was necessary to introduce changes to the Social Security reform system without delay, adding that failing to do so would mean "either huge tax increases or major benefit changes".

-END-

CARTEL CAPITULATION WATCH

Financial Times

Central banks shift reserves away from US
By Chris Giles
Published: January 24 2005 00:03 | Last updated: January 24 2005 00:03
Central banks are shifting reserves away from the US and towards the eurozone in a move that looks set to deepen the Bush administration's difficulties in financing its ballooning current account deficit.

In actions likely to undermine the dollar's value on currency markets, 70 per cent of central bank reserve managers said they had increased their exposure to the euro over the past two years. The majority thought eurozone money and debt markets were as attractive a destination for investment as the US.

The findings emerge from a survey of central bank reserve managers published today and conducted between September and December of last year. About 65 central banks, controlling assets worth $1,700bn, took part and the results showed a marked change in attitude over the past two years.

Any rebalancing of central bank reserve portfolios has serious implications for the global financial system as the US has become increasingly dependent on official flows of funds to finance its current account deficit, estimated at $650bn in 2004.

At the end of 2003,central banks held 70 per cent of their official reserves in dollar-denominated assets and central bank purchases of US securities had financed more than 80 per cent of the US current account deficit in 2003.

Any reluctance to increase exposure to dollar assets further could cause the greenback to plunge on currency markets.

"The US cannot take support for the dollar for granted," said Nick Carver, one of the authors of the study conducted by Central Banking Publications, a company that specialises in reporting on

"Central banks' enthusiasm for the dollar seem to be cooling off."

In a further worrying sign for the greenback, 47 per cent of reserve managers surveyed said they expected the growth of official reserves to slow to less than 20 per cent over the next four years. Between the end of 2000 and mid-2004, official reserves had increased by 66 per cent.

Slower reserve accumulation growth implies the supply of official finance is likely to become more limited but few expect the demand from the US for finance to slow. The consensus among economists is that the US current account deficit will increase to $694bn in 2005.

More than 90p er cent of central bank reserve managers said that the income from reserve management was "important" or "very important".

In the two years since a similar survey was conducted, reserve managers had begun to seek higher returns for the money under management.

-END-

14:31 Treasury Secretary Snow says he is not losing confidence in 3% growth expectations for economy -- CNBC
Snow says that he believes the market will have "good" job creation, noting the domestic economy's basic fundamentals are "excellent." Faster overseas growth by U.S. trading partners is needed to reduce the current account deficit. As usual, Snow skirted the dollar issue when asked by CNBC's Ron Insana on an appropriate value for the currency.
* * * * *

The John Brimelow Report

Good & Bad news. Gartman wavering.

Monday, January 24 2005

Indian ex-duty premiums: AM $4.59, PM $8.30, with world gold at $427.05 and $427.60 (corrected from earlier today). Slightly below, and ample, for legal imports. This is basis Bombay: the other Indian reporting points were narrowly viable for legal imports this morning. India returned from a three day weekend to find world gold abruptly $7 higher; but by the afternoon had clearly returned to import mode. UBS directly refers to

“decent physical demand from India and other Asian countries”

being seen in London this morning.

On the face of matters, TOCOM stepped aside: on volume equal to 19,440 Comex (+18.7%) the active contract rose 8 yen – world gold went out 80c above the NY close. But open interest managed to rise the equivalent of 630 Comex lots (to the equivalent of 109,834 Comex) and according to Mitsubishi the public increased its long by 1.4 tonnes. This is slightly surprising considering the steady rise in yen gold over the past week: normally one would expect to see liquidation. Perhaps the rumored accumulation of physical by the public ahead of the elimination of deposit insurance is the cause. NY on Friday traded 75,769 contracts (c. 53,000 net of switches). Open interest ominously rose 821 lots to 273,533.

This open interest rise is ominous because the CFTC data turned out to be the most dramatically gold-friendly in many months. Contrary to the expectations of UBS (which has a good eye in this area), the spec net long fell some 600,000 ozs to 10.21 Mm, rather than rising by 1Mm or so. This puts it at a level not seen since June last year, when gold was completing its last excursion into the $380s.

An authority not well liked by most of gold’s friends refers to this measure being down to a “must buy” point.

Perhaps most important of all, the reason for the decline in the net spec long was some aggressive large spec short selling. This short rose 5,549 lots (17.25 tonnes) in the week to January 19, much of it presumably in the drop from $425 to $422 early on. What is left of this is now of course under water. HSBC notes the arresting fact that the aggregate short is almost an all-time record. The previous occasions, Q2 ’99 (BoE sales panic) and late ’97 (break down from ’93-6 range) were phases of the spec community actually being net short.

Several observers attribute Friday’s powerful rally to short covering, which seem subjectively reasonable. Unfortunately, the lack of open interest decline suggests that the shorts – the most aggressive in several months – are being let out by a seller. So does today’s sideways crawl, in moderate volume (39,000 net of switches).

Speculator misjudgment of the physical market has been the hallmark of 2005 so far. But interestingly, even the Gartman letter is wavering in its negativism:

“We've not traded gold since we exited our long position so fortuitously back in December…We shall admit, however, that our interest again is being piqued...”

JB

January 24 - Gold $426.60 up 10 cents - Silver $6.83 up 4 cents

GATA And The North Country

The man who views the world at 50 the same as he did at 20 has wasted 30 years of his life...Muhammed Ali

A clarification is not to make oneself clear. It is to put oneself in the clear...Sir Humphrey Appleby

GO GATA!!!

This will be my shortest MIDAS ever. Just no time. Been running around attending to matters related to our Klondike gold conference in Dawson City in early August. Off to a reception for the Premier of the Yukon in 15 minutes.

The gold conference has been a huge success. Over 1000 people showed up at 11 this morning to listen to John Embry speak. More later on this conference and about our own in the North Country. Who can forget the movie "The North Country" with Jimmy Stewart. Dawson City was featured.

Was out of the loop today, yet could help but note how the stock market fell apart again. The DOG (2009, down 9) barked all day, while the DOW sank late to 10,368, down 24. Technically, both of these markets are in deep trouble.

Gold ought to be flying and should be by the end of the week. Silver too.

The dollar fell .07 to 83.27.

The gold/silver shares woke up. About time. The XAU gained 1.94 to 95.06 and the HUI rose 5.45 to 209.90, right below 210 resistance.

As you have heard from me for a couple of weeks, the gold shares are set up to fly as there are so few investors still on board, except us ole-timers. Many of the disgruntled have run for the hills. At the same time most of the gold pundits are neutral to bearish and the Wall Street crowd still can’t spell gold and silver yet. All of those not in at the present, will want in soon. As this occurs, and if it happens simultaneously, the gold and silver shares could go ballistic.

GATA BE IN IT TO WIN IT!

MIDAS