Beiträge von Schwabenpfeil

The US employment picture is still not a rosy one:

GM to drop 7% of jobs in '05
CEO: Workforce will lose 8,000 through attrition and retirement
January 10, 2005
BY JEFFREY McCRACKEN
FREE PRESS BUSINESS WRITER

General Motors Corp. will again shrink its U.S. workforce by about 7 percent in 2005, its chairman and chief executive told the Free Press on Sunday.

That works out to about 8,000 hourly and salaried positions that will be lost through attrition and retirement at GM over the next 12 months.

This 7-percent cut of GM's overall workforce is in line with what the automaker has done every year since 2002 as it tries to trim costs amid rising health-care expenses and other concerns… - END-

Comments coming from Jean-Claude Trichet at the G-10 meeting are insidiously laughable. Because Charlie McCarthy Snow says the US is going to act to seriously to correct our deficits, Trichet’s remarks come across as practically giddy. One has to suspect his private utterances are far different in nature:

BASEL, Switzerland, Jan 10 (Reuters) - Central bankers from the world's most important economies welcomed on Monday a promise by the United States to tackle its budget deficit, which is plaguing the dollar.

Failure to correct the huge U.S. trade and budget deficits poses a risk to the world economy, which is expected to grow at about 4 percent or better this year, Group of 10 chairman Jean-Claude Trichet told a news conference.

"We were certainly aware of the declaration of (U.S. Treasury) Secretary (John) Snow as regards the will of the U.S. government to take into account the necessity of reducing the fiscal deficit," he said.

"It was said very, very clearly by Secretary Snow, and I take it that it is certainly very important ... and has been considered very important by all observers," he said.

In early February the Bush administration unveils its budget plan and on Friday Snow gave the first hint of budget discipline, saying he wants to "do things" and work with Congress to bring the budget deficit down.

Trichet, who chairs the G10 meeting of central bankers from top industrialised and emerging countries on the global economy, said correcting the lack of U.S. domestic savings is important to resolving global imbalances. "What Secretary Snow said is very important to advance this global consensus," he added.

The G10 comments follow a call for U.S. action by the head of the International Monetary Fund, Rodrigo Rato. "America must resolve the problems linked to its budget deficit, which is now truly excessive," he wrote in Italy's La Stampa newspaper on Sunday.

Investors are increasingly nervous about funding the huge U.S. trade and budget deficits, which pushed the current account deficit over 5 percent of GDP last year.

Accordingly, the U.S. dollar has shed 25 percent of its value in trade-weighted terms over the past two years, straining the euro and the yen. Rato, in an unusual move, attended Monday's G10 discussion on the global economy.

Trichet further embraced the significance for the euro zone, which has suffered the brunt of steep dollar declines, of Snow's remarks by swapping his hat as G10 chairman for that of European Central Bank President to say how much he appreciated them.

"Secretary Snow said something that is very important and very appreciated," he told the news conference.

Snow's comments that the U.S. wants to "do things" to sustain the dollar helped the dollar regain strength. It traded at $1.3094 to the euro at midday on Monday compared with a recent low beyond $1.36, and currency analysts said the remarks should further lift the dollar.

"It's the first thing that sounded remotely like coordination of comments across the Atlantic for God knows how long, so that may give the dollar a bit more support " said Adam Cole, senior currency strategist at the Royal Bank of Canada.

"They seem to agree on what lies at the root of the problem -- that may give the dollar more support."

-END-

CARTEL CAPITULATION WATCH

The DOW gave up sharp early gains again, went down on the day, but rallied modestly later on to finish at 10,621, up 17. The DOG went plus 8 to 2097.

US economic news:

10:00 Nov. Wholesale inventories reported 1.1% vs. consensus 0.7%
Prior reading unrevised at 1.1%.
* * * * *

The John Brimelow Report

Continued selling pressure imperative for Bears;

Monday, January 10, 2005

Indian ex-duty premiums:: AM $9.92, PM $ 7.92, with world gold at $419.80 and $421.10. High; very ample for legal imports. A regular pattern seems now to have established, with gold edging up during the Indian day in the absence of US sellers.

Japan was closed today. Premiums from the Shanghai Gold Exchange edged up from Friday; $3.39 -$3.96, with world gold at $419.70: also high.

Friday of course was notable for the ferocious storm of selling in NY surrounding the Treasury Secretary’s jawboning of the dollar. An estimated 34,000 contracts traded between 10 am and Noon, a volume which used to be common in a day. Gold plummeted $6. And in fact, since the day’s volume turned out to be 105,975 contracts, 20% higher than the estimate, the actual shock was probably greater. Open interest collapsed 10,131 contracts – 31.5 tonnes.

This means that open interest has now declined over 50,000 contracts or 157.9 tonnes since gold and open interest peaked on December 28. This is 15.4%. Quite possibly this understates the selling pressure, since presumably the woeful technical picture has brought in some short selling (which would bolster open interest).

If gold were a market primarily determined by the matching of Western opinions, this liquidation would only be mildly encouraging. The question would be: what will revive buying? As it is, however the selling is going into a price elastic off take, primarily India and the Middle East, which is supremely indifferent to the considerations which move the West - especially the US. In other words, to keep gold at this level, this selling pace will have to be continued. That might be difficult to orchestrate.

Perhaps sensing this, a number of professional observers were quite sanguine about Friday’s action. First amongst these were of course the gold shares themselves, which quite uncharacteristically went up. UBS was another, commenting:

"…on Friday gold traded down to $417/oz briefly before recovering. We suspect that this may mark the low point in gold in this sell-off…Interestingly, euro-denominated gold has remained stubbornly supported over the past couple of trading days despite the large-scale speculative selling. We suspect …fundamental buying has supported the metal. We estimate …speculators have reduced positions to levels not seen since September 2004... We continue to view this current sell-off in gold as a temporary phenomenon... We hold our one-month forecast of $440/oz and see this as an attractive level to buy gold."

Refco Research is a third, putting out a buy recommendation for the first time in many weeks:

"Buy 1 February gold on break of 421. Risk close under 417. Expect 432"which became active this morning.

Conspicuously not amongst this group is The Gartman Letter:

"The reason for golds' weakness is really quite simple: the dollar is strong and the demand for gold is lower as a result…We have said all along that gold might well trade back to the $395-405 level before the market is healthy again ."

As readers of these notes know, Gartman is quite wrong about gold demand – the extraordinary Turkish imports last month, the premium data, and a host of anecdotes and remarks from the dealers refute him. Strictly speaking, he is wrong about the $US too – gold began to buckle under waves of heavy selling before the turn of the year prior to the dollar surge getting under way. But considering him as a bulletin board/propaganda conduit for major hedge funds, which I believe to be appropriate, his view explains the dogged selling seen recently – especially after the Comex data was released this morning.

JB

This commentary from a fellow Café member from Mexico sums up the gold market and where we are:

Bill.
Until the Cabal in taken out in a stretcher, Midas daily commentary may well be summed up in the following:

When the dollar goes up, gold is trashed down
When the dollar goes down, gold is stopped from going up
Gold will not move freely and allowed to be subjected to the forces of supply and demand, _not those of the Cabal, until the Cabal is taken away in a stretcher. When this finally happens the gold market will stop being monotonous and show some variety.

Then Midas will be able to report other than the above commentary.

It’s not the dollar - the one that moves gold, but the Cabal; and it moves it down in every opportunity. It’s not Midas the one that is boring, but the gold market itself.

Bill, keep high your spirits and your great efforts because it’s just a matter of time.
Gabriel.

While the gold open interest plummets, silver's remains steady. It rose 438 contracts to 97,728. Morgan Stanley remains aggressively bullish. The floor believes if March silver can take out $6.52, the price will fly.

Reasons given for the stunning late turnaround:

Bearish API reports coming in.
Better oil flows coming out of Houston ports/channels.
Refineries pounded heating oil late.
Gold lost ground again versus foreign currencies:

The dollar lost .36 to 83.36.
The euro gained .30 to 130.92.
The pound rose .56 to 1.8688.
The yen leaped to 104.19.

The gold open interest fell sharply, down 10,131 contracts to 279,959, which is nearly 100,000 contracts off its high. The Gold Cartel’s blatant price bashing has achieved its objective of demoralizing spec longs and gold investors in general. The hedge and high tech funds are running for the hills, and doing so like crazy.

The cabal won this battle, however, the Gold Cartel’s problems are mounting significantly every month. One need only read the material presented in this MIDAS to understand why they are losing their war. As 2005 progresses, the price will reflect just how much so.

Some key oil news as per a friend of John MacKenzie:

Iraq has canceled its December Kirkuk crude term contract commitments with lifters because of ongoing sabotage-related disruptions to crude flows to the Turkish Mediterranean port of Ceyhan, shipping agents said Monday.

"All loadings have been canceled," a shipping agent said. "They [the vessels] have been told to go home." Iraq's Kirkuk crude exports to Ceyhan stopped more than three weeks ago after a string of attacks from Dec 17-18 hit key infrastructure sites along the northern pipeline network. Iraq's oil ministry has struggled to repair the damaged network but poor security conditions and extensive damage have hampered its efforts. Four tankers—Minerva Lisa, Butron, Astro Cassiopeia and Sea Magic--have been waiting from as early as Dec 18 to load 4.625-mil bbl of Kikruk crude for ExxonMobil, Spain's Repsol and Cepsa and Portugal's Petrogal, shipping agents said. "If there was any prospect to load, it would have been done," the agent said.

State Oil Marketing Organization officials declined to comment on the latest development, but it is likely that SOMO will have to pay a significant amount to compensate lifters for the cancellation. SOMO has carried heavy security-related costs for delays to loading since the US-led invasion of Iraq toppled Saddam Hussein in April 2003. With Kirkuk crude off line, it is now unlikely that SOMO will move to sign long-term contracts for Kirkuk crude for the first half of 2005 until there is better security along the pipeline network. Of the 147 attacks against the country's energy infrastructure recorded in 2004, the majority have occurred in the north, making it difficult for SOMO to guarantee its commitments. "Kirkuk will be sold when there are stocks in Ceyhan," an industry source said.

-END-

January 10 – Gold $418.60 up 20 cents – Silver $6.42 up 1 cent

Surprise Financial Market Tsunami As Real As The One In South Asia

Have great hopes and dare to go all out for them. Have great dreams and dare to live them. Have tremendous expectations and believe in them..Norman Vincent Peale

GO GATA!!!

There so much quality material to read in this MIDAS (which will require some time), I am keeping my comments to a minimum on yet another revolting Gold Cartel day. There is very little point to following the gold price around the world because it is always taken down in the US, following major capping by the cabal. This morning’s AM Fix was $421.25. That was all she wrote.

Was the gold news bearish in the US? Hardly. Not while gold was open anyway.

Oil not only took out $46 per barrel, but $47 too, before collapsing after the Comex close to $45.25 down 18 cents.

Oil

- Prices 30% higher than Jan 04.

- China oil imports up 21% over 03.

- Osama threat to Saudi Arabia to target oil fields. If one drop of crude burns oil will rocket to $60 to $70.

Charts Data

- 34 year gold chart shows breakout to the upside.

- S&P moving in opposite direction to CRB Index.

- Market value of Real Estate has moved higher and rate of disposable personal income has moved lower to in affordability.

- Asset value in homes at 29% of value of total assets.

- Gold solidly above 200 day moving average 1 year.

- Gold solidly positioned in up trend channel from 2000.

- Dollar solidly entrenched in downtrend channel established Feb/02.

- Price of gold has risen from $255 to $425 since Jul/99. Thirty year T Bond Yield has fallen from 6.6% in Nov/99 to 4.4% Nov/04

- S&P 500 up from 820 Sept/02 to 1180. Gold from $330 Sept/02 to $425.

Reference Sources

Dr. K. Richebacher, Doug Casey, Wistar Holt, Bill Murphy, M. de Charbert-Ostland, Derek K. Artsdalen, Dr. R Appel, Jim Sinclair, Richard Russel, John Embry, Bill Buckler, Sol Phala, John P Calverly, Eric Hommelberg, Lars Lindgren, Dave Morgan

Silver

- $1 Billion short position rumored.

- Why aren’t deliveries being asked for on contracts?

- China has secured 75% of the world’s 2005 silver production via various derivatives maneuvers. Silver price will explode. Look for $10 by April or sooner.

- Like gold, an engineered sell off has occurred so the shorts can cover their positions. A huge new short position has been added in addition to liquidation.

- The market has done everything to convince the retail investor never to be in silver again as per April and now. Investors and traders do not want to have to compete against any more than they will have to. Very Bullish!

- The most unreported silver story of the year…..The Mexican Bill. All 31 Mexican Governors want to monetize silver and urge approval of the Bill. Mexico is the world’s largest silver producer. This story has not been reported in the American financial press.

US Dollar

- The US Dollar is in a temporary counter trend correction to the upside after bouncing off .80 five times. Expect choppy action as it proceeds to a minimum of .84 and a max of .88 Estimate this wave up to last two to four weeks. Next wave will go down below .80. - - This trend is due to short covering. Could end sooner if other indicators kick in as currency traders are getting close to the areas where they start selling dollars again.

- Since early 2002 the dollar has lost 37% against the Euro and 24% against the yen.

- The US dollar crisis is not coming. It is here. Nobody on CNN speaks of it.

- The US $ is in a bear market rally but going down the drain. Below 80 within a month in an accelerating crisis. Short covering is preventing a break below USDX .80. Once .80 is broken convincingly, there could be a potential freefall of the $. There is no defense of the $ below .80. (Sinclair).

- Russia, China and Iran have much to do with the dollar bear. The horrible chart of the US $ is second only to the bankruptcy of Enron.

- US$ @1.40 against the Euro is the next target.

- Interest rates must rise to double digits or the dollar must fall.

Misc.

- Newmont CEO Pierre Lassonde, member of Pres. Bush’s economic advisory council, sold $40 million of his stock at much higher prices in Nov. Who knew what was coming?

-Intervention of US Gov. in oil, bonds, gold, gold stocks, dollar, silver, Dow, stats on CPI, PPI, inflation, etc. Time frame is growing rapidly shorter.

US $ Index at critical juncture
US T bond at critical supports of $111.5 and then $106,
DOW critical support at 1075, then 10430, and then 9800.
Crude oil must break above $46 then $50.
Gold must move above $433 then break above $446.
Expect strong downwards correction in bonds and equities.

U.S Economy

- War, Tsunami’s, debt crisis, credit crisis, pension crisis, dollar crisis, Fannie May mortgage crisis.

- DRAMATIC NEWS: Jan 4th, US treasury notes fell on release of news from Dec. 14th Fed. Reserve meeting re concerns on inflation. The US Fed is admitting that inflation is much worse than cooked up Gov. figures have reported over the last year. Bond bearish!

- Crude oil jumped to $43.91 a barrel. 18 months ago $43 was considered to be a disastrous price for the economy.

- Insider sales in 04 were highest since bursting of the Internet Bubble in 2000.

- Credit driven asset bubbles due for severe correction. Underwritten since 1996 by short selling of 17,000 tons of gold gone from central banks, but still on books as reserve. This debt has yet to be paid.

- Runaway asset inflation of stocks, bonds, homes, US $. Based on artificially low interest rates and rampant excess credit due to Greenspan.

- Moderate consumer and producer price inflation. Fuzzy stats. What exactly do "core" rates have to do with reality?

- Goldman Sachs forecasts growing deficit net foreign investment income 05.

US fiscal deficits will no longer be supported by foreigners buying US paper.

- The US must launch severe spending cuts or raise taxes or both. This will halt economic and employment growth. Dollar collapse or recession is inevitable.

- Debt levels are untenable and foreign central banks will not continue to support the US debt.

- On November 19th, congress raised the Treasury debt ceiling to over $8 trillion in order to continue to finance the deficits. Annual interest on that is over $320 billion per year. More income must be put aside to pay interest and dividends to foreigners, and US must pay higher interest rates to keep creditors lending.

- The US Gov. spends $400 billion more than it takes in, which is 4.2% of GDP.

- The current account deficit is the largest in history at 6% of GDP.

- With the US citizen nearly zero percent savings, the US sucks up 80% of the world’s savings.

- The aggregate current account deficit and budget shortfalls account for over 10% of GDP which is at a tipping point for the $ to collapse.

- Add to this the household debt and the growing corporate financial leverage.

- The structural damage done to the economy over the last 20 years is probably irreversible. It has been seriously harmed by the diversion of capital funds to frivolous expenditures on housing and faster ways to apply for mortgages.

- Fannie May is in serious trouble as we speak. The SEC ruled that their derivative accounting did not meet with FAS 133 accordance and that they restate earnings to the tune of $9 billion (loss).

- Private investors are less eager to finance America’s huge debt. America’s debt service payments will increase sharply if the deficit remains so large ($165 billion for the third quarter or 5.6% of GDP.) As interest rates rise, refinancing will become more difficult.

- Asian banks collectively hold over 2 trillion in American obligations and are suffering billion dollar losses in purchasing power. Investors in Russia, India and the Middle East are now selling dollar obligations.

- Globally, foreign banks hold $9 trillion of U.S. paper assets (treasuries, agencies and corporate bonds) and they are suffering losses as the dollar falls. How long will they continue to prop up the US?

- US bond markets have been defying the $ weakness and the 4 interest rate hikes.

- US consumer is tapped out after keeping the economy afloat via inordinate tax cuts and ultra cheap credit (ultra low interest rates) leading to sharply slower growth for this year. - Consumer spending accounts for 89% of real GDP. The economic recovery has been passed by. The stimulus is spent.

- Disposable personal income is down by 4.8% in the second half of 04. In the third quarter private household-spending rose by $139 billion while earnings went up only $81 billion.

- Taxes and inflation went up.

- New "net birth/death" computer generated employment statistics from the BLS (US Bureau of Labor Statistics) are suspect as compared to actual surveys.

- Continuous rate hikes will prick the housing bubble.

- Three credit bubbles existing in housing, carry trade and bonds will burst.

- Afghanistan and Iraq are huge, long term drains on the economy with no relief in sight.

- China is invading Canadian oil fields. Canada is the largest supplier to US. China is also active in Venezuela, Russia, Iran and mid east.

- News just out that Bush will change social security benefit payments as per inflation rates (CPI, PPI) rather than wage increases (as they tend to rise faster). Expect fudging of CPI and PPI stats to continue.

* Excerpt:

Consumers Begin to Feel Inflation's Pinch
Wednesday January 5, 3:19 pm ET
By Marc Levy, Associated Press Writer
Consumers Begin to Feel Pain of Inflation As Cost of Many Products and Services Marches Higher

"HARRISBURG, Pa. (AP) -- After a decade of relatively tame prices, consumers are starting to feel the "ouch" of inflation as the cost of everything from coffee, candy and home appliances is marching higher.

It's not a sharp pain yet, and some call it hardly noticeable. But with companies such as Procter & Gamble Co., Hershey Foods Corp. and Whirlpool Corp. passing along the higher prices they pay for raw materials to their customers, it's beginning to get attention from people who shop in grocery, appliance and department stores.

It's also getting noticed by officials of the Federal Reserve, and that could mean higher costs for everything from car loans to home mortgages.

Minutes of the Fed's Dec. 14 meeting released on Tuesday suggest that central bankers' worries about rising prices could prompt them to continue bumping up short-term interest rates -- which they raised five times in 2004 -- to keep inflation in check."

Gold Shares

- 20 year bear market over. 2004 consolidation. $17 billion in restructuring, refinancing and mergers in 04 versus $3B in 03, drew funds away from chasing prices up in a small market sector. Important factor in a secular bull market. Those who have already made profits have a nice head start.

- Tremendous leverage is now in juniors that have good resources/reserves, and management.

- A spectacular rise is expected as the nearly four-year bull market resumes its up trend.

Juniors have lost 30% to 50% of their value since last year. Secondary corrections can be brutal. Markets are thin, volatile and emotionally driven. Many stocks are acutely oversold.

- Shorting now has added insult to tax loss selling in 04. Also, some profits are being taken now in 05, as they are not taxable for 14 months.

- A number of stocks have had great gains due to positive advancement of their discoveries and should shortly emerge as leaders of the next price advance.

- Juniors make 75% of all discoveries. With the majors facing declining reserves, they will have to go after and bid up the juniors.

- New, strict, US SEC rules require all market makers to close out all naked short positions by Jan. 3/05. Starting Jan. 10th, the SEC will publicize all stocks where the market makers in each stock have not complied and where traded shares have not been accounted for, forcing them to buy shares of the Naked short, or just plain short the company’s shares.

- India, China, Russia, Turkey, Middle East gold demand up, up and growing; Turkey up 129% Dec. 04 over Dec. 03 in spite of higher prices.

-The international investment banks will be the driving force for gold. They were responsible for the dramatic rise in gold from 1978 to 1980 at over $800.

- What is an ounce of gold worth?

A man’s suit, shoes and belt at $1,000?
At its previous high in 1980 of $850, in inflation-adjusted terms, today, it would be $2,000 plus/oz.
An ounce of gold used to by the DOW. $10, 500 today?
- Gold: a medium of exchange, a store of value, It is durable, homogeneous, divisible, a luxury always in demand, and portable.

It has been the international standard of exchange since before WWI. It was a tangible asset that could back debt.
Fiat dollars (debt) can be printed out of nothing, increasing the supply of a country’s claims far beyond it’s tangible assets
Gold stands in the way of deficit spending, which is a scheme for the hidden confiscation of wealth. "It stands as a protector of property rights." (Greenspan; Gold and Economic Freedom, 1966).
Sprott Report, John Embry and Andrew Hepburn. August 04.

Central Banks intervened surreptitiously in the gold market in the late nineties to prevent a gold derivatives crisis that threatened the global financial system. This appears to have started around the time of the Long-Term Capital Management crisis (bail out of huge short 300-400 ton short gold position by Fed. orchestration) and commenced in earnest after the post-Washington Agreement gold price explosion in 1999.
- So much gold was borrowed from the central banks at low interest rates and sold into the market that an uncoverable short position developed.
Price manipulation exists to this day. See report at Sprott Asset Management.

A big thanks to Dennis Oliver, who sent Café members a helpful recap:

Gold Jan.6, 05

- Gold now in oversold position as of today, Jan 6.

- Funds are selling on weakness and buying on strength. Redemptions come in as market declines.

- Gold and silver stocks corrected in 04 although gold rose 5% and silver 13%. Shares affected by currencies (Africa), increased costs, lower grades. Still in a long term bull market.

- Gold needed a decline stage in order to provide the necessary ingredients for the next power up phase and cause gold to rally in the face of all stronger currencies.

- Despite massive manipulation, (phantom supply and demand) gold and silver have appreciated for four straight years with gold going from $255 in 01 to $438 in 04. Oddly, during those years few analysts called for gold to do anything but move down every year.

- Gold will continue to benefit from the pressure on the US $ and its vulnerable status as the world’s reserve currency. Gold is rare; a store of value that is no one’s debt and it cannot printed. It is benchmark against which other things are valued, especially currencies.

- Several unnatural variables are in play which affect share prices because of the staggering contrast between the usual market dynamics and their charts, versus the dramatic changes caused by manipulation, i.e.: silver shares plunged long before the bullion takedown on Dec. 2nd. This reveals the two pronged attack method against shares and bullion.

- The evidence of the presence of the ETF (US Exchange Stabilization Fund created under Reagan, reports only to the Pres., Gov. of the Fed, Greenspin, and Sec. Of the Treasury, Snow, is obvious. Congress is out to lunch on this. Gols is sold, manipulated at will.

- The evidence of collusive manipulation for profit is unequivocal, but ignored. Government sanctioned lawlessness. (Selling short via bullion banks Goldman Sachs, JP Morgan, Deutsche Bank, Citicorp, Merrill Lynch since early 1990’s). With the US Gov. as a backstop, anyone could make money shorting gold.

- There are 13,000+ tonnes of gold loans/swaps still out there, other than those of the hedgers, which have not been called in. Most of those were put on with gold trading around $300, plus or minus. These loans, representing commercial interests, are enormous losers on someone’s books. (Murphy)

- Lawsuit filed by US bullion dealer Blanchard and Co. against JP Morgan and Barrick begins in April 05, attempting to prove and expose illegalities of the bullion bank covert operations.

- Recent gold bashing by the gold manipulators has most gold investors completely demoralized. Storng hands want the weak hands shares. End of limit for manipulators is at hand.

- Huge new short positions added on Jan. 4, plus long liquidation.

- John Brimelow reports on Jan. 4th that physical demand has gone crazy! Especially India, Turkey, China, Indonesia, Russia and mid east.

- Very little press/media coverage on gold fundamentals with drivel gold market commentary common. Inane noise about why it moves up and down as per cycles, technicals, US $, all without understanding, or wanting to understand, the true nature of demand, size of the bullion bank short positions, yearly supply/demand deficits, Gold Cartel price suppression.

- Gold mine supply is declining. Expect the present supply of 2,500 tons/year to decline to 2000 tons or less in 5 years. For every 100 tons taken out of the market, add $7.50 can be added to the price (Pierre Lassond).

- In Q3 supply contracted sharply by 22.4% at 828t versus 1066t in third Q of 03. (World Gold Council Nov. 25th)

- Current funding of exploration will not replace reserves. Production is relying on discoveries made many years ago. Many producers are reporting declining reserves (Anglogold, Ashanti, Harmony, SA, Aust., Peru, Barrick, Cambior) Even if gold was $1,000/ounce; it still takes 4 to 7 years to open a mine.

- Central banks scour for supply to suppress price, as world gold demand soars.

- Key point is not what the US $ does but what the real strong physical buying of gold does to the paper price suppression and derivative pressures on price.

- Dec 1 gold closed at $453.50, dollar at 81.56. Jan. 4 dollar at 81.34 and gold down $25? Totally out of whack.

- Expect short term price below $430 for several days. Turnaround soon and accelerating by end of month. Short-term dollar rally to end, see below.

- Goldman Sachs and World Gold Council GLD gold ETF were major short covering buying on Jan. 5. 15 tons sold out of the GLD on Dec. 7th now covered for a $10 million profit. (all backed by U.S. Gov. ETF)

- Urgent attempt now in force to keep gold down. The central banks (Germany, Italy) attitude is changing with respect to selling gold. This means less swapping and lending to sell into markets.

- No time table has been given for the renewed central bank gold sales agreement to proceed for 5 years.at made the big bucks between 1978 and 80 when gold went to $800 plus.

- Gold for years now capped at $6 constantly on the upside, allowed freefall on downside.

- Bank of Italy confirms manipulation of Gold Cartel and IMF gold deception. Swaps go back to 97. Reveals 13,000 tons not accounted for in official central bank statistics.

- Unprecedented takedown of $10 plus in four weeks reveals desperation to negate perception of mounting U.S. financial market problems. Attention must not gravitate away from markets to gold shares, bullion.

- Strong fundamentals for bullion: supply/demand deficit, US budget deficit, trade and current account deficits. Russia, China, Japan diversifying reserves away from US$, global geopolitical problems.

- Germany declares negative sentiment towards (Washington Agreement/04) gold bullion sales, reducing estimates of when and how much to sell into markets.

Dear Mr Murphy,
I must say you and the GATA folks are doing a great job! By assembling some of the smartest people in the industry under gata you are doing a wonderful thing! I have followed you for over a year now and along with Mr Sinclair yours are the two columns I read daily. You have fire and passion about gold and the economic freedom which comes with it. I share this passion and I sent some $ for gata a month ago because I believe in the cause. What people have to understand is that this economic mess called the U.S. economy is for REAL! The Debt is real! The economic consequences we face I believe have the power to "take us out" in regards to our standards of living, and anyone whom has any savings should be in gold and silver now whilst it is still cheap! In the future it will not matter if we bought it at $6.50 or $8.00, it will matter that we have it as a store of wealth. People forget the lessons of our broke forefathers whom came to north america with a mistrust of banks because they lost their money. They knew to keep their money buried in tobacco cans in the backyard. They did this because they could trust themselves but not the banks. Trust physical metal, not the banks.

I just want to encourage you in your fight, and I am sure Washington, Jefferson and others would be on our team today if they were around! I am with you and mr Sinclair in holding fast as their is no other alternative with the debt levels and fundamentals so terrible in the big picture. I only sell 1/3 of my position into strength if I do at all and by golly I will not leave my position without a fight, they will have to pry my fully paid shares from me. Maybe we should ask everyone to take delivery of their shares personally?

Again, you are inspirational and a good man for what you are doing with Gata. We are winning, the lows in silver and gold are continually getting higher and higher! I have the cup and handle picture from Mr sinclair's site beside me on a bulletin board. Time is on our side.
Regards, Chris

The gold shares sold off again late, like they do almost every day. The XAU only rose .38 to 93.39, while the HUI rose 1.04 to 202.73. One positive is the shares have stopped retreating versus bullion. Gold was battered the past two days and the shares took it all in stride. Odds are they have bottomed.

There is no denying the technical damage done to gold has been extraordinary. The Gold Cartel’s efforts to bury gold holders and deflect investor interest in the West have worked. It will take some time to repair this damage if history is any judge. However, the market is extremely oversold. Both gold and silver are due for healthy bounces. Silver could keep on going.

GATA BE IN IT TO WIN IT!

MIDAS

Rhody on jewelry and gold:

Hi Bill:
You asked yesterday if walking out of Tiffany's with high fashion gold jewelry, the stuff lost 40% of its value. I have kicked around in this field a bit so I can comfortably say that if you tried to re-sell gold jewelry priced retail at Tiffany's, you would receive only 10 to 20% of the gold melt value. High end jewelry retails sell their gold at 10 to 12 times melt. Downtown jewelers have mark ups of 8 times and low end retailers mark up about 4 to 6 times.

Your best buy is estate jewelry from antique dealers who used to mark up 3 times over melt but more recently one can find material at double melt, a real steal compared to your local jeweler. On occasion one can find an estate dealer who flips gold jewelry at a 7% spread, which is the same as most bullion dealers. I go to a coin dealer who sells me the stuff at spot. I have picked up $2500 gold watches for a few hundred dollars. One caution:

stay away from the 9 and 10 K stuff. It's so low grade it is no longer considered gold. One of the signs of increasing shortage in the gold market is the wholesale switch to low carat gold in the jewelry industry. Most retailers don't carry 14 ct or above gold anymore. Picking up gold and silver at scrap prices or below is sort of a hobby with me.

I agree with your sentiment here. Gold is money, not an industrial grade ornament. Debasing gold from money to an industrial commodity is one of the strategies of the CABAL. I might add, that jewelry fabricators provide underlying support for the entire leasing market in gold and silver, which makes sense given the high markups for jewelry. With threshold demand provided by these industrial consumers of gold, the lease market is made available for the CABAL's use during interventions.
Regards, Rhody.

-END-

CARTEL CAPITULATION WATCH

The DOW fell late, dropping 19 to 10,603. The DOG also fell late, but only lost 1 to 2088. A couple of points to highlight:

*The US stock market could not hold gains all week long; not good.
*For the first week of the year, the market performance over the last five trading sessions is very disappointing to the bulls.

The constructive news and administrative moves to boost the market are long-gone to fading fast. What lies ahead is ugly. If the US takes the necessary steps to respond to foreign nation's insistence we get our financial house in order for them to continue to finance our deficits, the US economy will be jolted. If the US refuses to comply, the dollar will really tank. Once the momentum crowd turns aggressively on this market, look out below!

Here is a bit of a shocker:

"For the first time ever, the U.S. does not rank among the world's 10 freest economies in the Index of Economic Freedom, published annually by The Heritage Foundation and The Wall Street Journal." http://www.accountingweb.com/cgi-bin/item.cgi?id=100330

Freedom's Top 10

AccountingWEB.com - Jan-6-2005 - For the first time ever, the U.S. does not rank among the world's 10 freest economies in the Index of Economic Freedom, published annually by The Heritage Foundation and The Wall Street Journal.

The U.S.' score in the 2005 Index did not change from 2004. But improvements in the economies of Chile, Australia and Iceland enabled all three to surpass the U. S., leaving it in a tie for 12th with Switzerland and out of the top 10 for the first time in the 11-year history of the Index.

"The United States is resting on its laurels while innovative countries around the world are changing their approaches and reducing their roadblocks," said Marc Miles, a co-editor of the book, along with Ed Feulner and Mary Anastasia O'Grady. "The U.S. is eating the dust of countries that have thrown off the 20th-century shackles of big government spending and massive federal programs."…

-END-

Can you imagine where the US would rank if the Heritage Foundation knew the degree to which the US is actually manipulating our financial markets in Orwellian fashion? Our ranking would sink to level of the Communist Chinese.

The John Brimelow Report

Huge Comex liquidation = Selling climax?

Friday, January 07, 2005

Indian ex-duty premiums: AM $7.24, PM $7.15, with world gold at $422.50 and $423. Ample for legal imports. Both the rupee and the Bombay Stock Exchange elected to close the week on an uptick: the former was quite volatile today, making the task of Indian arbitrage operators difficult.

Shanghai Gold Exchange premiums continued high: over $3 on relatively heavy volume. Reuters reports that

"In our time zone, we are seeing good physical demand," said Bruce Ikemizu, head of bullion trading at Mitsui and Co in Tokyo.
TOCOM today traded the equivalent of 33,346 Comex lots (+55%), with world gold edging up 90c from NY to go out at $421.40. Open interest rose the equivalent of 866 Comex lots. Mitsubishi yesterday, (belatedly available) reported that the general public long had risen some 12 tonnes this week, so maybe there is some accumulation on this exchange.

Comex yesterday traded a heavy 73,327 contracts, with open interest falling again, by 4,561 contracts (14.47 tonnes) to 290, 091. Since peaking on December 28 Comex has shed 126.4 tonnes of open interest – 40,629 contracts. Even making the implausible assumption that there has been no short selling (which of course bolsters open interest) there has been a furious and unsustainable selling pace set in the past few days. Largely because of this, both The Gartman Letter and Mitsui’s Andy Smith, in different ways key spokesmen for the Bears, were envisaging an up day today.

Perhaps the most salient observation to be made about today’s action is that gold in Euros has stopped going down. So maybe we have seen the zenith of the ambitions of the Bears.

In a piece this morning on CBSMarketWatch, Mark Hulbert remarked:

"As of Thursday night's close, the HGNSI stood at negative 23.2%, which means that the average gold timer in this group is actually net short the market….over the past month, the gold market exposure of the average gold timing newsletter has dropped by more than 100 percentage points. That's more than just an orderly retreat. That's a veritable rush to the exits…the average gold timing newsletter that the HFD tracks is now more bearish than at any time since late 1997, more than seven years ago."

See
http://cbs.marketwatch.com/new…4%7D&dist=rss&siteid=mktw

As with the physical market premiums, one can only note this is not the behaviour of a cresting gold market.

JB

The gold open interest continues to disappear, falling another 4652 contracts to 290,090.

The COT report released after the close revealed a 30,000 contract swing commercial reduction in their net short positions, sizeable, but not as much as I expected. With gold tanking three sessions since then, we have probably had another 20,000+ reduction added.

The silver open interest gained 331 contracts to 96,857.

Here is some good cheer. The silver stocks fell a fair amount for the second day in a row, to the tune of 449,670 ounces to 102,890,317. If silver is as tight around the world as our sources are reporting, this is just what should occur. A move below 100 million ounces would be significant.

The inflation/versus deflation discussion continues to make the rounds. The CRB is trading plus or minus 280, off its 291+ high. Can’t see commodity inflation topping out anytime soon. Oil was over $46 per barrel at one point today and the grain/soybean complex looks like it is completing a massive base.

It could not be clearer that the lynchpin of the US strong dollar policy is to aggressively rig and suppress the price of gold. On November 23rd the euro was 130.79, which is just where it is today. Gold on that date was $449.

Then, if you look at the bond, dollar and S&P charts, you will find the bond and stock markets are in the midst of broad sideways patterns (virtually going nowhere on a net basis over the past many weeks/months) and dollar mid-range to its activity over that period of time. ONLY GOLD has moved sharply in one direction on a net basis, that being down, WAY DOWN.

The dollar, up .36 to 83.72
http://futures.tradingcharts.com/chart/US/35

Continuous gold chart
http://jessel.100megsfree3.com/GoldPF.jpg

March S&P
http://futures.tradingcharts.com/chart/SP/35