Mahendra’s latest missive this morning should brighten the silver bulls:
DEAR MEMBERS,
PLANETARY POSITION IS INDICATING THAT BIG FIREWORK OR PRICE EXPLORE IS COMING IN MY FAVOURITE (SILVER), MAY BE TODAY OR SOON IN FEW DAYS? GET READY,
PLEASE DON'T SELL OR SHORT SILVER.
THANKS & GOD BLESS
Mahendra
http://www.mahendraprophecy.com/
Rhody on leasing:
Bill:
These lease rates are last Friday's, but they indicate that gold lease rates are in backwardation. Notice that the spread between one month and one year gold rates is 200%. If you check silver's you will see that the spread is a more normal 400%. This suggests considerable leasing of gold to augment the price suppression. Lease rates for both metals are low.
This does not compute. Low rates imply either negligible risk to the lender or plentiful supplies. Risk is not low anywhere in a credit bubble and we know that gold supply is actually tight at these prices, not ample. My conclusion is that the powers that be are doing everything possible to make official gold supplies available at subsidized lending rates. Mind you, if you hold bullion and your metal is being leased out to help pay for vault charges, you are being cheated, as the artificial lending rates now come nowhere near covering your vault charges. The logical thing to do is not to lend it, but pay your storage fees using fiat. Since the lease rates do not reflect the actual risk, it is unlikely that leased metal will be returned. If you lease it, you lose it.
I recommend taking bullion out of any storage system that leases to subsidize storage.
Regards, Rhody.
More from Rhody:
Hi Bill:
Kitco finally updated its lease rate data, so if you can stand another comment about gold and silver lease patterns, here it is. Gold's lease rates are still in backwardation, and that implies stress and serious effort at price capping. Silver lease rates are now rising across the board but faster in the near terms. This also implies stress and serious capping efforts on the spot price. However, with today's increases in silver rates, we have resurrected a pattern not seen since last April. During the last explosive rally of silver, one year gold lease rates became less than the one month rates for silver.
(One could lease gold for a year, cheaper than you could lease silver for a month.) Spot silver may be going parabolic here. Rhody
GATA’s Mike Bolser frequently mentions how gold soared when former Treasury Secretary O’Neill left office, prior to Secretary Snow’s nomination and confirmation. We believe this could have occurred because there was no one to run the gold manipulation scheme in the Exchange Stabilization Fund, as only the President and Treasury Secretary are able to do so. No President would want to soil his hands in the coming gold scandal.
The world is clamoring for the US to get its financial house in order. Yet, everywhere we turn, the call is for more spending:
WHouse sees borrowing to fund Social Security plan
WASHINGTON, Dec 6 (Reuters) - The White House said on Monday that it envisages using government borrowing to help finance President George W. Bush's plan to add personal retirement accounts to Social Security.
"There will be some upfront transition financing that will be needed to move toward a better system," White House spokesman Scott McClellan said.
Asked if the transition would be financed by additional government borrowing, McClellan said: "That's what you're looking at doing as part of the transition to a better Social Security system."
-END-
Since the President has pledged not to raise our taxes, how will our budget deficits ever come down? More evidence why the dollar is in DEEP trouble. So is our stock market in the months ahead!
CARTEL CAPITULATION WATCH
The DOW dropped 45 to 10,547, while the DOG scored yet another gain to 2151, up 3.
The dollar finished at 81.32, up .34, while the Euro sold off late, closing down .55. The 30-year DEC bond rose again – this time up 12/32 to 112 17/32.
Treasury Secretary Snow is on the way out:
05:11 President Bush has decided to replace Treasury Secretary Snow, reports NYT
Bush has been looking closely at a number of possible replacements, including White House chief of staff Andrew Card. An adviser to the White House said a decision to replace Snow had been made, as soon as Bush could decide on a successor.
Reference Link (registration required)
* * * * *
The John Brimelow Report
JB: India v. short sellers.
Monday, December 06, 2004
Indian ex-duty premiums: AM $7.81, PM $8.39, with world gold at $454.95 and $455.35. High: very ample for legal imports. The Rupee closed at a new import facilitating high, breaking $1 =R44 for the first time on this rally amidst reports of accelerating foreign portfolio investment inflows. This strengthening of the world’s largest gold buyer is a crucial obstacle to ambitious bears.
An interesting and unusually forthcoming article on the Indian web site redif.com (courtesy TheBullionDesk) suggests that the Indian demand schedule for gold has indeed been shifted by the country’s prosperity (Tanishq is a leading jewelry chain):
"On Dhanteras day…Tanishq's outlet in south Delhi. recorded an astounding 3,000 (visits)…virtually double the numbers the previous year. Sales that day touched an all-time high of Rs 1.75 crore (Rs 17.5 million). Tanishq's Bangalore headquarters has posted the startling countrywide sales for this day at over Rs 26 crore (Rs 260 million), up by over 30 per cent from last year. Tanishq…has seen a 100 per cent increase in its sale of gold coins this year over last year… Harish Bhat, chief operating officer…says he expects to end the year with a 45 per cent increase in sales of gold jewellery.
Only about half this growth can be ascribed to price increases. See
http://www.rediff.com/money/2004/dec/04spec.htm
Just like Friday, according to Mitsubishi, TOCOM experienced overseas selling from dealers at $456: the public was a modest buyer. On volume equal to 14,723 Comex lots (down 33%) open interest rose the equivalent of 1,020 NY lots: Mitsubishi infers a 4.1 tonne increase in the public’s long. The active contract closed down a yen: world gold was down 80c at $454.75. Japan seems tolerant of $455 gold. (NY Friday traded 67,133 lots; open interest rose 2,117 contracts.)
Parties operating out of New York are not tolerant of this price. The most interesting thing about Friday’s interesting trading was the scale and the ferocity of the attack on gold after the 8-30 AM payroll numbers, (which of course were shocking and unexpectedly gold friendly). Almost a third of estimated volume had traded by 9am. ScotiaMocatta observed:
"The metal traded to 453 in a matter of minutes but into a wall of selling from New York dealers. Further selling then came into the market from overseas source…"
The CFTC data indicates that as of last Tuesday significant short selling was already discernable. NM Rothschild noted:
The CFTC numbers showed that in the week to 30th …Funds were net sellers of over one million ounces … the …increase in the speculative short position has decreased the likelihood of a massive fall in the price."
UBS feels that since the CFTC reporting cut-off last Tuesday:
"open interest (excluding trade on Friday) has increased by 0.84Moz although looking at the move in the non-USD price, this may represent new shorts rather than additional longs.".
Taking the timing of the selling (including this evening after the NY close: the thinnest part of the day) and the open interest data, it looks pretty clear that the Gartman Letter’s view last Friday:
"we have almost certainly seen the highs for gold for weeks, if not months, into the future. $455-456 shall be the highs against which we can not only exit our long …but against which we can actually sell gold short."
is conventional in some trading circles.
Fathers of this years’ vintage on Indian brides will be delighted. The only question is if these shorts will hold on to the New Year, before being routed.
The noted bullion dealer bear is notably more circumspect. Indeed, he raises two potentially gold positive facts:
The BIS statistics on OPEC FX Reserves can be interpreted to mean the group has being buying some gold
and
In the week to Nov 30, the combined Comex/TOCOM/Comex options open interest fell 24 tonnes while gold rose $5. In fact, the $28 rise since the end of October has seen a 37.5 tonne decline. He seems puzzled as to the cause. One obvious possibility for the rise is ongoing physical offtake.
JB
You might like to know the GATA ARMY is being heard:
Bill,
Today I received a telephone call from a Security and Exchange Commission attorney in response to my November 23 letter about the gold ETF. He wanted to follow up on some of the points I had raised. They are:
Concerning the differences between the wording in the prospectus and reporting in the media he said the SEC can’t prevent that. I said my concern was that the STREETtracks Gold Shares prospectus did not adequately list the risks that the metal might not be in storage. By contrast Merrill Lynch, often lists risk factors at the beginning of the prospectus in red ink so potential investors can have not doubt as to what they are buying into.
I said that the prospectus read like an effort to hide the risks so that if someday shareholders lose money because the gold is not there the trustee can say they were warned, if only obliquely. An historical caution I gave was the Salad Oil scandal from the 1960’s. American Express loaned million of dollars, based on collateral of tanks full of salad oil as security. Unfortunately, the tanks were empty and American Express had to write off the loan.
The attorney said there is some confusion at the agency as to whether STREETtracks Gold Shares is a "registered investment company" (RIC). One of his colleagues told him the security was a RIC. However, he said further checking turned up the fact that the security is not an RIC. Thus, shareholders do not have the protection afforded to owners of mutual funds. (The manager of a mutual fund has a hard time stealing the assets as he and the fund company do not have possession of the stocks and cash, which is resident with a third party such as the Depository Trust Corp.)
I suggested he review the prospectus of the Central Fund of Canada (CEF) to find out how a company goes about making sure that the gold it claims to have is really present. The attorney appreciated the suggestion.
I was pleasantly surprised to get that call. Clearly, the attorney and the SEC are seriously looking into this (he said they had gotten a lot of similar inquiries).
Best wishes,
Hank Fellerman
WORLD GOLD COUNCIL'S BULLION FUND
DOUBLE-COUNTS GOLD BARS, GATA SAYS
More than 2 percent of the gold reported as the property of the World Gold Council's newexchange-traded bullion fund on the New York Stock Exchange (GLD) appears to have been double-counted on account of duplicate serial numbers on the fund's gold bars, the Gold Anti-Trust Action Committee said today.
The duplication was discovered by GATA consultant James Turk, editor of the Freemarket Gold & Money Report and founder of the GoldMoney gold depository and Internet-based gold payment system. Turk examined the bar list reported to investors by the fund.
In today's statement, GATA argued that the duplication of bar numbers deepens concerns about the adequacy of the bullion fund's custodial and auditing arrangements.
"For years the suppression of the gold price and the manipulation of the gold market have been facilitated by the mystery that has been deliberately woven around the leasing of gold and around gold custodianship generally," GATA said. "If the World Gold Council's bullion fund is not to be suspected as another part of that manipulation, the council must answer some questions urgently:
"* Why does the bullion fund list ownership of duplicate gold bars?
"* Why have all the custodians and potential custodians of the fund's gold not been identified?
"* Why is the fund refusing to let its gold holdings be fully and publicly audited?
"* Is any of the fund's gold being leased, made available for leasing, or encumbered in any way?
"* Exactly what is the fund's relationship with the Bank of England, a major lessor of gold?"
Turk's report on the duplication of serial numbers in the bullion fund can be found on the Internet here:
http://news.goldseek.com/JamesTurk/1102312799.php
***
The GATA camp is only after the truth. After our being suckered by the mainstream gold world for so long, the World Gold Council, who has facilitated the gold fraud for so many years, should not be given a free pass when there are so many serious questions to be answered.
When it comes to the World Council and their new product, there are two items to keep on the front burner as far as I’m concerned:
*Since this new ETF came on stream, the gold price has acted worse in terms of foreign currencies than prior to its launch. This is a fact. Just look at the price of gold in terms of euros and pounds. Over the past couple of weeks gold hasn’t even kept pace with the dollar's fall. In euros gold closed at 337.50 after making a triple top at 344.
According to the World Gold Council’s numbers, their new entity created 100 tonnes of new gold demand in a brief period of time. This new demand represents 4% of total 2004 mine supply. With the Indians and others such aggressive buyers of physical, this should have sent the price soaring as gold already is in a severe monthly supply/demand deficit.
Instead, gold lost ground vis-à-vis foreign currencies. The only explanation, IF the WGC ETF was responsible for buying what they claim they did, is The Gold Cartel countered this sizeable buying by aggressively going into their coffers to keep gold from doing what it would have in a free market.
If I’m missing something here, please let me know.
*Point number two. When you look at the bigger gold picture, the World Gold Council has dropped the ball completely. When you compare coming up with one gold ETF, one which has glaring deficiencies, compared to allowing The Gold Cartel to continue its scam right under its nose, this ETF is relatively meaningless.
What I mean by that is we know that at least 10,000 tonnes of central bank gold has been surreptitiously fed into the marketplace. This is on top of any leased gold used by hedgers. That number is 100 times greater than the 100 tonnes accumulated by the WGC ETF, or only 1% of the clandestine gold lending – a mere drop in the bucket.
Had the World Gold Council run with the ball and exposed the gold fraud years ago, it might have come to an end some time back due to international pressure. The price of gold would be far higher than it is at the moment. Even if pressure by The World Gold Council didn’t stop the crooks, exposing that half the central bank gold is gone would have a huge impact on the investment community. Once investors fully comprehend the central banks don’t have the clout anymore they had for so long, thanks to their nefarious scheme, it will create a rush of gold buying all over the world. This is what GATA wants the investment world to know and is why "officialdom” silences us. This is what the World Gold Council has gone out of its way to prevent the world from understanding, which is why I consider them to be a useless outfit.
December 6 – Gold $453.50 down $1.90 – Silver $7.90 down 9 cents
Gold Cartel Attack Thwarted Again
"Bulls of 1929 - like their 1990s counterparts - had their eyes glued on improving profits and stock valuations. Not a thought was given to the fact that the rising tide of money deluging the stock market came from financial leverage and not from savings."
- Dr. Kurt Richebacher
The London Am Fix was $455.75. Not long thereafter the cabal forces warmed up for their assault on gold, taking it lower into the Comex opening. Once the Comex commenced, they went into their usual bullion bashing drill. As a result, gold lost further ground against foreign currencies, dropping below 336 in euros. It recovered to 337.50 by the close, yet still another closing loss.
The geopolitical scene is heating up and should have some impact on the price of gold in the weeks ahead. Iraqi police, those expected to guard the election poll places, are being blown up at a horrific pace. Meanwhile, Saudi Arabia was shaken too:
04:56 Follow-up: attackers kill 4 Saudi guards, take 18 local staff hostage at U.S. Jeddah mission -- Reuters
Citing security sources.
* * * * *
04:51 U.S. consolate in Jeddah, Saudi Arabia has been sealed off by Saudi security forces
Reuters is reporting gunfire near the building and plumes of smoke rising from the area. Saudi police engaged the attackers, according to the reports. The U.S. has closed the embassy in Riyadh and its consulate in Dhahran.
* * * * *
For the second day in a row The Gold Cartel went all out to bury gold and came up short, as bullion finished the day $2 off its lows and well above $450 psychological support. As John Brimelow continues to report, the cash market is on fire. Attempts to break gold are met with ferocious buying. Thus, the bums aren’t able to flush out the specs. Happened ALL the way up, thus far anyway.
Received a call from our STALKER source this morning. Twelve midnight last evening, he received a dispatch from his London bullion dealer contact who, while still very bullish, was looking for a gold pullback to $448. This conservative dealer is still expecting gold to trade $464 by year-end.
The gold open interest rose 2117 contracts to 356,109, while the silver open interest gained 271 contracts to 125,375.
Silver traded funny all day long. Each time it looked like it was going to tank, it popped 5 cents. Then, late, it looked like it could reverse to the upside and it fell 6 cents near the close.
There is a great consternation out there in Café country over the World Gold Council’s ETF. Veteran, shrewd gold folks are in two camps:
*Those who believe the gold ETF is the best thing since sliced bread because it is a financial market entity which allows big money such as pension funds to buy physical gold. Heretofore they did not have a vehicle to do so. They believe this will create huge demand for bullion as time goes by.
*Those of us who agree with that assessment on the potential for gold ETFs, yet fault the World Gold Council for the structure of their entity. GATA’s Chris Powell gets right to the key points in a GATA press release this morning:
Pot pourri:
Catherine Austin Fitts on the new World Gold Council ETF:
PS...speaking of the ETF, according to Money Laundering Alert, Bank of New York is back in negotiations with prosecutors to make a deal to avoid criminal prosecution again (as they did in 2000 for the Russian money laundering). Are they not the ETF trustee? Nice trustee.
-END-
Some thoughts on the gold share action from a fellow Café member:
Hi Bill
I'm still fully invested. If the basic, gold bull, share investor is fully loaded we have to wait for 'new blood' to enter the market before share prices will rise. In the meantime any trader or profit taker will only drive the prices lower. If the general equity markets are moving up or perceived to be doing so then the 'money' will stay there and not move into the PM market. If the opinion below is followed by action we could be in for a longer wait than we thought. In the meantime the gold market will grind higher as the $US falls. Mining profitability outside of the US is diminished as local currencies appreciate and costs increase. Canada for example. Some pm stocks have gone nowhere in the last 2 years. This will continue to put the squeeze on production and cause the bad guys to run out of resources sooner rather than later and we will get our anticipated breakout. In the meantime keep adding to positions on down turns and take the odd profit here and there as a particular stock does its own mini run up and then retreats again.
Just thought I would add my two bits as writing this tends to consolidate the thinking process.
Kindest Regards
Tony Brogan
To "rap" up for this Sunday, none of us know what The Gold Cartel will do to us on any given day, or over a short-term time frame. What we do know is the price action tells us they are fighting a losing battle. They are using up too much physical gold to keep it up for too much longer. My bet is they will lose the battle for $450 like they did at $430 and $330. Even if they do win this battle, they are losing the war. The large cabal shorts are on borrowed time.
For suffering gold/silver shareholders, it is my belief the quality junior and gold exploration companies are in the process of putting in a major bottom here and will double to quintuple, or more, by December 2005 as The Gold Cartel goes down to a brutal defeat.
GATA BE IN IT TO WIN IT!
MIDAS
Hello Japan, China????
FROM THE OFFICE OF PUBLIC AFFAIRS
To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.
December 3, 2004
js-2127
Report to Congress on International Economic and Exchange Rate Policies
This report reviews developments in international economic policy, including exchange rate policy, focusing on the first half of 2004. The report is required under the Omnibus Trade and Competitiveness Act of 1988, which states, among other things, that: "The Secretary of the Treasury shall analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade."
http://www.treas.gov/press/releases/js2127.htm
-END-
This report is hard to swallow after GATA catching the US Treasury in so many lies about gold over the years:
US Treasury report finds no forex manipulation
By Laura MacInnis
WASHINGTON, Dec 3 (Reuters) - None of the United States' major trading partners manipulated their currencies to gain economic advantage in the first half of 2004, the U.S. Treasury Department said in a report released on Friday.
In its semiannual report to Congress on international economic and exchange rate policies, Treasury urged Asian countries with fixed exchange rates -- including China -- to institute more flexible, market-based mechanisms. The Treasury said China's fixed exchange rate regime has made the country's macroeconomic policymaking more difficult. It also said accumulation of foreign exchange reserves had fueled both credit growth and inflationary pressure in China…
-END-
What fun for our team to know that JB’s diligent work has been key to understanding why gold has done what it has done for so many months. As reported, via John Brimelow, the cash market has been extremely strong on gold’s current move higher. The Gold Cartel has been unable to flush out the specs as they have done so many times in years gone by. As John has pointed out so often the past months, NEVER before have the Indian bullion dealers paid up like this on price strength to satisfy local market demand.
The latest on The Café Sentiment Indicator:
Boy has this been a winner. Been low all the way up and still is. Only a 5 at best. It was A NINE a year ago when gold was $422, $32 LOWER than it is now! Next to John Brimelow’s cash market, this has been the most significant indicator I have ever come across. The beauty of it is, I have presented it to you for the entire bull move up and expounded all the time why I thought it was so important. From my standpoint, what fun. It has been a HOME RUN indicator for gold futures players.
The savvy Chuck Cohen checked in on Saturday:
Bill:
Two straight days of huge share liquidation in the Rydex and the Central Fund is down to almost zero, the first time since the first time since the beginning of 2002. This portends something very large, as the last time this occur was at the very bottom of the HUI move up. We'll know soon………
Who later followed up with:
I have to say that I am a little freaked as I went through some of the internet pages. First, the Times is reporting that the retailers are panicking already because of the tepid season so far. But even more so here are my observations of the confluence of very extreme technical stuff. First, the Rydex PM has had a dramatic drop the past two days even with gold up. Usually VERY bullish. The Central Fund is now down to almost a zero premium. The last two times it was this low was at MAJOR lows in the gold indices. The tremendous drop in the price of oil which has brought only a yawn to the street and a disconnect with gold. One would think that gold would have some kind of sympathetic response with it.
Plus, the weakness in the dollar hasn't elicited any mention of gold or that it's sickliness might cause rates to shoot up.
Finally, check out the Times today on the plight of the Asian traders in dollars. What are their choices? NYTIMES.COM
Conclusion. If we aren't near something pivotal, then we might as well close down the shop and sell real estate. Chuck
*Recently, The Gold Cartel has prevented gold from moving up in anything other than dollar terms. What could change that in the near future?
Iraq is a fiasco. As it becomes more and more apparent the US is mired in a mess which will worsen our budget deficit, it will soon create further tension in financial markets around the world. As a result, demand for physical gold will increase even further.
US financial markets could undergo extreme turmoil in the weeks ahead. Interest in gold could explode as fear and safe-haven buying increases among those fleeing from more traditional markets.
A lot more to bring your way on this early December weekend:
From a fellow Café member:
"I found Brimelow's explanation of the Indian "ex duty premium" to be very helpful and thought I'd ask you to do those of us who are not traders (professional or otherwise) a favor and give us as good an explanation of a "commercial signal failure.’"
A Commercial Signal Failure is when the so-called commercials, or "physical trade" players, continue to build their positions as the market goes against them. On the other side of the trade the specs continue to increase their positions. The commercials, used to winning, keep expecting a correction. Sometimes the fundamentals are so extreme the commercials get buried. When their losses become too painful, they are forced to cover, usually in panic market conditions. This is when the failure occurs.
What is fascinating to me is NO ONE outside of the GATA camp is dealing with the unprecedented gold short position, which may be as high as 16,000 tonnes. This has never been the case throughout all of gold market history. Much of this position is related to leased gold used by The Gold Cartel to artificially suppress the price all these years. Sure, a good deal of these short gold positions might be forgiven by the US Government, Bundesbank, etc., but no way all of it will be. If only a fraction of these "commercial" shorts run for the hills at the same time, gold will go parabolic.
Then, there are some of the big hedgers who put on short positions with gold $100 to $150 lower than today’s price levels. With costs rising in local currency terms, many have to be choking on the hedged prices they are forced to live with. One of these days soon we are going to hear about another Daughters of Gwalia nightmare. Such an event could kick off my long-awaited "Commercial Signal Failure."
The fact that NO ONE OUTSIDE OF THE GATA CAMP even mentions such a potential happening is mind-boggling. Once again, this gold market is the least understood (by the industry itself and the investing public) and worst reported on one than any other in history.
Speaking of John Brimelow, his BRILLIANT explanation of the Indian premiums, so key to our understanding of why gold has acted so well for so long, has been posted at:
http://www.vdare.com/jb/041130_indian.htm
***
Boersen-Zeitung, Frankfurt
Saturday, December 4, 2004
http://www.boersen-zeitung.com…tion/aktuell/bz236013.htm
USA wollen erst bei 1,45 Dollar intervenieren --Treasury: Auch kräftige Yen-Korrektur nötig
US-Regierung sieht in weiterer Dollar-Abwertung "effektives Instrument" gegen Leistungsbilanzdefizit det Washington -- Die US-Regierung ist offenbar bereit, einen weiteren deutlichen Kursverfall der eigenen Währung in Kauf zu nehmen. Ein hochrangiger Mitarbeiter des US-Finanzministeriums, der namentlich nicht genannt werden wollte, sagte der Börsen-Zeitung, man werde frühestens dann an Stützungskäufe denken, wenn der Euro "die Marke von 1,45 Dollar überschritten hat".
US-Finanzminister John Snow habe die langfristigen Gefahren der Defizite im Haushalt und Außenhandel der USA für die Konjunktur erkannt. Er akzeptiere,
Auch wenn Snow und andere Regierungsvertreter zumindest in der Öffentlichkeit an der seit über zehn Jahren geltenden Doktrin des "starken Dollar" festhalten, hat sich diesen Aussagen zufolge hinter den Kulissen ein grundlegender Gesinnungswandel vollzogen.
Wie der Treasury-Mitarbeiter weiter erklärte, will sich das Finanzressort in Washington von dem Säbelgerassel aus dem Ausland und den Aufrufen zur Dollarunterstützung keineswegs einschüchtern lassen. Die Äußerungen des japanischen Finanzministers Watanabe, der gemeinsame Interventionen der japanischen Notenbank und der Europäischen Zentralbank in Aussicht gestellt hatte, sofern Washington nicht irgendeine Bereitschaft signalisiere, die Talfahrt des Dollar aufzuhalten, stößt bei Snow offenbar auf taube Ohren. "Die Drohgebärden werden an unserer Politik nichts ändern", betonte sein Untergebener. "Sie sind aber auch nicht dazu geeignet, das Gesprächsklima zwischen Washington und Tokio zu verbessern."
Zu den Wechselkurskorrekturen müssen nach Ansicht der Bush-Regierung insbesondere auch die asiatischen Länder beitragen. Auch wenn sich die US-Valuta mittlerweile der psychologisch wichtigen Grenze von 100 Yen genähert hat und ein weiterer Wertverlust den Konjunkturaufschwung in Japan bremsen könnte, geht Washington davon aus, dass Japan einen überproportionalen Anteil an den Korrekturen tragen wird und der Dollar im ersten Halbjahr 2005 auf 90 bis 95 Yen sinken könnte.
Der Kursverlust des Pfund hingegen brauche sich nicht mehr fortzusetzen. "Die Engländer haben ihren Teil getan", erklärte der Treasury-Mitarbeiter. Die weiteren Beiträge "müssen zum einen von der Eurozone kommen, aber auch von Asien, insbesondere China". Eine Entkoppelung des chinesischen Yuan vom Dollar werde man zwar nicht verlangen, aber doch überzeugende Schritte hin zu einer Lockerung der Anbindung.
–END-
Let us now switch to a Dan Denning (Daily Reckoning) article, sent to me on Friday, and posted at
http://www.kitco.com/ind/Denning/dec032004.html.
Kind of strange at it was sent out with a November 23 dateline. Some excerpts from GOLD AND GRAVITY written with Feb gold at $450 (nearly $8 lower than Friday’s close):
Is the gold price giving us a repeat performance of October’s fake-out in the oil market? My suspicion is that gold is acting a lot like crude did last month...running up to fresh highs – and making headlines all the way...
But this isn’t the main event. Not yet.
The day of reckoning for America, her deficits and her dollar is surely on its way. Investors who haven’t yet bought gold as protection could be forgiven for thinking they’ve missed their chance. But we may see gold make the inevitable run up to $450 – as early as next week - and then experience a serious correction and consolidation……
With gold making 16-year highs, the dollar making fresh lows in euro and yen terms, I'm more inclined to take recent developments as a sign of a near-term top in the gold price. In contrarian terms, whenever the crowd is all on the same side of the trade, the trade is nearly over….
***
Dan Denning is a smart guy, I am sure. And his call could be right on the money too. However, to say his call is contrarian is "dead reckoning" wrong. The MOB calling for a correction has been howling for many weeks, gaining disciples on each $5 rally; leaving only a few lonely short-term bulls as gold grinds higher and higher, despite what the crooks are doing.
What the correction camp may be missing:
*Since the financial markets are so sanguine about a dollar drop, the central banks may have decided to let the dollar take its medicine right now, letting the dollar fall far more than anticipated in the near-term without any kind of meaningful correction. The longer the US bond and stock markets maintain their serenity, the more likely it is the dollar will fall.
*GATA’s Chris Powell sent out a dispatch last week re a Swedish central banker who stated he had information there would be no meaningful currency intervention at all in the near future. So far this has been the case, to the consternation of dollar correction bulls.
*Chris then put out this dispatch yesterday which should send shivers to dollar longs and those gold bulls who are short or out of the market:
8:25p ET Friday, December 3, 2004
Dear Friend of GATA and Gold:
The Reuters story about today's decline in the U.S. dollar, just dispatched to you, mentioned a report in a German newspaper quoting an unidentified U.S. Treasury official as saying that the U.S. government would not intervene in the currency markets to support the dollar until it fell to $1.45 to the euro.
That newspaper was Boersen-Zeitung, a financial paper in Frankfurt, and the story at issue is appended for our friends who are fluent in German.
The story is not terribly coherent when run through an automated Internet site translator, but it does say that the U.S. Treasury Department considers exchange-rate adjustments to be the best way of rebalancing international trade.
If the story says anything of great interest, perhaps our German-speaking friends will let us know -- or at least send us some good sauerbraten and beer. You should see the slop some of us GATA drones have to eat in front of the computer on Friday night as we troll the Internet for clues to the truth. Truth may feed the soul but put ketchup on it and it's just ... ketchup!
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
We already know about Dennis Gartman’s brash call to go short with impunity on Friday (he’s already down $2 to $3 per ounce). Here are some comments from this Mineweb story, which can be read in full at:
http://www.mineweb.net/sections/gold_silver/396837.htm
Gold takes a breather
By: Gareth Tredway
Posted: '03-DEC-04 15:00' GMT © Mineweb 1997-2004
On Friday, after initially rising nearly $2/oz on a US new job creation number that was half that expected, the price dipped below $450/oz. A South African commodities trader says the market was expecting the numbers to be worse and, so, the price only rose slightly on the news.
"For now I think we have seen the top, and maybe we will see a pull back on gold and the euro," said the trader. This pullback would see gold drop to around $445/oz and a euro back at $1.3280 to $1.3250, the analyst reckoned…..
The trader says, gold should be at the $460/oz - $465/oz level at the moment, but added that the metal will test these levels within the next two to three months. "We shall maybe struggle around there again," he said……
Gregor Krall, technical analyst at BOE private clients, told Mineweb on Thursday that for the present gold could be a little overdone, but there is strong support at the $425/oz - $430/oz levels. At the other end of the scale, Krall said strong upper resistance was seen at $468/oz and the $503 levels…..
Most market watchers remain cautious for the present, saying: "There is always the risk that the dollar whips back."
-END-
Points to make:
Not one of these pundits, naturally, dealt with the fact that gold did not respond like it should have because of Gold Cartel intervention. Instead the dingy SA commodities guy says traders were expecting the jobs number to be worse than expected. What a bunch of crud. NONE of the Wall Street pundits were bearish on the jobs number which is why the bond market soared when the jobs number was announced. This is a good example of what I mean when I say the gold market is the worst reported-on one in history.
The emphasis on gold, as always, is on "overdone to the upside" and on a "top." How about pointing out that even with the "dazzling" new WGC ETF buying, gold has not even kept pace with the dollar fall? What could be more obvious that "Something Is Rotten In The State of Denmark?" If the WGC ETF really did buy 100 tonnes of gold, it had little to no affect on the price as gold is actually trading worse vis-à-vis the dollar than BEFORE this supposed new buying kicked in. How can that be?
None of these enlightened pundits, like so many others, talk about the possibility gold could have a ways to go to the upside FIRST before we get a meaningful correction, like all markets eventually do. Except for Jim Sinclair, John Embry, John Brimelow, James Turk and myself, almost everyone in the public commentary domain is short-term bearish.
Sure gold should be at least $460 to $465 right now, just to keep pace with the dollar’s drop, as per this MineWeb pundit’s comment. We know why it isn’t. Hip, hip for The Gold Cartel! These people who fail to report on it are clueless and/or are prohibited from letting the truth out there, as is Davin McGuire of Dow Jones. I feel sorry for him at this point. Good guy. Just muzzled by the Orwellians in our American financial market press
Now back to the latest. Of utmost significance to our camp is the mainstream investment world’s (and almost all gold market pundits) lack of short-term bullishness regarding gold. It is extraordinary and bodes well for the few of us who have remained steadfastly bullish all the way up, as well as for those with gold share investments of any kind. As we all know, gold futures longs and gold bullion/coin holders are standing tall today, whilst gold shareholders are suffering and bewildered because of the pathetic performance of the shares.
Sure, the world powers can intervene in the dollar at any time which could jolt the gold price. Yet, this is what the correction camp has been saying for weeks. Since the New Orleans Investment Conference on November 10th, with most every gold pundit in attendance looking for a correction, gold has rallied more than $20. Even if there is a massive intervention, gold would most likely (worst case) head back down to its break out point of $430. The cash market is just too strong for gold to deteriorate much further than that. Meanwhile, most of the pundits have their clients out of a market move of historic importance, and maybe the most historic investment opportunity of all time! To play for pennies makes no sense to me when there are SO many marbles (chips) are on the table.
The irony is almost ALL the short-term gold bears think they are contrarians. They are the ones with almost ALL the company, and have been for some time! Even more ironic is the higher gold moves, the more company joins them from those leaving the bull camp. Right now who do you know out there who believes gold will rally from here? Almost no one is talking UPTOWN! To be lonely BULLISH soothsayers, as most of the GATA Camp is in at the moment, should be comforting, as it is commonly a winning viewpoint for true contrarian investors!
In addition, here we have gold screaming into 16-year highs and there is nary a peep from the media. No hoopla at all, the kind one might normally expect at market turns. One could say the reaction to the gold surge is extremely bizarre – or more appropriately, like benign neglect.
Take this Kitco, December 4 posting, for example:
London gold closes at $444.70 US, down $0.47
LONDON (AP) - Selected world gold prices Friday in US dollars a troy ounce:
Hong Kong: $448.50 off $7.55
London: $450.20 up $2.60
Paris: $444.70 off $0.47
Zurich: $449.53 off $0.70
***
HUH?????? Selected prices – for what – to accommodate the bear’s wishful thinking?
James Turk’s original work on Germany’s gold in this piece:
Behind Closed Doors
by James Turk
April 23, 2001
may be reviewed at
http://www.fgmr.com/clsddoor.htm
***
For reference on where I am coming from on this let us review the prescient work of GATA’s James Turk in some excerpts from:
Accounting for the ESF's Gold Swaps
by James Turk
August 13, 2001
http://www.gata.org/esf_gold.html
Last April in "Behind Closed Doors", I presented evidence that the US government had swapped with the Bundesbank some 1,700 tonnes of gold stored at the depository in West Point. At the time, I wasn't able to figure out where the transaction was hidden in the US governments accounts, but I now have the answer. This 1700 tonnes at $280 per ounce is a $15.3 billion transaction. This accounting entry is in the $20 billion liability explained above, which at $280 per ounce allows for the possibility that the size of the gold swap has increased to $20 billion. I say 'possible' because the rest of this liability may have arisen from a currency swap.
So here's the accounting. The US government swaps gold with the Bundesbank, which now owns the gold in West Point. Further, to secure this transaction, the Bundesbank receives SDR Certificates, which solves "The Mystery of the Disappearing SDR Certificates" (Letter No. 289, August 13th, 2001). The ESF gets the gold in the Bundesbank's vault, which it then lends to the bullion banks in an off-balance sheet transaction.
Since I first reported that the Bundesbank owns the gold in the Treasury vault at West Point, I have been asked countless times, how can the gold still be reported as being held in the Treasury vaults and listed as a US Reserve Asset if it is really owned by the Bundesbank? Well, according to GAAP accounting it can't. And that is what I have now discovered in the 2000 CFS, which presents the offsetting gold liability in the IMA.
This 2000 CFS footnote was changed from the 1999 CFS for a reason - to reflect new conditions in the accounts. As further confirmation of this point, we already know that on September 30, 2000 in its reports of the US Gold Reserve, the Treasury began labeling the gold in West Point as "Custodial Gold", changing it from its previous classification of "Bullion Reserve". This gold is being held in custody for the Bundesbank, its owner.
It is worth recalling that all of these changes took place in the fiscal year ending September 30, 2000. That year began October 1st, 1999, just days after the Washington Agreement. There has been a lot of evidence presented that the Bank of England and other central banks intervened heavily in the gold market to cap the rally then underway to get the gold price back below $300 per ounce. See for example, Paragraph 55 of Reg Howe's Complaint against the Bank for International Settlements et al., at http://www.goldensextant.com.
The Gold Cartel is working overtime to get this spin out there. Another slant on the same planted story:
German "wise man" urges Bundesbank gold sale-paper
BERLIN, Dec 5 (Reuters) - The Bundesbank should sell its gold holdings as quickly as possible, one of the German government's panel of independent economic advisers was quoted on Sunday as saying.
"From a monetary policy point of view, there is no reason to retain these gold holdings," Peter Bofinger, one of the so-called government "wise men", was quoted as saying by the Berliner Zeitung. "It would certainly be sensible to invest the money in education and human capital."
The newspaper also said leading members of the ruling Social Democrats parliamentary party were pressing for the sale of gold holdings and had been in regular contact with the Bundesbank.
Bundesbank President Axel Weber said last month the Bundesbank would decide by the end of the year whether to use an option to sell any of its gold under an agreement with other European central banks.
The European Central Bank Gold Sales Agreement, a five-year sales pact that came into force at the end of September, regulates the amount of gold central banks can sell.
Under the pact, Germany, the world's second-biggest holder of gold with reserves in excess of 3,000 tonnes, has an option to sell 600 tonnes of the precious metal over the five years. ((Writing by James Mackenzie, editing by Chris Johnson; Reuters Messaging james.mackenzie.reuters.com@reuters.net, Berlin Newsroom +49 30 2888 5230, berlin.newsroom@reuters.com))
I guess these German wise men want to make like the English who sold their gold at $280 so they could invest the proceeds in interest bearing dollar vehicles (nice move). No pretense of that here. Just sell the gold because it is going straight up and proving to be a very valuable asset. Wonder who got to these guys?
What these wise men don’t know is Germany’s gold, or at least half of it, may already be gone, lent out at $150 below current prices. Perhaps some in the German political/banking world fear they will be found out and want to get these loans off the books by declaring them as sales and receive cash from the proceeds?
What the GATA camp knows for sure is there is some 10,000 to 15,000 tonnes of central bank gold "officialdom" has not accounted for via sales and hedge book loans. Whose central bank gold is it? The US? Germany? The amount is so large some of it has to come from one of those countries as they supposedly account for 1/3 of the central bank gold reserves in the world.
