Beiträge von Schwabenpfeil

CARTEL CAPITULATION WATCH

The DOW held its ground at 10,391, up 4, while the DOG was steady at 2039.

07:31 ECB's Trichet says recent appreciation by euro/dollar is "brutal"
Says the moves are not welcome.
* * * * *

A number of Café members were waiting to learn what Bill King would have to say about Friday’s surprising US job numbers:

The King Report
M. Ramsey King Securities, Inc.
Monday Nov. 8, 2004 – Issue 3033 "Independent View of the News"

The market has absorbed the shock of a much larger than expected non-farm payroll number. And because of the preeminence of wise guy trading, the analysis of the Employment Report will commence after the knee-jerk market reaction.

The details, as usual, are not as jiggy as the Employment Report on first blush implies. Job growth appears to be the result of the hurricanes and the election. Construction jobs surged by 71k, temp jobs jumped by 48k and government jobs increased by 41k. How many of the tens of thousands lawyers hired to litigate the election and support staff are in the Employment Report?

5k manufacturing jobs were lost, a gain of 9k was expected. There was no change in average hourly earnings or the number of hours worked per week. Income growth is still abysmal.

"The Bureau of Labor Statistics also reported that wages and salaries grew only 2.4 percent over the past year. That's the lowest one-year pace on record - and it lags behind inflation, which clocked in at 2.7 percent. It's nice to see consumption up. But these numbers show it's being fueled by borrowing, not fatter paychecks, and that is worrisome." http://www.nytimes.com/2004/11/06/opinion/06sat3.html?th

Grant Noble: "The U.S. economy has 2.7 million fewer manufacturing jobs and 1.26 million fewer private sector jobs now than when George W. Bush was inaugurated…The only areas of job growth are in government, restaurants and bars, education and health services, construction, and credit intermediation. During October U.S. manufacturing lost another 5,000 jobs. Charles W. McMillion, president of MBG Information Services, reports that hours worked for non-managerial manufacturing workers have declined 7.6% since the current recovery began - an unprecedented development."

-END-

The John Brimelow Report

A Fallujah gold market?

Monday, November 08, 2004

Indian ex-duty premiums: AM $8.16, PM $7.91, with world gold at $434.45 and $432.65. Ample for legal imports. The India Central Bank had to intervene heavily to check the rupee’s surge today, notwithstanding which it closed at an import-facilitating 5 month high. The Bombay Stock Exchange closed at an 8 month high having risen 4% last week. The rupee is being bolstered by foreign portfolio investment inflows, reported today to have reached $5.8 billion this year compared to $6.7 billion for the whole of last year, having accelerated since the summer lull. The recent decline in oil prices is adding momentum too.

India looks set to be a major buyer of world gold in the immediate future.

Japan also seems to have been a buyer. Open interest rose the equivalent of 1,753 Comex lots and, according to Mitsubishi, the "General Public" long jumped 6.4 tonnes, or 2,058 Comex lots. The active contract closed up 12 yen and world gold stood at $434.80 at the end of Tokyo trading, $1.55 above the NY close. Reuters once again refers to bullion buying by the retail public in Japan. Volume was equal to 18,464 Comex lots (+3%). (In NY on Friday 83,754 contracts traded, 10% more than estimated; open interest jumped 7,365 lots to a new record of 331,018.)

If Standard London’s prices are to be believed, premiums in the Gulf remain, hardly surprisingly, firm.

However, although world gold made and held new 16 year highs for several hours during the early Asian day, there was considerable opposition. Mitsubishi remarks gold was:

"…offered above 434.00 by US profit taking selling…and spot gold was gradually weighed by dealers offer… capped by weak Loco LDn gold …While EUR/USD was traded around 1.2970/1.2985, spot Gold was capped by dealers long liquidation… Saw good Public buying on Tocom."

Mitsui-HK simply remarks

"Resting offers provide

Prices on the Shanghai Exchange have one again fallen to deep ($2 ½ - $3 ½) - discounts to world gold: from the vantage point of physical prices, China continues to act as a dampener on world gold.

For once, the usually accurate UBS commentary seems wrong: they say:

"In Asia this morning gold made new 16 years highs this morning as more speculative buying was seen that outweighed light physical and Tocom general public selling."

Tokyo in fact seems, according to the statistics to have been a buyer, while ACCESS volume was not particularly heavy. UBS is concerned to argue that the gold price rise is simply a facet of the dollar:

"The failure of the metal to move higher in non-US dollar terms demonstrates that there is no reason to own gold at the moment, a point we have made on a number of occasions recently."

Perhaps this suits the overall House view: it does not accord with the physical market.

Friday’s refusal to collapse in the aftermath of the payroll data was, it now materializes, an event involving heavy volume and substantial buying (and consequently, selling) rather than being a simple echo of dollar movements. Barclays suggests the alleged advent of the NYSE gold ETF is beginning to effect trading. But given the timing and geographical origin of the gold buoyancy, this looks more properly like a Fallujah rather than an ETF market. The Canadian broker Doug Pollitt is quoted on Bloomberg saying:

"Four more years of Bush is a gift to the gold markets – more war, more deficits, more divisions"

Putting aside the fairness of this assessment, it looks as if it is a view widely shared to the East, as well as the North.

JB

November 8 – Gold $432.50 down 40 cents – Silver $7.47 unchanged

Strong Cash Gold Market Giving Gold Cartel Fits

I know the price of success: dedication, hard work, and an unremitting devotion to the things you want to see happen...Frank Lloyd Wright

GO GATA!!!

When I went to bed last night, gold was up $2 and starting to do what it ought to after such a dramatic day on Friday and after making 16-year highs. However, as we know, gold has traded like no other market in history over the over the past half-decade+. It rarely trades as it should from a technical standpoint. Of course, we understand why. It is a managed market.

Today was no different than so many other times over the past many years. Gold was stuffed by The Gold Cartel at the $430+ level AGAIN. It makes little difference to them whether gold is $435 or $427. They will just sell more to do what they can to keep the price from getting away from them. We know this is so because of the growing open interest, up another 7,365 contracts to a new record of 331,018. The specs keep piling in and the price managers keep selling.

In addition, the cabal continues to make sure gold goes nowhere in many other currencies. Here is part of the general enthusiasm/investment interest problem – from a Café member very involved in the financial markets in Europe:

Hi Bill,
While you guys enjoy the break through the 430 USD/oz barrier, there is nothing to celebrate in Europe.
The gold price in EUR is one beautiful distribution formation.
And very easy for the Powers-that-be to hedge their short gold positions with a currency-contract...
Regards
Bart

Then this additional comment followed:

Hey Bill,
Great day on Friday!

Anyway, isn't is amazing how "they" won't let POG rise above Euro 344? I mean, Trichet today said he WANTS a weaker Euro, but still POG doesn't rise so much as a cent against it.

The chinks in the armor are expanding.
Andrew

It is remarkable how limited the thinking is about gold vis-à-vis foreign currencies in the establishment world. The analysts are blind as bats and extremely ignorant. Gold has been held in check against the euro, etc. It is the manner in which Gold Cartel has rigged the price. No need to go into the cap, cap drill for the 1000th time. However, it is important to mention this gold world blind spot to demonstrate a significant reason most gold analysts don’t comprehend why the price is going to explode at some point in the near future. They are clueless even with so much GATA evidence staring them in the face.

Meanwhile, The Gold Cartel’s efforts to send gold back down below $430 were rebuffed today. The reason: the same one brought to your attention all the way up to these price levels: the physical market is on fire. There is tremendous competition for supply on every dip. The cabal induced gold to trade down to $430.60 during the Comex trading session and that was that. Back up she went.

Here is a BIG POTENTIAL POSITIVE. The gold spreads are blowing out. Not long ago the December/June spread was running at $5 June premium. Friday it blew out to $5.90 and today it closed at $6.10. OK, so why the big deal?

Before gold went nuts in 1979, the spreads did the same thing about two weeks before gold went ballistic. Perhaps we are looking at the same pre-market, take-off occurrence? There is a good chance many traders are looking at inflation REALLY accelerating in the US. If so, interest rates will shoot up – bond yields will head north. This will increase the contango (spread between the futures markets trading months). Gold exploded in 1979/1980 on inflation fears. Those fears may be creeping their way back into the thinking of the more sophisticated traders out there.

Early today our floor sources were pleased to see the amount of scale down buy orders on their books, figuring it was this way on many other books on the floor. Early morning they felt price setbacks would be well cushioned. This became evident by the close.

Silver fell 8 cents, took off to the plus side for 8 cents, and then settled down to a nothing day. The open interest rose 1742 contracts to 120,756.

The Comex silver stocks DROPPED once more, falling 591,940 ounces to 103,067,278 and another new low for the move. This is bad news for the silver bears.

The dollar rose a whopping .10 to 84.17 and the euro fell .23 to 129.23.

Crude oil slipped 52 cents to 49.09.

By Peter Brimelow
CBS.MarketWatch.com
Monday, November 8, 2004

NEW YORK -- Gold's spot price closed at $434.30 on Friday -- its highest level since December 1988. It's been trending relentlessly upward since May.

But the Hulbert Gold Newsletter Sentiment Indicator, which reflects the average recommended exposure to the gold market among a subset of gold-timing letters tracked by the Hulbert Financial Digest, is only at 57.41 percent. It has not moved for some time.

This stolidity is in dramatic contrast to the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average equity market exposure among a subset of short-term market-timing newsletters.

As of Friday night, the HSNSI stood at 55.07 percent -- up from 48.9 percent the day before and 27.9 percent in September.

Mark Hulbert has concluded that on a contrarian analysis, this stampede of bullishness suggests that the post-election stock rally is overdone.

But he doesn't feel that way about the gold rally. It just hasn't attracted the same enthusiasm from the letters monitored by the HFD. So -- Hulbert tells me -- it may go on.

Similarly, the gold stock indexes -- the Amex Gold Bugs index (HUI) and the Philadelphia Gold and Silver Index (XAU) -- are well below their recent highs.

Over the weekend, the Australian gold service The Privateer.com came up with this quote:

"'Interest is very limited,' sighs Caesar Bryan, manager of the Gabelli Gold Fund (GOLDX), who ruefully concedes to being the longest continuously-serving manager of gold funds in North America. Cash flow is light. 'Anecdotally I hear this is true across the group.'"

The Privateer believes gold is in a major bull market. A close above $440 would signal a breakout.

And then there's the Elliott Wave forecasters grouped around Robert G. Prechter. Paradoxically, Prechter is a long-term gold bull. But he has been calling for a savage short-term bear market in gold -- unless it sends a clear signal that would cause him to review his technical work. That signal used to be "a close beyond $422."

Several readers have been interested to know whether Prechter and his lieutenants at the Elliot Wave Financial Forecast accept that this signal has now been given.

Prechter seems to have quietly forgotten about $422. This is not necessarily a gotcha! offense -- the ultimate test is whether an adviser is right, not how consistent
his arguments are.

Still, the latest Elliott Wave Financial Forecaster says:

"The rally from the May 10 low of $375.70 has carried higher than anticipated, but the overlapping waves of the rise are clearly corrective. ... Gold should be at a top. A downward reversal would be the start of Wave 3, a multi-month decline. As previously noted, a close above the April 1 high [$436.50 basis December] would cloud the picture and require a re-examination of the wave count."

I read this to mean that futures have to close above the April intraday high.

It hasn't happened yet. But it's getting very close.

-END-

Zitat

Original von silversurfer

da diese Seite nun recht lange offline war, könntest Du bitte so nett sein und die GAta Berichte von Montag und Dienstag bitte auch noch reinstellen, da anscheinend Mike Bolser, der die Berichte schreibt anscheinend vor einem kurzen heftigen Rücksetzer warnt.

Hallo Silversurfer,

das war wirklich eine größere Panne hier im Forum ... Keine Angst, es wird alles "nachdokumentiert", braucht aber wegen der Fülle wahrscheinlich etwas Zeit

Gruß
Schwabenpfeil

Zitat

Original von silversurfer

Ich dachte zuerst nur der Wahlausgang in USA wird ein Krimi, aber der Krimi ist jetzt immer noch voll am laufen, und wird wahrscheinlich die Spannungspunkte immer weiter aufbauen.

Hallo silversurfer,

ja es ist richtig spannend momentan das Wirtschaftsgeschehen zu verfolgen. Besonders gespannt bin auch ich über die weitere Entwicklung der Lagerbestände von Silber.

Gruß
Schwabenpfeil

Chapter VIII Gold & Investment opportunities in junior gold mining/exploration companies

Since the start of the current bull market in Gold in 2001 the Gold share index HUI appreciated by more than 600%. Still lot of denial does exist among fund managers regarding the strength of this current bull. It seems that the first phase of this bull market in Gold (which was characterized by denial) is in its latest stage and phase two (which will be characterized by acceptance) will be launched by slashing Gold’s 16 year high of $430. Expect some serious inflow of investment capital during this second phase of the bull market in Gold and watch out what will happen with the high quality junior mining firms. They can go ballistic but it requires a stomach of steel in order to keep them during severe corrections. They tend to rise faster as their senior brothers but also the opposite is true, they fall much harder during corrections, so investors should get used to increasing volatility among the junior shares. Is an investment in a junior mining firm extremely risky as some people want you to believe ? Well, Ian Gordon (vice president of Canacord Capital and editor of the long Wave Analyst) gave some presentations in Europe lately (sept 04) in order to promote the investment opportunities in junior mining firms.

His presentation was titled:

“Investing in Junior Gold Mining Shares. What risk? What reward?”

He clearly pointed out that an investment made today in a high quality junior mining firm should not be categorized as being a high risk investment. Why not ? Because you’ll buy them at historic low levels today thereby reducing the downside risk towards a minimum.

So what makes the juniors so special then ? Well, the reason is twofold. First of all the senior producers will go after them so why won’t you as an investor do the same ? Second is that Juniors tend to rise much faster in a Gold bull market as their senior brothers but as said before also the opposite is true, they’ll drop much faster during severe corrections. So why are the senior producers hunting for the better juniors ? Well, the Gold industry is facing a decline in Gold production coming years and the senior gold producers will be struggling in order to replace their dwindling gold reserves. How do you think major producers are going to replace their dwindling Gold reserves in short term ? The only way out for them is to go after the better junior companies with promising assets or on the verge of discovery. Remember that the juniors are responsible for 75% of all discoveries, so that makes it quite obvious why the senior producers are heading this way. Barrick already opened an office earlier this year in Vancouver in order to monitor Junior companies, AngloGold speaks pubicly about take overs of high quality junior mining companies, Goldfields invests in Juniors etc… The trend is obvious.

This chapter will show that junior mining companies should benefit more from a rise in the price of Gold as their senior brothers and should benefit tremendously from major discoveries because their senior brothers are watching them like a hawk !

END.

See you back next week with Chapter VIII “Gold & Investment opportunities in junior gold mining/exploration companies”

I won’t publish the chapters in chronicle sequence. I’m still working on all chapters right now and will publish whatever comes first. As said before readers who are interested in the entire report can drop a mail. I’ll send the report in pdf format somewhere around mid December.

Chapter VI Gold & Monetary use

Since 1971 no currency with any kind of Gold backing does exist so many analysts do argue that Gold hasn’t any monetary status anymore. Well, nothing could be further from the truth. In 1971 president Nixon closed the Gold window. Critics of Gold back then argued that Gold had lost its monetary use and therefore would collapse below 35 US$ / ounce. They assumed that the paper dollar gave value to Gold, not the other way around, they did not know that Gold was money. So what happened ? Instead of falling below $35 it took off skyrocketing all the way up to its all time high of $850 US$ / ounce. Why ? Because investors lost their confidence in the US$. So where to go with your money when you lose your confidence in the world’s reserve currency ? Well, there is only one reliable alternative to the world’s reserve currency and that is Gold. It’s that simple, Alan Greenspan says : “Gold still represents the ultimate form of payment in the world.” When confidence in the world’s reserve currency is high there is no need to hold Gold and vice versa. Therefore Gold holds a tight inverse correlation to the dollar and is called the anti-dollar (see chapter I). The financial authorities these days admit that Gold still remains an important monetary asset.

"Gold still represents the ultimate form of payment in the world." - Alan Greenspan, Testimony before US House Banking Committee, May 1999.

"Gold will remain an important element of global monetary reserves." - Statement by the European Central Bank, September 1999.

Some CB’s who want to diversify from their dollars are accumulating Gold. Recent examples are the CB’s of China, Russia and Argentina.

Furthermore some countries are investigating the possibility of launching the Gold Dinar which if they succeed in doing so will strengthen Gold’s monetary role only further.

Chapter VII Gold & Oil

This chapter will shine a light on previous oil shocks and their consequences. As we will see, previous oil shocks were a perfect call for higher inflation figures and recession. Will this time be any different ? According to Alan Greenspan yes, he says that higher oil prices won’t be much of a problem for the economy these days and inflation won’t pop up as during the seventies.

Well, energy experts such as Mathew Simmons and Colin Campbell do think otherwise.

They make a powerful case for the end of cheap energy. The nasty consequence of a lack of cheap energy is the end of economic growth. Will we ever come out of a recession again for a sustained period of time ? Well, Richard Heinberg author of “The Party is over – Oil, War and the Fate of Industrial Societies” doesn’t think so. Matthew Simmons (energy advisor for Dick Cheney) just uses different words, he says : “ there is not one serious economist in this world who would say that you can have significant economic growth without the availability of cheap energy.” Simmons rules out the possibility of cheap energy coming decades. When asked if there is a solution to the impending energy crisis he said : “I don’t think there is one. The solution is to pray. Under the best of circumstances, if all prayers are answered there will be no crisis for maybe two years. After that it’s a certainty.” END. We’ll have to get used to oil prices far exceeding the $100/barrel mark. This leads us to the Gold/Oil ratio which is at an historic low these days. Such imbalances won’t stay there for a long period of time so what gives ? Oil going down or Gold catching up ?

This chapter provides some background material explaining what Peak-Oil is all about and what its impact could be on the world economy.

Chapter V Gold & Manipulation

Although this topic won’t be discussed by most main-stream Gold analysts (because they don’t want to be associated with groups like GATA) it’s getting harder and harder for them to ignore the ever increasing amount of circumstantial evidence which they provide. This chapter will show the rapid increase of support for GATA’s manipulation claims and discusses the Blanchard case. (GATA predicted years ago that sooner or later JPMorgan and Barrick Gold would be sued due to their Gold manipulation scheme, how right they proved to be) Furthermore it will address key questions which GATA opponents always fail to answer, questions such as :

Why do enormous derivatives build ups in Gold among the big bullion dealers (commercials) always coincide with drastic declines in the price of Gold ?

How come that 4 standard deviation preemptive selling events pop up EXACTLY 6 months prior to 2,600 tonne gold deliveries in the UK according to Her Majesty's Customs records ?

How come that these repeated events would happen only once by chance in 1,538 years of COMEX trading.

How come that leading statistics professors have concluded intervention is real ?

Straight MA lines simply don’t exist in free traded markets. How come that they are clearly visible in the charts of the dollar index adjusted value of Gold ?

Why the commercial dealers NEVER run for cover when the speculators are piling in big time, they (the commercials) just keep selling and selling until the long specs are getting tired of failing breaking key-resistance levels and start bailing out en masse thereby giving the commercial dealers exactly what they want which is a possibility to cover their shorts at much more convenient (cheaper) levels. So the commercials NEVER lose, is this same pattern visible in other free-traded markets ?

How come that furious attacks on Gold always happen during COMEX sessions and without any downside limit ?

How come that during COMEX sessions the price of Gold NEVER appreciates more than $6 ? And when it does (less than 3 times a year) , why is it smashed down right away the very next day ?

The statements mentioned above are going against all common TA logic. The technical analysts do fail again and again because they consider two parties only in the game, those who are seeking profits and those who are fearing losses, but the truth is that there is a third player in the market as well and that’s the US government. Whatever their main reason is (protection of the dollar, keeping inflation expectations in check, avoiding a flee from equities into precious metals, etc..) , they don’t seem to be pleased with a sharp rise in the price of Gold.

Chapter III Gold & demand

Demand for Gold is growing these days. It comes from several sectors such as , producer dehedging, increase of investment demand, shift from CB selling into CB buying etc.

Just China itself will contribute considerably to the expected increase in demand for Gold.

Last year the Honk Kong edition of Friday’s China Daily quoted the Bank of China’s bullion guru saying : “local consumers could pour $36 billion into the metal, equivalent to around 2,950 tonnes, or more than one year of supply, at current prices.” Xi Jianhua, the Bank of China's gold business expert, is also quoted saying that it would be "safe and feasible" for China swap to some foreign exchange reserves for gold. Furthermore the World Gold Council reported that Chinese demand for Gold is expected to triple in next few years. Besides China, also the CB’s of Russia and Argentina are accumulating Gold. Regarding Producer dehedging expect this program to continue at the rate of at least 300 ton/year coming years. Hedging is dead and won’t be reinvented this decade. This should be obvious when the king of hedgers Barrick Gold announced earlier this year that they won’t do any hedging anymore for the next 10 years ! Furthermore issues such introduction of Gold ETF’s and industrial Gold demand will be covered.

Chapter IV Gold & Supply

The Gold industry is facing a decline in Gold production coming years. This is a direct consequence of a lack of Exploration during the 1997 – 2002 period. Exploration budgets have been cut by 67% during this period due to uneconomical prices of Gold. From 2002 onwards many Alarm Bells were being raised regarding future Gold production. Alex Davidson (Vice President Exploration Barrick Gold) said last year : "Big mining companies need to spend more on exploration, or else, at current annual production rates, reserves will be depleted in 10 years, he said. It can take six to eight years between making a discovery and starting mine production, and "we're not currently funding exploration at a level required to replace reserves," Davidson said." Well fortunately the Exploration sector attracted more investment capital again since 2003 but the sad truth is that it doesn’t matter how much money you’ll throw at Exploration, no matter what the Gold price is, it still takes 3 – 5 years from scratch before a big discovery will be made and after that it still takes 4 – 7 years before a mine can be opened in order to mine the new discovery. This year (2004) showed painfully clear that the miners do face a decline of Gold production indeed. Even a blind man can see the supply/demand gap widening sharply coming years which will fuel the primary uptrend in Gold.

Projected decline in Gold production see chart below :

Chapter II Gold & Inflation, Interest rates, negative real rates

Although official inflation statistics do suggest that inflation is well under control, the opposite seems to be true. Just ask people if they are happy with sky-rocketing food, energy and health care prices and you’ll get an idea. Hedonic adjusted Pentium IV processors won’t cure the pain felt in consumer pockets. Needless to say that over 90% of the American public don’t believe the official inflation statistics and neither does PIMCO’s managing director Bill Gross.

A dollar devaluation and future inflation seems to be inevitable coming years due to the astronomical fiscal liabilities of the US government. Peter Peterson, secretary of commerce during the Nixon administration and Prof. Laurence Kotlikof, senior economist at the President’s Council of Economic Advisors (CEA) during the first Reagan administration, published excellent books lately ( “Running on Empty” , “the coming Generational Storm” ) in which they explain in greatest detail why the US is heading towards bankruptcy. They project a fiscal liability of more than 50$ trillion which requires a budgetary resource that only inflation can provide. Sure, these topics weren’t discussed during last presidential debates and the brave ones dealing with this issue and willing to tell the truth are simply fired (O’Neill). O’Neill after his resignation :

"It’s all about sound bites, deluding the people, pandering to the lowest common denominator," he said. "I didn’t adjust (in Washington) and I’m not going to start now."

So a fiscal gap of $50 trillion+ is looming on the horizon but the sad truth is that this amount of money isn’t simply there. As Prof. Laurence Kotlikoff says, it requires a budgetary resource that only inflation can provide. Inflation leads to higher Gold prices. Will the FED follow the inflation curve by hiking short term rates as well ?

The FED started raising interest rates from a 40 year low of 1.0% but still has a long way to go to catch up with more realistic inflation figures. As Long as the FED stays behind the inflation curve real rates will stay negative which have been according to its own history one of the strongest drivers for Gold. Furthermore this chapter will shine a light on rising rates and Gold. The mainstream argument that rising rates are the death for Gold (a rate-hike should strengthen the dollar and therefore be bearish for Gold) is simply a lie. Rising rates as a result of a dropping dollar is very Gold friendly. What does history say about rising rates and Gold ? Well, the chart below doesn’t need any further explanation :

Gold Drivers 2005 preview

Introduction

When I started working on an update of the Gold drivers 2004 report I quickly realized that the volume of the new report would make it unusable for an easy read. Therefore I’ve decided to publish each chapter one by one over an 6 week time-span which makes it easier to digest. So what to expect from the Gold drivers 2005 report ? Key drivers for Gold such as the US dollar, demand/supply, negative real rates etc.. will be discussed in each chapter separately. This preview will shine a light on each chapter and gives a good impression of things to come.In the end (mid December) the entire report will be available in pdf format. Readers can drop a mail in order to obtain the entire report.

Chapter I Gold & US$

Projections about a declining dollar due to an ever increasing twin deficit supported by many investment veterans (Buffet, Soros, Rogers,Templeton etc..) are met by much denial from as well politicians as well as from investors. Dick Cheney for example publicly said that deficits don’t matter and that the world is happy to continue investing (and thereby financing these deficits) in the US. Sure, as long as foreigners are willing to pour in the amount of $2 billion dollars every working day the dollar won’t crash. But if foreign confidence were to wane, the US dollar will be heading south. Already rumors are surfacing (source Financial Times) that China is selling US dollars and buying Asian currencies in readiness to switch the renminbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at. However some analysts argue that the mountain of US debt should work as a ‘synthetic short position’ in the dollar which would result in a sharp appreciation of the dollar. This chapter deals with these issues in detail and will show that no matter how you look at the US twin deficits and America’s future fiscal liabilities, this problem is huge and some painful adjustments not only seem to be necessary but unavoidable as well. It should be obvious that one of these major painful adjustments will be a massive devaluation of the US dollar. It seems that the idea of a dollar devaluation is gaining support from the FED when the president of the Dallas Fed, Robert McTeer recently said :

“over time, there is only one direction for the dollar to go – lower."

Former ECB president Wim Duisenberg quoted by Spanish Newspaper El Pais recently said :”A dollar devaluation seems inevitable due to the tremendous US Current Account deficit.” Furthermore he recently said on Dutch television that we can only hope and pray for a smooth economic transition in the US. END. Well, I can’t help but to think that he’s afraid of a dollar crash. Why is this so important ? Simple, the US dollar is the primary key driver for Gold, as the dollar goes, so will gold but in opposite direction, gold is the anti-dollar with a high inversed correlation to the dollar ! In the end, gold is still a monetary asset and trades like a currency.

By Peter Brimelow
CBS.MarketWatch.com
Monday, November 8, 2004

NEW YORK -- Gold's spot price closed at $434.30 on Friday -- its highest level since December 1988. It's been trending relentlessly upward since May.

But the Hulbert Gold Newsletter Sentiment Indicator, which reflects the average recommended exposure to the gold market among a subset of gold-timing letters tracked by the Hulbert Financial Digest, is only at 57.41 percent. It has not moved for some time.

This stolidity is in dramatic contrast to the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average equity market exposure among a subset of short-term market-timing newsletters.

As of Friday night, the HSNSI stood at 55.07 percent -- up from 48.9 percent the day before and 27.9 percent in September.

Mark Hulbert has concluded that on a contrarian analysis, this stampede of bullishness suggests that the post-election stock rally is overdone.

But he doesn't feel that way about the gold rally. It just hasn't attracted the same enthusiasm from the letters monitored by the HFD. So -- Hulbert tells me -- it may go on.

Similarly, the gold stock indexes -- the Amex Gold Bugs index (HUI) and the Philadelphia Gold and Silver Index (XAU) -- are well below their recent highs.

Over the weekend, the Australian gold service The Privateer.com came up with this quote:

"'Interest is very limited,' sighs Caesar Bryan, manager of the Gabelli Gold Fund (GOLDX), who ruefully concedes to being the longest continuously-serving manager of gold funds in North America. Cash flow is light. 'Anecdotally I hear this is true across the group.'"

The Privateer believes gold is in a major bull market. A close above $440 would signal a breakout.

And then there's the Elliott Wave forecasters grouped around Robert G. Prechter. Paradoxically, Prechter is a long-term gold bull. But he has been calling for a savage short-term bear market in gold -- unless it sends a clear signal that would cause him to review his technical work. That signal used to be "a close beyond $422."

Several readers have been interested to know whether Prechter and his lieutenants at the Elliot Wave Financial Forecast accept that this signal has now been given.

Prechter seems to have quietly forgotten about $422. This is not necessarily a gotcha! offense -- the ultimate test is whether an adviser is right, not how consistent
his arguments are.

Still, the latest Elliott Wave Financial Forecaster says:

"The rally from the May 10 low of $375.70 has carried higher than anticipated, but the overlapping waves of the rise are clearly corrective. ... Gold should be at a top. A downward reversal would be the start of Wave 3, a multi-month decline. As previously noted, a close above the April 1 high [$436.50 basis December] would cloud the picture and require a re-examination of the wave count."

I read this to mean that futures have to close above the April intraday high.

It hasn't happened yet. But it's getting very close.

-END-

On the GATA story showing up in various ways:

Dear Bill
I refer you to the following publication.
http://www.citigold.com/whyinvestingoldnow.html
This is proof that not all gold companies sit back and say nothing about the gold price suppression. Please give this company some press on your site....they are one of the "good guys".
Regards
Mark Treloar

The commentary on this site of most interest from GATA’s standpoint:

"Governments and central banks have been suppressing the price of gold since 1995 by lending and selling their gold. They won’t be able to keep it up forever. Then the price of gold and silver will soar."

The gold shares continue to act as if gold is going to back to $400. The XAU fell .33 to 106.53. The HUI can’t get out of its own way and dropped 3.29 to 235.07. The HUI needs to blow through 240 to get back on track.

My largest position precious metals stocks continue to be clobbered. In addition to Golden Star Resources, Samex and ECU Silver have been hit, most likely due to related margin calls from Golden Star’s plunge (it is the only marginable stock I own). I have another call into GSS management to answer some questions and will let you know what I find out. The Golden Star CEO and Treasurer are in Ghana at the moment.

I waited 6 years for gold to do what it is doing now. Instead of enjoying the moment, I spent half my day fielding GSS rumors like:

*I have dumped all my shares
*The Gold Cartel is going after Golden Star because they know it is my largest position
*Golden Star is going to acquire another company
*Something is terribly amiss
*It is another Enron
*Tribal unrest in Ghana (not the Ivory Coast) has natives in an uprising in Ghana and lopping off heads (Brother Tim says they are having a 50% hats off sale in the country)

C’est La Vie, or La Guerre in this case. Anyways, what a short-term nightmare! Only money remember. My current opinion is all this panic selling is nuts.

The most powerful people in the world do not want gold to go up from here. We know that. The ponderation is whether they can stop the price from doing so. My bet is they cannot because the physical market is just too strong. Never before have the Indian premiums acted like this on such market strength. Never before have the Indians had to compete against such other powerful buying interests.

In addition, it is remarkable how little excitement there is out there with gold doing what it has this past month AND with the war raging in Fallujah in Iraq. Extraordinary! It seems the biggest, smartest money around the world wants in on gold and silver and the general investing public could care less. I find this to be very bullish for the weeks ahead.

GATA BE IN IT TO WIN IT!

MIDAS

On the action of the big hedgers:

Bill,
The letter about Sons of Gwalia by Martin Hastings reminded me that when SOG went under, and Franklin Gold was first mentioned as a shareholder, I had checked out Franklin's portfolio. I wondered how a fund could invest so much money in a notorious hedger like SOG. Well, I guess Franklin's managers likes hedgers. As of today their top 4 holdings are Placer Dome Mining (8.30%), Anglogold Ashanti (7.90%), Barrick Gold (7.20%) and Newcrest Mining Ltd. (6.60%) . This fund looks like a great way to support the Cabal and miss out on a lot of profit, too. When gold breaks out, Franklin's top holdings will likely join SOG in bankruptcy court. You GATA own gold, not owe gold!
best wishes,
Peter R.

SEC close to backing new gold ETF
By Kevin Morrison in London
Published: November 7 2004 21:43 | Last updated: November 7 2004 21:43

The long wait for a new listed gold investment product backed by the World Gold Council and State Street Securities may soon be over, with the US Securities and Exchange Commission expected to approve the product, a first of its kind to be listed on a US stock exchange.

The WGC, an industry body financed by some of the world's largest gold miners, and State Street, the US group, are expected to meet next week to finalise details of a marketing programme for the new product, which will allow investors to buy gold without worrying about storage, insurance or transportation costs, or the risk of margin calls associated with gold futures.

Precious metals traders and fund managers said talk of an imminent approval from the SEC was a factor behind the run up in the bullion price to a 16-year high of $433.90 a troy ounce on Friday as hedge funds were taking positions in the futures market last week in anticipation of the launch of a new product.

The gold investment instrument will be an exchange traded fund (ETF), which are very popular for US investors as they track stock indices for a lower cost than index-based managed funds.

The product, which may be listed by the end of the year on the New York Stock Exchange, will be an open-ended fund and track the gold price, with each unit equal to one-tenth of an ounce of gold.

If approved it would end an 18-month wait for the London-based WGC, which first filed for the product originally called Equity Gold Trust in May 2003. One of the factors why it has taken so long is because it represents a landmark decision for the SEC.

There is no investment product listed on a US stock exchange that is backed by a commodity because pension funds are largely prohibited from taking a direct investment in a commodity. It could also potentially pave the way for more ETF-style funds backed by commodities.

Barclays Global Investors has also filed a gold ETF investment proposal with the SEC.

Another factor that the SEC had to overcome was the fact that the new gold investment product was to be controlled by the WGC, an industry advocate. However, it is understood that WGC plans to eventually sell the company that will administer the ETF to State Street.

-END-

zu obigem Artikel, weiss aber nicht ob man verlinken kann

http://www.lemetropolecafe.com/img2004/CBGA_table.pdf

Auckland Ed has a heads-up for us:

Hi Bill:
Check the attached report. It speaks for itself.
ONLY 6.6 tonnes of GOLD sold as of Oct 27th under the 2nd Washington
agreement.

CBGA_table.pdf

Cheers from Auckland

There is some hoopla about the SEC approving the long-awaited World Gold Council’s ETF, whose launch is ONLY a year behind schedule. What is sickening is the timing of the probable approval – right AFTER the US elections. Just more evidence how the establishment works to achieve their own agendas when it comes to gold.

The excess dollar problem is making its mark around the world, slowly but surely (for the moment):

Bill,
Thought you might be interested in this. Colombia is one of the few countries in the world that manufactures almost its total domestic product. There is a large amount of wealth created there by these legitimate businesses, other than what our government would like most to believe. Recently I ordered several thousand board feet of this beautiful purple hardwood for our new home from a Colombian who is selling his wares here in Panama.

Yesterday he came to me to ask what in the world was happening as he was taking a bath on this load of lumber as the Colombian Peso was rising in value so fast that the country is AWASH in US Dollars. Seems everyone is trying to get out of the dollar and into the peso. Of course I was trading dollars for something of real value, hardwoods. This is so bad, he is going to be forced to cover the spread on the initial container of wood which will cost him about $.10 a board foot!

Yet this is a statement of what is going on in most of South America right now. The fall in the dollars value is beginning to effect street level functions in countries who have shed their own currency for years, in an effort to flee to the dollar as it was rising. Now, these dollar holders are forced to shed the dollar at an almost alarming pace to try and stave off another loss in business due to the fluctuation of currencies with no value.

The beat goes on over the corruption on Wall Street:

Drudge reports: "Securities and Exchange Commission is investigating dozen brokerage firms -- including Morgan Stanley, Merrill Lynch, Ameritrade, Charles Schwab and E Trade Financial -- on suspicion they failed to secure best available price for stocks for customers." http://www.drudgereport.com/ ***

Good input from Aussie Land on what seems to be a "building" pattern around the globe:

Dear Bill,
Catching up on my periodicals (I am an architect) I found some ominous items in the weekly magazine, "Building" , 8 October 2004, published in England by The Builder Group. I quote directly as follows:

Page 21.

"Bank predicts 2% deflation in house prices next year.

INVESTMENT BANK Numis Securities has downgraded its housebuilding forecasts, modifying its previously bullish predictions.

Numis said that because the housing market had slowed more quickly than expected, it now expected that there would be a 2% deflation in prices next year. This compares with its previous forecast of no fall for the same period.

Director Mark Hughes said: For 2005 we do not subscribe to the view held by many that house price inflation will soften to a level where it is in line with wage inflation and general cost inflation of 4-5%. .....

Numis is expecting the housing sector to perform less buoyantly than originally predicted in the next six months, and has modified its sector stance to reflect this.

It has downgraded forecasts for companies including....(lists ten top large housebuilding companies in UK ). It said that it expected other analysts to follow suit in the next four months.

Page 22

Leading cement supplier warns of 15% price hike.

CASTLE Cement, UK's third largest cement producer, this week warned the industry to expect a cement price increase of up to 15% in the first quarter of next year.

Mike Eberling, Castle's commercial director, said: "We want to warn the builders and contractors about the sheer size of these costs."

Eberling said that as the price of coal and electricity was set to rise by 20% and 50% respectively, the company faced no option but to increase its own prices.

" These increases have a disproportianate effect on cement manufacture because it is such an energy intensive process."

The hike in energy costs is mainly driven by a booming demand in China, which in turn has driven up coal and shipping prices."

In Sydney we recently had a 15% price rise in structural and reinforcing steel; in one step. Add this to a hike in cement, thence reinforced concrete; you can imagine what happens to the cost of a building. These are not real estate bubbles based on hype, but ordinary arithmatic driving the price. It starts with energy. We, that is the world, have to find cheaper forms of it.

Bill, these two items from UK are as typical for Australia as for UK and I suppose it will be the same in USA. They form a vyce, squeezing the builders from both sides. Costs beyond the control of the builder cause his sales price to rise, so there are these outcomes.

1. Builder cuts his profit to keep the sales price affordable and heads for self -inflicted bankruptcy, or/and
2. Builder raises the price, does't sell in a reasonable time and goes out backwards with holding costs or/and
3. Builder stops building, so do all the others, and the housing industry crashes.
4. No houses being built, people cannot find homes to buy at any price.
5. Crunch.

In Sydney where I live, it recently became obvious to the market that prices had been increasing faster than incomes. The buyers got left behind, and they have stopped buying. The market has not crashed but has slowed down seriously. This is what Cafe members have been discussing for sometime for the USA market. You are not alone.
Regards,
Chris McGuirk