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As the markets are wont to do, instead of a wild volatile day in the gold pits and in the other financial markets, trading was very subdued. Gold came in lower, rallied after the CPI number, sold off again to the unchanged area, and then drifted back up late in the day. The volume was very light. Silver was firmer all day long and closed near its highs and HIGHER than the week before for the first time in six weeks. Technically, it appears silver has bottomed after an incredible massacre, one engineered by the price money managers. Neither gold, nor silver have any gaps to fill on the downside. The gold open interest fell 257 contracts to 255,231 and the silver open interest fell 425 contracts to 91,046. Some fundamental news input from my STALKER source. Business is very brisk in London and Zurich as far as bullion is concerned. A decent amount of that buying is coming out of wealthy individuals who live in Saudi Arabia. They don't buy for one second what the vice-governor of the Saudi Arabian Monetary Authority said in his Reuters interview yesterday about gold being "a relic." They probably know it was a planted statement also. Muhammad Al-Jasser, who gave the interview, could be the new designated spokesman for The Gold Cartel in Europe now that Ernst Welteke, former Bundesbank head, has been sacked. Oil closed in all-time high ground at $41.38, up 30 cents. The dollar closed down .35 to 91.80, while the euro rose .58 to 118.69. Gold has a way to go to prove itself as far as a technical turnaround is concerned. First stop is a close above $380. If cleared, we should head back up to the $390/$395 area and gold might do so very quickly. A close above $395 sets our sights on $430 again. With oil making all-time highs, US rates still at 1%, and the geopolitical situation in Iraq continuing to deteriorate, the gold fundamentals remained at "10+++" or even went up a notch. Meanwhile, the gold sentiment and despair out there over the last six week debacle is sky high (low is more like it). We now have a set up for gold to explode. It might even be a picture perfect scenario. The same for silver. The John Brimelow Report
Portuguese; Interesting UBS on CFTC Friday, May 14, 2004 Indian ex-duty premiums: AM $8.34, PM $7.56, with world gold at $373.85 and $ 373.50. Comfortably above legal import level. Financial markets in India continue traumatized by the electoral victory of the leftish Congress Party. The rupee slipped almost 1% to a gold-import unfriendly 4 ˝ month low. The stock market collapsed by 6.1%. That, of course, could be gold friendly, since it implies less competition from an alternative asset class. No evidence has yet emerged that India's current gold import regulations are threatened. Japan displayed no interest in gold today, with the yen low but steady. TOCOM volume shriveled 55% to a derisory 10,903 Comex equivalent and open interest dropped the equivalent of 742 Comex lots. The active contract was up 3 yen, but world gold was down $1.80 from the end in NY on offshore selling. Mitsubishi reports: "Loco Ldn gold was under pressure by dealers selling to the low." (NY yesterday traded 59,817 contracts. Open interest fell 257 lots.) Once again, a backdrop of very gold-positive news failed to rally bullion as ready sellers came forward to quench any appetite. Estimated volume surged 44% in the last half hour (10%) of the trading day, blocking gold's recovery from the day's low. UBS makes an interesting comment about the upcoming CFTC data: "COTR data, to be released after tonight will show the degree of long liquidation and new short selling that has entered the gold market recently. We suspect that the release will show that funds held net long positions of around 8-9 million ounces in size as of Tuesday. If the net long position has fallen by more than we are expecting, however, the market could react very positively." Late yesterday, the Bank of Portugal admitted the sale of another 35 tonnes of gold, "with settlement in May". The fact that this minor amount was sold "in recent months" rather than in a brief time supports the argument of those who believe the Portuguese have complex derivative obligations which trigger from time to time at higher prices. And, of course, the failure even by this relatively punctilious Central Bank to report these sales monthly underlines the unreliability of Central Bank reporting on gold. JB CARTEL CAPITULATION WATCH The DOW came back from an early drubbing, however, it couldn't hold any kind of rallies, even with the bonds rising 24/32 to 104 12/32. The best that can be said for the DOW is the PPT managed to give it a close above 10,000 at 10,012, up 2. The DOG was hopeless all day long, finishing at 1904, down 22. The US economic numbers were mixed. Capacity utilization at 76.9% and industrial production, up .8%, were fractionally better than expected. The highly suspicious CPI numbers came out with the core CPI up more than expected: May 14 (Bloomberg) -- Prices paid by U.S. consumers in April rose 0.2 percent, the fifth straight increase, reflecting higher costs for hotel stays, medical care and college tuition. The increase in the consumer price index followed a 0.5 percent gain in March, the Labor Department said in Washington. Excluding food and energy, the so-called core index rose 0.3 percent after a 0.4 percent rise. -END- A slight consumer confidence disappointment: May 14 (Bloomberg) -- The University of Michigan's preliminary index of consumer sentiment for May was 94.2, the same as a month earlier and less than forecast. The university's expectations index, which measures optimism about the next one to five months, fell to 85.8 from 87.3 last month. The current conditions index, based on perceptions of consumers' financial situation and whether it's a good time to make big purchases, rose to 107.2 from 105 in April. -END- One of the big surprises of the day, one which will affect US import prices: May 14 (Bloomberg) -- China's consumer prices rose in April at their fastest pace in seven years, led by food, which may harden the government's resolve to restrict lending and clamp down on industrial projects that are encroaching on farm land. The consumer price index, which measures the cost of goods and services, increased 3.8 percent from a year earlier after rising 3 percent in March, according to Beijing-based Mainland Marketing Research Co. (China), which releases monthly figures on behalf of the statistics bureau. The gain was the biggest since March 1997 and exceeds the government's 3 percent average inflation target. -END- GATA's Mike Bolser: Hi Bill: Watch the yen As the dollar rises the yen falls by the same percent. This pattern has been roughly in place since the dollar and euro were last at parity on December 5th 2002. This relative currency pattern can be viewed at my website: www.pbase.com/gmbolser/interventional_analysis The appearance is that the Japanese are buying the dollar with their currency in order to support it thus distributing the inflationary effect of printing money in order to buy it. The Japanese have for a long time purchase US bonds to artificially prop the US bond market. There's a limit to the yen debasement and that limit was last reached at yen =134 in January 2002. At that point the Japanese gold community awoke and began a gold rush that quickly attracted attention with stories of elderly ladies with wheel barrows loading their metal into double-parked Hondas. So the Fed plan to spread around the currency debasement which results from inflation among witting partners really isn't a sustainable plan at all, it is a delaying tactic like all the other tactics emanating from Greenspan. Colored paper The attached 50 Billion Dinara note from Yugoslavia is interesting to contemplate. Will there be a time in our near future when a $50 Billion US dollar note will circulate? At a restaurant, will we someday ask how much should the tip be...$1 or $2 Billion? Gold is wealth and colored paper is backed lately by the full faith and credit of Bill Clinton and George Bush....or whoever the Yugoslavian gentleman was on the face of the Dinara note. Chuck checked in last evening: Bill: Bill, we are on the absolute verge of an amazing collapse in all of the markets. I don't include gold because I don't know who is left to sell. Get ready for the skeletons to come out of the financial closet. Interest rates are either going to explode or come down as stocks rupture here. I don't think anyone knows the answer. Hang in. It is going to be spectacular from here. No more of these rescue games. Chuck Houston's Dan Norcini: Hey Bill: Another very significant point - The commercial category DID EVERY BIT OF NET BUYING in the gold pit from May 5- May 11. That buying was to the tune of nearly 20,000 contracts. That is huge and I mean HUGE. They too are now down to the smallest net short position they have had since July 2003. The kind of buying now taking place is quality buying by jewelry and refining interests and such not to mention mining outfits who are eliminating hedges. The reason I state this is because the COMMERCIAL LONG category is now carrying the largest long position (83,705 longs) they have had in over a year and a half. As a matter of fact, the last time they were anywhere near this loaded on the long side was back in March 2003 when they were carrying a bit over 73,500 longs. That was two weeks before gold bottomed near 319 and then went directly to 372. From where I am currently sitting, gold is coming to an important crossroads. If the composition continues to change the way it has been doing for some time now with the funds moving off the long end to the short side and big commercial interests either covering shorts or going long, gold needs to find a bottom here fairly soon. We certainly do not want to see the funds completely on the short side of gold since their selling could then push the market considerably lower. I do not expect that to happen but then again I did not expect gold to break under $380 either. Open interest has increased some 8,300 contracts since last Tuesday's release through this Thursday. What is significant in my opinion is that if you start at Friday of last week and take the numbers through yesterday, open interest has basically gone nowhere. It was at 253,594 last Friday and as of Thursday this week it is at 255,231; not much in the general scheme of things but significant in this regards - New buyers and new sellers are slowly entering the arena as it appears the drain in open interest has stopped for now. This is symptomatic of a market in a range trade that is deciding which way it now wants to move. It is now attracting both fresh longs and fresh shorts to replace those who are bailing out and liquidating positions. We will need to keep a close eye on any continued build in Open Interest especially if it occurs while gold continues to move back and forth within its current range between 371 and 385. The longer it can maintain this chop without violating either downside support or upside resistance as more and more buyers and sellers join the battle, gold will be poised for a significant move in one direction or the other as a great deal of pent up energy will be released. Either the shorts will panic if we break thru the topside resistance or the longs will throw in the towel if support near 371 is taken out. If the former, then we will see $395-$400 gold fairly quickly in my opinion. If the latter, I would prefer not to even think about that. One side note - with the beating gold has taken of late, in Euro terms, it is now nearly the same price it was at the beginning of 2002! Another way of looking at this is that every single European investor who might have bought gold in January 2002 as a hedge against terrorism or simply in an attempt to retain value has gotten a measly 8 Euro gain per ounce as of today in his gold holdings in the last 2 ˝ years. That is how thorough a job the cartel has done in clocking the yellow metal. Different Planets Often it seems many in our crowd, like me, live on different planets than many of the Wall Street crowd. In general they see the US economy booming, corporate profits on a roll, inflation subdued and the future for US financial markets to be quite positive. Our camp sees the US economy as topping out as the tax cuts and government fiscal economic stimulus run their course, corporate profits maxing out as a result, inflation soaring and a dismal outlook for US stock and bond markets. Many of us also see the US markets as managed, especially gold, and feel the economic reports coming out of Washington are doctored to suit Wall Street and the Administration's political objectives. Most of them on Wall Street have no idea what we are talking about or they scoff at our notions. The Café is an eclectic group with many viewpoints, so I want to make it clear I am generalizing and speaking for myself and those who I communicate with on a frequent basis. Many of us think as this Café member who sent the following today: Bill Bill, what irritates and angers me the most is the fact that this gold cabal is making every attempt to make it as difficult and painful as possible for people to protect themselves in the time left before the US$ system goes into a nosedive into what could become a freefall and then into a unthinkable tailspin. How did we ever get this far along in the implementation of official economic madness? I'm just shaking my head at the epidemic consensual denial of what appear to be the warning signals of nothing less than an impending disaster. I agree with Tom. I don't know whether a disaster is impending, or is coming down the road over the coming year, but one is coming. The Orwellians in the US Government and financial system have messed around with the markets and truth too long. The dam they have plugged up for so long is quietly breaking. When they go and put their finger in a leak in the dyke these days, another one pops up: *Inflation is on a roll in the US, yet you wouldn't know it by the relatively tame CPI reports. Wall Street might accept them. Mainstream does not. Report after report is coming in about housewives going nuts over the cost of milk, etc. The high cost of gasoline has many shook up, as do soaring health costs. This is what counts to the average American, not a hedonically adjusted CPI number which takes into account alternative rent costs and sinking computer prices. The CPI is a farce. *The PPT can ramp up the DOW when it wants, however, the insiders don't buy it. They continue to unload on rallies. Even the public is becoming skeptical as mutual fund flows have turned negative for two months in a row. The US stock market might be oversold, however, it is susceptible to a dramatic sell-off at anytime. *Long term rates are soaring, even as the Fed refuses to raise the short-term rate. They speak of how wonderful our economy is and then are too afraid to raise the short-term rate a lousy .25 basis points. It doesn't jibe. As a result, real US interest rates continue to go more negative, which is very gold friendly. *Who would ever have believed oil could make all-time highs and gold would be drubbed for $60 and sent concurrently plunging during the weeks leading up this high? Price Action Makes Market Commentary. The Gold Cartel and Working Group on Financial Markets know inflation is on the rise and our bond market in trouble, thus an all court press was put on gold, as described in last Sunday's MIDAS. More than one Wall Street pundit was heard this week pointing to the falling gold price as an indication inflation was not a problem. What a farce! The worse farce of all is so many in the mainstream investment world and the public are taken in by this disingenuous drivel. They are going to pay a heavy price for living on that other planet. Today, a Café member told me a radio commentator on a national financial market program said (referring to the Smart Money magazine article), "There is a nut in Dallas named Bill Murphy who says he has every penny in gold and silver investments." In essence, many on our planet who have a significant portion of their assets in gold and silver investments are looked on as aliens by many of the mainstream Wall Street crowd. Well, while disgusted with what The Gold Cartel has done to my portfolio and our camp the last six weeks, I am more confident than ever about what is coming. The crowd on our planet will be the ones with the big smiles on our faces in the months and years to come. We had better think about an immigration policy for we are likely to be overrun by the Wall Street followers panicking to leave their planet and land on ours. *** From a subscription based oil news service sent by Café member Mark: "I dabble in the oil tanker markets. Something few folks know is that the breaking price for tankers is at all time high-ship breaking runs around 400-450 a ton-the worldwide ban on single hull tankers has pushed the scrapping tonnage up exponentially as 2007 is the closing date-comparatively there is little scrap vessel tonnage left." Shanghai. (Interfax-China) - The Chinese government plans to upgrade its local oil fleet to bring its imported crude oil delivery capacity up to 50 mln tons by 2005. The fleet will mainly deal with imports from the Middle East and West Africa, said a senior official with the Ministry of Communications. Four leading domestic carriers, the China Shipping Group (CSG), the China Ocean Shipping Group Corp. (COSCO), the China Merchants Group (CMG) and the the Nanjing Tanker Corp. (NTC) under the China Changjiang National Shipping Group (CSC), will collaborate with the two local oil majors, PetroChina and Sinopec, in forming the fleet. The target is to raise the proportion of foreign oil shipped to China by Chinese tankers to 50% in 2005, when approximately 100 mln tons of foreign oil will be brought into China. Currently, Chinese oil carriers only ship around 10% of the foreign oil imported to China each year…….. The International Energy Agency said on Tuesday that the rapid acceleration of economic growth and surges in Chinese domestic consumption will lead to world oil demand rising by 1.95 million barrels per day. This is 270,000 bpd more than what was forecast in April by the Paris based International Energy Agency (IEA). World oil demand is set to rise to as much as 80.6 million bpd, or 226,5 billion tonnes annually. The increase in the IEA's forecast is equivalent to 92,4 million tonnes annually. Assuming that a major share of the extra oil will be transported by tankers, the employment outlook for the world tanker fleet is looking positive. According to the FT, global oil refinery capacity could be stretched to the limit if current consumption estimates are achieved. This will cause oil prices to remain above current record levels at US$40 per barrel in New York for some time to come. US gasoline demand, which is currently running at 5% above last year's levels, and soaring Chinese oil usage are the two main factors driving the higher consumption forecasts from the IEA. Not helped by spring refinery shutdowns, possibly offset by a lower demand for heating oil in Europe and the USA, oil prices continue to rise. Opec admitted this morning that it was powerless to act, and despite intentions to increase production, oil prices are heading for all-time highs. The situation is expected to tighten further in the run-up to Christmas, the peak time for oil usage in the developed world. -END- Does that sound like China is slowing down? MIDAS recently reported of a Chinese task force in Chile looking to substantially increase their copper production and supply in the years to come. What slowdown? Anyone heard of an "official" confirmation of the bin Laden gold reward tape? Answer so far: NO! Figures! From the second edition of THE Hedge Book, the Virtual Metals/Haliburton hedging survey on behalf of Mitsui: "Q1 04 saw another large fall in the global gold hedge book, with the Hedge Impact falling by 2.5 Moz to 68.3 Moz." This means the gold producers covered as gold ran up to $430, which once again proves GATA's point there was an organized attempt by The Gold Cartel to keep gold from blowing through $430. In the past, The Gold Cartel would use the cover of gold producer selling to explain why the gold price was falling, or not rising as it should. They can't do that anymore and get away with it. As we know, the gold open interest rose to around 306,000, a record. So who were those guys who were the sellers, if not even partially gold producers who were instead BUYING? The Gold Cartel and friends of course! From GATA's Sid Reynolds in Australia last evening: Hi Bill, 1)In Australian $ gold has barely changed in last month ie around A$550/oz ($A has fallen from 80c to 68c) 2) With gold and silver staying down, it can't have all been paper manipulation, else as you've pointed out repeatedly any paper manipulation without physical would result in immediate recovery from any falls. So this means the cartel must have used a huge amount of physical which means they surely will run in next month. Regards, Sid On Saudi official sector gold supply: Hi Bill, http://www.gold.org/pub_archive/pdf/Rs23.pdf -END- The Netherland's Eric Hommelberg: Hi Bill, 1 - Stocks never tend to stay either in deeply oversold or in deeply overbought area for a long period of time. 2 - A deeply oversold HUI always bounces back >50% in a relative short period of time. Yes, even during the worst years of the bear market in Gold this was the case ! See chart below !  3 - Last time we've witnessed a severe oversold condition in the Gold shares was March 2003 when the HUI hit a bottom at 112. The Bull couldn't be stopped until the HUI reached 258. So where are we right now ? Indeed right in the deepest oversold territory of the last 6 years !  So the HUI took a dive to 163 and finds itself in the deepest oversold territory of the last 6 years. According to its own history we could witness a sharp upward correction any time soon which will launch the HUI well over 200 in a short period of time ! Best, The gold shares were firm right from the get-go and plowed their way higher for most of the trading session. The XAU wound up at 81.21, up 1.12. The HUI finished at 177.37, up 3.84. A close above 184, Wednesday morning's spike high, could give impetus for a powerful upside move in this VERY oversold index. HUI, like silver, made a weekly recovery high: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hui&sid=0&o_symb=hui&freq=1&time=8 Those buying the gold/silver shares this week DURING this recent bloodbath ought to come up smelling like roses in the weeks ahead. GATA BE IN IT TO WIN IT! MIDAS Appendix BILL COMING DUE By PAUL THARP http://www.nypost.com/business/20852.htm May 14, 2004 -- Retailers also are suffering a new shopping slump after their biggest boom in a year and could get hit harder when higher prices kick in, analysts say. Labor Department data yesterday show factory and producer prices jumping more than twice the level that economists had expected - due primarily to soaring crude oil and a shortage of raw materials being devoured at China's booming factories. Some companies want to pass added costs to consumers right away, such as paint giant Sherwin-Williams, which in the past year has spent about a quarter more for its petroleum used in paint-making. Industry data are as grim as the government's, with the private Institute for Supply Management saying that prices paid for raw materials surged in April at their highest pace in 25 years. The government said prices of steel-mill products, for example, are at their highest rate in 30 years, surging 6.3 percent in April alone, the biggest monthly jump since a 6.8 gain in July 1974. The list of double-digit jumps in wholesale prices in the past year is long. Refrigerators are up 13.3 percent; animal feed, up 31.8 percent. Chicken is up 18.3 percent, cooking oil's up 28 percent and eggs are 23.3 percent higher. Analysts blame soaring oil prices, soaring above the the $40-a-barrel level this week. "These prices are economy wreckers," said Peter Beutel, energy analyst at Cameron Hanover. "The emergency is here and now." Some economists fear a domino effect from the wholesale price squeeze. Major airlines already are passing along a fuel surcharge on cargo rates, a boost of as much as one-third, and are planning similar hikes for passenger fares, say industry sources. Producer prices in April rose 0.7 percent, higher than the 0.3 percent economists expected. Retail sales last month skidded 0.5 percent following an 8 percent gain the prior month. Consumers avoided purchases of cars and clothing - two of the largest spending categories - the Commerce Department said. The agency, in an effort to put a calming effect on the way consumers' paychecks are being eaten up, said that if cars and clothing were carved out of its data, retail sales would have gained a healthy 9.4 percent in April. Likewise, if food and energy wholesale prices, which account for two of the biggest spending items among consumers - were carved out, the wholesale inflation rate would have been a tame 0.2 percent. Economists are bracing for possible surprises in today's report on how much consumer prices actually rose in April. Copyright (c) Le Metropole Cafe, Inc. Le Metropole Cafe is a Membership site. Visit and experience a 2-week Free Trial! Email this Article to a Friend 426705662 |
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