| | |
Gold Leaving The Station & Specs/Investors Falling Behind Bill Murphy
June 18 - Gold $394.90 up $6.20 – Silver $5.97 up 7 cents Two
qualities are indispensable: first, an intellect that, even in the darkest
hour, retains some glimmerings of the inner light which leads to truth; and
second, the courage to follow this faint light wherever it may lead. ..Carl von
Clausewitz GO GATA!!! It is a rare day lately when the MIDAS gold market commentary cannot be written after the first hour of Comex trading. Rarely does anything change for the gold good in this managed market. The highs are almost always made within the first hour. Gold is then either held at those highs, any new highs are modest at best, or it is sold off. OOPS, that was my exact opening commentary in yesterday’s MIDAS. Oh well, as is normally the case on almost all gold up days, it fits perfectly for today too. I can’t stand the buggers that keep capping the price. The Deputy Chairman of the Russian central bank, Oleg Mozhayskov, can see the gold market is rigged and said so in front of those in the gold industry who attended the LBMA conference in Moscow in early June. He even had the audacity to mention GATA in public company and say we were right. We are talking about a G-8 central banker here! That is astounding and monumental for GATA's credibility!! What is the matter with the morons in the mainstream western gold industry? What a bunch of powder puff patsies! Gold rose $6 and change (virtually limit up as far as the $6 Rule is concerned) in the first minutes of trading and did so with euro DOWN 30. Gold went completely on its own, which is a WONDERFUL development. The euro only rallied when the US current account number was reported at 8:30 EDT and it was worse than expected. The euro then took off, eventually closing .76 higher at 121.21, while the dollar fell .52 to 89.43. The effect on gold? Zip. Gold actually SOLD OFF slightly by day’s end even as the euro rose an entire point. The fact that gold rallied so strongly without outside market support is marvelous news. It tells me there is a VERY strong hand buyer out there who wants gold come hell or high water. I have heard a couple of extraneous comments about gold that might fit together. The first is from one of the most highly regarded gold traders on the floor. He told my source that he smells somebody dumping a large hoard of dollars to buy gold. Perhaps it is the Arabs. My STALKER source says STALKER number 2 is active and he believes the business is coming out of Asia, perhaps even Malaysia, in preparation for the Dinar's inauguration later this year. This is all speculation, however, it makes sense. What we do know is somebody went after physical gold with a vengeance this morning, sending gold soaring until the crooks showed up like they always do. What is also exciting is gold is on the move with many specs and investors on the sideline. The Café Sentiment Indicator is a 3 or 4 and the Comex open interest is at its lowest levels in about a year or so at 223,015. It only went up 2759 contracts yesterday. In years gone by we would get a 77,000 spec open interest increase over a period of many weeks and gold would only rise $10. Even The Gold Cartel and other commercials are exiting the scene. The COT revealed they got out of 3,522 longs and 7,190 shorts, which is why the open interest has contracted. Reg Howe, Bob Landis and I were to speak in front of a group of money managers in Boston next week. Collectively, they manage over $100 billion in funds. A month ago the room was packed to hear about the dollar from Dave Lewis. Our meeting was cancelled on Wednesday due to lack of interest. Either that, or the attendees were to scared to be in a room with a few people who are not afraid of confronting the establishment. Anyway, gold is close to popping through its 200-day moving average and taking out $400. We are only a hop, skip and a jump away. On a positive note, gold has closed on the firm side two days in a row, on its highs yesterday and not far off today. One fine looking gold chart: http://futures.tradingcharts.com/chart/GD/84 Silver had trouble holding $6, however, like gold, it was firm all day long, selling off modestly on the close. Like gold, the silver open interest is very low. Yesterday on its surge, the open interest only rose 138 contracts to 86,922. Still room for 88,000 spec longs to take gold through $430 and 36,000 spec longs to take silver back above $8.50. Oil closed up 19 cents to $39 per barrel. The John Brimelow Report Gifts from the Middle East? Friday, June 18, 2004 Indian ex-duty premiums: AM $3.03, PM $0.11, with world gold at $387.90 and $392.20. Below, and well below, legal import level. India reacted with more that the usual unenthusiasm to abrupt jumps in the world gold price ($9 up this afternoon on the previous morning.) The rupee exacerbated the response by falling to a 5 1/2 month low against the dollar, with Indian sentiment damaged by noises the new Government is making about higher taxation. The discreet qualities of gold are likely to be increasingly valued by affluent Indians in the future, a reverse of what was generally expected before the election. Prices on the Shanghai Gold Exchange have slipped to a narrow (10-20c) discount this morning. TOCOM responded to finding world gold $4 higher on the opening with no excitement. Volume did rise 21% but only to equal a wretched 14,911 Comex lots, while open interest was static (+89 Comex lots). The active contract was up 5 yen, but world gold slipped $1.65 from the NY close. There appears to be no Japanese initiative in gold at present. (NY traded yesterday 41,981 contracts; open interest rose 2,759 lots.) Obviously, however, someone is supplying initiative, with the perennially bearish Barclays commentator complaining of yesterday: "Aggressive buying catapulted the prices for gold, silver and platinum higher yesterday…gold is now softening…However the market will be wary of selling the market aggressively with the potential for another burst of buying this afternoon. In the event, after a $2 lull in the Asian morning, powerful buying started quite early in the European day. TheBulliondesk had noticed a big surge in traffic by 8am NY time, by which point the price was already up $3.70 at $392. And of course it has continued since, with estimated Comex volume standing at 52,000 by 1pm, far ahead of yesterday. This looks like a conscious effort by a large capital pool to overcome the defence offered so freely below the key technical levels in the mid $390s. The timing and apparent preference for the physical market suggest the possibility on Middle Eastern orientation. Assuming the leaders of this effort are reasonably well informed, this fight will presumably resume next week. In the meantime, as weekend reading, I commend the latest essay by The eXile correspondent War Nerd concerning the last but one outbreak of terrorism in Saudi Arabia: "But it doesn't look to me like these Saudi terrorists were looking to die… It reads to me more like terrorist collusion with the local cops -- either that or the cops and soldiers of the Saudi government are so totally intimidated they're not a factor any more. And that means Saudi Arabia probably isn't going to last much longer. When the government troops won't leave their barracks, when the cops run every time the rebels fire a shot...well, church is about out. Think Tehran when the Shah fell, or Cambodia in '75… this didn't happen overnight. It's been building up as long as I can remember. And it's going to have to get worse before it improves. I'm going to be writing a lot of columns with "Arabia" in the title this year. http://www.exile.ru/192/war_nerd.html JB CARTEL CAPITULATION WATCH The US stock market continues to meander. The DOW finished up 38.89 at 10,416, while the DOG gained 3 to 1987. June 18 (Bloomberg) -- The U.S. current
account deficit widened to a record $144.9 billion in the first quarter as
Americans bought more foreign-made goods, a government report showed. GATA’s Mike Bolser: Hi Bill: So far this last decline and bottoming process is echoing the one in 2002. Take a look. If so, we should move up to about 225 on the HUI followed by one more setback and then move up in earnest. It is a pretty remarkable similarity including the pessimism and disbelief although I think it is much higher this time. We are obviously ready for a financial "event" here. Even this week the market lifted each day in the last half hour while the golds sold off each day at that time. GSS was interesting obviously some of the
massive shorts got scared but was not ready for the move. But it sets up a
break out target for it, perhaps when there is some resolution of the IAM
takeover. The unconcern in the stock market is matched by the degree of fear in
the gold market. Fascinating! Commentary from a Café favorite, The King Report: Bill Gross (Pimco) the world’s largest bond manager in yesterday’s FT: "Too much debt, geopolitical risk and several bubbles have created a very unstable environment which can turn any minute. More than any point in the past 20 or 30 years, there's potential for a reversal. We have become a levered global economy, specifically in Japan and the US. With all this consumer debt, business debt, government debt, smaller movements in interest rates have a magnified effect…" Slate.com: "Yesterday's trade deficit figures showed that Americans continue to hurl dollars overseas in exchange for cars, oil, televisions, you name it. In theory, that's bad news, since it means the money we earn isn't stimulating domestic demand. The good news is that a lot of the dollars we export find their way back here. And while we Americans shrewdly use our greenbacks to get a lower price on things we need or desire like DVD players, many foreigners are using the cash we send them to buy stuff that Americans don't want to buy—government bonds. What a great deal! We underpay for their great electronics; they overpay for our mediocre bonds." This is Milton Friedman’s rationale for free trade. It is great until the holders of the debt change disposition. There’s nothing like living and depending on the kindness of strangers, and foreign ones at that! Asia, with the preponderance of global population, must export massive amounts of goods to the US and Europe to import and pay for the necessities of life, particularly food. Years ago we saw a piece of research that highlighted Asian Tigers’ necessity to export to pay their food bills. Now China, India, Indonesia (1st, 2nd & 4th most populated countries) and Vietnam have joined the mix. The Institute for Supply Management says prices paid by manufacturers for raw materials in May are near the highest level since November 1979. ISM’s prices paid by non-manufacturing companies for raw materials soared to a record in May. Good thing inflation is under control and the core is benign. "The average for all grades of unleaded gasoline rose 36 percent this year through the end of May, according to U.S. Department of Energy figures. Passenger car prices rose 1.1 percent in May, the biggest increase since March 2003, after falling 0.2 percent in April. Costs of light trucks rose 1.1 percent after dropping 1 percent the month before." http://www.freep.com/money/business/jobs17e_20040617.htm Inflationary pressure is building in the pipeline. Intermediate goods prices rose 1.1% in May. Core intermediate prices rose 0.9% after rising 1.1% in April, which was the largest rise since 1/95. Core intermediate good prices are +5.1% y/y, the highest increase since when October 1995. Crude goods prices soared 2.8% in May after rising 3% in April. Core crude goods prices fell 3.8% in May but are still +22% y/y. Ed Hyman’s (ISI) latest report is full of charts and details that show the economy might have peaked a month or so ago and inflationary pressure is building. That’s our view and prognostication. We must now watch the data and see if the stagflation keeps intensifying as Easy Al replays the ‘70s. Derek VanArtsdalen from San Antonio: Good morning, Bill—  For the most part, this
chart is self-explanatory. It doesn't take a T/A genius to figure out where the
dollar is probably headed: lower. Its recent strength was enough to challenge
the topside of the channel (red circle), but that strength appears to be giving
way to the natural forces of downside pressure. With Sir Alan pumping out
dollars like there's no tomorrow, the U.S. buck is hardly worth the paper it's
printed on. Anything can happen, of course, but if I were a dollar bull I sure
as hell wouldn't take any comfort in the chart above. The MACD histogram is
starting to contract once again, and you can clearly see what has happened each
and every time it's done that. In short, look out below...  I've read a few articles recently whose writers predict an imminent fall in oil prices to something below $25 per barrel. If oil is indeed destined for sub-$25, there's nothing on this chart to suggest it. Some folks are looking at the price action over the last several months and anticipating the completion of the right shoulder on a head-and-shoulders formation (small green circle). However, chart patterns don't always produce the expected result, as evidenced by the much larger completed head-and-shoulders formation within the large green circle. Even though such patterns are supposed to be extremely bearish, there's no law that says they must be. As you can see, the larger head-and-shoulders pattern, which is technically about as perfect as they come, didn't result in anything except much higher prices. So, I wouldn't put much faith in the
smaller one that's forming now. In fact, the internal indicators are growing
stronger, not weaker (red lines). As several writers have pointed out, we're
only one major terrorist event from plus-$50/barrel oil. Good luck on
re-election, Mr. Bush...  I worked up this chart yesterday but didn't have it ready in time for "Midas," but you can see that we were closing in on the apex of a symmetrical triangle, which means that the price was ready to break out one way or the other. If I had gotten this stuff in on time, I would have predicted that the price would break up and out. Well, it's about 9:15 a.m. Eastern Time, and the gold price on Kitco is up about six dollars. So the breakout is a decisive one. The measured move from
this chart puts the next price objective at about $452. After that, I think
$486 is obtainable in the next few months and possibly $500 by year's end. As
you know, Jim Sinclair is staking his reputation on $480 gold on or before
August 15th. I wouldn't want to bet against him...  When you see things from
this view, you've got to wonder what all the panic is about, eh? Sure, a $50+
price correction is painful, no doubt about it. But in the grand scheme of
things gold's near-term prospects appear promising. There's nothing confusing
about this chart, and I for one believe that the pronouncements of gold's death
have been greatly exaggerated...  The most striking thing about this six-month silver chart is the presence of the huge gaps down (two purple circles). The first one left a void around $7.80, and anyone who thinks it won't be filled is crazy. Sooner or later it will, and my bet is it'll be sooner rather than later. Yesterday's price action
broke severely up and out of the 10-week downtrend (red line) as you can see by
the black price marker circled in green. Things are obviously heating up this
morning in follow-through action. Also note on the chart that the internal
indicators (circled in red and blue) are beginning to look quite healthy.
Anyone shorting silver now is a real gunslinger and could well get taken to the
cleaners in the weeks ahead... In fact, you'd almost need
a Federal Reserve board member assisting you in order to misunderstand what Al
is saying. I feel it's only fair to mention Al's website is
THE ALCHEMIST -END- Regards, I’ve Seen This Movie Too I sat with my boss in a sweltering but fashionable downtown eatery in Toronto in mid August 1987 having lunch – with two chaps who were the book runners for my number one client, a major bullion bank and at the time the biggest derivatives dealer in the word. One of them was a Polish immigrant, a Ph.D. in mathematics who had been recruited from then DOW 30 constituent Honeywell. While he spoke in slightly broken English, this guy was not only a genius but had represented Canada as an Olympian as a sailor. These were indeed ‘heady times’. The DOW had just broken the magical 2000 level and 5 year mortgage money was available at approximately 10% in Canada if you were on friendly terms with your local bank manager. In those days 10% money intuitively made most business deals work. Over a nice bottle of wine talk quickly turned to ‘the markets’, interest rate in particular and in a larger sense the general equity markets. It was after a couple of ‘jars’ of wine and some banter about the equity markets that our Ph.D. friend, in his broken English informed us, "there are going to be days when the [stock] market [DOW] goes down 4 or 5 hundred points". The other three of us sitting at the table stared at him in disbelief laughing at him like he was full of crap. Given that that the largest one day movement in the DOW Jones to that point in time was about 28 points we asked him what his reasoning was for such a bold prediction. His answer was [again in broken English], "the incorrect assumptions in portfolio insurance". So, the three others of us are starting to feel our wine a little bit and we question our Ph.D. friend a little bit further. We asked him pointedly just what it was that ‘was wrong’ with the assumptions in portfolio insurance? His reply, "Simple, portfolio insurance constitutes computer generated equity trades. The more the markets move in a given direction, the more the computers will exacerbate the move in the same direction-thus the market will drop 4 or 5 hundred points easily in one day." That produced chuckles and a retort of, "By the same logic it seems the market might equally be susceptible to a 4 or 5 hundred point rise in one day?" As I’ll never forget the reply was [again in broken English], "Empirical observation I have made, things never seem to ‘crash’ up." The other three of us were dumbstruck. We asked him what made him so certain of his convictions on the equity markets? His reply, "I’ve modeled it all in my computer. It is certain to happen given the right conditions." This guy had ‘modeled’ the equity market in a computer program he created in his spare time, for fun, and determined under which circumstances it would catastrophically ‘fail’. He equated this exercise he had undertaken to a car company like FORD testing a new model in a wind tunnel for aerodynamics. By now you must all be wondering what any of this has to do with where we are today? The answer – the analytical mind of Jim Sinclair. I wonder if Jim ever speaks with a Polish accent in broken English? Never the less I keep getting this déjà vu feeling all over again – a lot of folks who should know better have not been around the block a few times and cannot see with the clarity of Jim Sinclair. I know history tends to repeat itself [most chartists would agree], and I know I’ve seen this movie before. This should give us all reason to be deeply concerned. Rob Kirby SA’s gold production falls by 8,3% in Q1 South Africa’s gold production decreased
by 8,3%, to 84 616,5 kg, in the first quarter of 2004, versus the same quarter
in 2003, the South African Chamber of Mines said in a statement yesterday. -END- The gold/silver shares continue to fall further behind the moves up in both gold and silver. The XAU closed at 86.03, up 1.69. The HUI failed to close above its 50-day moving average of 191.05. It has not done so since April 13. It also could not take out its downtrend, finishing at 189.38, up 4.58. Placer Dome’s recent exploration success in Nevada is creating a stir. Below is a map with the location of J-Pacific's projects in Nevada's Cortez Mining District. J-Pacific's current projects in the District are noteworthy particularity in light of the current market chatter concerning Placer Dome's activities at Cortez Hills and ET Blue. J-Pacific closed at 46 cents Cdn, up 6 cents or 15% on the day. Star of the week was Samex which popped a bit more than 60%, closing at 83 cents, up 10 cents on heavy volume. Congrats to geologist Rob Kell who has worked his butt off coming up with the goods. Over the past couple of weeks I have brought to your attention from different sources that two North American gold refiners were reporting unusually firm premiums. Comex, thanks to the price managers, had gone disconnect with the physical market, the real gold market. The market became so firm the past few days, The Gold Cartel could only cap the price rise, not hold it back. With the cash market this strong and the
specs on the sideline in a relative sense, yet poised to enter the buy side,
the cabal troops are going to have a heckuva time keeping gold from taking off.
With the geopolitical situation a horror show at the moment, one which is
likely to worsen further, gold is likely to rise faster and go further than
most market players can envision at the moment. MIDAS Appendix California
files major suit against Enron over energy price manipulation
Email this Article to a Friend 336779347 |
 |  |  |  |  |
Printer Friendly Version
Email this Article