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Once again we see increasing evidence the typical American consumer is squeezed. Inflation is going way up, jobs are hard to find and income is not keeping pace with inflation. It is more evidence the effects of the tax cuts and government economic stimulus are wearing off and the big picture, negative macroeconomic factors are beginning to kick in and take their toll on the American scene. What could be more bullish for gold than a weakening US economy and US dollar, along with increasing inflation while our interest rates are at historic lows? This increasingly negative interest rate scenario is screamingly gold bullish which is exactly why the Orwellians continue to cap the price. They don’t want an unsuspecting public to know the truth as a suppressed gold price takes away the alarm barometer from the average investor. "Look, no real problems," says the Working Group On Financial Markets, "see how tame gold is." The likes of the Larry Kudlows were yapping like that all morning. This routine has become so obvious it is now almost juvenile - at the See Spot Run level. Only the nitwit retards in the mainstream gold world fail to deal with this blatant manipulation farce. Just back from a breakfast at the Highland Park Pharmacy, a drug store with a 50’s type soda jerk counter, stools and all – with the old waffle irons etc., a real throwback – cheap food and fast service – a real treat. Had to get out of here. Couldn’t stand the aggravation of watching our corrupt powers set the prices for the day. Besides, there was no point watching gold long after the opening because the price was not going to better the first half hour/hour opening high anyway – AND IT DIDN’T. OK, back to work. The bad news is the manipulation scenario I am reporting on IS this disgusting. The good news is the folks rigging the market have blown it so egregiously, gone so completely out of control, the prices of gold and silver are going to go berserk as their nefarious shenanigans go completely awry. For some time now MIDAS has been stating the economy is nowhere near as strong as the pundits claim and inflation is far worse. That is now becoming clear to many in the mainstream investment world, even with the puffed up numbers put out by the Bush Administration. Hiding the truth these days has become harder and harder to do. The Fed and the administration have backed themselves into a corner with their market manipulations and have run out of ways to maneuver. Inflation is real, but if they raise rates to combat inflation, an already fragile economy goes tapioca. The Bush Administration and the Fed are in deep trouble when it comes to dealing with our economy, thanks to the last 8 years of managing markets. What goes around, comes around. To give you an idea of how managed gold is at the moment, one only need look at a few charts. Just a few days ago, the concern was US interest rates were going to soar, the dollar to rally sharply and gold to be crushed. Supposedly, this was why gold cratered after breaching $400 on the upside on Monday. But, LOOK: Runaway September bonds Swooning September dollar Soaring September euro Bonds and the euro have surged to the upside and broken out sharply in that direction. The dollar has broken down hard out of a heavy congestion period, which is now a substantial top formation. Gold? Forget about it: Arrested August gold Gold was not allowed to close above its 200-day moving average ($399.50 basis August) or $400, even though it blew through both points TWICE during the week. Even with all the outside markets going for it, the GOLD POLICE said Thou Shalt Not Pass Go! And that was that. For those who STILL think a weak dollar is the key to the gold price (can there be anyone left?), take a gander at what the dollar did early on today and compare it to the gold response. Gold rallied a piddly $2 and change on THIS:  Can you imagine if the dollar had rallied that much how low gold would have plunged this morning? To get a further grip on how flagrant the gold price rigging is these past weeks, note what Houston’s Dan Norcini had to say early in the day: Hey Bill and Mike: Same old modus operandi Cap it on the dollar down days and smash it on the dollar up days. Mike B's premise looks to be holding true. These guys are mounting a fierce assault at the DIVG level near the mid 340's. A bit of historical reference - The euro was at 1.23040 back on April 1 when
gold was sitting at $430. The Euro is bumping right up against that same level
this morning and gold is fully $30+ lower than it was back on April 1. If gold
were trading in lockstep with the dollar it would be sitting at $425 or better
this morning. That is how effective the price capping scheme has been. Gold in
Euro terms looks absymal. It is trading near the same levels it was in January
2002. Think about that again. Europeans who had bought gold at that time due to
concerns over geopolitical developments, et al., have made ZERO return on gold.
Amazing. Speaking of amazing. Here we have these incredible silver fundamentals and FEW specs are long. The big decrease was in the July contract. Word is one firm took delivery of about 4200 contracts which is roughly equivalent to the 21 million ounces which changed categories in the Comex warehouses this week.
For the week: *the euro rose 1.68 *and gold - it fell $4.50 with every technical in the world going for it! Makes sense right? Fits in perfectly with how the pundits continually call the gold market right? As you can tell, time for a relaxing three day holiday for me. CARTEL CAPITULATION WATCH The DOW went into a plodding retreat early, down about 50, and then remained at that level all session long, closing at 10,282, down 51. The Sep euro closed at 123.09 and the dollar finished at 88.18. More on the pivotal jobs number: U.S. job growth slows to 112,000 in June By Rex NuttingWASHINGTON (CBS.MW) - Job growth in the United States slowed in June after three months of robust hiring, the Labor Department estimated Friday. Nonfarm payrolls rose by 112,000 in June, less than half the 244,000 expected by Wall Street economists surveyed by CBS MarketWatch. Employment fell by 11,000 in the manufacturing sector after four months of growth. The unemployment rate remained at 5.6 percent as expected. Average hourly wages rose by 2 cents to $15.65, a 0.1 percent increase, less than the 0.3 percent expected. Payroll growth in April and May was revised lower by a cumulative 37,000. The average workweek fell by two tenths of an hour to 33.6 hours. Total hours worked in the economy dropped 0.6 percent. The US factory number was disappointing also: :00 May Factory Orders reported -0.3% vs. consensus (0.7%) GATA’s Mike Bolser: Hi Bill: Stunning long-term Federal Reserve Note Versus Gold Chart: From The King Report: Today is the employment report. As we wrote yesterday, a great number will have only an ephemeral effect. A soft number will contribute to the new economic ebbing perception. As we related, the data warrants a soft number, but political expediency has manufactured stronger than warranted numbers recently. However, now that the BLS’s CES Birth/Death Rate of small business has been exposed by us a very few others, the BLS is likely to look elsewhere to boost the number. We are stunned that after tracking, talking and writing about the Plug/Bias/now named the B/D Rate since Al Sindlinger put us onto it about a decade and a half ago, the investment world over the past two months has discovered it. Notable economists that have been forecasting, analyzing and waxing about the employment report for years did not know about it. Consider 2004 a historic year in economic and financial history – it is the year that a critical massive of market denizens realized and publicly admitted that government economic data is serious flawed. The inflation and employment numbers so egregiously diverged from reality that numerous people had the epiphany about government data deception. -END- Perhaps of interest: Bill Murphy of GATA speaks his mind that the place to be is in Gold and why the bad guys will not win. Bill Murphy, the Commander-In-Chief of The Gold Army; the Chairman of GATA (Gold Anti Trust Action Committee); For other live interviews, presentations and reports go to www.smartstox.com Wayne Angell takes some deserved heat: Dear Bill, The Plunge Protection Team had some week last week holding up the US stock market. From Jesse: If you have had the feeling that you are trading against computer programs
backed by the biggest pockets in the world generating the bulk of the trades on
the NYSE, you might be right. Read the report as well as the press release. It’s interesting.   Sure is a lot of
trading for 'Agency' -END- Goldman Sachs dwarfs everyone else. Big surprise, eh!?!? Jesse goes on to note: Notice distribution of trades OFF the NYSE? 15 firms generated about 68% of NYSE volume as program trades and of those,
about half were for themselves and half were for 'Agency' -END- Some Down Under thoughts: "This is not the end. It's not even the beginning of the end. But it may be the end of the beginning." Winston Churchill after the defeat of Erwin Rommel's Afrika Corps 1942.I've emerged from my self-imposed hibernation this morning because I sense we are on the cusp of some real changes in world events. One of the reasons I took a break from my 'idle thoughts' was because of the very sameness of the news - the financial markets have been sitting on their hands awaiting Sir Alan's telegraphed 25bp rise in the Fed discount rate, and the rest of the world held its breath in anticipation of the sham handover of sovereignty to the new Iraqi/US puppet government. Nothing much has changed in the Land of Two Rivers, and neither is it likely to. The insurgents will continue their terror campaign, and Iraqis will soon see that nothing has changed. Already, a majority of Iraqis say that the Coalition occupation is the cause of the violence and want the Americans to leave. That sentiment will intensify in the coming months. And the trial of Saddam, which legal experts are already calling a kangaroo court, will only serve to increase terrorist activity. A few weeks ago, I said the Coalition would pull out by Christmas (Goodbye, Farewell, and Amen). That time frame is still possible, although sometime next year is more likely. George Bush is getting very nervous, because the polls are saying that his credibility on the reasons for invading Iraq is crumbling amongst voters. His election is now less than 4 months away. Nervousness can quickly lead to panic - never stand between a desperate US president and a second term. Back on Wall Street, there's more than a bit of nervousness too, although no one's panicking - yet. But there's a dawning realisation that the massive stimulation of tax cuts and Sir Alan's easy credit adventure is fast coming to a close. More mainstream economists are saying what we've known all along; the Fed has kept rates far too low for far too long, and there's going to have to be some savage interest rate rises if the inflation genie can be stuffed back in his bottle. See today's New York Times for more:- http://www.nytimes.com/2004/07/01/business/01place.html?th This was Greenspan's plan all along. He knows that America swims in a sea of red ink, and he knows there's only two ways to reduce the depth - either raise taxes and slash spending, which no one even contemplates in an election year, or inflate away the debt. The billions he's pumped into the economy MUST cause monetary inflation, which differs from supply/demand inflation. The latter is caused by too much money chasing too few goods, whereas the former is simply a result of flooding the nation with cash - more dollar bills means each is worth less, and hence prices must rise. There's no shortage of goods in the US economy, not while China continues to produce the cheapest of cheap consumer items. Greenspan and the markets know this. And they know that the inflation genie is already doing more than just flexing his muscles. He's out there wreaking havoc, and he's being aided by high energy and commodity costs. The fall in the oil price has been shortlived - it topped $38 last night in New York trade. While I was away, the current account deficit blew out to a new record, and this is after two years of a weaker greenback. As long as China pegs its currency to the dollar, and while Americans could take equity out of their homes by refinancing, imports continued to grow. But now that the refi option is no more, that avenue to consumer profligacy is closed. Walmart and other retailers are already forecasting falling sales, and last night Ford announced a 7.7% fall in new car sales. The US economy is 70% driven by the consumer - when he stops, the economy stops. That's not all. "The Mouth of the World" as Bill Bonner calls America, has been responsible for 95% of world growth over the past few years. So when the 'mouth's' appetite is sated, the whole world takes a break. China is booming because Americans have continued to spend, and Japan has awoken from its 15 year slumber because it's been exporting to China. Europe has been doing a fair bit of exporting too, but like Japan, it's domestic economy is moribund. Europeans aren't spending, neither are the Japanese. China's middle class is still too small to make a difference, and the Brits are struggling with higher mortgage rates. The world economy has been out of balance for too long. Assets bubbles have inflated not only in the US but throughout the developed world, and even in the developing world. Last night the Dow fell over 100 points, not a crash by any means. But balance will be restored to the world economy. If we're very lucky it may happen relatively gently. But if we're not, everything - bonds, stocks, real estate, commodities - will crash to earth. Almost overnight, the mood on financial markets has gone from smug complacency to nervous tension. It's also noticeable that gold rose last night while the Euro fell, not by much, but the disconnect of the dollar/euro nexus was there. This is not the end. It may not be the beginning of the end, or even the end of the beginning. But it's more than likely the beginning of the beginning. The Idle Fellow In contrast to their recent behavior the gold shares performed admirably this afternoon. The XAU rose 1.88 to 87.27, while the HUI gained 4.89 to 191.36. Golden Star Resources, which has been beat up lately by arbitrageurs over GSS’s bid for Iamgold, led the way, gaining 36 cents (8%) to $4.82. The HUI looks as if it is ready to break out to the upside from a defined pennant formation. A breach of the 195 area ought to do it, and should send this index to much higher levels. HUI Just when you think the gold fundamentals can’t get better, they do. Then again, they have been at the "10+++" level for some time. Of course, as we saw today, in the very short-term they are meaningless, as are the technicals. All that matters is how much the strong physical market eats into whatever gold supply the heinous Gold Cartel can throw at us. In the short-term gold and silver could do anything. After this week, how can anyone use normal analysis to make any sort of reasoned prediction? Yet, with the overall financial market scene SO conducive to much higher gold prices and getting more that way each passing month, I can’t see both precious metals staying down here much longer. The cabal rats have backed themselves into a corner with less and less room to maneuver. Those with patience and an understanding of the big picture are going to make a fortune as the second half of this year rolls on. Gold, silver and the shares remain THE historic investment opportunity of a lifetime. GATA BE IN IT TO WIN IT! MIDAS =================================== 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 426719865 |
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