MURPHY ON GOLD
January 6
– Gold $538.80 up $12.70 - Silver $9.08 up 31 cents
Gold And
Silver Rocket … Gold Cartel In All Out Panic … Commercial Signal Failure
No real
surprise. Because gold topped out above $530 weeks ago and then tanked, many
market participants were thinking the same again. However, markets rarely
accommodate "mob" thinking. Yesterday’s vicious market setback; fast,
deep and violent … followed by today’s even smarter comeback is CLASSIC super
bullish action.
From the
Wednesday MIDAS:
"We
should have already had our major shakeout on this part of the move. As
is, many veteran gold pundits are sitting on the sidelines with their gold
trading positions and have their clients out of their share positions. The
market surprises are far more likely to be on the upside than on the downside
for the time being. Yesterday’s surge was only our "Jacks for
Openers."
Today's
gold move up into new high ground further validates GATA’s analysis of the gold
market:
*The Gold
Cartel has lost control.
*Physical
market demand is overpowering the bums – their diminishing central bank supply
is just not enough at these price levels.
*We are in
the middle of a Commercial Signal Failure. The Gold Cartel and other shorts are
panicking to cover whenever they can. Their problem is that there is so much
buying out there, the market won’t stay down long enough for them to do any
covering in size.
Repeat
commentary from the Wednesday MIDAS for emphasis purposes:
The price
of gold is going to rocket from these levels because:
- There are many
thousands of specs still to get long. The open interest numbers confirm as
much.
- There are tens of
thousands of shorts out there who are very exposed to a gold price
explosion. A number will want out, or will be forced out. They will be
buying on dips, as well as on rallies ... and later at any price.
- Most everyone is still
gold clueless. Most of Planet Wall Street AND the mainstream gold world
are baffled why gold is doing what it is. They just make up reasons why
gold is moving up. Not hard to do. PRICE ACTION MAKES MARKET COMMENTARY.
… This
tells me GATA is right on the money about the shorts panicking in order to
extricate themselves from their short positions. How are they doing? Not so
good. By my calculations all they covered yesterday was around 40 tonnes, max.
The total short position is above 10,000 tonnes. If only 10% of the minimum
number of shorts plan to cover, it will take another 25 days like yesterday. 25
TRADING DAYS!
SO, many
more shorts are still to get out in the weeks and months to come. Then you have
more than 45,000 specs who can get long just to take the open interest only
back to where it was with gold $80 lower than here. AND THEN you have central
banks trying to buy gold and a surging physical gold market in various
locations of the world.
Wait until
Planet Wall Street wakes up.
***
Yesterday MIDAS
brought to your attention a little noticed article about the Chinese and their
monetary reserves. The FT ran with it late last evening and it caught the
attention of many in the gold world:
China signals reserves switch away
from dollar
By Geoff Dyer in
Shanghai and Andrew Balls in Washington
Published: January 5 2006 20:13 | Last updated: January 6 2006 02:43
China indicated on Thursday it could
begin to diversify its rapidly growing foreign exchange reserves away from the
US dollar and government bonds – a shift with significant implications for
global financial and commodity markets.
http://news.ft.com/cms/s/f39fa8e4-7e25-11da-8ef9-0000779e2340.html
-END-
The gold press was rife this morning
about the Chinese shifting some of their reserves to gold. My take on all of
this central bank buying talk and what is going on:
MIDAS has been reporting to Café
members for TWO YEARS now of Chinese buying through our STALKER source. I
reported nearly five years ago of the Chinese scouring South Africa to secure
gold supply. In addition this column has reported on South Korean central bank
buying, as well as strong suspicions of other Asian central bank buying by the
"little Stalkers."
Most importantly, the price of gold
has taken off, and all this talk of central banks buying gold has hit center
stage since Gold Rush 21 … after Andrey Bykov, a key economic consultant to
President Putin, left the conference. The sequence of events from the Russian
Central Bank mentioning GATA in a speech in Moscow (then translating the speech
for GATA), to Bykov at the conference, to President Putin having a picture
taken of him with a gold bar in his hand, has been well documented here.
Many of these central banks have
been buying for some time. The Russians and Chinese are too smart to announce
their intentions to the world in advance. They have already done a lot of this
buying, or secured supply, most likely through intermediaries. At some time in
the future it will show up on their books as gold reserves. Have no idea when.
However, the key here is that hedge
funds and other big money are getting the word major central banks are buyers
of gold. THAT is the new perception. Thus, they want in because
they know the gold market CANNOT accommodate even marginal buying from these
sources without taking the price much higher.
In addition, the big money realizes
that a number of these same central banks WILL BE buyers on dips. So, they
realize the downside for the price of gold is limited.
It gets better. The Gold Cartel and
their allies know they are TRAPPED. The crooks and friends know the downside is
limited too and are trying to cover as fast as they can. This is why we are
seeing these dramatic price surges to the upside.
The gold open interest fell as
expected 3177 contracts to 328,916.
The silver open interest also fell …
2232 contracts to 131,542.
This morning I was informed of a
rumor of a forced silver liquidation yesterday for some obscure reason –
including options … due to something not related to the silver market itself.
That makes sense as the magnitude of the silver move down did not make sense.
The reason is that we had "the
trade" and Morgan Stanley as buyers the day before with the funds as
sellers. Could not understand the depth of the silver sell-off.
While we are seeing a Commercial
Signal Failure in gold, the silver shorts are still hanging in there. Only a
matter of time before there is a Commercial Signal Failure in silver too. We
will observe silver move $1 higher in a single trading session.
Gold makes yet another 25-year high
… FEB gold
http://futures.tradingcharts.com/chart/GD/26
March silver
http://futures.tradingcharts.com/chart/SV/36
********
Speaking
of history … Adrian:
http://www.oregonlive.com/editorials/oregonian/
index.ssf?/base/editorial/113641530636210.xml&coll=7
Bill,
How many times in financial and market history have these four infamous words
been uttered "This time it’s different"? My guess is probably too
many times to count! And how many times has it actually turned out to be
"different this time"? …a rough approximation is
0.00000000000000000000000000000000000000000000000000001% of the time commonly
known as ZERO or NEVER!
Last time I remember hearing this
was the New Economy of the 1990’s where Greenspan himself declared that
increasing productivity due to innovation and technology had killed the old era
of business cycles and we could expand our growth almost as far as the eye
could see…for ever. You now know that that wasn’t true! It wasn’t different for
the dot.com boom. Coincidently the same guy (Sir Alan) has postulated that the
inversion of the yield curve is "different this time". This has
always signaled recession in the past. But it is "different this
time"! Oh really Mr. Greenspan! Well it’s a good story, and if you can get
away with it for another 25 days it really won’t matter. Because by January 31 it
will be "different this time" because we will have a new chairman of
the FED in the form of John Law the Second, Dr. Ben Bernanke. But wait a
minute! He pledged to continue the Greenspan policies. Greenspan strictly
followed a doctrine of price stability and zero inflation, so he restrained
himself to conservatively magic into existence only a piffling 6 trillion
dollars in M3. Dr Bernanke will perhaps think that its time to target a bit of
inflation…so who knows how much M3 he will conjure into existence?...and you won’t
know because they don’t intend to tell you. M3 has passed into the realms of
state secrets. May be it will be different this time,….but only by being more
of the same!
When a long established harbinger of
economic turmoil is dismissed as out-dated, broken, irrelevant…it’s time to get
some of that long dismissed, outdated, irrelevant barbarous relic…what’s it
called again? ..errr G-O-L-D…yes! That’s it…GOLD. In 6000 years of human
history, when it’s been time for gold, it has never been different.
Cheers
Adrian
********
Adrian nailed it again last night:
Bill,
With the stunning OI yesterday this is a VERY dangerous game the Cartel is
playing this morning. They want every one to take the bait that the
unemployment numbers are really bullish and the job market is on fire…. so then
why did the FED say they aren’t going to raise interest rates for much longer?
This could be a real quick flush out and bounce back. With the OI as it is the
Cartel can not go short more short and stay more short…they have to go more
short and hope to cover immediately as well as covering some of their other
shorts.
This will be telling. If it bounces
to any great extent we are off to the races. The OI of yesterday suggests a big
bounce back.
Cheers
Adrian
All Café members owe Adrian Douglas
a salute for one of the truly great sleuth market calls (short-term) I have
ever come across. For those of you who are new to The Café:
11/13
Explosive Rise
in Gold Mining Shares Has Been Coming – Now We Know Precisely When
By
Adrian Douglas
http://www.lemetropolecafe.com/Pfv1.cfm?pfvID=5010&SearchParam=Adrian
Douglas
…We have known for some time that we
could expect a massive move up into Phase 2 of the gold bull market. I think we
now also know when.
-END-
JUST IN…
More SENSATIONAL COT (COMEX
Committment Of Traders Report) news:
As of Tuesday the large specs
increased their spec longs by 1363 contracts, but increased their shorts by
4,924 contracts. Meanwhile the Commercials increased longs by 3,406 contacts
and reduced their shorts by 1,819 contracts.
This is unprecedented for the shorts
to continue to cover their positions on such a rally and, once again, confirms
the GATA analysis of the gold market. The bums are on the run. The Gold Cartel
is in a heap of trouble. What do they say about, "It couldn’t happen to a
nicer group of guys!"
Yep, the Commercial Signal Failure
is going into full bloom. GATA stretcher-bearers: you are doing a gentlemanly
fine job of carrying these bullying bad guys out. Well done.
IN LATE
... Adrian on the Open Interest:
Bill,
You are dead right. What a corker!
The Open Interest is just
a knock out!!. It’s a real standoff …the only way for some one to go long is
for someone to go short on the other side of the contract. Who would want to go
short when this rocket is just blasting off? For someone to cover a short some
one has to pitch in his longs. Who would want to pitch in his longs when the
rocket is just blasting off? And so we have an amazing game played out. The
only resolution is a MUCH higher gold price. At a much higher gold price some
longs might be ready to take some profits and some traders may want to go short
sensing an intermediate top. So the price goes up dramatically and the OI
hardly moves. The outsiders want to go long but can’t get in because the shorts
will not go more short, and in fact they want to get out of their shorts but
can’t because no one is pitching longs. This situation is telling everyone what
the new dynamics are and it is screaming "HIGHER GOLD PRICES" as the
ONLY resolution.
The Midas report has
spelled this out in advance of the move. I wonder if there has ever been a
market move in history that has been so well defined and laid out in ADVANCE of
the move. Café members are getting a hell of a deal for their subscriptions!
Cheers
Adrian
The gold/silver shares are on fire.
The XAU rose 4.47 to 139.86 and the HUI leaped 8.24 to 305.08. Yes Siree Bob,
the gold/silver train has pulled out of the station with most all of Planet
Wall Street clueless … much of the mainstream gold world too.
What fun to see the smaller golds
come to life after two years of doing little to sinking away. An example of
this is one of my biggest holdings, Samex Mining, which closed at 71 cents, up
9.5 cents (15.45%). It wasn’t long ago that Samex was spending most of its time
between 30 and 40 cents.
(SMXMF)
http://new.stockwatch.com/swnet/default.aspx
Many of the smaller gold/silver
companies have begun their moonshots. The Gold Rush Fever long talked about in
the MIDAS commentary has commenced … and we are only at blast off!!!
The moves in many of the gold stocks
will dwarf the NASDAQ mania of the late 90’s. Most in Planet Wall Street
investment world still cannot even spell gold stocks yet.
*******
GATA BE IN IT TO WIN IT!
MIDAS
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