Murphy On Gold & the Markets

March 9 – Gold $441.70 up $1.70 – Silver $7.59 up 10 cents

Gold, Silver, Mount St. Helens And Jimmy Buffet

"I don't know,
I don't know,
I don't know where I'm gonna go
when the volcano blows!"   ………..Jimmy Buffett

GO GATA!

GO GOLD RUSH 21

The MIDAS headliners the past few days have had a volcano focus. Looks like my commentary might be prescient:

Don’t know about you, however, I consider this an omen for us. Mt. St. Helens is trembling and so are gold and silver. That volcano has come alive, just like silver and gold have. What you see when viewing this imposing Washington State mountain is what the investment world is looking at when it comes to the precious metals. The Gold Cartel has messed around with the natural, free way of things far too long. The Gods are not happy with them. SO BE IT!

Meanwhile, back at the ranch, The Gold Cartel’s attempts to manipulate/suppress the price of gold continue to grow bolder. As one market watcher said this morning, "they don’t even care who sees it any more."

The Gold Cartel has a number of rules which they constantly execute as part of their rigging operations. The $6 Rule is well documented by now. Another one is once gold goes limit up ($6 Rule parameters), it is NEVER allowed to follow through on the upside the very next evening, or on the following Comex opening. NEVER! Doing so might engender some serious excitement re gold as an investment. The Orwellians will not tolerate such prehistoric notions, notions which might threaten their own cretinous empire building type of thinking.

Last night and this morning was no exception to this other cabal rule. Even though the dollar was comatose, the crooks immediately took gold 80 cents to $1.50 lower when trading commenced during the Kangaroo trading hours in Australia - where the volume is usually very light. What is astounding is that a humongous 7,000 contracts exchanged hands during Access trading hours. This means The Gold Cartel had its hands full keeping the price from extending yesterday’s gains, which any normal market would do after a major breakout.

The depth of The Gold Cartel’s depravity was reinforced this morning when the US bond market (the bond vigilantes are waking up to the true US inflation situation) was pounded for a full point going into and after its opening. Now, if there was ever a reason for gold to EXTEND yesterday’s capped rally, it would be another sign inflation is heating up, which we got this morning:

March 9 (Bloomberg) -- U.S. 10-year Treasury notes fell, pushing yields to the highest since early August, as a rise in oil and gas prices fanned concern inflation will accelerate… -END-

The early interest rate move extended its rise throughout the day:

30-year March bond
http://futures.tradingcharts.com/chart/TR/35

Total breakdown from a massive top formation by the 10-year note:
http://futures.tradingcharts.com/chart/NO/35

But, there is no inflation!

Thank you very much Bloomberg. If bonds are going up on inflation concerns, why is gold stuck in its tracks after a major breakout like we had yesterday? That was written with gold stuck at unchanged for the better part of the Comex trading period.

In a free market gold would have been up another $2 to $3 in the early going. When you have Orwellians controlling a market and rigging it on behalf of the major bullion banks in the US, gold has to be held in check to demonstrate to the naïve and clueless investment world that inflation really isn’t that worrisome. Same drill; these propagandists point to the calm gold price to prove their point. You would think a few dingbats in the mainstream financial market community would catch on to this repetitive deception.

The gold market is now closed. The farce worsens. Once again you could not have had a more bullish gold day, yet The Gold Cartel made sure reality was not allowed to reign. They sat on gold all both morning and afternoon. While other markets were surging, or swooning in fairly big moves, gold had to struggle for every dime on the upside. The crooks were on the case (gold) during the entire Comex trading session. Just like the other day, gold should have risen over $10 by the close. Instead we got crumbs.

My colleague and buddy Chris Powell was laughing at me this afternoon, saying I was the volcano about to blow. It’s just so hard to watch this all day long and take it without any of the nincompoops in the mainstream gold world saying anything about what is going on here.

It doesn’t get much more gold bullish:

CRB – up ANOTHER 1.05 to 313.70
April crude oil – up 18 cents to $54.77 per barrel
Dollar – down .35 to 81.58
March euro – up .56 to 134
10-year note – down 26/32 to 108 30/32
30-year bond – down a whopping 1 19/32, a new low for the move

The 10-year note breakdown is both dramatic and significant. Prices are breaking down (yields breaking out) after completing a MASSIVE top. The interest rate picture is worsening in stunning fashion even as the Doofuses in the Treasury and Fed continue to claim inflation is not a problem, nor is there any serious inflation in sight.

All that and gold pops a piddly $1.70 AFTER breaking out from a major support pattern. The euro gold price FELL .54 to 329.27.

I think it is important to pound away again on a long-held theme of mine. Those who say gold is the antithesis of the dollar are correct in some sense, yet have it all bass ackwards.

The way it really is centers around The Gold Cartel using the dollar action to cap the price of gold and keep it in check via foreign currencies. One of the reasons is to stifle Western investment demand. Those holding gold in foreign currencies are seeing a nothing market and have no incentive to buy. Gold never appreciates in foreign currency terms no matter what else is going on in the world.

Why bring this up again? Because The Gold Cartel is being found out. There is a zero component in the price of gold for anything other than what the dollar is doing, which defies its historical trading pattern (see Dan Norcini below). And, as we saw in December, when The Gold Cartel wants to bury the gold price even the dollar action doesn’t matter.

What I mean by that is commodity prices are going nuts and US interest rates are on the rise in a major league way. This combination, along with a falling dollar, should have the price of gold on a tear for many reasons, which is JUST THE REASON WHY THE GOLD CARTEL IS ALL OVER IT.

Gold has been panned over the years as this relic of a market, a tiny one at that, which is meaningless in this day and age of super financial market sophistication. Quite frankly, if it weren’t for The Gold Cartel, there might be no reason to think otherwise. Gold could have been viewed as just another commodity and one rising with all the other commodities of the day.

Instead, because of their devious and greedy price suppression scheme – one originally put in play to effect the US’ strong dollar policy, they have made it the most important market of all these days. These short-term thinking fools among The Gold Cartel have created a time bomb which will inevitably go off (Murphy’s Law says at the worst possible time). They are suppressing gold to hide the true reality of the US economy and financial markets and give the US dollar as strong a presence as possible. They point to the subdued price action as evidence inflation is not really a problem.

However, the soaring commodity markets and now rising interest rates, along with a falling dollar, all suggest otherwise. This has to have a substantial impact on US financial markets in addition to all the other problems oft-discussed in this column. Meanwhile, because of the cabal’s fraudulent scheme, which made them many billions at the expense of the unknowing general public, the central banks only have half the gold they say they have. The crooks are running out of available gold supply at the worst possible time (yep, Murphy's Law again) which is why the phony financial press in the US won’t allow GATA to be heard.

The point is the reasons to own physical gold are beginning to go off the chart. More and more investors around the world want IN. Silver too. The precious metals are going to go berserk when the bums are carried out on stretchers, when they lose control of their scam.

One of the other major reasons The Gold Cartel is sitting on gold is they are short so much gold, it CANNOT be covered. Their derivatives exposure to this mammoth gold short position must be staggering. When the gold price rises sharply, and it will some day in the not too distant future, our long waited gold derivatives neutron bomb should go off along with a Commercial Signal Failure. When this happens, interest rates will go that much higher as pundits point to a soaring gold price as evidence of horrific inflation in the US. Stock and bond markets will tank even further, along with the dollar.

Gold (and silver) will reign supreme in the developing troubled time. The Gold Cartel’s ploy will have backfired in the most ignominious of fashions. The cabal will be haunted by its own BEST LAID PLANS.

Silver remains explosive and yet the price managers are all over it too. The silver open interest rose 2,583 contracts to 101,960. The gold open interest gained another 5,786 contracts to 296,335, which is indicative of the specs piling in and The Gold Cartel doing all they can to keep the price from rising too fast.

CARTEL CAPITULATION WATCH

Wake up time for stock market bulls. Contrary to the spin handed out by Wall Street, the scenario for the market and the US economy looks lousy with darkening clouds on the horizon. With longer term interest rates only JUST breaking out higher, the potential for serious chaos in the US real estate and stock market is now moved to the front burner.

The DOW gave up 107 to 10,806 and is leaving 11,000 in the dust. The DOG lost 12 to 2061, leaving 2100 in the dust too.

That wasn’t enough for the day. The Orwellian spin machine is out in full force:

13:28 Chicago Fed Pres. Moskow says policy still accommodative; rates can rise at measured pace
Nothing incremental in his comments. Moskow says must be vigilant regarding inflation pressures, but sees little evidence that long-term inflation expectations have risen.
* * * * *

Very reassuring Moskow. Your nonsense reads like it came from Moscow!

The geopolitical agenda of the US is becoming clearer by the day. There is a worldwide hunt to secure natural resources. Everyone knows how China is scouring the earth securing supply. So are other countries. Worse, the US in its Gold Cartel-like arrogance has offended so many other countries, they are going out of their way to snub us. The latest:

Industry, energy deals to boost Iran-Venezuela ties
By Pascal Fletcher

CARACAS, Venezuela, March 9 (Reuters) - Iran and Venezuela will sign investment projects this week to build a cement factory and a car assembly plant in the South American nation in a growing economic, political, and energy alliance between the two OPEC oil producers, officials said Wednesday.

More than a score of cooperation accords, including broad agreements in oil, gas and petrochemicals, will also be initialed during a three-day visit to Venezuela by Iranian President Mohammad Khatami which starts Thursday.

The visit risks raising U.S. hackles as President George W. Bush's administration has both countries under close scrutiny.

Washington accuses Iran of seeking to develop nuclear weapons, a charge denied by Tehran. Ties between Venezuela and its biggest oil client, the United States, have also become tense as U.S. officials portray left-wing President Hugo Chavez as an authoritarian anti-U.S. troublemaker in Latin America.

Stoking fears that the longstanding multibillion dollar Venezuelan-U.S. energy marriage may be at risk, Chavez has sought alternative oil partners by recently signing supply and investment deals with Russia, China, Brazil and India.

Venezuelan officials said similar wide-ranging energy cooperation deals would be signed with Iran.

–END-

PS:

13:26 Venezuela's Chavez says OPEC has no current spare capacity -- Dow Jones
April WTI crude quoted last at $55.35.
* * * * *

14:01Fed's Beige Book reports that economy expanded at a moderate pace through 2/28
The Beige Book for the 3/22 meeting says that the economy expanded in all districts, and that prices for consumer goods were mixed but relatively flat. The report appears to be little change from recent Beige Books. Seeing little movement in stocks or bonds on the report.
* * * * *

Gold demand news … The Gold Cartel’s worst nightmare – coming drainage of physical gold supply:

Jewellers spot gold in mainland
JIANG JINGJING,China Business Weekly staff
2005-03-09 09:43

"No diamond rings, no marriages."

That is how jewellery industry insiders describe the sector's market potential in China.

The jewellery sector has experienced double-digit growth which has coincided with the growth in China's economy and the rise in people's living standards in recent years.

Jewellery firms, from both the Chinese mainland and Hong Kong, are seizing every opportunity to reinforce their positions in the market.

Chow Tai Fook, the largest jewellery producer in Hong Kong, plans to open 100-120 outlets in the Chinese mainland this year.

Chow Sang Sang, another famous Hong Kong brand, plans to open 40-60 outlets.

3D-Gold Jewelry said it plans to own 1,000 stores in 100 cities. The firm has opened 200 outlets in the past five years.

-END-

Rhody with some insight on the rigging:

Good morning Bill:
I had an interesting time at the PDAC in Toronto yesterday. I met many interesting people, did a little mineral specimen swapping, and renewed acquaintances. The presentations were excellent. For the first time, gold and silver advanced strongly while I was at the PDAC, in contrast to all past years when both metals were tanked.

Lease rates were not roiled yesterday, but they are this morning. Silver rates advanced strongly across all terms, implying capping efforts today.

Gold remains in backwardation right out to the six month term but at low rates. This also implies major leasing to cap gold spot prices with central banks opening the lease spigots full to provide cheap liquidity. The parallel between the lease rate curve inverted to cool down the gold market even as rates overall remain low and the tendency toward an inverted yield curve in the bond market to control inflation is obvious. Just as lease rates in the bullion markets are low, so are interest rates in the paper debt markets.

Artificially low rates in both bullion and paper debt markets imply financial instability.
Regards, Rhody.

http://www.kitco.com/market/lfrate.html

Houston’s Dan Norcini was kind enough to send his insightful commentary on the CRB and gold to us. It shows you in stark detail the degree to which The Gold Cartel has rigged the gold market. AND, allow me to add, the central banks probably have less than half the gold in their vaults than they had when the CRB was last above 300.

Bill and Jesse:
Take a look at these monthly closing price CRB levels and the monthly closing spot gold price to see the actual numbers were gold should conceivably be trading at a bare minimum. The months listed below are the only time when the CRB was above the 300 level. The lowest gold price was 591.30 and that occurred as the CRB was definitely on the way down due to the spike in interest rates brought about by Volcker to knock it down. Every other time the CRB had a handle of "3" in front of it, gold was over $600/ounce.

Today's close on the CRB was 309.25 - London PM spot Gold price - 437.25 (New York Comex $441.10) - depending on how you measure it; gold should be anywhere from $591/ounce - $647/ounce, and that does not even include adjusting it for the dollar's loss of purchasing power in the last 25 years.

............................CRB.......Spot Gold

Absolutely pathetic isn't it?
Dan

The spin coming from the establishment on the inflation front is out of control and emanates from almost all quarters. I caught CNBC briefly and heard one economist (Yardeni) say how the surge in commodity prices was terrific for US financial markets and our economy as it reflected surging growth around the world. Then, this similar commentary from the New York Times:

Published Wednesday, March 9, 2005

Surging Prices for Commodities Reflect Global Growth

By JONATHAN FUERBRINGER
New York Times

Commodity prices are nearing record highs - but there may be less to worry about than investors think.

While higher commodity prices have often been a worrisome portent of inflation, those concerns have been overshadowed by the other significance of the rise - that economic growth is picking up in areas around the world.

Some analysts also say that the impact of these higher commodity prices on inflation will be muted.

The rise "reflects booming activity in the Asian developing world and on balance, that means the global economy is doing better than we thought," said Robert J. Barbera, chief economist at ITG/Hoenig.

Yet after a closely watched index of commodities rose to a 24-year high yesterday, doubts about this upbeat interpretation emerged in the markets. As the prices of crude oil, home heating oil and copper, all components of the commodity index, neared their record highs, the stock market slumped and Treasury prices fell, sending yields higher…

The CRB/Reuters index of 17 commodities climbed 1.1 percent, to 312.65, not far from its 314.50 high in January 1981. In the last year, the index has risen 15 percent, with most of that coming in the last month….

Still, for investors, the rise in commodity prices, especially for industrial materials, is positive right now because it is a sign that the global economy is healthy, which is good for the American economic recovery.

As for their inflationary impact, Mr. Barbera, the economist, argues that it should be much weaker than in the past. One reason for this, he said, is that the industrial commodities are being used in low-wage countries, like China and others in Asia, to make products that can sell for less elsewhere in the world, mitigating the inflationary pressure.

To support his argument, he notes that the prices of consumer goods, excluding food and energy, have climbed just 0.9 percent in the last 12 months through January. In that same time period, the CRB/Reuters index of raw industrial commodities has climbed 4.8 percent.

"So the inflation link is tenuous at best," he said. "I don't see the big inflation associated with this."

-END-

Which brings us back to rigging the gold price. If the price of gold were screaming right now, the pundit on CNBC and this New York Times reporter would be forced to sing a different tune.

The third rule of the low-lifes in The Gold Cartel is after they cap the market like they did today, they take gold down in the ACCESS market to influence trading. Like yesterday, they are at it again as I go to print. Gold is down $1.40. So far all that happened today, which should have sent the gold price through the roof, gold is up a net of 30 cents. The "SCANDALE" grows like Pinocchio’s nose.

The gold shares sold off as they usually do late in the day. The XAU ended only .56 higher to 102.83, while the HUI dropped from 227.18 at its high to close at 224.72, up only 1.01.

While a very aggravating day, the big picture scenario for the Mount St. Helen’s gold and silver volcano to blow sky high continues to electrify the skyline. The bums are in big trouble. One of these days in the near future, they are going to get theirs – in spades!

Gold, silver and the shares remain THE historic investment opportunity of a lifetime.

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

Thanks to so many who took the time to email Bloomberg’s Caroline Baum. This retort came in last night to Café member Brad T:

"did you folks just have a convention or something? i got about 6 notes from
conspiracy theorists in succession. go feed off one another."

MANY more of you emailed today, including me with a copy to Bloomberg’s gold reporter, Claudia Carpenter (no response as of yet, of course):

March 9, 2005

Dear Ms. Baum,
You are a highly regarded journalist and I assume a staunch believer that we have a free press in America. That is not the case when it comes to the gold market. You trivialize six years of documented evidence by GATA that the gold market is managed in clandestine fashion to the detriment of our so-called free markets - and to the benefit of the major bullion banks in the US. You do so without knowing the facts.

I realize you have much on your plate and don't have time to deal with all those facts. However, if you are so sure of yourself, why won't you, or Bloomberg, let what GATA has discovered be presented to your readership, along with dissenting views? I wrote the following in my commentary at http://www.lemetropolecafe.com/ last evening which covers eminent financial market people around the world who say GATA is correct.

Would you at least take the time to see who they are and respond to GATA's challenge?

All the best,

BILL MURPHY
CHAIRMAN
GOLD ANTI-TRUST ACTION COMMITTEE

March 8

After many of the mainstreamers in the gold industry, my biggest beef is with the US financial press and those in our government running around the world promoting democracy when we don’t even have a FREE financial market press in the US, nor do we have FREE financial markets. This particular rant touches on the lack of free press and I am going to focus on a highly regarded Bloomberg journalist, Caroline Baum, and Bloomberg itself.

Six years ago this coming June, Bloomberg gold reporter Claudia Carpenter came to a luncheon GATA gave in New York in which I explained to the attendees what GATA uncovered and what we had to say. The word GATA has not been mentioned once before then, or since, by Bloomberg. Not mentioned once even though we have received focused commentary on us by:

*Oleg V. Mozhayskov, Deputy Chairman of the Central Bank of Russia, who bluntly brought GATA to the attention of the mainstream gold world. Mozhayskov delivered the keynote address at the London Bullion Dealers Conference in Moscow on June 4th 2004. His speech was delivered in Russian. The only words he mentioned in English were Gold Anti-Trust Action Committee (or GATA).

*Sprott Asset Management in Toronto, which released its own publication in August 2004, "Not Free, Not Fair: The Long-Term Manipulation of the Gold Price," confirming GATA's work.

*Eckart Woertz, vice president of CFC Securities in Dubai, for the Gulf Research Center, who just last week published a study, "The Role of Gold in the Unified Gulf Cooperation Council Currency," by his research foundation in Dubai. The report endorsed the Gold Anti-Trust Action Committee's findings that Western central and commercial banks have rigged the gold market and have much less gold than they claim to have and so are vulnerable to rising demand for gold.

Yet, not one word from Bloomberg, who wouldn’t even mention our GATA African Gold Summit in Durban, South Africa, attended by 5 sub-Saharan gold producing nations, the SA Reserve Bank, trade unions, SA gold producers, etc. The South African Broadcasting Company featured us two days running. Bloomberg? Nothing!

***

The Korelin Economics Report Discusses Putting Recent Gold Price Levels into Inflationary Perspective with Neil McMillan

www.kereport.com

Neil McMillan, President of gold producer Claude Resources (AMEX "CGR" and TSE "CRJ"), joined Paul and I on the latest edition of The Korelin Economics Report. Our discussion with Neil gave credence to the argument that gold could very easily be trading in the four figure range sooner rather than later. This becomes apparent when one adjusts the 1980 price of gold for inflation and brings it up to the present day. If you missed the show last weekend, check out our segment with Neil by going to www.kereport.com and clicking on Segment 5.

In another segment, we continued our discussion of the effect of Petrodollars on decisions within the international community with Jim Willie of The Hat Trick Letter. Jim brought out some thought provoking ideas, which could explain political relationships around the world and their effects on commodity pricing. Jim’s discussion gave us serious thought about what Bill Murphy and the folks at GATA have to say about gold price manipulation. We will be taking this up with Bill on next week’s show.

Jay Taylor discussed Former Fed Chairman Paul Volcker’s recent candid statements concerning the U.S. economy in another segment of the show. If you think that everything is coming up rosy in the financial world, listen to what Jay has to say.

We also followed up last week’s report on Northern Dynasty Minerals with Lawrence Roulston. Great timing as Lawrence alerted listeners to the new resource estimate of Northern Dynasty just shortly after the press release came out. Lawrence began following this company before anyone else so we feel that has the best ideas to share with our listeners as to its future potential.

Paul and I wrapped up the show with a discussion of two new debt "opportunities" available to consumers. Listen to this segment and perhaps you, like other listeners, will send us an e-mail to thank us for keeping you out of them.

* * * * * * *

Alexander Korelin is the co-host of The Korelin Economics Report along with Paul Warren. This program is syndicated nationally on Talkstar and can also be listened to on the Internet by going to www.kereport.com and clicking on "recent programs". Guests pay no fees to appear on the program and neither Mr. Korelin nor Mr. Warren own any stock in the companies discussed unless it is fully disclosed.

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