Bill
Murphy On Gold
Le Metropole Cafe, LemetropoleCafe.com
July 15 - Gold $420.50 up
$1.40 - Silver $6.94 unchanged
And, DOWN THE STRETCH THEY
COME – Like Silky Sullivan!
"If you
have zest and enthusiasm you attract zest and enthusiasm. Life does give back
in kind."
Dr. Norman Vincent Peale
GO GATA!!!
The funds unloaded early,
taking gold down to $417.40 and the bottom of its massive wedge formation. The
Gold Cartel and rest of the trade were substantial buyers, which firmed the
market up. Then, a huge physical market purchase sent gold up $1 on the day.
The gold open interest rose
1559 contracts to 270,876. This tells us the funds, in addition to liquidating,
were going short yesterday. Based on the gold action we saw today, the
liquidation part is over, with this morning’s quick spike down looking like a
selling climax.
What fun to see gold
reclaim $420 so quickly. Good stuff, especially with the dollar on the upside.
Gives us a real shot that a bottom has been put in.
The COT revealed the
commercials adding 11,391 contracts to their long positions and decreasing
their shorts by 18,042. No surprises there.
The silver open interest
rose 1607 to 125,544 and remains unusually high, especially when contrasted
with gold. The silver open interest is higher than when the gold open interest
was 355,000. Talk about dichotomies.
Don’t know what to make of
this one. The SEP/SEP silver spread narrowed 3 cents today. That is a
substantial narrowing and usually indicates supply stress and is bullish.
Silver seemed to be a
victim of some unwinding of long silver, short gold spreads.
The euro gold price finally
showed signs of life again, storming back to 349.16, after sinking to the
346.60 area yesterday.
The dollar rose. 35 to
89.62, while the euro lost .50 to 120.71.
The CRB lifted .46 to
309.57. That would have put the old CRB about 314.50, still not far from
multi-decade highs. Dec corn popped 6 more cents to $2.68.
I am still a proud member
of Dr. Norman Vincent Peale’s Marble Collegiate Church in Manhattan, New York.
The dynamic Dr. Peale, who wrote the heralded "Power of Positive
Thinking," was still preaching when I joined his church in the early 80’s.
His successor and friend of mine, Dr. Arthur Caliandro, is very special in his
own right. It was my privilege to be responsible for Marble Collegiate Church’s
first "I Have A Dream" sponsorship program – which was in its infancy
stage. The bottom line is Marble raised enough money for this program to guarantee
that a 6th grade class in Harlem, N.Y. could continually guarantee
its student graduates a college education if they lived up to their part. I was
present for the first recognition ceremony at Marble. I still have a great
affinity for Dr. Caliandro and Marble.
For more information on
this very special program:
http://www.ihad.org/pres_msg.php
***
So why should I bring that
up except for relating to the Dr. Peale's quote? Simple. It is all about what
Gold Rush 21 can be. A primary goal of GR 21 is to increase enthusiasm and zest
to beat the bums. There is an enormous amount of positive thinking
going into our historic conference in The Yukon. It is all about what the gold
market can be. It is all about the effort which is going to be mustered to
defeat The Gold Cartel. That effort might be the difference between $420 gold
versus say $820 gold. It is the difference between your gold shares going
nowhere fast and going up 300 to 1,000%, and more in some cases. It is the
difference between a free market and an Orwellian one.
Let’s hear it for
Vancouver. Excellon Resources and Iron Mask Explorations – both Vancouver based
– just signed up. GATA thanks Ian Gordon, Joe Martin and Candente’s Joey Freeze
for their continuing efforts to make GR 21 a historic success. Vancouver is
coming on like my favorite race horse, Silky Sullivan:
"And now here comes
Silky Sullivan!" -- Various race-callers
When the track announcer
made that announcement during the 1958 Santa Anita Derby (GI), the then-record
crowd of 61,123 that showed up for California's main Kentucky Derby (GI) prep
race, began to scream and stomp for the big, handsome chestnut who had captured
their hearts with his come-from-way-behind running style.
Silky Sullivan was more
than just a racehorse. He was a phenomenon, the star of his own TV show and
ghost-written newspaper column. He was the "people's horse," a
Hollywood matinee idol with a flair for drama and suspense. Just when he seemed
hopelessly beaten, he actually had the opposition right where he wanted them…
The Santa Anita Derby was
vintage Silky. In the first five furlongs, he fell 28 lengths off the pace. But
when jockey Bill Shoemaker rattled his bit - Silky didn't like to get hit with
the whip - here he came, flying past horses until he was 3 ½-lengths ahead at
the finish line…
http://www.kentuckyderby.com/2002/derby_coverage/derby_news/derby_news_04012002.html
-END-
That is the sort of late
energy/sign ups coming out of Vancouver the past week or two. We are down the
home stretch, so keep 'em coming Vancouver.
A month ago at Joe’s gold
show in Vancouver I said the following in my presentation to the attendees:
"If GATA were to count
on the response we have received to date from the Canadian mining industry, we
couldn't beat the Little Sisters of the Poor."
That surely is no longer
the case. By the time Gold Rush 21 is over, our team will be fully capable of
giving The Gold Cartel all they can handle. Although, while we have several
all-pros coming from Toronto, the participation and interest from the Bay
Street crowd has been tepid to put it kindly. To describe the response between
Vancouver and Toronto in football terms:
Vancouver 45 Toronto 14
Howe Street 45 Bay Street 14
Here is a beaut: In another
Silky Sullivan performance, it gives me great pleasure to inform Café members
that there are more attendees coming from Mexico than Toronto, including a television
crew. ROB-TV where are you?
Mexico 24 Toronto 10.
There is still time
Toronto. Some details:
*www.GoldRush21.com
*Our extraordinary event
coordinator, Janet Lee, can be reached at janet@klondiker.com
*The History of Dawson
City, Yukon Territory
http://www.yukonalaska.com/communities/dawsonhist.html
The John Brimelow Report
Happy Indians. A question for TGL
Friday, July 15
Indian
ex-duty premiums: AM $3.33, PM $3.57, with world gold at $419.70 and $418.70.
More than ample for legal gold imports. India is clearly a solid buyer at these
prices.
Attitudes
in the Far East seem to have improved too. TOCOM volume jumped 107% to the
equivalent of 18,070 Comex lots; and although the active contract was down 9
yen, world gold recovered 20c from the NY close. Open interest rose the
equivalent of 519 Comex lots; according to the Mitsubishi data, the "general
public "added 7.3 tonnes (2,347 Comex contracts) to their long. On the
Shanghai Gold Exchange, premiums jumped $1.50 or so to the $2.64 - $2.86 zone.
The locals apparently do not credit the story reported in the FT that China
will revalue next month, otherwise gold would be at a discount.
HSBC
sensibly points that Friday is a poor day to look for physical activity from
the Muslim world, a point one should perhaps have emphasized considering the
damage done on July 1st. At this time of the year, besides geopolitical
and oil driven demand, offtake from the tourist trade, especially in Turkey, is
appreciable.
The
most notable thing about yesterday’s NY selling binge - which saw estimated
volume double from Wednesday to 80,000 lots – was the last 30 minutes. Estimated
volume on the day exploded 60% - 30,000 contracts (93 tonnes) as an effort by
gold to rally from the low was stopped at +$1 and beaten back to +50c. These
dimensions are extreme (packed into, after all, only 1/11th of the
trading day), and indicate that the sellers – whether commercially motivated
shorts or policy-driven – were very determined not to permit a significantly
stronger close.
In
fact, actual volume was somewhat higher, 87,318 (c.75, 000 net of switches) and
open interest rose 1,559 contracts (4.84 tonnes) to 270,876, despite
several commentators identifying stop-loss selling at $422. ScotiaMocatta:
"Dealers
were noted sellers above 424.00 capping the price…after a few hours of sideways
trading fund selling came into the market. Resting stop loss orders were
elected below 422.00 causing a sharp sell off…"
It
is clear, as suggested yesterday, that predator short sellers were attracted
in.
The
chart situation is ugly. It has upset Dennis Gartman who has begun to cut his
positions:
"Gold/…
is EUR 346.80 this morning and that is far below its high of EUR 367 only two
weeks ago. What was a profitable trade is now becoming "un-" and it
is foolish not to act, so we shall, reducing our exposure by one third
immediately... and prepared to do more should spot gold in US dollar terms
close today below $319.50." adding (with a suitable chart)
"SPOT
GOLD IN US DOLLAR TERMS: A Trend In Jeopardy?This trend extends back into the
spring of '01, and it is now in very serious jeopardy of being broken. We can
make this discussion rather simple and to the point: this trend line damned
well better hold! Nothing more must needs be said."
(Actually,
something more does need to be said: what is your hypothesis as to what went
wrong? After all, barely a week ago the entire TGL portfolio was various types
of long gold plays. Please would any Gartman subscriber out there ask?)
In
point of fact, of course, despite noisy bearishness in several quarters, gold
did not break today. Especially considering the appreciable commercially-motivated
short now present, it seems likely we will be tackling the $440 level again
sometime in August.
JB
CARTEL CAPITULATION WATCH
The
US stock market levitation keeps on keepin’ on. The DOW gained 12 to 10,641 and
the DOG rose 4 to 2157.
08:30
June PPI reported 0.0% vs. consensus 0.4%; ex-Food & Energy reported
(0.1%) vs. consensus 0.1%)
Prior PPI unrevised from (0.6%); prior ex-Food
& Energy unrevised from 0.1%.
* * * * *
08:30
May Business Inventories repored 0.1% vs. consensus 0.2%
Prior revised to 0.2% from 0.3%.
* * * * *
08:30 July Empire
Manufacturing reported 23.9 vs. consensus 10
Prior
reading revised to 10.5 from 11.7.
* * * * *
09:15
June Industrial Production reported 0.9% vs. consensus 0.4%; Capacity
Utilization 80% vs. consensus 79.6%
Prior Ind. Production revised to 0.3% from 0.4%;
prior Capacity Utilization unrevised from 79.4%.
* * * * *
Houston's
Dan Norcini:
Hi Bill;
Last week I sent a short commentary about the silver market after looking over
the COT and doing some quick analysis. At that time, I mentioned that silver
appeared to be getting very close to bottoming. My rationale was that the level
of fund shorts was at a level where typically, in this market, we have reached
a bottom.
This week’s data only
confirms me the more in my belief. Actually, the fund net long position is now
once again incredibly close to levels which have marked near term bottoms.
There is only about a 2,000 contract position difference from the recent low in
May this year. Open interest has increased every day this week since the
Tuesday the report came out and is now 2,500 contracts greater than it was on
the day of the COT report. The fact that this occurred with silver heading
downward leaves me reasonably sure that the fund net long position is now at
the same level it was in May this year when we bottomed near 685.
Same goes for the fund
short positions. That category of traders actually slightly increased their
selling this past week and have probably exceeded or are very close to at least
20,000 contracts short. The funds have an amazing ability to sell the bottom of
the silver market as they do in the gold market. Fading them near support
levels and resistance levels has been very, very profitable.
Additionally, the big, bad
commercial category ( I say this with tongue in cheek since the commercials are
not omniscient nor are they always right as the myth continues to be
perpetuated by those who are ignorant of such matters) is now only 800
contracts or so shy of the low point that was reached in May of this year as
well.
What we can ascertain from
this is as follows:
Silver is finding
commercial short covering and fresh commercial buying taking place anytime it
dips down toward the 710 region and below. It especially finds strong commercial
buying interest near the 685 region and above. At the same time it does, the
zombie-like trading funds who cannot tie their own shoe laces much less think
without a black box telling them how to do so, decide to unload all their longs
and institute fresh shorts. Needless to say, between the gold and silver
markets, it is a wonder that we have not seen more of these hopelessly inept
trading fund managers who are wasting their clients’ money go belly-up by now.
The skinny in all this is
that the downside risk in silver appears to be quite small at these levels and
I suspect there are more than a few traders who are eagerly waiting to buy any
further dips in the silver market. I would especially expect the region just
above 685 to offer major support and a strong buying opportunity.
About the only thing that
might derail such a scenario is if some sort of fundamental realignment were to
take place in which the trading funds could actually be induced to move to a
completely net short position. How or why this might happen is difficult for me
to conceive given the fundamentals underlying the silver market. Even then, it
is hard to see silver heading lower than 655-660 as that has proved to be the
bottom of a long term trading range in which silver is ever so slowly
constricting or coiling for a major move.
Dan Norcini
***
THE GOLD PRICE IS GOING MUCH, MUCH HIGHER!!!
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