Murphy On Gold
Bill Murphy
Gold
Rush 21, Putin, de Gaulle, Bridgewater Associates, China, And Gold
Confidence is contagious. So is lack of confidence ..Vince
Lombardi
GO GATA!!!
No
question the past couple of weeks have been the most exciting time for gold
since the surprise Washington Agreement was announced on September 26, 1999.
Day after day we in the US come in to breakaway gaps as the surging physical
market in London keeps taking the market higher and higher. This is exactly the
sort of gapping action MIDAS has been waiting to see for some time. The London
AM Fix came in at $493, up $4.30 over the prior Comex close. At one point last
evening gold was up $6.50.
It doesn’t
take Einstein, James Turk, or Bill Murphy to notice something has changed
drastically as far as the gold market trading is concerned. You only have to
open your eyes.
So, what
is going on out there? Gold is not rallying for any of the reasons so often
ascribed by the mainstream gold world and Planet Wall Street. Anybody notice
the GOLD EXPERTS like Goldman Sachs and JP Morgan Chase coming out with bullish
market commentary of late? Compare what we heard during the oil bull market
from the oil analysts about the reasons crude was making its run to the $70 per
barrel level to the explanations why gold is on the move. There is no
comparison because The Gold Cartel and other bullion dealers are silent. The
oil move was about supply and demand. So is the gold move. Yet this major
factor is barely discussed by Planet Wall Street. Instead, you have the
mainstream gold world spokesmen like Jessica Cross of Virtual Metals calling
for gold to average $430 in 2006. This is who Planet Wall Street trots out as
an expert, extolling the fact she is excited because gold might even approach
$500 this year before collapsing. It is mind boggling how infantile the gold
world is and how barren(disingenuous is more like it) their analysis is
regarding what this market is really all about.
Since gold
is making its move towards $500, then to $1,000, with little outside market
influence, something else has to be at play. Not that complicated really.
Physical market demand is gradually overwhelming the ability of The Gold Cartel
to keep the price from rising. The nefarious price-rigging scheme of a bunch of
white-collar thugs is going down. I suggest, with back up provided below, that
GATA’s efforts have been instrumental in this process.
What MIDAS
is laying out here is not so much about chest-thumping (though I don’t mind
that necessarily since few others outside of Peter Grandich will even mention
the word GATA in public). It is to give Café readers more confidence GATA knows
what we are talking about and that a certain portion of the biggest money in
the world now knows we do too. It is about laying out a further foundation for
an appreciation that the price of gold is headed for $2,000 per ounce and
beyond … and what that means investment-wise in the years ahead.
Coincidence
or not, the price of gold has soared since GATA held its historic gold
conference in the Yukon Territory’s Dawson City on August 8th and 9th
of this year. In a little more than three months the price of gold has risen
from the low $430’s to a high today of $494. Remarkably, it has made this move
with the dollar taking off. Since early August the dollar has risen to 92 from
87. The euro dropped from 125 to 117. Few outside the GATA camp thought gold
could make a move like this with such dollar strength. The GATA camp not only
thought it could happen, we went on record saying it most likely would happen.
You would
think this gold move, accompanied by dollar strength, might have a few in the
mainstream gold world saying maybe GATA is on to something. Then again, if you
know these folks, they would rather be wrong the next decade than admit GATA
was right all along. Oh well, we’re smiling.
Now for
the backup on this … something has happened since Gold Rush 21 to change the
trading character of the gold market. There are number of factors which are
attributed for the gold price rise. A number of them are valid, however, they
are only secondary factors. If they were primary factors, it is only reasonable
to see their visible effects in other financial markets. This is just not the
case. In addition to the stock market moving up along with the dollar steadily
rising, intermediate/long-term US interest rates have held steady. Gold is
making its move NOW due to inherent factors specifically related to gold itself
….
Demand for
gold is surging around the world and slowly overwhelming available supply. The
price of gold is rising to ration that supply. MIDAS has LONG stated that to
know what GATA knows about what The Gold Cartel has done is the key ingredient
to realizing what has to happen to the price of gold in the years ahead. The irony
is so simple to understand once you are exposed to the evidence GATA has
collected over the years. I pose to you what GATA laid out at Gold Rush 21 is
quietly spreading all over the world and that major investing players are
acting on that information to accumulate gold … that GATA is having a
significant impact on increasing gold demand all over the world.
Judge that
for yourself based on the following sequence of events:
*** In a
stunning development, Oleg V. Mozhaiskov, Deputy Chairman of the Central Bank
of Russia, bluntly brought GATA to the attention of the mainstream gold world.
Mozhaiskov 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).
Naturally
when we heard of this, GATA asked the LBMA and attendees for the Russian
speech. We had a translator ready to convert it into English. NO ONE in the
West would send it to us. No less than 5 other well connected people associated
with the gold industry tried to get a copy for us. All failed. GATA, sensing
the importance of the presentation, turned to the Russians themselves. This is
the Fax they sent to my colleague Chris Powell:
It read:
Dear Sir,
Re: Your
fax message of June 20, 2004
I thank
you for your interest to my speech at the Moscow LBMA Forum in early June.
Since it was made in Russian it can hardly be of use to you unless translated
in English. My friends in Moscow Narodny Bank, London, promised to do the
translation within a reasonable time. As soon as it is completed you will
received the text by E-mail. After you get it you will let me know whether you
wish to carry on the dialogue.
With best
regards
Oleg V. Mozhaiskov
Getting
that sort of cooperation is like having Greenspan's number two at the Fed and
the Chairman of JP Morgan Chase going to bat for you.
Here is a
quote from this remarkable speech in which this Russian banking bureaucrat
lashes out against the US for its economic policies:
"This
dualism in gold price formation distinguishes it from other commodities and
makes the movements in the price sometimes so enigmatic that market analysts
need to invent fantastic intrigues to explain price dynamics. Many have heard
of the group of economists who came together in the society known as the Gold
Anti-Trust Action Committee and started a number of lawsuits against the U.S.
government, accusing it of organising an anti-gold conspiracy. They believe
that with the assistance of a number of major financial institutions (they
mention in particular the Bank for International Settlements, J.P. Morgan
Chase, Citigroup, Deutsche Bank, and others), some senior officials have been
manipulating the market since 1994. As a result, the price dropped below US$300
an ounce at a time when it should, if it had kept pace with inflation, reached
US$740-760."
*** One of
Russian President Vladimir Putin’s economic advisors, Andrey Bykov, contacts
GATA and attends Gold Rush 21 in Dawson City, passing up the well established
mainstream gold conference in Perth, Australia. Andrey told us at the end of
the GATA conference that it was the finest conference he ever attended.
(Cannot
resist repeating this cute story. On the way to Gold Rush 21 Andrey sat next to
a Nun. He introduced himself and told her where he was from. The Nun asked if
he was a spy. Andrey responded, "Yes, but I am on holiday.")
To learn
more about Andrey Bykov and his credentials:
http://cns.miis.edu/pubs/week/030421.htmhttp://www.dpi-zug.org/dpi/ndf.html
*** In what may be the most important statement on gold by a head of state
since French President de Gaulle once said gold "has no nationality and is
eternally and universally accepted as the unalterable fiduciary value par
excellence":
Nov 22
2005 3:47PM
CB should increase gold weighting in reserves - Putin
MAGADAN.
Nov 22 (Interfax) - The Central Bank should review its gold and forex reserves
policy in favor of increasing the weighting of gold, Russian President Vladimir
Putin said in Magadan.
"I
think that the CB should pay more attention to precious metals on Russian
territory when forming its gold and foreign-exchange reserves," Putin said
at a gold industry conference in the city.
"The
reserves are after all gold and forex reserves. Let's not be too restrained
here," Putin said
-END-
President Vladimir Putin holds a
gold bar at a mineral resources exhibition in
Madagan in the Russian Far East, Nov. 22, 2005.
Itar-Tass photo.
Wonder
what Goldman Sachs and JP Morgan have to say regarding Putin’s definitive
comment … one which backs up the orchestrated comments by the Russian who
attended the LBMA gold conference in JoBerg last week? If it is the usual, it
will be nothing. Perhaps a gulp from these Gold Cartel shorts instead!
The
comment by Putin is both stunning and very meaningful. The reasons for the
Russians to bolster the price of gold are voluminous and were brought to your
attention months ago in this column. The ever-vigilant Adrian has hit one of
those nails on the head:
Bill,
The US conspired with OPEC in the 1980’s to bring
down the price of oil to destroy the main foreign currency earning source of
the USSR, of course other commodities fell in price too which also hurt the
USSR. Putin was in the KGB at the time. As a result the USSR disintegrated and
Russia lost its place as a Superpower and became a third world country. I don’t
think you just get up, dust yourself off and say "OK, that was a fair
beating, we deserved that. Let’s forget about it and move on". The US
waged economic warfare on the USSR’s most economically sensitive commodity,
oil. Even though it makes sense that Russia should increase its gold reserves
we know from the attendance of Bykov to GR21 that they now know that gold is
the economically sensitive commodity of the US. Clearly Putin knows how to
return to Superpower status and wealth.
Cheers
Adrian
Is the
chronology of the evolving Russia (GATA) gold story a one-off fluke? I don’t
think so. We need only refer to the very visible and highly regarded
Bridgewater Associates to confirm that the GATA message is spreading all over
the world. A Bloomberg replay of commentary by Martin Hennecke, a senior
manager at independent investment adviser Bridgewater Ltd. in Hong Kong:
Bridgewater's
Hennecke Comments on Gold, Silver Markets Outlook
2005-11-21 22:27 (New York)
By Meggan Richard
Nov. 22 (Bloomberg) -- Martin Hennecke, a senior manager at
independent investment adviser Bridgewater Ltd. in Hong Kong, comments on the
outlook for the gold and silver markets….
On central banks increasing gold stocks:
``What is today officially on the books of most of the
central banks, it's now about $450 billion worth of gold. If you take all the
world's central banks together plus the IMF, all the financial institutions,
firstly that's not much gold to hold, and secondly its estimated that actually
half of this metal has been sold out in a process called leasing.''…
-END-
Now where
do you think Hennecke received his input on the estimation that half the
central bank gold is gone? No one in the world speaks of this sort of thing
except the GATA camp. For that matter the mainstream gold world does not assign
ANY gold out on lease except to the hedgers. NONE. NADA!!!
For
Hennecke to even bring the staggering gold short position up is a BIG DEAL. The
reason is that it will have more “big player” investors investigating what the
heck he is talking about. It is only a matter of time before these players
stumble across GATA (ironically, banned to be even mentioned by 99% of the US
financial market media). When these investors do their homework, like we have,
it has to be a "GOOD GRIEF!!!" Once an investor knows what The Gold
Cartel has done, and the precarious position they are in, he or she has to
start drooling over owning gold.
Hennecke
operates out of Hong Kong. He has been aware of what GATA has to say for some
time and stated as such (without mentioning our name) in the past. In that
regard, we have another significant development as far as central bank gold is
concerned (sent to us by eagle eye John Brimelow):
DJ MARKET
TALK: China Should Raise Gold Reserves-Economist
0232 GMT
(Dow Jones) China should raise its gold reserves to around 2500 ton in
short-medium term, to over 3000 ton long-term to diversify FX risks, Teng Tai,
chief economist at China Galaxy Securities, says in article published on
state-run China Securities Journal…---END-
The China
Securities Journal is run by the Chinese Government. Veteran Café members have
read about the activities of the STAKLER(s) for a long time now in this column.
We are positive the main STALKER is buying for the Chinese Government and have
repeatedly said so. This is why I keep pounding the table that The Gold Cartel
is in BIG TROUBLE! They have been found out. Governments and mega hedge funds
are going after them. They now know how vulnerable The Gold Cartel is.
Why not go
after them! We only have to review how profitable it can be to go after
vulnerable shorts. It surely has been profitable for those taking on the copper
shorts. The gold shorts are in far worse deeper doo doo than the copper shorts.
Even if The Gold Cartel is allowed to escape a substantial portion of their
12,000 to 16,000 tonne short position via cash settlement, you have a nightmare
situation for The Gold Cartel if only 10% of the shorts are forced to cover.
How do you cover 1200 to 1600 tonnes of gold in a market which has a monthly
supply/demand deficit of more than 140 tonnes per month? What about the
billions of dollar worth of derivatives tied to many of these positions … the
ones on the books of the BIS?
********
Silver is
breaking out of its base also and should accelerate from today’s close in the
weeks ahead:
DEC silver
http://futures.tradingcharts.com/chart/SV/C5On another
GATA related gold leasing note and a VERY possible reason gold is trading the
way it is, let us not forget what Deep Throat brought our way over a month
ago:October 15 - Gold $469.20 - Silver $7.80 *Deep Throat showed up.
What was sent to GATA today was CONFIDENTIAL. I can only get into the basic
subject matter, not delve into too many specifics, and not reveal our source.
The essence of what was sent to us was the ILLEGAL gold/silver leasing scams
are coming to an end. That the authorities are apprised that gold and silver
have been leased out in an ILLEGAL manner and that those bullion banks doing
the leasing do not have the gold and silver to back it up.***
***
Now let’s
take a peek at the HUI chart of 2003. The HUI had struggled for a long time to
breach its long term resistance at 155. Finally in July 2003 the HUI managed to
slash its 155 resistance and never looked back. And the smaller explorers?
Well, they didn’t participate immediately in the HUI rise, many of them took
off within a month after the HUI break out.
The
situation today has a striking similarity with 2003, see charts below:
You see
where we are today?
My point
is that if 2003 could be any guide for what lies ahead of us then the window of
buying opportunities for the smaller explorers could be closing down fast.
Again when
the HUI broke its long-term resistance of 155 in 2003 it still took a few weeks
before the smaller juniors took off, but when they took off they took off
really fast and yes many of them appreciated by a multiple of 100% in just a
couple of months (see example junior chart below, stock took off 4 weeks after
the HUI broke its 150 long-term resistance.)
Summary:
· 2003:
smaller juniors hardly participated in rising HUI from 92 to 155. The smaller
juniors took off AFTER the HUI broke its long-term resistance of 155.
·
2003:Window of buying opportunity for smaller juniors after the HUI broke its
long-term resistance of 150 was just about a few weeks.
· 2005:
smaller juniors hardly participated in rising HUI from 165 to 250. If the HUI
can manage to slash its long-term resistance at 250 and making new highs (>258)
then the window of buy opportunities for the smaller explorers could be closing
down fast.
Example of
a small junior taking off AFTER the HUI broke its long-term resistance
of 150 in 2003:
So to the worried shareholders of the smaller
exploration firms I would say, just hold on to your shares and wait for the HUI
to make new highs.
All the
Best,
Eric
Hommelberg
ehommelberg@golddrivers.com
The Gold Discovery LetterThe last
chart Eric has up there is of Samex Mining (43 cents as of tonight's close),
which tanked the past two years like a bunch of the other smaller golds. Both
Eric and I have substantial positions in Samex.
The senior gold shares continue their relentless march
higher today. If Chuck, Eric and I are correct, unlike the general US stock
market, the gold/silver shares have a LONG way to go.
The XAU
rose 1.03 to 119.06 and the HUI gained 1.49 to 254.81. A mid-day raid on the
gold shares with gold up $5 failed completely.
I am off
to San Diego tomorrow morning to hook up with my Mom and brothers and sisters
for Thanksgiving. Might have a MIDAS out tomorrow, might not. However, if not,
will definitely get one out on Friday.
This is as
important a MIDAS as I have ever written since The Café opened over 7 years
ago. If there was one MIDAS for investors to read around the world (even the
recalcitrant financial market press), this is the one. GATA would appreciate it
if you could get this one around over the holidays. Time to pour it on The Gold
Cartel and make them sweat as much as we can.
Gold has
made its surging move without help from outside financial markets and other
factors normally cited as reasons for gold to move higher. THAT IS ALL TO COME
and will assert itself in the months ahead. After the Fed Minutes were released
this afternoon, US bond and note yields fell and the dollar weakened. The
probability for gold and silver to accelerate from this price level in the
weeks ahead just INCREASED.
The price
of gold is going to go far higher (more than $2,000 per ounce) than most anyone
on Planet Wall Street and the mainstream gold world can conceive of.
Gold,
silver and the shares remain THE historic investment opportunity of a lifetime.
GATA BE IN
IT TO WIN IT!
MIDAS
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