Bill Murphy writes ...............April 28 - Gold $385.50 down $12.90 - Silver $5.87 down 37 cents
Gold Cartel Mounts All Out Assault On Gold
America will never be destroyed from the outside. If we falter, and lose our freedoms, it will be because we destroyed ourselves..Abraham Lincoln, 16th U.S. President (1809-1865
GO GATA!!!
A client of a good friend called up out of the blue this morning and said today’s attack on gold and silver proved GATA’s case, if any day ever could. As Bill Buckler calls it, the "Reverse Gold Barometer" was put to full use. The more the reasons gold should soar, the more The Gold Cartel buries it. The US financial market scene and geopolitical situation are deteriorating by the week and could soon spin out of control. Just a few of the problems:
*Iraq is a disaster and looking worse by the day. The United States must eventually send in many tens of thousands of more troops to even come close to winning the day. What is this going to cost? Or, we can cut our losses and run, which would also create a nightmare. No need to go into the Iraq story more. One need only turn on the tube.
*The US stock market is slowly rolling over:
https://futures.tradingcharts.com/chart/SP/64
*The US bond market is reeling. June closed at 107 11/32, down 25/32.
https://futures.tradingcharts.com/chart/TR/64
*Crude oil appears to want to go much higher. After taking out $38 again, it sold off to $37.46.
June crude oil
https://futures.tradingcharts.com/chart/CO/64
Put all of that together and you have some pretty sound reasons for gold to shoot up, not down. However, The Gold Cartel and Working Group on Financial Markets know if gold does take off, it could exacerbate the already disturbed financial markets, so they trash it – the same modus operandi we have witnessed for many years.
The cabal orchestrated their move to coincide with today’s OTC option expiry in gold, which has far greater participation than that of the Comex. In addition, they flirted some nonsense about China:
NEW YORK, April 28 (Reuters) - COMEX gold and silver futures skidded on Wednesday as metals markets were rocked by comments by Chinese Premier Wen Jiabao suggesting China will take strong steps to cool its economy, which has been sucking in raw materials to feed an economic boom. –END-
Price Action Makes Market Commentary! What jibberish about the Chinese news rocking gold and silver! It makes sense that copper would take a hit, but not gold and silver. The Chinese story was out for many hours and gold and silver did nothing. The damage was done when the US opened up for trading and The Gold Cartel went on the attack.
The reasons you are hearing from the press why gold was clobbered are garbage, nothing more than Red Herrings. The price managers wanted to take out all technical support at $390, flush out more specs and turn others bearish. The cabal failed last week, took a rest, and stormed back today.
Where do we go from here? Hard to say because the technical damage is so severe. The good news is it might not matter much because we are talking about a rigged market, not a normal free trading one.
The big funds are going from mega long and appear to be on their way to going mega short. The Gold Cartel does appear to be maneuvering the market to get the funds short so cabal forces can cover their massive short positions. Perhaps this is what the market needed before it takes off for $500 and above, as the cabal just can’t control it much longer due to the growing demand for physical. It looks more and more like this is their last hurrah and they are going all out to get the job done.
The gold open interest fell 3519 contracts to 246,504, while the silver open interest dropped 1492 to 106,516.
Gold down $13; another example how gold is allowed to fall any amount, but all upside attempts are capped around the $6 rule.
Just to make matters worse, the CBOT raised margins on min-gold last night by 77%, effective today. Silver went up about the same. No doubt it was timed with their attack on the precious metals.
Silver was bombed along with gold and looks just as ugly. The shorts went after the long left breakaway gap right below $5.80, but didn’t get it. Perhaps tomorrow.
Meanwhile, lumber futures went limit up for the second day in a row, ending the day at $424 and unleaded gasoline made a new monthly contract high close at $1.2268.
Gold will need to get back above $395 and silver above $6.05 to get on track again.
The John Brimelow Report
Does gold live in Falluja?
Wednesday, April 28, 2004
Indian ex-duty premiums: AM $9.82, PM $10.76, with world gold at $397.45 and $396.40. Well above legal import point. Reuters carries an account of the acceleration in gold offtake recently:
" "There is good demand for imported gold," Rajiv Popley, a leading gold trader, told Reuters from Bombay. People are finding the current price level comfortable to buy new gold."… In Bombay, the country's financial hub, around 700 to 800 kg of gold is being sold every day compared with around 400 kg earlier this year…. Around 1,000 kg gold is being traded daily in the western city of Ahmedabad, the country's leading bullion trading centre. This compared with around 500 kg in January this year."
Japan, which is closed tomorrow and for much of next week, continued little interested. Volume did jump 71% to the equivalent of 26,011 Comex contracts, probably on position squaring, and the active contract was up 4 yen, but world gold went out $1.30 below the NY. Open interest slipped the equivalent of 829 Comex lots. (Gold traded 34,476 contracts in NY yesterday; open interest fell another 3,519 lots.)
Gold drifted higher yesterday in NY:
"Gold has stabilized well following the recent wave of Fund liquidation with strong physical demand a key factor…"
remarked Standard London. Of course, this sounds ironic in view of the massive raid on Gold this morning in NY. Since gold was never particularly involved in the China play – despite much wishful thinking – there is no real reason for it to be much hurt by the fashion change, unlike, perhaps, platinum. India, far more important, continues to prosper, and peace is not breaking out in the Middle East. (The same applies, perhaps not as strongly, to Crude Oil, which has made a 3 1/2 year high today) .Clearly, this is detail is lost on many market operators right now, including many owners of gold shares. Dow Jones has published a reasonable account:
"…the chances of a rise in U.S. interest rates, spurred some selling….Black box funds then also piled in as key support around $389.50- $390 gave way…The slippage then emitted sell signals to chart and momentum-following funds which drove Jun gold down to $384…"
Normally, with the physical market positioned as it is, one could be confident that this will end as a bear trap. Given the condition of the world, though, and the unusual amount of Official Sector harrumphing earlier this month, one has to consider the logical possibility of a major, Central Bank-facilitated, slide, such as started in late’96 and again, more blatantly, in early ’99. Something of this type is apparently what the shares fear.
In this connection, it is worth contemplating the WSJ account of Fed Governor Bies’ Dow Jones interview about FNM and FRE (see Appendix):
"Bies suggested that the government-sponsored enterprises also could be headed for trouble if they try to maintain their rapid growth."
" "There's no market discipline here," Bies said, "and we're kidding ourselves if we believe there's market discipline…." She said the GSEs aren't properly hedging their interest-rate risk exposure. This exposure, combined with the GSEs' push for more profits, could spell trouble if not properly handled, Bies said."
""What we're concerned about is their growing reliance for earnings growth on interest-rate risk,""
Considering who is speaking, and the subject, this is stunning, and it is odd to think of gold slumping with this development in the wings. Or, then again, maybe not.
Any sustained effort to hold gold down here, however, will require the shipment of huge amounts of physical.
JB
CARTEL CAPITULATION WATCH
The DOW was hit hard, falling 135 to 10,342. The DOG was hit even harder, dropping 43 to 1989.
The dollar closed up 80 to 91.43, a new closing high, while the euro fell .99 to 118.20.
GATA’s Mike Bolser:
Hi Bill:
The Fed added $11.5 Billion in repos today April 28th 2004, an action that upped the repo pool to $47.38 Billion. At this hour (10:30 AM) the precious metals is getting bombed again while the DOW is also down a bit to 10,400. There seems to be nothing in the news to explain the drop except that it came exactly at the time of the PM fix.
The repo pool is telling us that the DOW will go higher while the Fed manipulated gold price is telling us not to go to precious metals. The contrary investors have as clear a signal as they are ever going to get. We also have a vigorous counter attack telling us that the Fed is very concerned at the gold market's resilience and they are spending even more bullion ammunition to "send a message".
The Fed seems ready to juice the DOW higher or to run the currency markets up. Time will tell which.
Mike
Hi Bill:
The Fed bombed gold today but because the PM fix was registered at $392.25 against a rising MCDI (major currency dollar index) of 88.92, the DIVG held its ground at 348.79 in a tight cluster surrounding the cardinal point of 350 and MOST importantly, the DIVG's 200-day ma held in a perfectly man-made, linear up-trend (yellow trace). Although I haven't measured the R^2 regression value of the January to May 2004 DIVG 200-day ma I can see by direct inspection that it falls well over .975--a nearly perfect clustering of points to match a predetermined (By the Fed) DIVG pathway. This metric IS the Fed's status map. They control the flow of gold to quench the rising world demand and the Fed has decided they can't hold it steady.
All the activity after the PM fix is basically bluster since the real physical market is on the LBMA and elsewhere as John Brimelow so diligently reports. The low COMEX prices don't cause very much physical drain, mostly they strike fear into the hearts of share buyers who may wish to consider physical metal to supplement their paper gold.
The takeaway from today's DIVG metric reading is that the existing policy of gold market retreat by the Fed remains intact. Any change in that policy, for example, the re-establishment of a new DIVG defense level, will be clearly announced by a dip in the DIVG's 200-day ma. We don't have that at the moment. We don't even have a true dip in the 30-day ma. BTW IF the Fed attempts to set a new defense ceiling for the DIVG, it will be the mother of all buying opportunities.
We may get such a set-up tomorrow but I'm biased against that outcome because we have now been in a four-month long Fed retreat, longer than any other Fed generated phase in the gold market (except for the long retreat up from $250 gold). So if we hold through the week around DIVG = 350 we will then shoot straight back up over 400 to 430 and above.
Mike
The repo and DIVG charts have been updated at:
https://www.pbase.com/gmbolser/interventional_analysis
Houston’s Dan Norcini:
Hi Bill
As could well be expected on a day like today, my email box runneth over. Most of the emails I am fielding are wondering what happened to cause gold to crater like it did.
My answer is succinct. Fear and panic.
The Chinese announcement served as a catalyst to knock copper down sharply at the LME (London) as some feared reduced copper demand from that quarter going forward. The selling ran into fund sell stops underneath the market which then escalated its drop. The selling quickly turned into a downside rout as panic took hold and spilled over onto the rest of the industrial metals complex taking down aluminum, nickel, zinc, etc. Even platinum got caught in the downdraft with palladium then getting sucked in. Of course, silver could not escape as it was then viewed completely as an industrial metal and thrown out alongside everything else.
As Copper opened on the Comex for the day session, it immediately cratered setting up an atmosphere of panic across the entire metals spectrum. Actually, gold was holding up fairly well considering the brutal rout taking place all around it. It ran down twice into the 392 region and both times came right back up again. I was actually impressed with its ability to do so on a day in which the emotions were running so high all around the floor. Then everything suddenly turned. Seemingly out of nowhere a bit after 9:08AM Central Time, some big player came in and offered it down under 392. I watched it drop quickly to 390, bounce back, it was hit again, bounced back, and then apparently selling came from all around the floor and smashed it under 390 and into the stops lurking there. It actually hit some stops but buying appeared right at 388 and took it right back up again all the way back to 390 within a minute. Of course it was then trampled right back down and the rest is history.
I am of the opinion that this was a very well orchestrated bear raid whose perpetrators spotted an opportunity to take advantage of the panic atmosphere on the floor of the Comex around the rest of the metals to absolutely annihilate gold and crush the morale of the longs. There is no other explanation as I have been around long enough to recognize when stops are being targeted and exactly the manner in which that is done. This is selling that is intended to knock the market down; not to obtain the best possible price. Rest assured the player/players who dumped the large offer that took gold under 392 was quickly joined by floor locals piling on who smelled blood in the water. The originator of that sizeable offering knew they would have the pit prostitutes as their allies. They got their meal today. I suspect that many who are new to gold are now ready to swear off of it forever and curse the day they first heard of it. That is most unfortunate since nothing has changed in the least in regards to gold's bullish fundamentals.
We are now in the arena of the pure technical geeks and until this money game is over and done with, the fundamentals will be ignored. That can happen from time to time but rest assured, those same fundamentals will reassert themselves in time and the Johnnie-come-lately bears will rue the day they shorted this market.
I was of the opinion that 390 would be our bottom as the price action of the last few days was encouraging. The volume had not been all that significant, with the exception of yesterday's pick up which looked promising as it indicated some of the new shorts were running. We had come all the way back up and touched 400 overnight a full $10.00 off the low. That is pretty darn impressive and looked to me to be a sign of powerful buying interests stepping up to snatch up the yellow metal in the low 390's which no doubt they considered bargain basement prices. Watching the stops run underneath 390 was like watching something out of the Twilight Zone. There was a surreal quality to it all. It almost seemed to be something taking place in slow motion. Nonetheless, it has happened and now we will have to see how the support region near 385 and then 380 hold up.
I personally am of the opinion that cooler heads will prevail later this evening and tomorrow and judge this sell off in gold unwarranted given the fact that the dollar is still well within the trading range it has established over the last week or so. One might expect to see gold trashed like this if the dollar managed to run to the .93 level or better. But for the dollar to simply move back up a bit within its recent range and see gold acting as if it the dollar had suddenly sprouted wings and flew off into the stratosphere to the moon and beyond seems downright to be lunacy from my point of view.
Still, panic and fear are the two of the main ingredients that go into making idiots of traders and investors, the other being greed, who lose their wits and their capability of clear thinking when under their influence. Years of trading have convinced me that we need to institute some sort of sobriety check before we let traders enter the pit and have both a Greed-o-Meter and a Fear-o-Meter to test them before they get loose and hurt themselves with their own stupidity.
Let's see how far these daring shorts are going to want to press their luck.
Dan
Dan, Goldman Sachs was the massive seller you are referring to. Big surprise, eh?
Mirrors my sentiments:
Bill,
I could kick myself. I should have known yesterday when PM prices were up but stocks were down markedly that the cartel sold stocks left and right yesterday knowing that they were going to do what they did today. Yesterday's stock action didn't make any sense and now we know why!
MSN's money center site says that commodities crashed today because of an announcement out of China. How silly! Unless that announcement happened to come during the first two minutes that Comex was open it is just another cover story for the bad guys.
These bums aren't just eating the funds for lunch on futures and options. They are scamming the public big time on stocks. They have gotten so cocky about how well their bear raids work to induce mass liquidation of the markets which then allows them to cover their shorts at huge profits, that they have now decided to fleece the stockholders of precious metals companies as well. Why not? All they have to do is short stocks before they crash gold and silver prices and then buy them back after everyone has panicked out. They profit in both directions and our government and the regulators they put in place look the other way the whole time! It is simply way beyond outrageous! They have to be making hundreds of millions of dollars at everyone else's expense. Someone has to go after these guys!
Regards,
Kevin S.
I have been waiting for months for the HUI to complete its downside pattern and today is it! Specifically, once the early DEC peak was confirmed in early JAN, I have been operating on the thesis that the HUI would set out to reconnect with the long term uptrend that currently sits around 180. Today we hit that target. The most interesting aspect of this however is that the structure of the unfolding triangle formation is very similar to what the HUI did from JUN 2002 to DEC 2002. I believe that we are currently living through a very similar experience (and pattern) of late JUL 2002 which was equally painful to the HUI.
If the pattern holds, then I would expect a snap back to the 210 level in 12 days or less and a gradual climb to the 220 area. The point of all of this is make it clear that today/tomorrow is very likely the best entry point this year! By the way, my upside target for the HUI on this move is 450 to 500 to be completed in 12 to 18 months. Have a great day and BUY THE HUI NOW!
G. Tetrault
Richard Russell this evening:
"….. Lots of distress selling in the gold and silver shares with stochastics now at their lowest level since March of 2003. That Month was the start of the huge rise to the high of December, 2003."
The XAU was bombed 6.26 to 81.20. The HUI was obliterated, sinking 16.63 to 176.69, close to 10%. This is what happens when senior gold producer executives say nothing, do nothing about The Gold Cartel. If you’re angry today, please direct some of that anger at them. It is an outrage they never make a peep about the most important issue in their business. They remain silent and let their shareholders be abused over and over by a bunch of crooks.
BRUTAL! That is the only way I can think of to describe today. Total demoralization everywhere. The best thing to do at this point is think BIG PICTURE and think about where you want to be at the end of the year. The gold and silver fundamentals continue to improve, yet we get clobbered because of the cabal. For the moment, we suffer, but I cannot see them keeping gold and silver down for very long.
The shares have been under siege all year. No doubt, the bad guys knew this was coming and surely have made a killing on the short side. Don’t you love the way they take your money? Buckle up time. We’ll be smiling again. Just have to wait it out.
GATA BE IN IT TO WIN IT!
MIDAS