Bill Murhpy writes ..............January 31 – Gold $421.70 down $4.10 – Silver $6.73 down 4 cents
BEYOND FARCE
The obviousness of the blatant rigging of the price of gold gets worse and worse by the week. Underlying facts and fundamentals mean nothing to The Gold Cartel. Spin and disinformation rule the day for them. Their mantra, PRICE ACTION MAKES MARKET COMMENTARY, forges on.
Last evening gold opened up quietly lower with the dollar slightly higher in response to the results of the Iraqi elections. Then, gold suddenly dropped $3, like a stone cutting through water. The dollar had barely budged. Bloomberg, which usually covers gold only when it goes down, immediately put out the following:
Gold Futures Fall After Eight Million Vote in Election in Iraq
Jan. 31 (Bloomberg) -- Gold futures fell after as many as 8 million Iraqis voted yesterday in defiance of attacks by insurgents, reducing the appeal of the metal as a safe haven asset.
Some traders bought the metal last week on concern violence would disrupt Iraq's first democratic election since 1953, said David Thurtell, a commodity strategist at the Commonwealth Bank of Australia. Some investors buy gold in times of political unrest as a hedge against declines in other assets.
``The election has gone off reasonably well and hasn't been the disaster many thought it might have been,'' Sydney-based Thurtell said. ``Gold tends to benefit in times of chaos and uncertainty.''
Gold for April delivery fell as much as $3.30, or 0.8 percent, to $425.60 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange. It traded at $425.80 at 11:48 a.m. Sydney time.
-END-
(I had not heard of one person who bought gold last week because of the Iraqi elections. Most specs were exiting longs, or going short.)
Gold rallied back to in Europe with the AM Fix $423.80 and even into the early Comex session, trading up to $424.60 at its best level. Then the 500-pound cabal gorilla went into action and gold was battered, taking out $420 in short order. Once again we see how the United States uses gold as a flash indicator/barometer of its policies. Had gold risen $5 the commentary would have focused on the potential turmoil after the elections instead of the election itself, etc.
The rest of our trading day was almost surreal. The euro slowly rallied and rallied, going up on the day before retreating slightly to 103.30, down .13. The dollar only rose .10 to 83.63.
A British Café member noted this morning:
Hi Bill,
On Friday I marked the following at 6pm GMT:
gold 425.15
£ 1.8854
Yen 103.46
euro 1.3031
Now they are:
gold 420.30
£ 1.8854
Yen 103.61
euro 1.3025
Really blatant!
Rgds,
Mario
There are a number of very shrewd gold market commentators who link the gold action solely to that of the dollar. Just not the way it is. First of all gold was brutalized in December and early January by The Gold Cartel and for the most part the dollar barely budged. Then there is today, which could not make the true gold story any clearer.
In Vancouver during a panel discussion I explained that contrary to most observations, it was my opinion that gold was not about the dollar. It is about The Gold Cartel using the dollar action to manipulate the price, to keep the price from going higher in foreign currencies and to dampen gold enthusiasm in general around the world. Today’s gold bashing was no accident. It was cartel orchestrated price manipulation in order to discredit gold as a go-to investment.
Throw the dollar out the window, throw these talked-about gold ETF investments out the window. Throw it all out the window. This is about the big bad wolf US flexing its pathetic muscles to foster an illusion about what is really transpiring in the world. I say pathetic because the celebration today is about DEMOCRACY and FREEDOM coming to the Middle East via the Iraq elections. To rig markets and subvert the free market in the process to help prove that point is PATHETIC.
In time when all of this propaganda and market manipulation comes to light, it will effect a scandal more grandiose than Watergate or Enron. Only a matter of time.
The gold open interest rose 1298 contracts to 259,212.
Can’t forget today was month end. The norm for The Gold Cartel is to take gold down on the last day of the month.
The euro price of gold was starting to make some serious headway, a real plus, until today. It had risen above 327. Thanks to The Gold Cartel it collapsed to 323 before settling at 323.86.
At its worst, gold fell to $418.90. By the close it rallied back nearly $3 and the bottom line at the end of the day is another savage attack to bury the gold price failed. The bums couldn’t close gold below $420 which is key. My comment Friday that $420 support should hold was looking a bit shaky there for awhile. Still believe it will hold and we should be staring at $430 again very soon.
Silver came roaring back like a champ after being down 18 cents. The fundamentals are still very powerful.
Speaking of roaring back, crude oil was mauled early too, falling sharply, yet surged late to finish the day at $48.25, up $1.07. So much for that raid. Lost over the weekend was OPEC abandoning their lower price target range and refusal to raise output. The difference between gold and oil is oil has a cartel to prop up the price, gold has a cartel suppressing the price.
The John Brimelow Report
Do the predator funds have the nerve?
Monday, January 31, 2005
Indian ex-duty premiums: AM $7.78, PM $7.83, with world gold at $424.40 and $423.55. Ample for legal gold imports. Oil weakness of course helped the rupee ignore the dollar rally early this morning.
Today Reuters carried an upbeat story on Indian demand:
""The price fall will trigger more buying at a time when physical demand in the domestic market is very high," Suresh Hundia, president of Bombay Bullion Association, said…Traders said about 500 kg of gold was being imported in Bombay daily against 300 kg in December, when prices were high…Sales in Gujarat's main city of Ahmedabad, which supplies gold to adjoining states of Maharashtra and Madhya Pradesh, have doubled to about 600 kg daily from a month ago, traders said."
Premiums at the Shanghai Gold Exchange, narrowly positive on Friday, widened to the $1.27 - $1.68 level today, with world gold at $424. Quite counter intuitive, of course, since premiums were higher six weeks ago when world gold was in the $430s; they have notably recovered since Chinese authorities reverted to refusing to get off the Yuan undervaluation gravy train late last week.
Gold came under pressure on the open in Asia this morning; but TOCOM cannot be blamed. Volume was down 5% to the equivalent of 16,911 Comex lots, and the active contract was down 7 yen. World gold was down $2.25. Open interest was static (down 68 Comex lot equivalent); Mitsubishi implied the public added 0.9 tonne to its long. (NY on Friday traded 110,009 lots, or 76,000 net of switches; open interest rose 1,298 lots).
A rally attempt in NY on Friday morning was very promptly blocked. ScotiaMocatta says:
"Dealer selling above 427.00 soon forced the price back …"
Dow Jones that
"April gold got off to a robust start…However bullion bank sales…kept the $430 goal out of reach…"
Mitsui-HK’s version is
"Gold and silver finished lower after…succumbing to heavy oversea(s) selling from the outset…"
Once again, one has to note that the volumes involved, net of switches, was heavy.
Today gold’s friends have been confronted with the news that waves of selling in gold on the Asian opening ("spot gold was under pressure by dealer selling." – Mitsubishi), and in the run up to the NY start, represented the unwinding of "safe haven" buying following the Iraq election. This raises the question, where was the preceding rally? – or at least, who was the seller who blocked such a rally?
The World Gold Council, circulating its Central Bank holdings data rather curiously on Saturday, sheds little light on this question. The only interesting point is a 15 tonne sale by the Philippines in November. It is possible to infer from the data that the French may have been a moderately important (10-20 tonne) seller in December; perhaps this has intensified.
In any case, it is clear from the media noise (including renewed bearishness from The Gartman Letter, acting in its capacity as a hedge fund bulletin board –
("If the situation in Iraq plays out as we think it shall in the aftermath of the "endorsement" of democracy made by the Iraqi people then the gold market bulls shall have a very tough time of it. Support that now exists between $421-422.50 shall likely be under pressure.")
that the predator funds are sensing a ceiling, and are consequently trying to summon the nerve to test the floor.
Such a move would be quite bold, because as HSBC points out this morning, CFTC spec shorts rose 900,000 ozs last week, the largest gross spec short since immediately before the Washington Agreement in September ’99. It would also put them into direct contention with retail Asian physical demand, which they probably do not understand.
JB
CARTEL CAPITULATION WATCH
After a horrendous January, the Wall Street crowd did what they could to salvage what they could. The DOW rose 63 to 10,490. The DOG leaped 26 to 2062.
US economic news:
8:30 Dec. Personal Income reported 3.7% vs. consensus 3.4%; Spending 0.8% vs. consensus 0.8%
Prior Income report revised to 0.4% from 0.3%; prior Spending revised to 0.4% from 0.2%.
* * * *
10:00 Dec. New Home Sales reported 1.098M vs. consensus 1.2M
Prior reading revised to 1.097M from 1.125M.
* * * * *
09:57 Chicago Purchasing Manager reported 62.4 vs. consensus 59
Prior reading revised at 61.9.
* * * * *
WASHINGTON (Reuters) - U.S. consumer spending advanced solidly in December as personal income shot up a record 3.7 percent on a big dividend payout by software giant Microsoft Corp., a government report showed on Monday.
The Commerce Department said personal income rose 0.6 percent in December when the impact of Microsoft's dividend payment was stripped out.
Consumer spending climbed 0.8 percent in December and was up 0.9 percent when factoring in a small drop in prices. The department said the price index for consumer spending, a measure of inflation, declined 0.1 percent and was unchanged when volatile food and energy prices were stripped out… –END-
NEW YORK, Jan 31 (Reuters) - Treasuries prices were slightly softer on Monday, with mixed reports on U.S. regional manufacturing and the housing market tending to cancel each other out.
Prices initially dipped after the Chicago purchasing management index rose to 62.4 in January from 61.9 in December. Analysts had looked for a fall to 60.0. The employment index also ticked up to 52.8 after it dropped to a revised 51.1 in December, though the prices paid index declined.
However, figures on new home sales were much weaker than expected, especially after downward revisions to previous months. Sales ran at a 1.098 million pace in December when analysts had looked for a recovery to 1.20 million.
-END-
Let’s hear it for the US propaganda machine:
12:22 U.S. says a Statscan trade error may add 0.5% to Q4 GDP -- Bloomberg
Recall Q4 GDP was reported 3.1% on 1/28.
* * * * *
The Matrix lives:
U.S. Says 4th-Qtr GDP May Have Been Affected by Canada Error Jan. 31 (Bloomberg) --
U.S. fourth-quarter gross domestic product figures have been affected by an error in the Canadian trade report for November, a Commerce Department official said. The error may have underestimated GDP by as much as 0.5 percentage point, according to private economist estimates.
``If there is a mistake in the tabulation of data by Statistics Canada that was used in the U.S. trade estimates, and that does appear likely at this point, than the correction of that error would have an impact BEA's estimate of GDP,'' said Ralph Kozlow, associate director for international economics at the Bureau of Economic Analysis, the division that tabulates the GDP figures. ``We are looking at it right now. We are going to prepare a notice that we will post on our Web site.''
-END-
Perhaps it was a legitimate mistake. But these sort of unconfirmed stories, such as the rumors of Bin Laden’s capture, seem to always appear when the PPT has a market agenda. When you review stories such as these in the end, 90% do not pan out. Talk about lack of credibility. So now the US leaves such an important report up to some staffer in a foreign country? There is no check on their work? Canadians determine our GDP number? Beyond Farce again.
U.S. Treasury to borrow $147 bln in Jan-March quarter By Greg Robb
WASHINGTON (MarketWatch) -- The U.S. government will have to borrow a record $147 billion in the Jan.-March 2005 quarter, the Treasury Department reported Monday. Analysts had been expecting borrowing of about $136 billion. Treasury expects a cash balance of $10 billion on March 31. Treasury also announced that it expects to borrow $12 billion in the April-June quarter. –END-
The long bond closed at 114 29/32, up 1/8th and at a new contract high. So much for the resurgent US economy.
Well, hello out there mainstream gold world:
From the highly regarded LASCO Report today:
find this move down unusual to say the least. The HUI never dropped in proportion to gold and is now back to unchanged and the US$ Index never managed much of a rally. In fact, it has actually been negative at times over the last 30 minutes. The Yen, Euro and Swiss Franc are all up versus the dollar at this time.
If I didn't know better, I would think that someone is selling gold in order to rally the US$. Strange day. Every time the dollar dips, someone steps on gold.
EBO
As in the desperados putting out revised GDP stats.
***
Demand for gold continues to surge around the world:
UAE gold demand up 25pc
The UAE's retail consumption of gold rose by 25 per cent to USD1.5bn in 2004, despite higher gold prices, according to the World Gold Council's latest figures. UAE gold consumption was up nine per cent in tonnage to 96 tonnes, while Saudi Arabian consumption was up 4.5 per cent to 139 tonnes.
***
The activity of the price managers completely negated this comment by Bill Gates at the World Economic Forum in Swizterland:
Microsoft's Gates, World's Richest Man, Bets Against the Dollar
Jan. 29 (Bloomberg) -- Bill Gates, the world's richest person with a net worth of $46.6 billion, is betting against the U.S. dollar.
``I'm short the dollar,'' Gates, chairman of Microsoft Corp., told Charlie Rose in an interview in front of an audience of about 200 at the World Economic Forum in Davos, Switzerland. ``The ol' dollar, it's gonna go down.''
Gates's comments reflect the same view as his friend Warren Buffett, the billionaire investor who has bet against the currency since 2002. Buffett said last week that the country's trade gap will probably further weaken the dollar, which fell 21 percent against a basket of six major currencies between January 2002 and the end of last year.
``It is a bit scary,'' Gates said. ``We're in uncharted territory when the world's reserve currency has so much outstanding debt.''..
-END-
Gates is a techie, not known as an astute market tactician. However, he knows Buffet is and, for better or for worse, his comments received worldwide attention.
The Gold Cartel is sealing its own doom. Gold mine supply is just not keeping up with gold demand. As a result of the artificially low gold prices and skyrocketing costs to mine gold, future supply will fall even further behind as demand continues to grow.
Note the following in a recent story about Harmony and Gold Fields:
Ft.com
Warring executives delay gold consolidation
By Rebecca Bream and Bernard Simon
Published: January 30 2005 18:02 | Last updated: January 30 2005 18:02
…The next wave of consolidation in the gold industry might not happen as quickly as many had hoped, if recent comments from warring chief executives are to be believed.
The highest priority for the largest companies is to replenish reserves. The world's top five producers extracted about 27m ounces of gold in 2004, and the average grade of their remaining deposits has fallen by 14 per cent during the past four years.
***
Upon reading this information, the natural conclusion would be that the central banks are loaded up with 31,643 tonnes of gold and could get rid of this gold far into the future, which could prevent a rise in the price of gold for more than a decade. Especially, since there is little public information which counters the constant drone of how the central banks and the IMF are going to sell gold. Even the esteemed Jimmy Rogers uses this sort of statistic to steer investors from gold even though he has been pounding the table about investing in commodities for more than five years now.
The facts are the central banks have less than half of this amount as their reserves have been lent out (no longer in their vaults) to facilitate hedging to a small degree and to suppress the price to a substantial degree. GATA has produced three different analyses from three different people (Frank Veneroso, James Turk and Reg Howe) which support our findings. Yet, you can’t find them discussed anywhere in the mainstream, not does anyone challenge the World "USELESS" Gold Council.
It is all part of the gold farce. May GOLD RUSH 21 be a huge success for all our sakes.
In 1999 and 2000 GATA was pounding the table about how the hedgers were hurting the industry and foolishly hedging at unsustainably low prices. Thanks to the "South Africans for a Free Gold Market," who coughed up $50,000, GATA took out a full page ad in Business Day (WSJ of South Africa) at the Indaba gold conference in Cape Town, South Africa in early February 2001. We lashed into the hedgers. Hours later (with the price of gold at $255) AngloGold announced at the conference they had INCREASED their hedge coverage. They paid no attention to GATA, mocked us at the conference, and have been paying a price for their hubris and Gold Cartel facilitating ways ever since:
AngloGold bleeds as hedging cuts profit January 28, 2005
By Eric Onstad
Johannesburg - The world's second-largest gold producer, AngloGold Ashanti, yesterday posted a 7 percent fall in adjusted fourth-quarter operating profit as costs climbed and hedging dampened its exposure to a higher gold price.
But the group said it had slashed 2.2 million ounces from its hedging programme - whereby gold is sold in advance at fixed prices - because it was bullish on the outlook for gold prices.
"Their earnings would have looked much better if it hadn't been for the hedge book," said Stephen Roelofse, fund manager at Sanlam Investment Management….
-END-
****
The best can be said for the gold shares is they held key support. The HUI bounced off 200 again, closing at 101.47, down .42. The XAU finished at 91, down 18.
As mentioned long ago, the gold price will only go where it should when the bad guy bums are carried out on stretchers. The only ones going out on stretchers at the moment are brave US soldiers.
All we can do is fight the good fight and do what we can to expose this rotten Gold Cartel lot.
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
Before any Café members develop a wrong conclusion, I am as pro my country as anyone. However, I am for the real America and how we got here, not what is transpiring to ruin something so special. America came into being because a few rebels spoke out against the tyranny and injustices of the mainstream British. Those few eventually became many.
It is time for people to speak out before it is too late, before we become a nation few of our ancestors would recognize. I do not say that lightly. Each year the hands of big brother, via the Wall Street/Washington/financial press power axis, distorts the truth in order to spin their calculated agenda. The power structure subverts that truth to foster this agenda with the average American becoming more clueless by the year about what is really going on.
Besides the gold fraud/mess et all, the situation in Iraq probably deteriorated more in the last 10 days than at any other time during the aftermath of the war. I say that because of several reasons. The most important is it seems the US is losing the fight for the skies of Iraq. At least two helicopters have gone down over Iraq recently. We know of the 31 dead in western Iraq. Yet, the worst day for the British since the war started could spell some horrific problems in the months to come.