Bill Murphy writes.....Gold Share Shorts RUNNING FOR THE HILLS!!
Oh what a beautiful day in sunny Vancouver!
For years, one of my mantras has been the only important consideration concerning the eventual price of gold is whether The Gold Cartel is going to lose control of their price manipulation scheme - whether they are overpowered by a surging physical market and run out of physical gold supply ammo to continue their fraud. My thinking has always been the cabal must be carried out on stretcher for gold to surge hundreds of dollars per ounce higher, like it should have done years ago.
Today’s gold takedown is a perfect example my notion is a correct one. The Gold Cartel continues to make a mockery of the concept we have free markets in the United States. Consequently, the gold market acts like no other I have ever seen. It charges up, then gets knocked back right down – over and over we see the same pattern.
In my Midas analysis yesterday, I mentioned a great many bullish aspects about Thursday’s gold price move higher. Except for the fact gold was capped by the crooks at $370, it was a textbook perfect set-up for gold to charge ahead today. The one caveat was whether the corrupt price-cappers would come out swinging and trash gold, to keep it from taking out $370. If that were to be the case, one could throw the short-term bullish aspects of Thursday’s surge right out the window. My short-term analysis would be useless.
So be it! It didn’t take long to realize what was up. As usual, the bums wasted no time and took gold down quickly in the Access market and during Asian trading hours. It could not have been more clear they were going to attack gold today after the US employment numbers were announced. Those numbers came out this way:
June 6 (Bloomberg) -- Fewer American workers than expected lost jobs in May and revisions to a government report show that payrolls held steady in April, suggesting employers gained confidence after the Iraq war that the U.S. economy will expand.
Payrolls fell by 17,000 last month, the Labor Department's survey of businesses showed. The pace of job cuts is slowing after 114,000 workers were fired in the first quarter. The May jobless rate, derived from a separate survey of households, rose to 6.1 percent, the highest since July 1994, from 6 percent…..
Today's report is the first with sweeping new job reclassifications designed to give greater emphasis to service industries that now comprise 85 percent of the economy.
Economists had expected payrolls to fall by 30,000 last month following a previously reported decrease of 48,000 in April, according to the median of 68 forecasts in a Bloomberg News survey….
Employment in service-producing industries, which include retailers, banks and government agencies, rose 12,000 last month after rising 55,000 the previous month.
Manufacturers shed 53,000 jobs last month. The manufacturing workweek rose to 40.2 hours from 40.1 in April and overtime increased to 4.1 hours from 4 hours.
-END-
The numbers were not good at all. The spin on them was terrific. The stock market soared and yes, gold was bombed $7, erasing all of yesterday’s gains, and then some at one point. However, in the end, gold held critical support at $360 and the chart was not damaged from a technical perspective.
To give you some idea how desperate and determined The Gold Cartel is to keep gold from taking out $370, the Comex open interest rose 10,105 contracts on Thursday to 214,451, a monster increase. The buyers stormed into the gold pit as gold surged to $370 in a very short period of time. Yep, and as mentioned in the MIDAS last night, it was very evident the shady Gold Cartel called out their reinforcements to keep gold from breaking through that critical price point. Gold spent the rest of the trading day treading water. The bum’s game plan, as we have seen so often in the past, was to hold the line and regroup the next day to bury gold, which is exactly what they did.
Tedious, tedious, obvious, obvious are the blatant tactics of these establishment bad guys.
OK, enough rant. That’s the bad news. The good news is the crooks are in BIG TROUBLE. Their strong-arm tactics are nothing more than rear-guard action these days. In the days, weeks and months ahead, the “10+” gold fundamentals will prove to be too much for them to overcome:
*While the dollar rallied strongly today, it still has not been able to close above 94, finishing at 93.56
*Physical demand for gold remains very firm around the world
*Low interest rates are an enormous boon for gold that will spur on that demand
*The negative interest rate situation we have in the US, which is very gold demand friendly, is on the increase. It is thought the Fed will lower rates at their coming meeting this month. Our Fed Funds rate is already extraordinarily low at 1.25%. The employee cost index rose .3% this week. Annualized, that represents a 3.6% wage inflation.
*The US economic news continues to be anemic
*Scandals about the US reasons for invading to Iraq will mount
*The US stock and real estate markets are bubbles waiting to burst
*It appears we are in the early stages of an energy crisis. Crude oil took out $31, climbing 58 cents per barrel to $31.24. Natural gas was unchanged, but looks to go MUCH higher.
A confirmation gold should roar to $400+ in the weeks and months ahead is the unusually relatively strong action in the gold shares the past couple of weeks. Three times in the past 10 days, The Gold Cartel has slammed gold around $6. All three of those times, the gold shares would not go down. They either were unchanged, slightly lower, or moved higher.
Why are the gold shares acting so well now when they have acted so poorly the past year? First, I think is because more and more investors around the world are seeing the handwriting on the wall as to where the gold price is headed. The fundamentals are just too bullish. Second, it appears we have similar action happening in the general stock market. Week after week, stock market shorts are covering their positions, one of the reasons the US market has kept rising.
There is a massive gold short position in many of the gold shares. Traders are short sizeable positions in many of the majors and junior/exploration shares. Many of these gold share shorts are obviously trying to cover on the big gold down days and clearly they are having trouble doing so.
Golden Star Resources, my biggest holding, is a case in point. In the past two days, gold has netted a $1 gain, while Golden Star has rallied 38 cents, or 18%, closing in 52-week new high ground. There is a sizeable short position in that stock in both the US and Canada. They are getting their butts handed to them.
The only reason there hasn’t been a more dramatic short squeeze the past few weeks is because the gold price has been flat, held in check by the crooks. Contrast a held-in-check gold price to the stock market, which has been soaring. My guess is the gold shorts do not have too much more time left to get out. When gold takes out $370, the gold shares will fly. My long awaited gold share buying panic should finally come to pass. The gold shorts still hanging around for a big gold price drop will be annihilated. Some have been hurt badly already.
The HUI (146.52, down .60) and the XAU (77.08, down .62) both sold off late. Considering the gold pounding, it is a big win day and a moral victory for gold share holders.
On the gold share front, bellwether Newmont Mining ($32.29, up 34 cents) has broken out to the upside. The point and figure counts on this gold giant now point to a tripling, or quintupling, of the price.
The gold/silver price maneuvering is sickening. Yesterday, there was considerable silver buying, with the open interest climbing 2200 contracts to 77,200. Yet, silver barely moved. One would have thought nothing was happening, but there was a lot happening. We know the drill. With gold roaring to the upside, the price-fixers put silver in lock down to dampen precious metals excitement. With gold in the tank today, the restrictions were lifted. Silver was up 9 cents at one point.
How many times does the precious metals world have to witness this peculiar joint price action before making public commentary, or investigating this anti-trust activity? Years have gone by and the gold/silver establishment lets it occur with no supervision. The CFTC is even a bigger joke than the World Gold Council in that regard. Organizations such as those two are the reasons there are so many Wall Street scandals. They are nothing more than obsequious servants to the bullion banks and US financial/political power structure.
To give you some idea of how silver has been held down, take a look at the prices of gold and silver when I was at the Atlanta Investment Conference recently:
April 25 - Gold $324.20 down $1.30 - Silver $4.62 unchanged
.....
US household mortgage debt rose 12% last month. Home equity is at an all-time low in America. Look out when real estate prices come crashing down!
.....
The Newmont ultimatum to its bullion banks is an all or nothing deal. Word is Goldman Sachs is the holdout and trying to broker a better deal with Newmont, like they did in their Long Term Capital Management negotiations in September of 1998. Next week could be a very volatile one for the gold price. Who’s to say what is really going on behind the scenes?
There is one other way to look at the steady, albeit very volatile, gold price action of the last two weeks. Gold has held its ground as stock prices have surged round the world. The US stock market is due for a sizeable corrective tumble (at minimum), which will only accrue to gold’s benefit.
Gold remains in EXPLOSIVE mode! I will be surprised if we don’t see a $10 to $15 gold up day in the near future, Gold Cartel or no!
GOT TO BE IN IT TO WIN IT!