Bill Murphy writes.................The US financial markets continue to trade frenetically, almost like a bunch of nursery school children running around a school yard. What they seem to be responding to have about the same amount of significance as what has these little kids scurrying about. Greenspan says this, then he says that, then 3 Fed Governors soft pedal inflation talk, while 3 others state the Fed won’t let inflation get out of hand. The dollar tanks yesterday, then soars today, all on very little news. Meanwhile, the really important big picture items and what is really happening are ignored.
The only way I can analyze it is the Fed and Wall Street are trying to come up with extra right spin for what financial market players want to hear, while the investment players are trying to figure out exactly how this spin is going to play out, or to understand how far the spinsters can go without looking ridiculous.
Gold was capped yesterday and then was mauled today when the dollar moved up sharply in early overseas trading. This is exactly what The Gold Cartel had in mind with their blatant maneuver yesterday. This drew in fund selling today, while the cabal was a "massive" gold buyer, led by gold ole Goldman Sachs and to a lesser extent HSBC and Deutsche Bank.
By mid morning the dollar put in another leg to the upside when the BLS announced the PPI number would finally be released in the morning, now that the Bush Administration has figured out how it should be presented. The trading community fears it will be so bad, it will force the Fed’s hand to "aggressively" tighten. To what 2%, which is historically VERY low and would still be less than half of Great Britain and many other industrialized countries? Anyway, this was the reason given for further and follow-up dollar strength in the US.
It’s all a bit silly, like Goldilocks looking for the exact right temperature for her porridge. Too hot or too cold just won’t do. The Orwellian management of the US financial scene is completely out of control. Only a matter of time until it blows up and gold goes through the roof as it is all exposed.
This is the best news of the day and certainly among the most significant in GATA’s five plus years of existence. Our hard working Chris Powell has confirmed that the Deputy Chairman of the Russian central bank, Oleg Mozhayskov, indeed referenced GATA at the LBMA meeting in Moscow in early June, stating that major banks were suppressing the gold price. Chris will be following up on this as soon as possible with greater detail.
The ramifications of this comment are monumental as far as GATA is concerned. This is the equivalent of the number two at the Fed coming out not only mentioning GATA, but also saying we are correct. A G-8 central banker has referenced GATA in public and on the record!!!! Even more important as far as Café members are concerned, this confirms the Russians know what GATA knows. You can be sure the Chinese do also, and most likely a good deal more sophisticated people in the international financial arena. Therefore, word has to be spreading to the right people what has to happen to the price of gold to ration demand in the years to come. This can only enhance substantial gold accumulation by central banks and major investors.
Speaking of gold demand, while at the Vancouver gold conference I met a Café member who has been in the palladium business for 40 years in Houston. He sends various materials to a gold refiner who is able to extract a certain amount of gold. Last week, for the first time in 40 years, the refiner called him asking when the material would be shipped because he wanted the gold by-product. This confirms how tight the gold market really is in the real world, as opposed to The Gold Cartel’s disconnect one on the Comex. You might recall another Café source relayed to us that the refinery gold premiums are at the highest levels since the Y2K binge buying period.
The gold open interest rose 151 contracts, while the silver open interest gained 408 contracts to 85,796.
Silver performed well all day long with Morgan Stanley the featured buyer. The fact it could buck the gold sell-off so easily was impressive to the Café’s floor contacts.
Silver has formed a double bottom with a nice base, after its debacle and fall from $8.43.
https://futures.tradingcharts.com/chart/SV/74
The Comex silver stocks continue to drop, but only modestly thus far. They now stand at 117,816,074 ounces.
The silver cash market is also very firm. Can’t see the price managers holding silver down at these levels much longer.
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It is becoming clearer to more and more observers the US financial markets are being managed. Here are two back to back comments on this issue. The first from Craig Harris of http//www.harriscapitalmanagement.com. The second from a well known fund manager:
2.) when Greenspan was spewing that hyperbabble about deflation, gold was going up. Now 6 months later he's saying similar things about inflation and gold is going down. Is it possible that he has even more control over this market than even I believe? In other words, was gold allowed to rise so people thought he was doing a good job battling deflation and now sending it lower so it looks like he's battling inflation? Is it as simple as that? Is he just financially engineering "markets influence events they anticipate"? All that said, my worry about this idea is mitigated by my belief that in the longer term the USD has farther to fall.
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Hey Bill,
It is amazing to watch Greenspan and other fed members in action lately. While talking out of both sides of their mouths in merely a 48 hour period, several fed members (Greenspan Poole, Kohn) stated just prior to, or on 6/14 that monetary policy will be more aggressive than the market is expecting due to inflationary concerns. This drove bond yields and the dollar straight north. Then in Greenspan’s testimony yesterday, he reversed his position and claimed that inflation was not a problem (after all), driving bond rates and the dollar south. Looks today like the market doesn’t believe them as bond yields and the dollar reverse (again) and head higher.
What is becoming obvious is that the Federal Reserve is attempting to manage the markets on a 24 hour basis. When inflation rises they talk tough. However, as bonds react and yields climb significantly, they retract their statements and say as Lyle Gramley (former fed member) said on CNBS this morning, "I think the bond market overreacted to the fed’s inflation concerns."
As a side note, some hedge funds may anticipate some of this ridiculous volatility correctly and make money. However, my assumption is that most are "a day late and a dollar short" as the derivative market is suffering a serious bout of whiplash!
Regards,
W
A heads up for us:
Dear Bill,
I came across some information that I have not seen reported anywhere else. One of the gold community's favorite sources of information (joke), the Wall Street Journal, reported on 6/14/04 that Chinese banks transferred some of their overseas dollar deposits into other currencies. The BIS report showed selling of at least $6 billion at a time when the U.S. currency was falling. The BIS report estimated Chinese banks transferred roughly 7% of total U.S. dollar deposits into other currencies in the fourth quarter of 2003. This article was found in the International section of the WSJ under World Watch. The author of the article was Dow Jones Newswires.
It appears that this may be the start of a tremd to diversify out of the dollar which I believe to be dollar negative and gold positive. Maybe at some point in time, a few currency traders will determine that a growing and record current account deficit is actually bad news for the U.S. dollar.
Sometimes when I look at the constant manipulation of the markets, I sometimes wonder, is this actually happening? Did they just delay the PPI for the fourth time this year? Did I somehow wake up one day in some type of alternate realty?
I believe that you, GATA, Jim Sinclair, and many others are doing a great job and are helping to at least partially preserve some aspect of the United States. IMO, the U.S. is going to be a completely different country within 5 to 10 years. To the extent that the founding fathers will even recognize this country in 5 to 10 years will be at least partially due to your efforts and others in the gold and silver community. Keep up the good work.
Sincerely,
Paul Yusem
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Word has it that a rumour is circulating that Placer dome has been drilling at ET Blue in Nevada and hit 100 metres of 0.75 opt. Placer closed at $16.15, up 84 cents.
The gold shares came back from the dumpster in the early going and closed flat. The XAU gained .51 to 83.55, while the HUI rose modestly to 182.16, up .07.
The gold/silver shares remain in the weeds. They also remain THE historic investment opportunity of a lifetime.
GATA BE IN IT TO WIN IT!
MIDAS