Bill Murphy writes .........March 11 – Gold $445.50 up $3.40 – Silver $7.51 up 3 cents
Potential For Serious Financial/Real Estate Market Chaos Builds
We live in extraordinary times to say the least. Perhaps a more appropriate way to describe these times would be bizarre or surreal. On a number of occasions I have made references to the movies The Stepford Wives and The Matrix as a way to describe what is going on out there in US financial market land. Another has been referring to an Orwellian mob running the US with its Economic Fascism models. Both are useful in describing today’s action.
PS: the above commentary was written with the DOW down 20 and me scratching my head how could it not be down more with what is going on in the commodities markets. Now it is down 56. This makes a bit more sense.
Last night, as is almost always the case these days, The Gold Cartel took gold lower in anticipation of a rout today. Not only did they not get one, the cabal bullion banks had to be bailed out by their Godfather. This news set the tone for the day:
08:30 Jan. Trade Deficit reported $58.3B vs. consensus $56.8B
Prior deficit revised to $55.7B from $56.4B.
* * * * *
As MIDAS expected, the trade deficit was worse than anticipated. The currency markets began to gyrate wildly; up, down, up, down, then up again. As the foreign currencies shot up, The Gold Cartel went into action like they always do to cap the gold price. However, they suffered a real jolt when Goldman Sachs showed up as a massive buyer out of nowhere – to the tune of thousands of contracts. Gold went up from slightly higher to $2 and change higher. Stops built up around $446, basis the April contract. They were taken out on the next surge and then The Gold Cartel went on another one of their patented price-capping routines for the rest of the day. As is almost AWAYS the case, gold made its highs early and then was held in lock down. Because of all the fund buying in gold, the bums had their hands full containing the surge. Volume was VERY heavy. John Brimelow told me late this afternoon the estimated volume was a huge 80,000 contracts, 18,000 of it coming in the last half-hour alone. 50,000 of the volume came after gold shot up $4 to $5. That will give you some idea of the firepower the corrupt ones threw at gold to keep its advance modest. To aid them their mission, these creeps then went after the gold shares and silver to calm things down. Have you ever seen such a consistent market farce in all your life?
Meanwhile, the commodity markets keep going ballistic. It’s no exaggeration using that description.
The spot CRB finished the day at an astounding 318.62, up 3.47. The move in US commodity prices is breathtaking. Meteor? Moon Shot? Take your pick. Haven’t seen sustained powerfully bullish action like this in 25 years. What’s exciting is the grain/soybean complex has come alive. Who knows what could happen should there be any kind of weather problem in the US this spring or summer.
Crude oil came right back, closing at $54.43 per barrel, up 89 cents.
The kid has been on a roll with his MIDAS headlines of late:
2/22 It Doesn’t Get Any Better, Yet $6 Rule Still Reigns / CRB Explodes
2/24 Gold Holds Technically, Gathering Strength To Go Much Higher
2/25 THE OUTRAGE BUILDS / CRB Now Has A 300 Handle
3/6 Think Volcano
Yep, it was some volcano week. Just in everything but gold and silver thanks to the heinous Gold Cartel. No sense ranting on that again for the 5th MIDAS in a row. What I do think is important to focus on is that IMO these Orwellians are setting up an economic/financial market CRASH in the US, probably sometime later this spring. Their lying and spin will have run its course. Reality is about to hit home in the US and it won’t be pretty. The only way the US is addressing a myriad of serious fiscal problems is by rigging the gold price to deceive the investing public. THAT, they have done successfully. Americans don’t have a clue what is about to hit them. What a shame. (see more on this notion below)
What was the huge Goldman Sachs buying all about? Hard to say. Could be this reason emanating from www.briefing.com:
"We hearing that a large investment bank says they will be buying gold as a hedge against declining Treasury prices. When asked where they see the 10-year note yield, they said they expect it to get above 5% sooner than many think."
Just because GS was a major buyer does not necessarily mean they are bolting from the cabal. After all, this is Hannibal Lecter we are talking about. Could have been a division of GS buying for hedge purposes, or a gold producer covering its own gold hedges.
Some good cheer:
The euro gold price was last at 331.12, up 2.08. It broke through a triple top at the 329.50 level or so. GATA like that a lot. Once gold rises to a considerable degree in all currencies, which it will, The Gold Cartel is toast.
Technically, gold is in good shape. The chart is a good one and remains explosive.
April goldhttps://futures.tradingcharts.com/chart/GD/45
I like the fact we don’t have any gaps to fill on the downside. At some point we are going to get a breakaway gap. Gold is going to come in $3 higher and run from there.
The John Brimelow Report
Indian CB joins $ disgruntlement squad: Washington in trouble?
Friday, March 11, 2005
Indian ex-duty premiums: AM $6.87, PM $6.41, with world gold at $441.20 and $440.15. Adequate for legal imports. The rupee closed at an import-facilitating one month high.
India joined the procession of Asian states making noises about diversifying FX Reserve holdings away from the Dollar. (Many would no doubt be surprised to learn that the country’s FX reserves are the sixth biggest in the world.) Reuters reports:
BOMBAY, March 11 (Reuters)
India's reserves, the sixth largest in the world, are at a record high of $135.66 billion, and Reserve Bank of India Governor Yaga Venugopal Reddy told reporters diversification was being discussed at the central bank.
"Yes it is being discussed. We are always discussing. It's a continuous process," Reddy said. "It is an ongoing debate with all central banks…
(JB emphasis)
Reuters goes on to report that Lehman has issued to report asserting that the Chinese are already well underway on diversification:
"Lehman Brothers has examined China's $206.6 billion increase in reserves last year in conjunction with currency market movements and Beijing's disclosure that it spent $195 billion on foreign exchange intervention in 2004.
The bank concludes that China reduced the proportion of its reserves held in dollars to 76 percent at the end of 2004 from 82 percent a year earlier."
-***-
Obviously this kind of story is not helpful for the dollar – but it is for gold.
TOCOM continues uninterested. Volume fell 19% to the equivalent of 12,161 Comex lots, the active contract closed unchanged, world gold went out 50c below the NY close, and open interest was static (up 156 Comex equivalent to equal 98,943 Comex contracts). (NY yesterday traded 67,727 contracts, a shocking 44% above the estimate; open interest edged up 769 lots to 303,062.)
Yesterday, of course gold once again underperformed the dynamic commodities sector. Mitsui-London noted:
"Gold was firmer with some fund buying on the back of the weaker USD, although one or two banks selling at just under 443 and keeping a lid on it"
Standard London found the action peculiar:
"COMEX opened at its session low before being levitated higher to the day’s high of 442.60 bid. Throughout the day, it seemed like it was traded for size as it moved around by jumping erratically…With gold having breeched above $439, a previous chart point in the medium-term charts and not running higher, is like turning on the car engine, applying pressure on the accelerator with the gears in neutral…"
UBS (which today raised its 2005 estimated prices for many commodities not including gold) thinks it sees the problem:
"…speculators. Positions remain lower than at recent peaks deterred, we believe, by the risk of negative news about potential IMF gold sales. While we do not expect any gold sales from the IMF - nor probably a revaluation - these headlines will deter speculative longs from entering the market in any size until this issue is resolved"
Many would agree that fear of Central Bank selling – not just IMF gold, either – has severely intimidated Western investors. UBS may well be using a euphemism, of course.
With estimated volume today a heavy 62,000 by 1PM, half of which has traded since 11 AM with gold moving sideways, some might even suggest that actual Central Bank selling is the problem. Who would want to short into these conditions on a Friday afternoon?
While waiting for a resolution of this problem, gold’s friends can draw some comfort from the degree of conviction expressed by intelligent Dollar bears. The Gartman Letter today displays the fervor of its recent conversion, worrying about Central Bank FX diversification:
"we do find it more and more disconcerting that Japan, China, S. Korea and a few other Asian nations find themselves with a staggering sum of US government debt (dollars)… We do not fear that they shall turn to become sellers of US debt and/or dollars, but we do fear that they may not be the buyers that they were in the past…
it takes a mere lack of buying to send at market down. We fear the lack of buying... and that is a fear far large enough!
we are a bit dismayed by the results of yesterday's 10 year note auction. The bid/coverage and other aspects of the auction were fine, but we did find it a bit
disconcerting that the so-called "Indirect Bidders," amongst which are the world's foreign central banks, bought only 11% of the total $9 billion at auction. This is down from last month's 29% foreign "take…"
The more consistent Bridgewater Associates is even more outspoken in today’s "Daily Observations":
The Break Down of The Dollar System:
"As you know, we believe that the U.S. is moving toward a balance-of-payments/debt crisis that is similar in its dynamic to the dollar/debt crisis of 1968-71 that led to the break-up of the Bretton Woods monetary system."
"Due to the Chinese peg, Asian monetary policy has basically been locked into a dollar system…This Asian dollar monetary system is now just about to self-destruct. Asian central banks have wracked up unprecedented amounts of dollars, just as Europe and Japan took in excessive amounts of dollars as the Bretton Woods system neared collapse in the early 70’s. In the early 70’s, France first, and then other countries, started to peel off the dollar standard and started to ask the Fed for gold instead of dollars. The result was inevitable as the race for the dollar door began. In the last couple of weeks the exact same dynamic began anew as Korea, then China and Thursday Japan, all expressed their interest in diversifying their dollar holdings. The race to the door is likely about to begin."
With these sorts of ideas about, the current decline of the dollar could get interesting. MarketVane’s Bullish Consensus for the Dollar Index was 27% last night, the lowest this year: but it spent all last November between 20% and 23%.
The noted gold bear plays the contrary opinion card. He continues to take comfort from the (amazing) complete lack of flow into the ETFs
JB
A few points to make on what John presented:
*"With gold having breached above $439, a previous chart point in the medium-term charts and not running higher, is like turning on the car engine, applying pressure on the accelerator with the gears in neutral…"
Exactly Standard Bank. It’s called THE GOLD CARTEL. This is what they do.
*"one or two banks selling at just under 443 and keeping a lid on it"
It’s called THE GOLD CARTEL Mitsui.
*Regarding the UBS comment re speculators shying from gold over concern of IMF gold sales. You can thank the traitorous South African Finance Minister Trevor Manuel and the Lilliputian Finance Minister in England, Gordon Brown, for this. These devious souls want to help the poor by keeping the gold price down so the gold companies in Africa lay off miners because many mines are not profitable at these gold prices at present cost structures.
Meanwhile, there is a 1500+ tonne natural supply/demand deficit out there. If it weren’t for The Gold Cartel, the price of bullion would be $200 higher, at least. The poor in South Africa would be far better off because there would be a mining boom like never seen before. Brown and Manuel could care less about the poor. They are trying to save The Gold Cartel’s butt.
*On the gold ETFs. Wonder what gives there? The Gold Cartel must have given the World Gold Council instructions not to allow any more buying when the cabal is so desperately trying to hold down the price.
CARTEL CAPITULATION WATCH
Are investors finally waking up to the fact the US has ENORMOUS financial market problems at the moment? Too early to tell. The DOW faded later on to close at 10,778, down 77, while the DOG lost 18 to 2042.
The dollar closed down .13 to 81.42 and the euro gained .29 to 132.55.
Jesse notes:
The Treasury has been putting out a line of money pretty steadily, but a repo of 17 billion for ten days is one of the larger Treasury repo liquidity infusions to the banker/dealers I have seen in a while, if ever. Must be the big surplus they just got from the Treasury auctions this week, eh? lol. I think they have another big auction next week too.
TREASURY OFFERS TERM INVESTMENT OPTION
Contact: Laura Carrico: 202-874-7119
Investment Management Division
Highlights of Treasury Offering
Offering Amount: ………………………………....$ 17 billion
Maximum Award (50% of Offering Amount): .... $ 8.5 billion
-END-
OPEC's muscle may be dwindling:
The Organization of Petroleum Exporting Countries may be at a crossroads when meeting in Isfahan next week.
The first OPEC meeting in Iran for 35 years may be a turning point in the cartel's history. OPEC is now producing at full capacity, and spare capacity is almost nil. Yet the IMF is urging OPEC memeber states to double spare capacity for the sake of world economic stability. The Isfahan meeting may mark the end of cheap oil. The first 100 dollar barrel option was sold on Tuesday.
-END-
Houston’s Dan Norcini comes up with a fine heads-up on the trade deficit. This month’s trade deficit was not good. Next month’s will be a whopper:
Nice call on that trade deficit Jesse- that detective work you did with the China news was right on target.
Did you guys notice the price that was used for the average January Oil Import Price was $35.35? That was the lowest price since July 2004 when it was $33.28. The previous month's release for December 2004, came in at $36.63/bbl. I realize that they are talking about the price of spot crude oil and not the futures market but no matter how you dice it, the price of crude in January 2005 was above that of December 2004. I wonder how what they did to lower it? There must be some sort of statistical adjustment they are using.
Either way, imagine what the trade deficit number would have been if they had used a higher and more accurate number. Especially consider what it might be when we get the February and March data with crude back over $50/bbl.
-END-
Could not agree with Dan more re what is going on out there:
I have to tell you in all my years of trading, I have never seen anything quite as remarkable as this. I was just coming out of college when the commodity sector boom took place in the late 70's and thus was pretty ignorant in general about the markets and what have you.
What we are seeing take place today must certainly have the potential to become even more spectacular in my opinion when we consider the sheer number of hedge funds that exist today in comparison to what we had back then. Watching these guys goose the beans and the wheat market while pouring into coffee and just about everything else is simply breathtaking to observe. The amount of money they have access to is hard to fathom.
Can you even try to wrap your mind around what will happen to the teenie-tiny world of mining shares once these guys commit to them?
That is what makes the gold price action even more suspect to me. Every report that I can read mentions commercial scale up selling into these rallies as they step back and allow the funds to bid the market up. They are simply thrilled getting the prices they are getting for their products. Why fight what is in their best interests? Then when we turn to gold we see it fighting tooth and nail to climb upward as the fund buying meets offer after offer. Again, without even knowing what GATA has revealed, anyone who has the least bit of market understanding would have to ask who it is that sells in such a fashion and WHY?
Dan
Speaking of a heads-up; from a fellow Café member:
Hi Bill,
This morning’s WSJ Online contains an article re: the Senate passage of the ‘bankruptcy’ bill. It looks to me like it allows for a ‘mulligan’ on derivatives contracts? I don’t know if this is important but I at least want to make sure you guys are aware of this provision.
Thanks,
Terry H.
Here’s the excerpt:
The bill also has a little-noticed but important provision that is designed to prevent systemic financial crises by letting creditors close out their derivatives contracts with companies that have filed for bankruptcy.
Although the provision has been long pushed by the Federal Reserve Board, the Treasury Department and big financial-services companies, it has been attached for years to failed past bankruptcy-overhaul legislation. The law would reduce risk by allowing swaps and other financial contracts to be unraveled quickly and easily, without the approval of slow-moving bankruptcy courts.
-END-
Gold Cartel news last night from Jesse:
I have been watching the intraday pricing action in AIG for a week or so now. Its been undergoing some heavy distribution.
This article is really vague, but I noticed that it was accompanied by a drop in the stock after hours.
AIG postpones Goldman, JPMorgan client meetings
Thu Mar 10, 2005 06:44 PM ET
NEW YORK, March 10 (Reuters) - American International Group Inc. (AIG.N: Quote, Profile, Research) said on Thursday client meetings between AIG Chairman Maurice "Hank" Greenberg and two investment banks had been postponed, without providing further detail.
The world's largest insurer by market value said in a statement a meeting with Goldman Sachs & Co. (GS.N: Quote, Profile, Research) had been scheduled for Thursday evening and another with JPMorgan Chase & Co. had been set for March 14.
AIG shares fell to $65 in after-hours trading on Inet from their New York Stock Exchange close of $66.12.
A Goldman Sachs spokesman declined to comment, beyond saying the firm had been scheduled to host a meeting between some investor clients and AIG. Goldman told clients the postponement was "due to circumstances beyond our control."
A JPMorgan spokeswoman declined to comment.
The two meetings had been announced in separate press releases dated March 8.
-END-
AIG sank $1.41 today to $64.71.
For many years AIG, JP Morgan and Goldman Sachs were the Three Amigos in The Gold Cartel.
What The Gold Cartel has wrought re their rigging as far as gold in foreign currencies is concerned:
Hello Bill,
Great work.
Here are some approximate figures I worked out by looking at currency/gold charts from Kitco on how gold is being "managed" in a number of major currencies to clearly make gold do nothing and not be a viable investment alternative to the US dollar.
Swiss francs - Gold is worth the same in Swiss francs as in May 2001.
South African rand - Since January 2002 gold has declined 26%.
British pound - Gold is worth the same in British pounds as in May 2002.
Euro - Gold has declined 7% in Euro since May 2002.
Canadian dollar - Gold has declined 6% in Canadian dollars since January 2003.
Australian dollar - Gold has declined 5% in Australian dollars since September 2001.
To generate any bull market interest and excitement gold needs to increase not just in US dollars but also increase in other currencies. It is absolutely staggering the way gold has been manipulated to prevent it making any significant gains in many other major currencies. It is criminal when you consider the gains oil, uranium, nickel, copper, iron ore etc. etc. have made in not just US dollars but other currencies. Gold is not even allowed to be a commodity.
Criminal charges ought to be laid against these crooks.
To think Martha Stewart did time. What a mockery of equity and justice that makes.
Regards,
Neil Davis.
That is why it is so important for gold to make a move in all currencies. Once it does, the cabal is kaput.
All kinds of goodies today. From what I know of the Asians, this note from Peter to Dan might have hit the nail on the head:
Dan,
Your well-supported and well-illustrated observations of the bond market – vis-a-vis Asia's role in it – are fascinating. My own impression is one of watching a group of synchronized dancers who are signaling to each other that they are ready to change steps. If each country's reserve accounts are going to suffer losses by diversifying their holdings, isn't it more acceptable to do it as region? That way no one minister or central bank – or banker – is singled out.
While I am no expert on Asian psychology, I do believe these cultures value consensus. If this is true, someday soon the East Asians will present the United States with a done deal and find the strength in regional resolve to fend off America's howls. The U.S. can't crack down on them all at the same time. The day that happens is the day the stretcher bearers will have to work overtime. This should be real interesting.
Best wishes and thanks for all you have done to educate me,
Peter R.
Get a load of this – from Jesse again:
President says that US Treasury Bonds are "not so safe unless we fix the deficit"
He was cracking a joke during the Q&A, but is he? Does he really understand the difference in risk expectations and returns between stocks and bonds? I wonder.
https://www.whitehouse.gov/news/releases/2005/03/20050310-14.html
Scroll down into the Q&A
THE PRESIDENT: Let me ask you something about the Thrift Savings Plan. This is a Thrift Savings Plan that has a mix of stocks and bonds?
MS. WEBSTER: Yes, sir.
THE PRESIDENT: Now, how hard was that to learn how to do that?
MS. WEBSTER: And I chose the safe plan, government bonds. (Laughter.)
THE PRESIDENT: That's all right. Well, not so safe, unless we fix the deficit. But other than that -- (laughter). We're fixing the deficit. (Applause.)
-END-
But you aren’t Mr. President, which is why foreigners are beginning to run for the hills:
China Reduces Dollars in Reserves, Increases Euros, Lehman Says
March 11 (Bloomberg) -- China's central bank cut the share of its currency reserves held in dollars and raised its holdings of euros, according to an estimate by Lehman Brothers Holdings Inc.
Seventy-six percent of China's reserves, the world's second- largest, were in dollars last year, down from 82 percent in 2003, Lehman said in an analysis yesterday of figures published by the People's Bank of China. Lehman is the fifth-largest U.S. securities firm. The rest are in euros, Lehman said.
The shift may make it harder for the U.S. economy to attract enough money to compensate for a record current-account deficit, Shruti Sood, a currency analyst at Lehman in London, wrote in the report. The dollar fell after Japanese Prime Minister Junichiro Koizumi said yesterday the country should consider diversifying its foreign currency holdings, the world's largest…
-END-
Spinmeister time:
WASHINGTON, March 11 (Reuters) - Concerns that Asian central banks are looking to reduce their dollar-denominated reserves are misplaced, U.S. Treasury Undersecretary for International Affairs John Taylor told Dow Jones in an interview published on Friday.
"There's no evidence we have seen that central banks are changing their portfolio proportions," Taylor said.
-END-
Greenspan had better not hold his breath:
Bill-
You may have already come across this. I found it quite interesting the remarks today from the Federal Reserve Chairman regarding the dollar and "his hope that further declines in the value of the U.S. dollar would narrow the trade deficit". This may be true but ?????
Greenspan said in prepared remarks to the Council on Foreign Relations in New York today March 10, 2005 https://abcnews.go.com/Business/wireStory?id=570491
Down at the bottom of the page:
On trade, Greenspan expressed hope that further declines in the value of the U.S. dollar would narrow the trade deficit, which mushroomed to an all-time high of $617.7 billion in 2004.
A weaker dollar makes U.S. exports less expensive to foreign buyers and thus more competitive on overseas markets. A weaker dollar also can raise the prices of imported goods flowing into the United States.
By the way, excellent Midas today. My wife, who is very good at tuning me out, had no problem understanding "Why The Historic Gold/CRB Comparison To Today Is So Important."
I truly believe the more people that are exposed to this concept alone, will greatly increase investment demand in Gold. Perhaps the person at CNBC who you sent information to in the past, might appreciate this info.
Best,
Bernie
Tragically, my friend Blake Joyner died of a heart attack not too long after our trip and fortunately Michel Roy, a sharp mine operator, became the new CEO.
It seems to me the markets are set up for some serious financial market chaos, as I touched on above. Why:
*Contrary to the Wall Street spin, commodity price inflation is not just rising, it is going bonkers. While these same New York spinsters would have the American public believe this doesn’t matter, just like the US fiscal deficits don’t matter, they do. Denial has run its course too. Tell the American consumer these price rises don’t count when they go shopping or fill up their tank with gas. And tell US corporations sharply higher commodity prices aren’t going to affect their bottom lines.
*Rising long-term interests are surely going to have an impact on the housing market bubble too. The 30-year bond closed at 110 20/32, down 25/32, a new low close for the move. The 10-year note was down a half of a point, also making new lows for the move. Rising mortgage rates could be the pinprick to the housing bubble. The rising interest rate costs are sure to dampen corporate profits too.
*The Working Group on Financial Markets and The Gold Cartel have managed US markets for so long they have the investing public in a coma regarding the potential for severe market losses. Hard to remember the last time there was any real investing public fear out there about the US financial and real estate markets. The PPT has come to the rescue for years now before the public has thought about going into panic sell mode. This time might be different.
The reason is the foreigners paying for our increasing deficits are clearly becoming more reticent to adding to those positions. Some even want to cut back as quietly as possible. Pile soaring commodity prices on top of lessening foreign demand to satisfy US credit demands and you have the perfect storm for long term rates to take off from here. Sanguine Wall Street is going to begin to stutter about what to tell the public.
No time to cover the rest of the waterfront on why market chaos could be around the corner except to say with Americans so complacent and so over indebted, you have a recipe for a complete change as to investor psychology. Greed is very likely to turn to fear and when it does, LOOKOUT!
The gold shares stunk up the place with the XAU only up .10 to 101.89, while the HUI lost 1.10 to 221.56. With gold up nicely, the dollar down and commodity prices going berserk, this makes no sense unless one factors in The devious Gold Cartel.
While today turned out to be another annoying one, the big picture remains spectacular. As said often of late, the reasons to own gold are going off the chart. To catch up to the CRB, it must DOUBLE in price.
Sweet dreams for the weekend.
GATA BE IN IT TO WIN IT!
MIDAS