Bill Murphy writes........................
January 29, 2004 - Gold $398 down $16.60 - Silver $6.21 down 39cents
WAR!
"Your a stinker, do you know that? Your a stinker and you stink!"
- Prince John, from the motion picture "A Lion in Winter"
Prince John might just as well have been talking to The Gold Cartel.
If there ever was any doubt in anyone’s mind how big a deal gold is, today’s annihilation should erase all doubts. The vicious, orchestrated attack on both gold and silver was extraordinary, an act of WAR, and tells us how desperate The Gold Cartel/United States is to keep these metals from performing well. What could have caused such a brutalizing bashing, one so out of step with the action of the other financial markets following the FOMC comments?
The US stock market was way overbought from a technical perspective and should retreat on that aspect alone. Yet, the DOW bounces right back after a drubbing, just like it has all year. The euro dropped a bit, but not all that much. And the yen is about to make new highs as the Japanese interventionists are having trouble keeping it above 106 to the dollar. Interest rates went up modestly, but they had come down substantially recently. Today, interest rates were flat. As is, the rates are now right smack dab in the middle of their trading range. Only gold and silver were savaged and on what could be considered bullish news, not bearish.
As long stated in this column, the technicals don’t matter in a rigged market. What does count is how much bullion, or derivatives power, The Gold Cartel can muster up in the short-term to take the gold price down and how strong is the physical market demand to counter their continual selling.
What could be possibly going on here? Some thoughts:
*The Bush Administration is in sheer panic at the thought the Japanese might buy some gold and sell US debt obligations. The comment the other day by a member of the Japanese Parliament may have the US spooked. Asians have bought at least 40% of our Treasury paper. A partial move into gold at the expense of their buying our debt obligations could send interest rates up as Bush prepares for his re-election campaign.
*The Japanese comment follows the one by Malaysia’s Mahatir in Saudi Arabia in which he suggested the Arabs should be paid in gold for their oil. The Fed and Bush Administration may fear all this gold smoke will lead to a serious US financial fire.
*With gold and silver on the move, the Bush Administration and Fed fear a gold price rise above $430 could set off the gold derivatives neutron bomb and further exacerbate a potential rising interest rate problem.
*The change in the Fed wording (the outing of "considerable period") was as much a signal for an attack on the precious metals as it was to give the Fed back its interest rate flexibility in the months ahead. The Fed didn’t act yesterday. The way gold fell today one would think they raised the Fed Funds rate to 5% overnight.
*Something is very wrong in financial land and the news is going to break in the weeks ahead. The PPT wants gold in the tank and damaged when it becomes known.
Whatever the real reason is for this blatant attempt to harness gold, this second price bashing in two weeks ($13 fourteen days ago) is nothing more than a criminal operation by a bunch of white collar thugs. Some day this will all come out.
Color me wrong for the short-term. I certainly did not see this coming, but how could you? Technically both gold and silver were in a classically bullish mode and never looked better on the close yesterday. Never thought we would see a three handle on gold again.
To understand the gold market is controlled, one only need to watch how price rises are limited by the cabal’s $6 rule. Yet, gold is allowed to plummet any amount on the downside.
Well, The Gold Cartel finally got to those who exercised their $400 call options.
The good news is strong retail buying surfaced below $400. Orders were coming in from many people who missed the last advance up to $430. This is the feedback I received from a coin dealer and a futures broker.
Gold was sent reeling all day as The Gold Cartel hit the market with waves of selling. Rallies were almost non-existent. One of the objectives of the cabal is to turn some of the fundamentally oriented funds into sellers. Some of these buyers have been long since $325 and don’t punt very quickly. I’m sure a bunch were running for the hills today.
Silver makes six-year highs yesterday and then is slaughtered on news of little related consequence. Ridiculous! The PPT must have given orders to the bullion dealers in The Gold Cartel to sell any amount of silver required to crush the price. There can be no other explanation for this sort of price action. While a rising dollar can affect gold, it historically has had minimal impact on silver. The exception might be the rupee in India.
Silver failed to take out its recent low of $6.06. It hit $6.08 on today’s debacle. Now we have a huge upside gap and two downside gaps in silver. If I’m still correct on a squeeze coming in March, silver won’t stay down here for very long. The Gold Cartel can throw all the paper they want at silver, but if the longs want the physical in a month, they are in BIG trouble.
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The West is petrified of a rising gold price. Yesterday Norway pulled an England by announcing they had sold 16 tonnes of gold and were going to sell their last 17 tonnes. Only someone wanting the price to go down would announce a future sale in advance. Today, Mr. Gold basher himself, Ernst Welteke, popped off again about gold sales. Note how he comments on the higher gold price. What should a RISING gold price have to do with any potential gold sales? Mr. Welteke has let the cat out of the bag that that Western central banks are afraid of a sharply rising gold price and will take measures to keep the price under control. Of course, the GATA camp has known this for five years.
29 Jan 2004 17:04
ECB's Welteke says world growth key for recovery
MUNICH, Jan 29 (Reuters) - Rising global growth is more significant to economic recovery than swings in the foreign exchange rate, European Central Bank Governing Council member Ernst Welteke said on Thursday.
"The growth of the world economy plays a more important role than exchange rate developments for economic development in Europe and Germany," Welteke said at an event hosted by Germany's Bundesbank central bank.
Welteke, who is also the Bundesbank's president, said the rise in the January Ifo business climate index confirmed the central bank's expectations for a growth upswing.
The German Ifo economics institute's index of business sentiment, one of Europe's most closely watched gauges of economic activity, rose to 97.4, the highest since January 2001, from an upwardly revised 96.9 in December.
Turning to the upcoming talks on renewing the 1999 agreement among 15 European central banks limiting their gold sales, Welteke said: "The higher gold price indicates that possibly more gold could be sold (than the 2,000 tonnes under the current agreement)."
-END-
Now add the Macquarie Metals comment in JB’s report:
"Heavy German bank offering was seen at the top end of the recent range around $415"
Only the brain dead could fail to understand the gold price is being managed.
This note from a fellow Café member concerning commodity anti-trust issues is what irks the heck out of me about the nincompoops in the gold industry:
Did you see the front page 1/27 WSJ story "How Driving Prices Lower Can Violate Antitrust Statutes"? They use the word "monopsony" when describing commodities being suppressed to benefit a few giant corporations. The story details several antitrust lawsuits alleging conspiracy to suppress pricing on various commodities. A snippet:
"Price fixing and other forms of collusion are just as unlawful when the victims are sellers rather than buyers," R. Hewitt Pate, the Justice Department's antitrust chief, told a Senate Judiciary Committee hearing late last year. The hearing aired farmers' concerns that a few giant agribusinesses now control commodity prices in many markets. (emphasis mine)
We now have commodity price suppression evidence on the front page of the Wall Street Journal yet the cabal gold goons miraculously go unnoticed right under their nose. Maybe R. Hewitt Pate could look outside the Senate hearing room and see the 10 ton elephant standing in the corridor. His name is JPM/Goldman Sachs. On a day when the omission of a trite phrase by a Fed chairman seemingly drops gold to the mat and a blatant gold stock sell-off happens just prior to said chairman's utterances it is there for all to see. I guess we can now call cabal members "monopsonists". Certainly there are better adjectives, most of which are unprintable. No matter if they rig gold for the 748th time, someday the 749th try will fail spectacularly. I will be there waiting, as I have been since 1997.
James McShirley
The most obvious commodity anti-trust violation of all is right out in the open in front of the noses of the gold producer executives/World Gold Council and they do nothing. What a pitiful lot!
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Gold producers continue to cover hedges, not put them out. Why doesn’t anybody in the gold establishment explain where all this gold selling is coming from? Who are the culprits? These timid establishment souls will never ask the question because they are afraid of the obvious answer.
JOHANNESBURG (Dow Jones)--Harmony Gold Mining Co. Ltd. (HMY) said Thursday it has further restructured the Australian hedge books it inherited with the acquisition of the New Hampton and Hill 50 companies.
In a statement, it said a total of 365,000 ounces of gold, being a combination of forward sales and call contracts, have been closed out. "The restructuring of the Australian hedge books is a continuation of Harmony's being unhedged. With the acquisition of these two companies, we inherited hedge books consisting of forward sales and call contracts in excess of 2 million ounces," Harmony said.
Bernard Swanepoel, Harmony's chief executive, said following the latest restructuring only 495,000 ounces remain hedged. –END-
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Considering the gold and silver maulings, the gold shares held up very well. The XAU lost 2.25 to 94.05 and the HUI fell 6.28 to 213.18. If the HUI holds strong support at 210 and then can take out 220, the gold shares could move up again fairly quickly. The gold fundamentals remain a "10+++."
Where do we go from here? Will gold shoot back up soon, or retreat to the $380 to $390 area predicted by many of the gold timers? That will depend on the physical market. If buyers come out of the woodwork, this debacle should be a short-lived one.
If silver does not fill its gaps below and holds the $6.06/6.08 and closes above $6.25 in the next few days, it could shoot for new highs in a couple of weeks.
GATA BE IN IT TO WIN IT!
MIDAS