Bill Murphy writes ..................March 26 - Gold $422.10 up $5.40 - Silver $6.71 up 13 cents
California Dreamin’
Victory at all costs, victory in spite of all terror, victory however long and hard the road may be; for without victory, there is no survival...Winston Churchill
GO GATA!!!!
Back from my nieces tennis matches at UC San Diego in La Jolla. California traffic is horrendous, especially on a Friday afternoon.
What a morning! Gold exploded with the April Comex option expiry out of the way. Due $1.70 higher, it rocketed right out of the gate, climbing $6.90 higher before the gold police showed up to corral it from going any further. There is that $6 rule again. Talk about a broken record. It is like dealing with the “Do Not Pass Go” sign in Monopoly. In this case it is The Gold Cartel’s monopoly on the gold trading pattern. Somebody send those bums to jail.
Word is famous commodity trader John Henry bought 10,000 gold contracts on the OTC market yesterday morning. In years past the cabal has been able to shake them out. Times are a changin’. They tried again yesterday and failed. Early attempts today failed also.
As we all know, the gold move has been DRAMATIC the past two weeks. What makes it even more so it the euro is near its lows on its recent setback, while gold is not far from 15-year highs. While few like to hear I told you so, I am going to do so since this ole fart is celebrating his 58th birthday with my family. Gold is moving up sharply independent of the dollar, which is just should happen and what we want to happen. Gold is soaring around the world in terms of other currencies. All those out there who only pointed to a collapsing dollar as the sole reason gold would go up have been dead wrong. That is just about all we heard from all the pundits these past many months. The kid here and Mahendra got it right. Those are the facts. Enough of the chest thumping. However, sure do love having a big smile on my face these days – better than all those frowns on my countenance for so many years.
Many market participants seem perplexed why the gold market is so strong. Café members are not. It was brought to your attention with gold below $400 the Chinese and Saudis were going after bullion and gone after it they have. In addition, gold and silver are going through a structural change in that new big money speculators want in to make the precious metals their investments of choice. This is what the ebullient market action is telling us.
Some other key points to note for the day:
*Gold rose sharply even as commodity prices tanked for the second day in a row. The CRB has sunk more than 8 points in only two trading sessions.
*Gold closed around 349.5 in euros, which is a NEW 15-year high. Fantastic!
*The gold open interest rose another 3127 contracts to 283,020. Only the aggressive selling by The Gold Cartel has held back gold from taking out 15-year highs in dollar terms.
*Gold’s weekly close was the second highest one in 15 years, only topped by the one on the second week of January, 2004.
As far as silver goes, word has it the Russians sold 2.5 million ounces on the London Fix putting pressure on the price. While gold was due higher pre-Comex, silver was due five lower. However, the dramatic early gold move sent silver into a tizzy as it rallied 17 cents on the day before selling off.
There was only one silver delivery and it wasn’t directed my way. Unreal – I have been standing for a March silver contract for one month and still don’t have it yet. We are now down to the last day possible for the shorts to give it to me, which is Monday. I expected to receive notice of delivery weeks ago. And people wonder why the silver price is going up.
The silver open interest rose 535 contracts to 119,970, a new high for the bull market move. March dropped 12 contracts to 236.
Strangely, word keeps coming back to me that the silver traders in New York keep telling everyone there is plenty of silver around. Why doesn’t someone ask them if that is so, then why is the silver price soaring?
Perhaps the Russians will supply the silver market to meet the soaring short-term demand. However, that is all it will do, temporarily delaying the price rise. This new demand is going to intensify as the year goes on. The shorts are in deep, deep trouble.
Silver made yet another weekly high close. Somewhere in the days and weeks ahead it is going to go bonkers.
How many times over the past couple of years have we seen gold soar in the early Comex trading only to be stopped cold the rest of the session by cabal forces. Unlike normal free markets, it never surges, sets back and then surges again. The gold trading action this weeks suggests the day is coming in the near future when this tactic is going to fail and the bums are going to be blown out of the water as they are overpowered by world-wide gold demand. Gold is going up on its own without the help of outside markets. What do you think the gold price is going to do when the dollar resumes its inevitable downtrend, when the US stock market heads for the toilet, or when the heinous terrorists strike in dramatic fashion again? This is not a market to be short!
The John Brimelow Report
Concerning irresistible forces and
Friday, March 26, 2004
Indian ex-duty premiums: AM $2.14, PM $3.76, with world gold at $416.75 and $417.30. Below legal import point. The rupee made a sizable (for the rupee) move today, jumping 0.6% to $1 =R44.47. This will tend to underpin gold import appetite on any retracement of world gold.
While $US gold actually edged higher during Japanese hours, going out 25c above the NY close, TOCOM exhibited no interest. Volume slumped 33% to the equivalent of only 14,520 Comex lots, and open interest fell the equivalent of 555 Comex lots. Some commentators assume the Japanese are participants in the recent excitement: the evidence suggests not. Neither is the Shanghai Gold Exchange: prices moved back to a narrow discount today. (NY yesterday was estimated to have traded 102,000 lots, of which 15,053 were switches.)
Any doubt that the key force in gold right now is an enormous actor in the Western hemisphere was surely settled by the explosion on the NY open, clearly aimed at technical points: up almost $7 within a few moments; an immense 50,000 contracts estimated to have traded by 10 am.
The problem, of course, is that there seems to be an equally determined seller, operating through the usual bullion banks. As ScotiaMocatta says of yesterday:
"Sellers appeared shortly after the New York open forcing the price from 417.00/417.50 to the days low of 415.10/415.60. New York dealers were the noted sellers convincing locals to go along for the ride. However, commission houses took advantage of this, bidding the market back up. Locals were forced to cover their short positions."
UBS reports that
"A total of 5000 efps were posted yesterday, indicating that a Comex-trading speculators bought around 500koz of gold during European trading yesterday, explaining why the metal remained firm in spite of the weakness of the euro."
and suggests that the large spec long is now back over 18 million ozs (the high in January was 19.3 million). This means a 5 million oz build up in less than two weeks!
In fact the volumes traded on Comex in the past 7 days appear to be as high as anything in the Exchange history, except for the end of January period. Then, it will be remembered, gold was pushed back under $400 and a large volume of longs forced to liquidate; short sellers were drawn in and a powerful rally occurred on Feb 6th.
Obviously, considering how recent this event is, whoever is on the buy side now cannot not know that advances on new high territory on gold bring out this ferocious selling. The question is, is their evaluation of what they are up against correct?
JB
CARTEL CAPITULATION WATCH
The DOW and DOG both closed slightly lower after yesterday’s dramatic rally from an oversold contition.
March 26 (Bloomberg) -- U.S. personal spending rose 0.2 percent in February, the smallest gain since October, as purchases of automobiles and other durable goods slowed, a government report showed.
The increase was half as much as economists surveyed by Bloomberg News had forecast and followed a 0.5 percent gain in January that was larger than first estimated, the Commerce Department reported in Washington. Incomes climbed 0.4 percent following a 0.3 percent increase in January.
Consumer spending ``isn't driving the acceleration of the economy, but it's still shaping up to be pretty solid in the first quarter,'' said James Glassman, a senior economist at J.P. Morgan Securities Inc. in New York. ``As the expansion broadens to include hiring, that is going to provided ongoing support or the consumer.''
GATA’s Mike Bolser:
Hi Bill:
A quick update on the DIVG shows its 200-Day ma still powering higher along with the Euro Index Value of Gold (EIVG).
The previous 15 year highs for these absolute value metrics are 425 for the EIVG and 362.69 for the DIVG. This evening they stand at 416 and 359.75 respectively.
Even though the previous highs haven't been breached yet the real battle line at the DIVG 200-day ma has already been lost to the gold bugs as they gold cartel retreats upward...in a futile search for yet another defense line.
President Bush may crow and joke around at dinner parties about not finding WMDs in Iraq, but there's no joke regarding the unmistakable threat to US financial stability emanating from the precious metals markets.
THAT is the real war...and GATA is leading the charge.
Mike
More from Mike:
Hi Bill:
The Fed added $9.75 Billion in temporary repurchase agreements today March 26th 2004, an action that caused the repo pool to keep inching up to $32.33 Billion and also kept the upwards pressure on the DOW futures market. At this hour (12 Noon) the DOW is moving up through 10,255 to what appears to be a good day.
It is easy to be seduced by the DOW crash theorists but we live in an interventional world where government paper rules the markets and the Fed has shown its desire to print enough to keep the DOW moving up. We are still on track with a rising DOW as the Fed displays its main diversionary vehicle. It is a red herring...a ruse by an institution in deep trouble.
Even as they imagine they are still in control of everything financial, the Fed is losing the overall battle in its most crucial theater...precious metals and especially silver. These indicators inflation are the sine quo non of inflation and silver has traded as high as $7.75 today. Indeed, the LBMA still has not reported its February volume figures at this hour, how bad must the numbers be?
Mike
Houston’s Dan Norcini:
Hey Bill:
A couple of quick comments on the open interest and Commitments Data for gold as I am pressed for time today as it is Snout count day for the hogs.
The commercial category pretty much absorbed the entire amount of fund long buying. Commercial longs bailed out and sold while the cartel piled on an obscene amount of further short positions to sit on the rally. We are now approaching the levels in both camps that we saw back near $430 in January once again.
What I found very strange is the sizeable increase in the fund short category; some 6200 new shorts. That one really has me scratching my head. They are only about 1200 contracts shy of their largest short position for the last year. Funds are typically black box players and are of the momentum type. As a general rule they tend to buy strength and sell weakness. I am not sure what these particular short funds are looking at since every technical indicator has switched over to the buy side and is showing strength. Could be they are attempting to play the cartel's game and piggyback on their selling hoping to ride a potential spec flush down. Regardless, they sold to the small specs who bought in by a three to one margin. Since the data is only good through Tuesday of this week, it is difficult to say whether any of them have covered yet but since open interest is now more than 5000 contracts higher than the Commitments data, it is unlikely. If they did cover, the cartel no doubt was there to meet them and take their place.
One thing is for absolute certain. Without the selling of the bullion banks, gold would have easily moved above the $430 level and garnered an immense amount of new buying. It is these white collar criminals who still refuse to go away who are the ONLY REASON gold does not explode right here and now. I know all of us are waiting for the day they get what is coming to them in that pit. A pox on the whole lot of them.
Best,
Dan
But, there is no inflation:
Hey Bill;
I run a manufacturing plant and thought you might like to know that when my steel suppliers quote us prices they are only holding their prices for 48 hours and tungsten and molybdenum prices are only good for 24 hours.
And we don't have any inflation!
Best Regards
Peter Sanborn
Barnstead, NH
New York Fed Accounts Activity:
Bill,
As you know, I have been tracking the NY Fed's market activities closely for some time.
For the weekly period ending March 25, the NY Fed's Custodial Accounts showed a weekly net outflow of about 1.6 billion dollars.
This is the first outflow since October, 2003. Recently the Accounts have been adding about 1.6 billion dollars per business DAY.
Perhaps Japan is serious when they say their support for the dollar is going to change.
Jesse
Some news from Samex Mining, my second largest holding. You can check it out at their web site:
https://www.samex.com/news/aa-news-2004/NR1-Mar25-04.html
In essence they have renamed their El Zorro project in Chile to Los Zorros. They have done so to better reflect their finding five potential gold/silver deposits of size all in one zone. The potential is extraordinary. Drilling will commence sometime this spring. If they hit on just one of the five targets, we have a winner. This is the reason I loaded my boat with Samex shares.
The gold shares have gone into a disconnect with gold. It’s as if the share folks are trading them with the euro. Either that, or they cannot believe gold will stay at these prices, so why buy?
Something to think about which will give you some idea of what is to come with the shares. A savvy gold fund manager knows a very successful retail stock brokers who handles the accounts of 336 families (more than one account per family). Only five of those families have any gold stocks in their accounts and most of it is Newmont. In the years to come 85% or more will have gold stocks in their accounts.
Signing off from sunny California, dreaming of the days we have coming our way.
GATA BE IN IT TO WIN IT!
MIDAS