Bill Murphy writes ..................
March 31 - Gold $427 up $5.60 - Silver $7.91 up 16 cents
Gold And Silver Surge To 15-Year High Closes / Superb Market Action
Ramble On
The leaves are falling all around, time I was on my way
Thanks to you I'm much obliged, such a pleasant stay
But now its time for me to go, the autumn moon lights my way
But now I smell the rage, and with it hate, and it's headed my way.
Ah, sometimes I grow so tired, but I know there's one thing I have to do.
Ramble on. And now's the time, the time is now.
Led Zeppelin
The precious metal market action today was superb. Both gold and silver opened very strongly and went up from there to close on their highs of the Comex trading session. Both made news highs right near the close, a positive for tomorrow. Naturally, the $6 rule was enforced in the gold pits by the corrupt and increasingly impotent looking Gold Cartel. The high for gold was $5.80 up on the day.
Both gold and silver made 15-year highs. The highest previous gold close was in late January at $426 and change.
The big news of the day as far as I am concerned was the market action. Once gold and silver rallied, they just sat right around the highs very quietly. This is in complete contrast to the last time gold was up here in January. Then, the trading action was very frenetic. Today had more of the "uh-oh" feel as far as the gold and silver shorts are concerned. You can almost hear them talking to each other behind the scenes saying, "What the heck are we going to do? How do we cover our shorts without driving the prices to the moon?"
They don’t! GATA stretcher-bearers: please stand by!
It appears gold and silver are going to take out $430 and $8 respectively. When they do, the volatility should pick up noticeably. After $430, gold has no real technical resistance for a long ways up. We will start hearing talk about $500 gold when $430 is taken out and it might happen in short order. It is important to keep in mind what we know and few others are paying any attention to because they are clueless. And that is there is a massive gold short position out there. More than 16,000 tonnes of gold is owed to the central banks. Some of it may be paid back in cash settlements. But, certainly not most of it. The shorts cannot cover their positions in a major way in a market with a 125 tonne monthly supply/demand deficit without driving the price sharply higher. Then, you have the potential of the gold derivatives neutron bomb going off which could come at any time. At some point we ought to start hearing more about gold producer hedge book problems too.
When it comes to silver, forget about it. The shorts are in deep doo-doo. There is no way they can cover without the price accelerating even more than gold will because THERE IS NOT ENOUGH PHYSICAL SILVER OUT THERE for them to get the job done except from silver scrap. And that will take a price spike to ferret out and will take a middling amount of time. The Silver Streak is going to be a sight to behold!
The gold open interest only rose 970 contracts to 295,044 on yesterday’s rally. This suggests some shorts are beginning to run for the hills.
The silver open interest gained 721 contracts to 119,147. To me this is good from a technical point of view. The price is going up steadily without the specs pouring in. Another sign that silver has become a PHYSICAL market.
April Gold
https://futures.tradingcharts.com/chart/GD/44
Love, love, love this one – from a highly regarded hedge fund manager:
Hi Bill. I was visiting today with a friend who runs a Comex warehouse. In reference to your hypothesis that (new) buyers are going directly to producers, it sounds like those buyers are mainly the dealers, themselves, and they are definitely contracting at an increased rate with "producers" (which can mean refiners, a combination of mining companies and refiners, and other upstream handlers of the metal). It seems that they are concerned about their own delivery commitments, so they are arranging physical purchases and trucking the refined bars to the warehouses themselves. Pretty interesting, isn't it?
-END-
Sure is! This confirms other silver information sent your way the past months from various Café sources. The plot thickens.
May silver
https://futures.tradingcharts.com/chart/SV/54
JUST IN LATE from another extremely well-connected and highly regarded Café source who is very knowledgeable about the precious metals, someone who loaded the boat years ago with gold/silver physical and the shares. A month ago he bought 500,000 ounces of silver and did not have much of a problem doing so and with immediate delivery assured. This afternoon he was told the maximum order he could place is 100,000 ounces and he would have to wait a few days.
It gets better. Turns out he learned the bullion dealers are sneaking around with armored cars making deliveries. They are trying to give the perception everything is normal in the silver world. IT IS NOT! The buggers are going to get buried. Second line of GATA stretcher-bearers: please stand by!
It’s the funds versus The Gold Cartel in the gold pits. Money is pouring into various commodity funds and these new funds are usually put to work at the beginning of the month, which is tomorrow. This could be supportive for both gold and silver in the near-term.
The John Brimelow Report
India sneaks up;
Wednesday, March 31, 2004
Indian ex-duty premiums: AM $3.31, PM $4.00, with world gold at $422.50 and $424.25. Below legal import point, in the afternoon only modestly. The rupee jumped again today, and has now risen 3.5% against the dollar in the past nine sessions. Official GDP data, released today, indicated India logged a 10.4% y/y expansion in the last 3 months of ’03. This is bigger than China. Should the Reserve Bank opt not to reverse the recent currency strength with the start of the new Financial Year tomorrow , India will support world gold on any correction at a much higher level than Western Bears expect.
It is also the Japanese Financial Year close today. Perhaps this explains the big increase in TOCOM volume: up 131% to the equivalent of 40,689 Comex lots. The big news of the Japanese day, of course, was the jump in the yen to a four year high: uncomfortable news for those long yen gold futures, although possibly positive for physical bullion demand in due course. The active contract was down 8 yen and but open interest slipped the equivalent of only 102 Comex lots. (NY yesterday traded 104,095; open interest edged up 970 contracts: perhaps Monday’s shorts were covering.
Yesterday in NY appears to have been a day of quiet, orderly resilience. Volume, of course, was actually heavy: in fact, the last nine days on Comex are probably the heaviest in the gold contract’s history. The most arresting comment came via Dow Jones from Commerzbank:
"We have seen strong investment demand, which brought us up to the $420s," said Paul McLeod, vice president of precious metals trading at Commerzbank Securities. Additionally, "these folks are not short-term players and are not looking to take profits."
JB
The Paul McLeod quote is EXACTLY what MIDAS has been bringing to your attention for some time. It is a part of the structural change in the gold market I keep referring to.
CARTEL CAPITULATION WATCH
The US economic and world news was VERY stock market bearish, VERY dollar bearish, and VERY gold bullish.
First things first:
"Labor Dept says Feb PPI will be released tomorrow, 4/1 at 8:30 ET
The release date for the March report, originally scheduled for 4/8, has yet to be determined."
Oil prices dipped today, but not for long:
March 31 (Bloomberg) -- The Organization of Petroleum Exporting Countries agreed to reduce oil production quotas starting tomorrow by 4.1 percent, threatening to send U.S. gasoline prices higher and impede world economic growth.
Oil in New York this year has rallied 12 percent as demand from China and the U.S. rose and OPEC planned to reduce supplies. The advance sent U.S. gasoline pump prices last week to a record $1.758 a gallon, increasing pressure on President George W. Bush to bring down energy costs seven months before an election.
-END-
Very disappointing:
Chicago Business Index Fell to 57.6 in March vs 63.6
March 31 (Bloomberg) -- An index of Chicago-area business in March fell by the most in three years as hiring plans and production weakened, a survey of purchasing managers showed.
The National Association of Purchasing Management-Chicago said its gauge dropped more than expected to 57.6 from 63.6 in February, the second decrease in a row. The decline was the biggest since 6.2 points in March 2001. The gauge has exceeded 50, indicating expansion, since May.
''The upsurge in manufacturing activity that's occurred over the last several months is continuing, but at a slower pace,'' said Kevin Logan, a senior market economist at Dresdner Kleinwort Wasserstein in New York, before the report. ''The economy got hit with a real burst of demand in the third quarter of last year from tax cuts and business spending.''
Factories may be catching up with the demand to replenish inventories sparked by the economy's rebound, he said. At the same time, orders for goods made to last at least three years have climbed four of the past six months. Companies such as Emerson Electric Co. say bookings continue to rise, spurring increased production.
Economists and investors watch the Chicago report for clues about the strength of U.S. manufacturing. The index was forecast to fall to 61, based on the median of 58 estimates in a Bloomberg News survey of economists. The index fell below 60 for the first time since October….
The purchasing managers' production index declined for a second straight month to 59.1 from 73 last month. The new orders index dropped this month to 60.4 from 67.5.
The prices-paid index jumped to 75.7 from 66.9 in February. The index of order backlogs increased to 55.9 from 54.5.
The inventories index climbed to 54.3 from 46.5 in February…
-END-
But, there is no inflation!
More disappointment:
Factory Orders Rise 0.3 Pct. in February
Wednesday March 31, 10:00 am ET
WASHINGTON (Reuters) - New orders at U.S. factories rose slightly in February, the government said on Wednesday, although demand rebounded by less than expected and the previous month's decline was even larger than first reported.
The Commerce Department said factory orders advanced 0.3 percent last month after falling a revised 0.9 percent in January. Wall Street had expected a 1.5 percent gain. –END-
The dollar slumped on the poor US economic news, falling .83 to 87.98. The euro gained 1.31 to 122.81, while the yen made a new high for the move to 104.34 as it easily blew through 105.
What a nightmare Iraq is:
March 31 (Bloomberg) -- Bombings today in Iraq left five U.S. soldiers dead and three British soldiers injured, military spokeswomen said. In Fallujah, west of Baghdad, one American was among as many as six foreigners who were killed and their bodies mutilated by an angry crowd, the Associated Press said.
The U.S. soldiers were attacked as they rode in a military vehicle in Al-Anbar province, west of the capital, Baghdad, a U.S. military spokeswoman said by telephone from Baghdad. The U.K. soldiers were hurt southwest of the city of Basra, in the south, a spokeswoman for the Ministry of Defence said in a telephone interview in London. Details on the attacks weren't available, said the spokeswomen, who declined to be identified. –END-
But, there is no inflation:
New York City announces intent to raise base cab fares by 25% to $2.50
"Under the new guidelines, the base fare will rise to $2.50 from $2, with an added $1 surcharge to be applied during the evening rush between 16:00 and 20:00 ET. The cost of a one-way fare between Manhattan and Kennedy Airport will increase to $45 from $35. NYC Commission Chairman Matthew Daus said "Everyone's not going to be happy about this, but we believe we have a job to do, whether people are happy or not." It is the first taxi rate increase since 1996, according to Daus."
But, there is no inflation:
SINGAPORE, March 31 (Reuters) - U.S. unleaded gasoline futures hit a new all-time high on Wednesday after reports of explosions and a fire at a large BP Plc refinery in the United States.
Front-month April gasoline on the New York Mercantile Exchange charged to a record at $1.1768 a gallon, surpassing a May 2001 record at $1.1750. –END-
But, there is no inflation:
"milk prices have risen 40% in 60 days"..CNBC – EOM
But, there is no inflation:
Just got back from Boca Leather Gallery to check on some new furniture we ordered. Big sign on the show room floor reads: Effective today we have to raise our prices 9% due to cost increases in lumber and leather.
Brad
No inflation in France either:
Hi Bill,
I recently sold my south Orange County, CA, home and hopped the pond to a nifty old chateau in the south of France. Part of my culture shock indoctrination was the fuel costs that the French take for granted.
Your 3/30 Midas discussion has an Associated Press story titled: Fuel Prices Hitting Farmers Hard. "The nationwide gas price average over in the past two weeks is $1.80 for all grades, according to the Lundberg survey, which regularly surveys 8,000 stations nationwide. That is a new record high."
I sat down and did some cipherin' to come up with the reality that probably awaits the US motorists, truckers and farmers:
One litre of premium unleaded (sans plomb) in the French countryside (I haven't checked out the city prices) goes for Euro 1.10, which equates to, using the Kitco current spot dollar prices, US $5.114 per gallon. Diesel goes for US $4.165 per gallon.
I don't know how much longer the Lords of the Universe can keep the peak oil reality from the US citizens, but from where I sit a buck eighty per gallon looks pretty damned cheap.
My guess is that no matter which of the plutocrat twins Bush/Kerry prevail in November, shortly thereafter the thieves in the Houston oil patch will be unshackled and set forth to suck the last of the wealth from the American people. Heads up. You're going to need a sack of gold to top off the old Suburban.
I see a small, 4 cyl., manual transmission, highly efficient European diesel in my immediate future.
Au revoir.
DD
Despite the negative news of all kinds the DOW only fell 24 to 10,357, while the DOG only sank 6 to 1994.
GATA’s Mike Bolser:
Hi Bill:
The Fed added $8.5 Billion in temporary repurchase agreements, an action that pushed the repo pool up to $36.08 Billion and also kept its 30-day moving average turning upward in a gratifying manner.
A reliable source has informed me that my Labor Day DOW 11,750 prediction is exactly correct according to persons in the know. That's all I can say at the moment but regardless the trading pattern of the DOW, coupled with the Fed controlled repo issuance pattern tells a conclusive story that the Fed wants the DOW to break its old high in time for the election. Don't fight the Fed...unless it concerns precious metals which the government can't "print" into existence.
LBMA gold & silver volume held hostage--Day 17
Starting with the 15th of march we have seen 17 days pass with no LBMA
silver or gold volumes reported. How bad can the numbers be? Are preparations under way for a ban on all precious metals sales in the West? It's anyone's guess as we still see no response from the LBMA. The time for action on physical metal is right now.
Energy stress
Natural gas continues to be at risk as we move into the temperate season with a weak storage report. Moreover, with gasoline very high Senator Kerry has called for the President to cease purchasing crude oil for the Strategic Petroleum Reserve (SPR). Kerry knows perfectly well that those purchases were precipitated by required deliveries on past derivatives contracts that were sold short long ago. The president is just taking an action that Kerry himself would have taken but it's the political season so all's fair.
Indeed, the Bank for International Settlements records $458 Billion in the category that holds crude oil. As I've mentioned here before, the Chinese are building their own SPR and thus contributing to the oil price rise which ought to stay above $33 as a new floor and possibly head for $40 by the end of the year (after the election).
Mike
Chuck checks in:
It's hard to figure out what the market is saying about the major golds here. In quick succession, we have had the Goldfields stake, the merger between IAM gold and Wheaton, the rumor of Newmont and Barrick. And all of these plus Harmony continue to perform sleepily while some of the smaller producers are coming to life. Obviously, there is something afoot. I would expect as gold rises here, we will begin to see the anticipated pacman effects. I hope the small ones don't fall for the lure of a quick profit. Chuck
On the $6 rule and the breaking of rules:
Does it seem lately silver rallies are getting capped at about a 12 cent move? Funny how that is EXACTLY equal value on a COMEX contract to the $6 gold collar. If that isn't suspicious isn't it also curious the late day gold/silver stock selloffs usually bring them back to about 1- 2 % gains if not losses? Same percentages across the board basically. Those would be some interesting chart overlays for Spitzer. The crooks will get smashed when this is said and done. They might not get punished, but the rigging will end badly for them.
James McShirley
Setting off the interest rate derivatives neutron bomb?
Bill;
A while back I related a true story to you about an old client of mine. He was a former interest rate swap trader at a large bullion bank who had joined a new employer (bank) to trade bonds. I related a conversation we had one night at dinner about how he had done an analysis of the 'new employer's' swap book - that a sharp adverse movement up in interest rates effectively "blew the bank up". I just finished reading Dave Lewis' piece - When the gound gives way under your feet. Since I love connecting dots, I'm going to suggest that the true reason for the Feds not coming clean on PPI is exactly that - it would create a sharp adverse movement up in short term rates that would no doubt jeopordize the integrity of the financial system (through derivatives). I think that's it in a nutshell - we have after all been warned by Greenspan and Co. of the systemic risk posed by Fannie Mae and Freddie Mac's derivatives exposure. In my mind this is just another in a long list of deceptions - the real worry is JP Morgan's 37 trillion derivatives book (Greenspan's pet). His pet has turned into a one eyed monster that will undoubtedly consume him. No bloody wonder he has a little bit of heartburn.
best
Rob
I think they are listening to you Rob.....
Famous last words:
www.Forbes.com
J.P. Morgan Exec Dismisses Derivatives Worries
Tara Murphy, 03.31.04, 1:00 PM ET
NEW YORK - Making heading this afternoon, J.P. Morgan Chase investment banking Chairman David Coulter is dismissing concern about concentration in the derivatives markets.
In a speech to the International Swaps and Derivatives Association, Coulter said that J.P. Morgan's (nyse: JPM - news - people ) role in the $170 trillion over-the-counter derivatives markets is exaggerated. He also said the exit of one dealer from the market could be handled by others, who would pick up more business. Critics say market concentration increases the damage that could be created by disruptions at one institution. –END-
I would like to thank The Toronto Stock Exchange for halting ECU silver, my fourth largest share holding, over some Mickey Mouse reporting violations. The two week plus halt may be unprecedented for something so minor. Silver has rallied close to $1 since ECU was halted. Prior to the halt, the price had rocketed almost straight up. Such a move must have attracted a good number of short sellers who have been trapped ever since ECU stopped trading. By the time ECU starts trading again on Friday or Monday (just a guess), silver is likely to be over $8 and headed for $10. The shorts will have to scramble to get out.
Three cheers for one of my share holdings, mega-GATA supporter Seabridge Gold:
AMEX Approves Listing Application for Seabridge Gold
Wednesday March 31, 4:31 pm ET
TORONTO, ONTARIO--(CCNMatthews - Mar 31, 2004) - Seabridge Gold reported today that it has been advised by the American Stock Exchange that its application for listing of its common shares has been approved. This approval is contingent upon the Company being in compliance with all applicable listing standards on the date it begins trading on the Exchange, and may be rescinded if the Company is not in compliance with such standards. Following selection of a specialist and other final arrangements, Seabridge Gold's common shares will trade on the American Stock Exchange under the symbol SA. A date for the commencement of trading has not yet been set.
Seabridge Gold's common shares will also continue to trade on the TSX Venture Exchange under its current symbol, SEA. -END-
The action in the gold and silver shares is mind-bogglingly dreadful. I have no clue what is going on. End of the month squaring? Gold Cartel pounding the shares to dampen gold/silver excitement because they are having so much trouble controlling the physical gold and silver markets? You got me!
On a positive note, the selling is giving many new Café members a chance to jump into the gold/silver share fray at attractive entry levels. There is no way these shares are not going to soar in the months and years to come.
The HUI could only manage a pitiful 1.32 gain to 235.89. The XAU was even worse, plodding to a .38 gain to 104.95. That was the bad news. The good news was one of the leaders of the day was Golden Star Resources which jumped 37 cents (5.46%) to $7.15. Another was SAMEX which soared 18 ½ cents (almost 22%) to $1.04.
The gold and silver shares remain THE historic investment opportunity of a lifetime.
GATA BE IN IT TO WIN IT!
MIDAS