RE:today-worth readingTuesday, February 07, 2006
Gold and Dollar Market Summary
Author: Jim Sinclair
Dear CIGA
Today’s drop in gold was an attack coordinated by the commercial interest as the top caller had prepared the way either by accident or intention. The success of the attack actually surprised the attackers. Gold’s fundamentals strengthened today, however dollar fundamentals weakened.
Today you witnessed the bull funds breaking everything in the China Shop, but only for a temporary period of time. The volatility in gold is only going to worsen as time passes because it is the smallest market in the world now with the largest players. Hundreds of dollars per day will mark the range of gold within two years.
Selling into weakness and the panic among gold share and future holders was a scene to behold.
You will be receiving special bulletins this evening from the perpetrators that, as Dan explains below, set up gold to take this hit. Remember them well.
Gold will go to $1,650. There is no difference between yesterday and today except those of you with credit attached to your position have panicked.
Here is a quick review:
1. The US consumer is under water, and as long as their credit cards hold out, will continue to suffer from the disease of “Conspicuous Consumption”. This is only limited by credit lines granted.
2. Iran is dead serious in their march to self sufficient nuclear arms capability. Anyone can buy a nuke but few have the resources to manufacture them on an assembly line. Iran is determined to assemble these weapons of mass destruction in quantity. Neither Israel nor the US will stand by as this intention proceeds towards reality. Diplomacy in this situation is utilized by Iran simply to buy time until the deed is done. At that point it will be too late for Israel.
3. Iraq is a rolling disaster.
4. The primary objective of the present military conflict was to instill democracy in the Middle East. This fell flat on its face with the recent victory of Hamas. Saudi Arabia, Kuwait, the UAE and Bahrain will have nothing to do with democracy of any kind as it will effectively expel the kings and princes from their thrones.
5. Cheap oil is history.
6.The Federal Reserve serves the entity that appointed them. Housing, which is the key motivator of the economic recovery, is rolling over. You can be sure Professor Bernanke Fed will liquefy the system at all costs rather than sit by watching tax revenues tank.
7. The Federal Budget is going to grow exponentially.
8. The recent firm dollar is negative for the US Trade Balance.
9. The recent dollar rally is based in hot air and will deflate in 2006, bringing it to new lows.
10. The financial system is now built on a foundation of over the counter derivatives, which as one wise investor said “A mountain of paper garbage”. I might add “felonious garbage”.
11. Today’s treasury issue was disappointing due mainly to a clear lack of overseas central bank buying. This is now a trend and not dollar positive. It will compete against the fallacious viewpoint that a currency vale versus other currencies and gold is a product of comparative interest rate return. In historical comparison it has never been true in current conditions, and will not be true now.
Treasures weak after lukewarm auction
By Jennifer Hughes in New York, Joanna Chung in London and David Turner in Tokyo
Published: February 7 2006 17:48 | Last updated: February 7 2006 20:42
Treasuries fell and yields rose as investors reacted to a sluggish sale of three-year notes - the first leg of the Treasury’s three-part quarterly refunding this week. On Wednesday, the Treasury will sell $13bn in 10-year notes and $14bn in 30-year bonds on Thursday.
More…
Yet you throw away good gold shares while chasing strength by buying and then chasing weakness by selling. People will simply never learn. Remember your trend lines and that there are NO exceptions to the rule. Today many made that axiom a heap of mush.
Today was an orchestrated raid targeting levels of black box stops. This caused waves of selling as each domino fired at each next piece.
Since nothing has changed, I will not be moved. Gold is headed for $1650. I have muted the sound and will delete the deluge of top caller glee headed at us as we speak.
Have you considered hitting the mute button if you have sold your 1/3 position into strength and have absolutely no borrowed money attached to your position?
Trader Dan commented regarding today’s gold raid today as follows:
“No- nothing new that I have heard, same old – same old, top pickers come out with their sell recommendations in all their advisory services… the lemmings all follow suit, the upward momentum therefore slows and price stalls. Then the COT sharks press it down into the stops knowing that the newsletters are all in sell mode. Momentum players then swing to the sell side. COT traders are very sharp and know how to pick these damn idiots’ pockets. If they are going to telegraph to the whole world what they are doing, why not just take their money from them is COT’s attitude.
Chatter on the wire feeds is the usual BS. Falling oil prices, firm dollar, lessening of global tensions…blah, blah, and more blah.
This thing reeks of an orchestrated hit….”
In my opinion, a sell-off of this magnitude is unwarranted. I can see some give and take and some backing and filling, but a complete rout is odd considering the reasons for the rally in the first place. None of the factors that have contributed to the rise in gold this year have abated in the least. If anything, global tensions are increasing.
Then you have one of the most bullish reports on gold in years issued by a major investment player (Cheuvreux of Credit Agricole). On the heels of that report the price tanks? I don’t think so!
This does not pass the smell test. Right now there is nothing but rank panic-selling happening as gold is jettisoned without the slightest thinking process taking place. Stop-running flipped the short term momentum funds into sellers.
Interest from foreign buyers is flagging which creates potential problems for the dollar. Foreign buyers have scooped up large portions of Treasury debt offerings in the last few years, helping keep U.S. yields relatively low.