Bill Murphy writes....Gold bulls were huffing and puffing today, doing all they could to take out $335 and close gold above that level. To no avail. At $334.80 bid, The Gold Cartel put out the "Do Not Pass Go" sign. Gold caught a tail wind all day from a failing dollar, but even that did not help gold blow through $335. The cabal is desperately trying to keep a sharply rising gold price from fueling the sinking dollar and from fostering a move up in interest rates. The gold battle is one they are going to lose, but in the mean time, they are aggravating the heck out of us.
The gold chart:
https://futures.tradingcharts.com/chart/GD/4
A bit ago, I suggested that the recent trading action was somewhat parallel to the period prior to the big run-up of December/January. It still feels and looks that way.
The dollar closed at 98.56, down .46. The euro rose .77 to 110.19.
The dollar chart:
https://futures.tradingcharts.com/chart/US/63
What a bearish chart! First the move down from the 120 area. Then, a big congestion/new top formation above and below 100. When the dollar takes out 98, its March low, it could really accelerate to the downside. From a technical perspective, the recent congestion/top will act as a powerful hammer in knocking the dollar lower. That will fuel gold demand even further and make it extremely difficult for The Gold Cartel to keep gold down at these incredibly cheap prices.
Something VERY "mysterious" is going on in the gold/gold share world. That’s from a Café member who used to be the head of Listed Trading at Lehman Brothers and Merrill Lynch. The gold shares were clobbered with the XAU dropping 2.76 to 66.16 and the HUI sinking sharply to 125.88, down 4.23. This pro trader is going to buy the "mystery" and sell the "history." Interestingly enough, he believes some sort of shock could come out of nowhere and send the gold shares through the roof. "At some point, they will be impossible to buy, he told me." "They will never look back." I could not agree more.
better as (compared to) [instead of "as to"] Over the past year, whenever the gold shares acted so out of character compared to the bullion action, it portended a quick drop in the price of gold the next day. My take on that is that no one knows the gold market better than the price riggers. The bullion dealers, like Goldman Sachs, are stock houses Not only have they made fortunes playing the rigged bullion market, they are let in on what is coming and have been yanking the gold share market around at their pleasure too. Don’t you just love the unfettered, free markets we have in America!
The Gold Cartel bullion dealers and their hedge fund groupie friends have had free reign with your money for years, picking your pocket whenever they got the word on what was coming. We shall see if they do it again. But, one day they are going to get their clock cleaned when that gold shock surprise comes out of nowhere. That could happen tomorrow, or six months from now. Don’t know when, but one is coming. In the end, we will be paid handsomely for our patience. That annualized return in some of the gold shares will be mind-boggling. That’s why it is important to stay the course.
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The news that Portugal sold 45 tonnes of gold means that 80% of the gold the Portuguese still have left is leased or swapped. How many other central banks are in the same boat that we don’t know about? I suspect there are a number of them. The big question is whether this gold was called away from them because of options they wrote in past years. My most informed colleagues say that’s what happened. For years, MIDAS has written about the massive amount of options that central banks were writing to hold down the gold price and also to get a better return on their gold holdings.
It would seem to me central banks have to be very nervous about the growing gold problem. Many will never get their leased/swapped gold back. It’s gone. Wait until the dummy bankers/politicians have to explain to their public what happened as gold goes $800 bid. SCANDALE!!!!
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Hi Bill:
The Fed has injected $11 Billion in overnight and 28 day repurchase agreements. That action just about offset today's $12 Billion expiration. Thus the total repo pool stays at $36.25 Billion.
Best Mike
As Mike has brought to our attention, without new repo pool money, the US stock market falls.
For those tempted to buy into the Wall Street stock market spin and The Working Group on Financial Market’s stock market engineering, please carefully read this article first:
US SEES THE LIGHTS GO OUT AS STATES SCRIMP AND SAVE
From Roland Watson in Washington
The Times Online
April 24, 2003
In Missouri they are unscrewing every third lightbulb. Prisons in Illinois are splitting prescription drugs in half. The Governor of South Carolina is urging others to follow his practice of reusing Post-it notes and saving paper clips.
Across the United States the worst budget crisis in half a century has forced states to scrimp for savings in a style reminiscent of the Great Depression. Together, the 50 state governments are facing deficits of $30 billion (£19 billion) this year and $82 billion next.
Because all but Vermont are obliged by their own laws to balance their budgets, they have to find $112 billion-worth of savings in two years. California, which has the biggest deficit, is about to run out of money.
Tax rises would help to meet some of the need, but in many states moves to increase taxes have been defeated by legislatures or voters, leaving drastic cuts as the only way to make ends meet.
"The Big Turn Off" in Missouri, which has dimmed electric light by a third in most government buildings, is typical of the desperate scramble to save pennies. In Kentucky, every other ceiling light has been turned off in the State Capitol.
The Kansas Governor has asked agencies to drop the gold-embossed state seal from stationery, saving 2c a page. Agencies in Oregon are banned from colour printing.
Such measures, although eye-catching, are largely symbolic, Scott Pattison, of the National Association of State Budget Officers, said. "They demonstrate that you are doing everything you can." They are also aimed chiefly at administrative agencies, or at areas of spending where there are fewer votes, such as prisons.
Jail chiefs in Illinois are trying to cut their prescription drugs bill by ordering double-strength drugs and splitting them. In Virginia, prisoners are to receive only two meals a day at weekends. Kentucky has chosen an alternative route, releasing prisoners early.
The sums involved make it impossible, however, for state governments to confine their cuts to politically marginal areas. In Oklahoma, teachers are mopping floors, driving school buses and cooking meals because support staff have been laid off. In Oregon, teachers worked for two weeks without pay to keep schools open. School districts in some parts of Colorado are operating four-day weeks. In Idaho, towns have held cake sales to keep teachers on staff.
Across the country, tens of thousands of poorer families are losing access to healthcare as capitals cut back on the Medicaid programme. In Texas, 275,000 fewer children will receive healthcare.
California, which faces a $30 billion deficit, 30 per cent of its budget, will have to start writing IOUs by the summer unless it finds a way of raising money. Alaska and Oregon face even bigger deficits as a proportion of their budget. Nevada, New York, Arizona, New Jersey and Texas all face deficits of between 15 and 20 per cent of their budgets.
The turmoil has yet to threaten President Bush. The White House has tried to keep the issue at arm's length, refusing to bail out states and telling them it is their problem. Mr Pattison said that voters tended to take their wrath out on state legislators rather than presidents for local problems.
Mr Bush travels to Ohio today to bang the drum for his economic priority, his endangered package of federal tax cuts. The state demonstrates how state budget deficits could yet hurt him. Ohio is planning to cut 50,000 people from health coverage, the largest such cut yet.
If voters go into the presidential election year in 2004 with their education and healthcare systems in chaos, it may present Democrats with an opening.
Mr Bush contends that a recession that began before he came to office, coupled with war, is behind the financial straits of states, as well as of the economy as a whole. States, too, share some of the blame for gorging on the 1990s boom with little regard to possible perils ahead. They cut taxes, increased spending and put some aside in reserves. But it was not nearly
enough.
"States are really hurting," Mr Pattison said. "It is particularly bad because in the past they have relied on rainy-day funds to cushion the pain. Now it is nothing but painful cuts."
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