SATURDAY, March 3, 2007
THE INTERNATIONAL FORECASTER
MARCH 2007 (#1) Vol. 11 No. 3-1
P. O. Box 510518, Punta Gorda, FL 33951-0518
An international financial, economic, political and social commentary.
Published and Edited by: Bob Chapman
E-mail Address
International_forecaster@yahoo.com
CHECK OUT OUR WEBSITE
www.theinternationalforecaster.com
SUBSCRIPTION and RENEWAL INFORMATION: 1-YEAR $129.95 U.S. Funds.
Make check payable to ROBERT CHAPMAN (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address. We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$129.95 for a one-year subscription.
Foreigners please use foreign U.S. dollar denominated checks or Money Orders.
Note: We publish twice a month by surface mail or twice a week by E-mail. international_forecaster@yahoo.com
RADIO APPEARANCES:
To check out all of our radio appearances click on this link below:
http://www.theinternationalforecaster.com/radio.php
US MARKETS
The nation’s manufacturing sector, or what is left of it, slipped into recession over the past year, but our media, Wall Street, our government and corporate America somehow didn’t notice it. Now we are told, after multiple revisions, that GDP growth in the third quarter of 2006 was 3% and in the fourth quarter 2.2%. The later only two weeks ago was revised from 2.6%, up to 3.5%. Obviously the government is either hopelessly incompetent or was lying. We defer to the latter. Our Commerce Department tells us orders for durable goods, like computers, vehicles, aircraft and factory machines, plunged almost 8%.
These factors add fuel to the fire as markets in Europe and Japan fell as the Chinese stock market plummeted some 10%. US markets fell 3 to 4 percent, the worst fall since 2003. This is significant because with all their funds the “Working Group on Financial Markets” could not arrest the downward tidal wave even with the help of the Fed, although they found time and money to again viciously attack gold and silver. Of course, the market problems were the result of a computer glitch and if you believe that we have a bridge for sale you should take a look at.
We are in a recession, a real recession and not only manufacturing is telling us that, but so are the credit and housing markets. We have been in recession for a year and few professionals and investors know it yet. Can they be that dumb? We do not think so. They are in denial. They do not want their money feast to end.
Bad numbers have been coming for six months, but with market manipulation the players figured the elitists could keep the game going indefinitely. Even though manufacturing is only 12-14% of GDP, if it is in recession it is problematic for the entire economy. We also have high home inventories and foreclosures and a housing slump. We see GDP falling three quarters in a row, which sets a trend, a downward trend. The Street is again betting that there is a 52% chance of an interest rate cut. Maybe, that is if the Fed wants the dollar to collapse. Foreigners are not going to roll Treasuries and agencies if US yields fall as other rates are rising in England, Europe and in other countries.
The housing problems are approaching a crisis that will play itself out over the next 2-1/2 years as we predicted so long ago. The economy is facing major risks and most people are oblivious to them or in denial. This is human nature and it is natural, but it does nothing to make the problem go away.
...
Tuesday’s stock collapse is a strong indication that the four-year bear market rally arranged and managed by the Treasury and the Fed is over. The US economy has faltered for a year and few wanted to recognize it. The self-reinforcing asset inflation spiral is changing. Lower equity/asset prices will produce stress on earnings, consumption and debt, which will force liquidation of assets and institutes a negative spiral. Significant busts occur in March and April. In 1929, the first three days of March produced a 5% decline. A rally followed and by month’s end stocks had fallen 12%.
In 1987, stocks fell 8% in April and after an early May rally stocks declined to a 10% springtime loss.
In 2000, stocks collapsed in March, led by OTC stocks. They bottomed in April then rallied to September 1st. Then the real decline began just like it did in 1929 and 1987. 1973 also saw the same action, which was worse than 1987.
The present decline will last into April. Then there will be a brief summer rally and in September-October the bottom will fall out.
Just reflect back to the Chicago PMI as it started to fall in the second quarter of 2005, and collapsed in the fourth quarter of 2006. Now housing as we predicted has collapsed. Debt and income disparity are at records and a massive subprime lending problem is shaking the market causing a contraction in credit as the yen carry trade starts to dry up liquidity.
You will continue to hear more via the media that the economy remains healthy in coming weeks, especially from the propaganda circus known as CNBC. Denial, lies and mitigation always occurs after the first significant stock decline; but this bear market rally is very long in the tooth-historically very old. Even though there is overwhelming evidence of excessive speculation and an ebbing or falling economy, most investors and traders, due to operant conditioning, will remain bullish and complacent as they lose lots of money. Volatility has exploded on Tuesday and the VIX jumped 36% at its high. The yen rallied sharply as the bankers and hedge funds unwound the carry trade. Quality spreads increased. Credit derivative swaps jumped to their highest levels in 18 months. You can be sure everyone is on notice. The percentage fall in the indexes is not profound. But, they are missing the colossal point. In this highly levered world, this unremarkable decline produced record NYSE volume, a supposed, computer/trading malfunction, a record jump in the VIX and disturbances in derivatives and other financial instruments. We ask, what would result if a significant decline materializes? Tuesday was the first warning shot.
...
GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS
From a fellow subscriber.
“There was a definite gradual 50% decrease in one-year silver lease rates from about 1.5% to about .75%, commencing 2/23/07 and bottoming out on 2/27/07, the day of the major hit. However, the Kitco site says that the rate on 2/28/07 is down .03% from where it was yesterday, when in fact it is up .54%. I find these discrepancies somewhat disturbing, almost like someone is trying to hide something. It may well be that the cartel is simply having to settle for a more expensive lease rate for manipulation purposes than was previously possible. One-year gold lease rates continue to drift lower and today (2/28/07) they sliced off a substantial .05% to .13 percent, which is .03% lower than the six-month rate. As the cartel becomes ever more desperate, they may just go with the higher rates and worry about the resulting costs later. Significantly, the gold lease rates remained steady through the day of the major hit. Obviously, they did not want to tip gold bulls off that they were up to something, but the drop in silver lease rates, which are not watched as much, might have tipped us off that something was about to happen.”
Gold on Wednesday opened lower, off $14.40 after the first hour of trading, silver was off $0.33 and copper off $0.05. The Dow opened 60 points higher, Nasdaq up 46 Dow points and S&P up 55 Dow points. The euro was off .0027 and the pound was off .0019. Gasoline was up and oil and natural gas was lower. The Dow was up but with little conviction. The cartel again threw everything they had at gold and silver trying to break the market. The gold market was off $22.20 at one juncture but finished down $15.60 to $668 and silver fell $0.36 to $14.13. The April gold contract fell $14.70 to $672.50, silver fell $0.46 to $14.23 and copper fell $0.07 to $2.75. The cartel attacked viciously first in the access market putting gold off $16.20 and then in London, followed by attacks at Comex and CBOT. This shows you in spades that we no longer have a free market, but have no fear we will prevail. Don’t let these crooks shake you out. If anything today with gold off $15.60 gold and silver shares were up and that was probably short covering telling us the correction will end on Thursday or soon after. The XAU rose 2.20 to 139.66 and the HUI gained 5.08 to 339.80. Tuesday’s Tocom saw big shorts add 1,615 positions to 127,978 contracts. Goldman covered 378 to net 32,893. The silver shorts reduced shorts 719 contracts to 3,716. It also is of interest that the goldprice.org is telling us the gold correction is over. We also see derivatives markets under major stress. You simply haven’t seen anything yet. This is just the rollout. The manipulation of markets is no longer a secret. Everyone on Wall Street, our government, corporate America and in the media knows all the markets are rigged, especially the gold and silver markets. Yet, few dare to speak about it. Most because of fear or they are making a living emulating our government and their nefarious, criminal schemes. For the past six months the manipulation of the gold and silver market has been so blatant to most – everyone realizes what is going on. As the elitists become more disparate they will totally expose themselves and later when we have our criminal trials we will have ample evidence to hang them. Probably worse than any of the elitists are the regulators at the SEC, CFTC and the NASD who sanction and hide what is going on. The suppression has been bad, but the flipside is almost all the central bank’s gold has been sold for a pittance in order to achieve their goal of world government. Market intervention has caused investors billions of dollars.
The Dow struggled to put on 52 points on Wednesday, S&P rose 72 Dow points and Nasdaq rose 51 Dow points. Oil was up $0.33 to $61.79, gas up $0.03 to $1.85 – we are now looking at $2.50 gasoline at the pump soon and natural gas fell $0.23 to $7.30. The euro rose .0001, the pound rose .0019 to $1.9367, the Canadian dollar was off .19 to 85.54 and the dollar index was up .12 to 83.50. The 2-year Treasury yield moved up to 4.64% and the 10’s were 4.56%.
On Thursday many hours before the NY opening the euro and pound were off slightly, the yen was higher, oil was up $0.38, the FTSE was up 45 Dow points, which offset the Dow gain of yesterday, the Nikkei Dow fell another 150 points, gold was up $4.50, silver was up $0.21 and copper was $0.04 higher. Fifteen minutes before the opening gold was off $2.00 and silver was up $0.04. The FTSE was off 100 Dow points, which puts the Dow off 50 points going into the NYSE opening. Oil is off $0.13 now as well. Copper is up $0.03. After 15 minutes into the Comex/CBOT session gold was up $2.30, silver was up $0.15 and copper $0.03. After the first hour of trading gold was up $0.40, silver $0.07 and copper $0.02 The euro was off .0012 and the pound was off .0017, oil was off $0.37 and the Dow was down 208 after three minutes of trading. After four minutes the cartel hit the commodities and PM’s. Oil fell off $0.54, copper up $0.01, gold off $1.60 and silver up $0.03. The yen was up 1.50 and the yen carry trade participants have to be getting killed. After 1-1/2 hours gold was up $0.40, silver up $0.03 and copper up $0.01.
Artemis hedge fund is seeking $300 million to invest mainly in silver, some 80%. The rest will go into gold, nickel, uranium and other metals.
De-hedging in the fourth quarter slowed to 41 tons and that means for the year there was 397 tons of net de-hedging. That means net supply from the mining sector was about 2,100 tons. Company hedging now stands at 1,341 tons, the lowest since 1994.
After three hours of trading on Thursday gold was up $0.80, silver up $.06 and copper up $0.02. Oil was up $0.50. The Dow was off 16. Both the euro and pound were being battered by the Treasury and the Fed both off .0070. The day saw slow deterioration in gold with the price ending at $665.10, off $7.40, silver off $0.58 to $13.68 and copper off $0.06 to $2.75 in the April month. The only thing that held up was the energy complex. Oil rose $0.21 to $62.00, gasoline up $0.03 to $1.90 and natural gas rose $0.03 to $7.33. The euro fell .0038 to $1.3195, the pound fell .0039 to $1.9604 and the Canadian dollar fell .18 to 85.30. The two-year Treasury yielded 4.62% and the 10’s were 4.56%. Spot gold finished the day off $4.80 at $664.70 and silver fell $0.55 to $13.63. Friday should be a down day and it should signal the end of the correction in the precious metals and commodities.
Gold is caught in a titanic struggle having to fight its way desperately higher as it is attacked relentlessly by the gold suppression cartel. As this transpires there has been mounting physical demand globally, which consumes all the gold being mined, and then some, leaving a shortfall of 400 tons a year.
As we have said before the citizens of the US, Canada and Europe are not gold buyers. They know inflation is far more than government and the media tells them, yet they cannot understand the gold story, or are they gullible or just dumb?
The financial markets are out of control and we are in a recession, thus we have stagnation and inflation, better known as stagflation. A world economy that can only continue to function with greater and greater massive doses of liquidity. The minute central banks stop, deflation and depression begins. That is why we have had a broken stock market bubble and now we are entering the demise of the real estate bubble. What is next tulips or Beanie Babies? Then there are derivatives, which we are told that unofficially have reached $450 trillion.
Gold has incredibly powerful fundamentals so we have to take corrections in stride as we move higher. The manipulation is now so blatant that even non-professionals see it. That reveals signs of desperation, which should soon lead to the end of the suppression game. We ask, how many times can the IMF announce gold sales for gold – the gold they do not have and can’t access? Then there are the central bank sales of gold. They only sold 4/5’s of their quota last year and so far this year are headed toward about 50% fulfillment. In tandem with the forgoing that tells us the suppression is coming to an end. Remember, we are still in the early stages of a gold and silver bull market, so you should be using every correction to buy. If you are not in the game, you cannot win.
Friday three hours prior to the New York opening gold was off $1.90, silver was off $0.02 and copper was up $0.01. Oil was up $0.12, the Nikkei Dow was off 230 points, the yen was up .74 and the FTSE was off 20. Ten minutes into trading the gold suppression cartel attacked full bore taking gold down $11.20, silver $0.29 and copper was up $0.03. S&P futures were off 80, the Dow 72 and Nasdaq 120. The euro was up .0004, but the pound was off a giant .0140. Oil was off $0.22.
The crooks did their thing again on Friday for our government. Gold should have been up but it wasn’t. Due to the Working Group on Financial Markets and the Fed and the commercials with help and panic from the Chinese the cartel was successful in blasting gold and silver again. If you notice commodities didn’t get hit as gold and silver did. It had nothing to do with supply and demand and everything to do with manipulation. The good part is its close to over and the bad part is we have to start over again, but that is ok we have patience and time and we will win. We have since 2000. There is not shakeout, just shorts and derivatives. Gold open interest fell only 4,278 contracts to 413,038. The spec longs have not been shaken out. The big question for Monday is will the physical buyers stand head to head with the paper crowd – we will see.
The COT report tells us the spec longs increased their longs by 13,618 contracts and increased shorts by 1,459 contracts. The commercials increased their longs by 106 and decreased shorts by 15,706. That tells us the market was driven lower by a combination of derivatives and perhaps some late physical selling. The volume couldn’t have been large because lease rates on gold did not fall. We saw a low volume drop this week and that can easily be reversed. The market should start a short-term stabilization this coming week. The dollar index is weak and near cracking. Had not the pound fallen .0134 to $1.9436 on Friday, the dollar index would have finished much lower. It was up .05 to 83.64. It is acting sickly. Remember the London second fix yesterday made a new recent high. It’s no wonder the Illuminists are scared. We could easily have a breakout. Silver was worked over again as open interest fell 4,027 contracts to 120,670.
The Tocom gold shorts increased their net short position by 1,419 contracts to 129,379 on 2/28/07. On 3/1/07 they increased again by a huge 14,097 contracts to 143,494. Goldman increased their shorts 1,089 to 34,171. This started the downside in all gold markets on Friday. On 2/28/07 they increased silver shorts by 75 contracts to 3,791 and on 3/1/07 they increased silver shorts by 749 contracts to 4,540. Again this is where some of Thursday’s and Friday’s downward pressure came from.
Friday’s gold closed off $22.40 to $640.80 and silver fell $0.26 to $12.82. In the April gold contract gold fell $21.00 to $644.10, silver $0.69 to $12.96 and copper lost $0.05 to $2.71.
The Dow fell 120 to 12,144, S&P fell 144 Dow points and Nasdaq fell 216 Dow points. Oil grudgingly gave up $0.36 to $61.64, gas fell $0.01 to $1.90 and natural gas fell $0.05 to $7.24. The euro gained .0034 to $1.3194, the pound fell .0134 to $1.9436. The Canadian dollar fell .27 to 85.00 and the dollar index gained .05 to 83.64. The 2-year Treasury bill yield was 4.55%, closing up the inversion for the first time in months to the 10’s 4.51%. As an afterthought in two days, 20 million ounces of silver or 50% available for delivery has been called for delivery.
The cartel in spite of their recent success in knocking gold and silver lower again is losing power. Their behavior is blatant and that of someone disparate. The US Treasury is trying to control the unwinding and sale of US dollar positions and at the same time orchestrating a flight into Treasuries. This is bullish, especially when they have to use the access market to try to control gold. In their arrogance they want you to know they are screwing you and the world investing public. This is not the central banks of other countries, this is the go it alone now US Treasury and our Fed. This is not control – it is illusion of control by delusional people. This is their final act. We are about to become another Zimbabwe, so get ready for real hyperinflation as the Illuminati tries to keep the game going.
...
SUBSCRIPTION and RENEWAL INFORMATION: 1-YEAR $129.95 U.S. Funds.
Make check payable to ROBERT CHAPMAN (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address. We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$129.95 for a one-year subscription.
Foreigners please use foreign U.S. dollar denominated checks or Money Orders.
Note: We publish twice a month by surface mail or twice a week by E-mail. international_forecaster@yahoo.com
