THE INTERNATIONAL FORECASTER

Saturday October 27th the 102707(8)_IF

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                               Published and Edited by: Bob Chapman

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GOLD, SILVER, PLATINUM, PALADIUM AND URANIUM

On Wednesday, gold reversed and closed up $2.60 at $761.60 and silver fell $0.07 to $13.47 fending off the forces of evil. The stupidity of the day was the PPT’s reversal of the Dow from -140 to -1 at the close all in the last 1-1/2 hours; blatant manipulation and they do not care who knows what they are doing. S&P fell 34 and Nasdaq 147 Dow points. Except for Apple the economic news was awful. We are anxious to see if central banks will comply with the new IMF transparency rules regarding gold and the reporting of loans and swaps of gold reserves? If they comply we will find they probably have only 5,000 tons left having leased out most of their reserves. We expect a FOIA request for an exact accounting of US gold reserves. Gold open interest rose 6,786 contracts to 489,471 and silver OI fell 649 to 122,842. The yen rose .68 to $1.1417; the euro was -.01 at $1.4259, the pound fell .27 to $1.0324, the Canadian dollar fell .27 to $1.0324 and the USDX dollar index was -$0.4 to $77.49. The 2-year was 3.74% and the 10’s 4.34%. Oil jumped $1.83 to $87.10, gas rose $0.04 to $2.15 and natural gas rose $0.21 to $6.97. The big gold shorts on Tocom yesterday increased their net shorts by 4,117 to 54,679 and another player, not in this group, added 3,228. Goldman increased their gold shorts by 459 contracts to 13,340 and increased net silver shorts by 8 to 4,804. At 317 tons, India’s demand for gold in the second quarter equaled one-half of the world’s mining output. Indian demand for jewelry has almost doubled this year.

Thursday early saw pluses everywhere. The Dow was +8, S&P -4, Nasdaq +38 and the FTSE +112 Dow points. The CAC rose 58 and DAX was +84. The yen was -.25, the euro +.48 and the pound +40. The 2-year Treasury was 3.75% and the 10’s were 4.35%. Oil was +$1.43, gas +$0.04 and natural gas +$0.07. Gold was +$4.00, silver +$0.20 and copper +$0.03.

On Thursday gold was firm early on and stayed that way finishing up $5.40 to $767.00 and silver rose $0.35 to $13.82. Again gold should have been much stronger. Oil helped being up $3.36 to $90.46, gas rose $-.09 to $2.24 and natural gas was +$0.22 to $7.19. The yen fell .07 to $1.1409, the euro was +.067 at $1.4323, the pound was +.38 to $2.0517, the Canadian dollar rose .32 to 1.0353 and the dollar closed off again .31 to 77.22. Gold should have been up $20.00 plus. The 2-year was 3.77% and the 10-year was 4.38%. The access aftermarket in gold was up $2.00. The Dow was -3, S&P -14 and Nasdaq off 143. Gold open interest rose 3,893 contracts to 493,364, another all-time high. Silver OI was up 561 to 123,403. Word is the Istanbul Gold Exchange is running out of gold. They have been approaching mining companies looking for bars. They are the third largest buyers of gold in the world. The big Tocom shorts increased their net short position by 3,236 contracts to 57,915 as Goldman covered 393 to net 12,953. The same group cut silver shorts by 27 to 2,333. Gold demand from India in 2007 could surpass the 1,000-ton mark for the first time ever as volume doubles. Saudi demand rose 30% in the second quarter. The XAU rose 1.01 to 176.90 and the HUI rose 1.85 to 409.18.

Early Friday was mixed. The Dow was -16, S&P -5, Nasdaq +32 and the FTSE was +30 Dow points. The CAC was -5 and the DAX +1. The yen was -26, the euro +49 and the pound +15. The 2-year was 3.77% and the 10’s 4.37%. Oil was +$0.85, gas +$0.01 and natural gas -$0.16. Gold was up $9.00 and silver was up $0.27.

Today, Friday, at 3:00 am EDT, the big news is that silver just broke 14 and has already gone as high as 14.13, and gold has broken out also, setting a new 27-year closing high yesterday of 767, and has now soared to as high as 778.65.  Oil has gone ballistic, now up 1.72 to 92.18, on its way to 100.  Following the ruthless abandonment of the dollar at the latest G-7 meeting, the USDX has collapsed and threatens to break through 77, being about 77.107 at the moment.  The yen is now surprisingly weak against the euro, being about 164.384, while against the dollar it has not changed much, being at about 114.461.  This could be very bullish for gold when the European markets open up unless the yen strengthens again against the euro.  Looks like another big Friday in the making.  The commercial shorts are insane.  Gold futures OI went up Wednesday to 493,364 contracts and it looks like 500,000 may get taken out soon.  If the Fed cuts, we are looking at four figure gold, and we mean way into the four figures, unless the central banks go wild with gold sales and leasing.  We believe the large specs are ready for them.  Large specs should be stockpiling cash wherever they can get their hands on it and be ready to buy as much physical gold as the cartel offers, and then ask for more, like a little boy who has just had his first bowl of ice cream and wants seconds.  If you were looking for excitement, look no further.  It has arrived!  

Finally on Friday the gold and silver markets started to act as they should. We told you gold had clearly broken out and was headed to $1,000 two months ago and that silver would follow. We also said the hold on the gold price by the gold suppression cartel had been broken and so it has. Early on gold was up $8.60 and silver $0.27. Gold closed up $16.50 at $783.50 and silver rose $0.35 to $14.17, a clear breakout for silver as well.

A feat especially on a Friday. Thursday’s open interest rose 11,860 contracts to 505,224. Silver OI rose 3,095 contracts to 16,498. The COT report showed large specs reducing their longs by a net 15,555. The commercials reduced net shorts by 16,327 putting new shorts over the past two months still at 110,000. We suspect since Tuesday there has been further short covering by the commercials, especially on Friday. They are still very short and this rally still has a long way to go. This is a mega short squeeze better known as a commercial signal failure. Gold and silver got lots of help today. The yen fell .12 to $1.1420 in order to help the stock market on the upside via the yen carry trade. The euro rose .68 to $1.4387, the pound rose .17 to $2.0531, the Canadian dollar rose .40 to 1.0393 and the USDX fell .25 to 76.98, another new low. Copper rose $0.06 to $3.54 as all base metals rose. The 2-year ended with a 3.76% yield and the 10’s at 4.39%. The Dow fueled by the yen carry trade and the Fed rose 135 to 13,807, the S&P was up 188 and Nasdaq rose 320 Dow points. Wait until the central banks, under new regulations from the IMF, have to state their gold positions and we find they only really have about 5,000 tons left. We unfortunately are skeptical that all the central banks will comply. The Treasury Department’s new reporting form fails to comply, by not distinguishing unencumbered gold from encumbered gold, gold on deposit and gold swapped. No matter what they do we will get the last laugh, the profit and the opportunity to hold on to the value of our assets. We got an additional helping hand from oil, which was up $2.00, down $0.47 and finally up $1.40 to $91.86, gas rose $0.04 to $2.27 and natural gas rose $0.03 to $6.22. We might mention that as far as we know CNBC had nothing to say about gold hitting new highs. The big Tocom shorts on Thursday added a net 3,897 contracts to total 61,812 as Goldman covered 261 shorts to total 12,692. The big silver shorts reduced net shorts by 20 to 2,313. The XAU rose 5.04 to 182.31 and the HUI busted out over 400 to 420.59.

Jimmy Rogers, who correctly predicted the commodities rally in 1999, said silver and palladium are likely to outperform gold.

We have received unconfirmed reports that the molten gold and silver lava in the cauldrons that have turned the mountains of gold and silver shorts on the COMEX and the TOCOM into towering volcanoes has started to run down the sides of the mountains.  On Friday, we suspect that there was a massive short-covering rally or a commercial signal failure that sent both gold and silver skyrocketing and into the plasma state, but we won't know for sure until the gold and silver futures open interest data, which the NYMEX site has been conveniently blanking out since Friday morning, becomes available for review.  We fear for the bears, as they may have orders from the cartel to do the Kamikaze thing, but we suppose the bears really needn't worry.  If the gold bear gig does not work out they can always get rid of the white headbands with the red suns and do commercials for the animal crackers industry as the molten lava is sure to turn them into Crispy Critters next week.  Corporate budget managers and advertising directors will get a real bargain too as no costumes or makeup will be necessary.

On Thursday, spot gold started to get fired up, setting a new 27-year high closing price of 767.  But then late Thursday and all day Friday the situation became simply smashing, smashing the cartel that is.  The control rods were apparently pulled from the reactor core, causing both gold and silver to go into a thermonuclear meltdown in what can only be termed a Cartel Syndrome scenario, as the gold and silver plated cores of uranium threatened to melt down through the entire mountains of shorts on the COMEX and the TOCOM.  If you asked the cartel how they would spell relief, they would answer "S-w-i-s-s N-a-t-i-o-n-a-l B-a-n-k."  Sorry cartel, but that will not save you.  They do not have enough left that they are willing to sell.  The large specs will scoop it up like ice cream and the Indian jewelers will scrape up what is left for a snack.  The large spec mantra to the central banks is now based on a quote from a book by Charles Dickens called "Oliver Twist":  "Please sir, may I have some more."

Friday, gold and resource stocks set every imaginable record short of the all-time highs for spot gold and gold futures.  Spot gold blasted off to a new 27-year intra-day high of 785.85 and a new 27-year closing high of 783.50, up an astonishing 16.50, well on its way to 800 and beyond next week.  Gold futures did likewise, setting a new 27-year intra-day high of 789.50 and a new 27-year closing high of 787.50, also up 16.50 on the December contract.  The XAU set a new all-time intra-day high of 182.96 and a new all-time closing high of 182.41, up 5.21, while the HUI set a new all-time closing high of 420.59, up a stunning 11.41.  Not to be outdone, oil and silver supported gold magnificently.  Oil set another new all-time intra-day high of 92.22 on the lead contract (December) and a new all-time closing high of 91.86.  Silver was the real story today even though it did not set any records yet.  Silver exploded like a brick of C4, rocketing well past 14 for the first time in many months.  This is the sign we were waiting for that would set the PM sector on fire.  Silver, which closed at 13.82 on Friday, took off in true Roadrunner fashion and, like gold, never looked back, closing at 14.17, up .35, after peaking at 14.22 just before the close.  Anything and everything is breaking out and there is no stopping it now.  The dollar also supported gold, although unfortunately in the other direction, with the spot USDX plummeting below 77 into the 76 handle for the first time, going as low as 76.977 before closing at about 77.005. This is in anticipation of the much-expected rate cuts by the Fed between now and the end of the year.  And check out the weekly gains for any and all investment sectors this week.  Gold, silver and their related resource stocks blow everything else out of the water from a percentage standpoint, so you can be certain that money is going to continue to flow to PM's and their stocks at an ever-increasing pace as professionals start to take notice of these incredibly profitable places to put their money instead of putting it in low-yielding money markets and treasury bonds or risky general stock markets.

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-- Posted Sunday, 28 October 2007 | Digg This Article