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COT Gold, Silver and US Dollar Index Report - July 10, 2020

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Steady As She Goes / Silver Pops

By: Bill Murphy, Le Metropole Cafe,

-- Posted Thursday, 3 July 2003 | Digg This ArticleDigg It!

July 2 - Gold $351.30 unchanged - Silver $4.63 up 7 cents

Steady As She Goes / Silver Pops

For attractive lips, speak words of kindness.
For lovely eyes, seek out the good in people.
For a slim figure, share your food with the hungry.
For beautiful hair, let a child run his or her fingers through it once a day.
For poise, walk with the knowledge that you'll never walk alone.
People, even more than things, have to be restored, renewed, revived, reclaimed, and redeemed: Never throw out anybody.
Remember that if you ever need a helping hand, you'll find one at the end of your arm.
As you grow older, you will discover that you have two hands--one for helping yourself, the other for helping others.
-- Beauty Tips by Audrey Hepburn

Yesterday, silver was not allowed to run up along with gold. That would create too much excitement and also make it harder for the bad guys to put their cap on bullion. With gold coming in lower today, silver charged ahead, as much as 10 cents at one point. Before all this gold/silver price rigging came into play, the two metals often traded off of each other. No more. They trade in spite of each other. When The Gold Cartel goes down for good, gold and silver will once again trade like they used to.

Silver has made a short-term rounded bottom and has also formed a big picture rounded bottom. See:

Silver has been jerked around for so long, it is very difficult to do any kind of technical analysis that holds up. I have been looking for silver to take off for some time and it never does, thanks to the managers of this market. One day it will, and be a sight to behold. Morgan Stanley was a good buyer. Technically, silver doesn’t have any resistance until it reaches $4.95. That’s where it ought to go.

The gold trading was very light as it continues to do some "work" after its recent bashing. Once it takes out $353.50, it should run to $360 in preparation for an assault on $370.

The dollar sold off right near its close ahead of tomorrow’s important jobs report, finishing at 94.40, down .25.

The John Brimelow Report
Wednesday, July 02, 2003

Indian ex-duty premiums: AM $4.82, PM $6.14, with world gold at $350.75 and $350.70. Adequate, and ample, for legal imports. Mitsui’s resourceful gold commentator Andy Smith has apparently managed to locate the Indian gold (official) import statistics through April, which show less than 10 tonnes a month in January and February, and an astonishing 130 tonnes total for the following two months. This, of course, is quite consistent with the high premiums seen after gold fell back from the February high. In contrast to the early weeks of the year, India seems quite willing to import with world gold at $350. This, and what UBS refers to this morning as "some interesting reports of returning physical demand" from other quarters, constitutes a huge obstacle to the ambition of the Bears.

TOCOM calmly accepted NY’s dramatic rebound. Volume equal to 31,452 Comex contracts (5% more than yesterday); the active contract rose 4 yen; but $US gold did little, finally going out unchanged from the NY close. The Shanghai Gold Exchange premium has settled back to a normal $1.98. (NY yesterday traded 42,802 lots: open interest rose 2,993 contracts.)

Bullion Bank commentators appear bemused by yesterday’s NY action, defying, as it did some significant technical obstacles, and far exceeding the lead offered by the weaker dollar. (Today’s achievement of holding and even slightly advancing these gains with no help at all from the dollar is actually equally remarkable.) But an obvious explanation arises from reading Mark Hulbert’s column on CBSMarketWatch today. Hulbert reports on studies documenting the habit many equity mutual funds have apparently developed of "marking the close" at quarter end. If this can happen in the stock world, right under the nose of the SEC, and where it is actually illegal, it would hardly be surprising in the less constrained commodity world. Quite possibly the last two weeks of June saw gold under this influence.



The DOW (9142, up 101) and DOG (1679, up 39) roared ahead, continuing to ignore some less than robust fundamentals.

In late from GATA's Mike Bolser:

Hi Bill:
As promised yesterday here is a quick look at the repo totals chart showing the DOW as it touches its 30-day MA. The head fake of today's 100 plus DOW jump isn't to be trusted as the total repo pool is still below it's own 30-day moving average.

The dollar may still be enjoying a respite from organized selling from the Multi-polar world and if true, the Fed's jugglers have a bit more funding to work the DOW.
Best, Mike

Advisors’ Sentiment Review
July 2nd 2003
Bulls and bears back off from multi year extremes.

The 16.1% bears two weeks ago was the lowest since April 1987, and the readings have gotten a bit higher this week, but remain at a low 20.9% level. In a related development, the AAII survey of individual investors (not professionals), shows the biggest spread between the bulls and bears ever.

The previous two biggest spreads were back in August 1987 and January 2000. The August 1987 reading was just two months before the crash while the January 2000 was the month of the all-time high in the DJIA. In the other direction, we will report later this week that insiders were selling 4.11 shares for every share they are buying. This is very close to the high of 4.18 that we saw last May, which was the heaviest insider selling since 1986. The week before last we also had a record 325 buying climaxes, a major sign that stocks are passing from smart hands to dumb hands. With our indicators starting to come down from very, very overbought levels the fact that the smart people are selling like crazy, while the not so smart are buying like crazy is not a good sign. Our outlook is for a sell off into the summer time that will be followed by a better market for a while. We have been selling stocks we had bought at the July and October 2002 and the March 2003 lows and have also been making some short sales. –END-

Jessie tells it like it is about yesterday’s swift stock market turnaround:

The market started rallying in earnest today when this news (dismissal of Merrill Lynch class-action suit) was made public. Several analysts, including one on CNBC, attributed this news as the spark for the rally in a market that had opened down sharply, and then later went into an almost straight up rally after an earlier false start.

I wonder why they waited a day, and then released this news during market hours. I wonder how widespread the news of this decision was before the 'public announcement.'

Can Wall Street get any more arrogant?

Jesse also sends us the latest from the Dallas Fed:

U.S. Economy
National Update
June 2003

Evan F. Koenig reviews recent economic conditions in the United States.

It’s a familiar story. Consumer spending is following a steady upward track, while all of our other "hard" indicators of real activity are, at best, stagnant. Hope comes from a rebound in financial-asset prices. Analysts have for some time predicted that an acceleration in economic activity is "just around the corner." Judging by stock prices and junk-bond spreads, investors are betting that the analysts have finally got it right. Meanwhile, despite all the talk about deflation, core inflation is more likely to increase than fall in the year ahead……


Easy come easy go:

7/2 BAGHDAD (AFP) - US-led coalition forces scouring Iraq may not have found Saddam Hussein (news - web sites), they may not have found the weapons of mass destruction they insist he was hiding, but they have found 1,000 gold bars.

Or so they thought.

The ingots snatched during raids launched to hunt down Saddam's men have turned out to be copper bars painted gold, a senior official admitted Tuesday.

Officials have adjusted their list of campaign successes to include "gold coloured bars."


Amazing how they found all the phony gold while the gold price was flying.

On May 10, 2001 The Gold Anti-Trust Action Committee held its GATA African Gold Summit in Durban, South Africa. Five nations attended, as did the South African Reserve Bank, most of the major gold producers, the National Union of Mineworkers, COSATU, South African Broadcasting Company, and many others. Reg Howe, James Turk, Frank Veneroso and I were speakers. The essence of the event was to reveal to sub-Saharan African countries that the gold market was manipulated by a Gold Cartel, which was suppressing the gold price far below its natural equilibrium level. We explained this cabal had a hidden agenda that was extremely detrimental to the people and the economies of the sub-Saharan gold producing countries.

A Café member sends us the following:

I was reading that Bush is scheduled to visit Africa sometime this month. I am aware of the gold-price-fixing scheme that he (and his father before him) is involved in to the detriment of the poor in Africa. Since South Africa is the largest gold producer one would be tempted to conclude that it would be much better off than it is, but such is not the case in our fiat money system. I was just looking over the facts that I could find to determine how the evil monetary scientists are sucking the life out of South Africa. Let us listen to the hypocrite (Bush) as he tours Africa to see what he has to say. If he really wanted to help the Africans he would set them free from their slavery to the world's evil money system by ordering a stop to the evil practice of dumping the rightful inheritance of US citizens, namely, their gold. You see, Bush is taking what has been stolen from the previous generation and using it to enslave the present generation, not only in Africa, but here in the US as well.

For some facts on South Africa Click Here

Population below poverty line: 50% (2000 est.)

Unemployment rate: 37% (2001 est.)

Budget: revenues: $22.6 billion
expenditures: $24.7 billion, including capital expenditures of $NA billion (FY02/03 )

Exports: $32.3 billion f.o.b. (2001 est.)

Imports: $28.1 billion f.o.b. (2001 est.)

Debt - external: $25.5 billion (2001 est.)

Economic aid - recipient: $539 million (1999)


". . . South Africa produces 495 tonnes of gold a year, or about 30 per cent of the world's total, and the country still accounts for more than half of the world's known gold reserves, though much of it lies at depths of five kilometres or more. . ." -


495 tonnes = 15,914,621.25 ounces
@ $350.00 an ounce = $5,570,117,438.00
about 17% of exports
from the data exports are greater than imports
it must be interest on the debt that keeps SA in need of economic aid
even at 4% the interest payments could be in excess of 1/2 billion a year
couple that with the budget deficit of 2 billion and SA is about break-even
this could account for the need for economic aid

All Bush has to do is to stop manipulation of the gold price and there would be no need to supply SA with aid. It would also be able to pay off its debt from gold sales at higher prices. But, of course, Bush knows damn well how important it is to suppress the gold price. So who will win - the Fed's printing press or SA mines?


Those South African gold reserves that lie at depths of five kilometres or more are expensive to retrieve. They are called "high cost" mines. The gold price needs to be much higher to make it profitable to mine those reserves. If it were not for The Gold Cartel, the gold price would be hundreds of dollars higher. As much as 100,000 miners could be put to work. Each miner supports 10 to 12 others. The multiplier effect in many sub-Saharan economies would be dramatic in some cases. However, thanks to the cabal and Presidents Bush and Clinton, it is not to be. Yet, they both run around and act like they give a crap. It is sickening!

Almost all my funds are in the quality gold junior/exploration companies. I don’t have the time or inclination to check many firms out like Bob Bishop and Jay Taylor, so I go with ones I am familiar with. In most of the cases, it is because I know the CEO of the company and respect their ability and understanding of their business and the gold market. Rudi Fronk of Seabridge Gold, Shawn Kennedy of X-Cal Resources and Nick Ferris of J-Pacific Gold come to mind. In the case of Afrikander Lease in South Africa, I know and respect the judgment of Peter George, Alf Field and Ferdi Lips. All of those companies ought to do extremely well in the coming gold boom.

My largest gold share holding, Golden Star Resources, is attracting a good deal of attention lately. Rightly so and about time! Golden Star’s Peter Bradford has done a marvelous job and has gained a great deal of respect in the gold fund world. Commentary in the last two days alone on Golden Star:

Golden Star Resources
By: Clive Maund, Diploma Technical Analysis

"If you are the kind of investor who likes to buy a stock right at the start of a major, Stage 2 bull market advance then this is the stock for you. The long-term chart of Golden Star is a classic, showing the price just beginning to accelerate up and away from a big saucer base of about 5 years’ duration. It is fitting here to pay tribute to all those smart money investors whose persistent buying throughout the formation of this saucer pattern put a floor under this stock, gradually turned the trend up, and prepared it for the major advance that lies immediately ahead of us. Their efforts surely deserve appreciation, for all we have to do now is climb aboard and enjoy the ride. Where is it headed? Personally, I would be surprised if it didn’t reach at least $20 during the later stages of the developing gold bull market. However, keep in mind that this is a probability, and not a certainty."

The venerable Richard Russell on July 1:

"Incidentally, I continue to receive requests for interesting low-priced gold shares. Here's one that I've recommended before. It's done well, and I do own some. The stock is Golden Star Resources, symbol GSS (AMEX)."

Golden Star finished the day at $2.85, up 8 cents, a multi-year new high close. Vet Café members will remember me pounding the table on this company two to three ago when it traded between 40 and 70 cents! Congrats to the MANY Café members who jumped on board along the way. We have a LONG way to go. The party is JUST starting.

My second largest holding, Samex Mining, led by CEO Jeff Dahl, caught some ink too in the Knobias Market News:

52W HIGH: New 52-Wk High for SMXMF @ $0.268 up 3.08%
TUESDAY , JULY 01, 2003 11:26 AM

This is the 2nd 52 WEEK HIGH alert for SMXMF in the past 7 calendar days.

The share price for Samex Mining Corp (OTCBB: SMXMF) reached a new 52-week high today, trading at $0.268, up $0.008 (3.08%) from its previous close of $0.260.

The Company's previous 52-week high of $0.265 was set yesterday on June 30, 2003.

One year ago, the Company's shares closed at $0.150. The price has climbed more than 78 percent since then.

At the time of this alert, the stock had traded 9,700 shares via 4 trades, 91.89% below it's 20day average of 119,650 shares.

This new 52-week high currently puts the stock:

17.81% above its 20day Moving Average of $0.227
26.24% above its 50day Moving Average of $0.212
45.30% above its 100day Moving Average of $0.184


One of Mike Bolser’s favorite gold companies, Meridian, popped higher on this news:

TORONTO, July 2 (Reuters) - Meridian Gold Inc. (CA:MNG) (MDG) shares rallied nearly 8 percent on Wednesday after the company issued a strong exploration report for its El Penon gold mine in northern Chile….. – END-

Meridian closed at $12.40, up 25 cents.

It's nice to see individual gold companies pop on good company news. Not long ago, gold companies would not react to any kind of positive news on the exploration front.

Most of the gold shares took a breather. The HUI broke out of the box with a surge, rising almost two points, but settled back as the day wore on, closing at 154.68, up .46. The XAU was led lower as heavily weighted Barrick sank to $18.38, down 13 cents. Newmont ($33.50, up 16 cents) continues to widen its gap over the heavily hedged Barrick.

It won't be long before the HUI takes out its high at 157.82. If the bubbleized stock market faces up to reality about then and swoons about the same time the HUI is taking out its highs, the gold shares should REALLY run.




Liquidity trap
Corporate selling and individual buying signal market top

By Jonathan Burton,
Last Update: 12:01 AM ET July 1, 2003

SAN FRANCISCO (CBS.MW) -- It was nice while it lasted.

If the tools Charles Biderman uses to forecast the market's climate are precise, then investors should brace for a summer squall that could give back all of the second quarter's double-digit gains -- and then some.

Biderman runs, a Santa Rosa, Calif.-based firm that tracks the daily cash flows of 90 mutual fund families that collectively control about $1 of about every $7 invested in U.S. stock funds.

Corporate insiders have been selling huge amounts of stock into the rally that began in March, according to Biderman. When executives are heavy sellers and individuals are eager buyers, it's a recipe for a market meltdown, he says. And when that happens, it's not hard to figure out who comes out the loser.

Even more troubling, says Biderman, is that some of the nation's largest pension funds are issuing debt and investing the proceeds in stocks in the hope of covering future liabilities.

The last time buyers, sellers and borrowers had such intentions was March 2002 -- and the market tumbled shortly thereafter. A similarly ominous confluence, minus the borrowing, occurred in March 2000 and also ushered in the painful bear market.

Recently Biderman spoke with CBS MarketWatch about the significance of current funds-flow trends.

CBS.MW: What do cash flows into stock funds say about the U.S. market's condition?

"You have heavy corporate selling. New offerings and insider selling are at large numbers. At the same time, you have individuals pumping a lot of money into equity funds. The last piece of the liquidity puzzle that consistently happens at a market top is when investors borrow to buy. Recently we've had the state of Illinois borrowing $10 billion in the bond market and planning to invest that money in the equity market. And General Motors has announced it's going to do the same thing. So here you have pension funds borrowing to buy. All three are classic signs of a market top."

Why would corporate insider selling suggest a market ripe for a fall?

"When companies are heavy sellers, they know a lot more than you or me. Between the end of 1994 and the end of 1999, companies were buying back their shares on balance every month. Companies were shrinking the trading float of shares; the absolute number of shares outstanding was declining. It's no surprise, then, that the market tripled over that time frame. At the end of 1999 the balance shifted. When inflows peak and corporate selling peaks, it's always a sign of the top. We're seeing the same thing here."

How big a drop are you expecting?

"We're setting up for a 20, 25 percent decline -- probably back to where we started in March."

Individual buying is really that out of kilter?

"The demand for shares is so nuts. Yahoo (YHOO: news, chart, profile) is able to sell a zero coupon convertible (bond) at a 40 percent premium. In other words, you gave your money to Yahoo. They would give you the right to exchange your bond for shares at a price 40 percent higher than the current market, and you get no interest while you're waiting. If it doesn't go up 40 percent, you'll probably get your money back, assuming Yahoo is still viable a number of years from now."

People must be scooping up shares as fast as companies can sell them. How much money is coming into the stock funds you track?

"Rule of thumb is if a dollar is going into equity funds, another dollar is going into equities directly. So let's say $22 billion went in over the first three weeks of June."

The last time so much money cascaded in was March 2002. What happened after that?

"The market dropped 20, 25 percent through July. And we could have a similar magnitude drop here. It has nothing to do with the economy. It has nothing to do with earnings. It's just that stocks got too expensive. For various reasons people decided they wanted to put a lot of money into the market here, drove prices very high, and companies are saying, 'At these prices I'd rather have cash.'"

But isn't there still a lot of cash on the sidelines, waiting to be invested?

"Your second statement I contest. There is a lot of cash. Waiting to be invested? Why?

"People who put money into bank savings accounts, which is where most of the money has gone, are not probably going to take the money out and buy Cisco Systems (CSCO: news, chart, profile) if the market goes up for another month.

Borrowing is the third leg of this rickety stool.

"Pension plans and pension funds are one bad decision from disaster. The reason is that the people who manage them have their eye on something else other than the ultimate benefit of the pensioner. They now are borrowing because statistically it's proven that you make 8 percent a year forever [from stocks], so if you can make 8 percent and borrow at 6 percent, you make some money. You get kind of convoluted."

What should traders who agree with you do now?

"If you're a trader, my recommendation would be to go short stock index futures here."

Jonathan Burton covers the mutual fund industry for CBS


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-- Posted Thursday, 3 July 2003 | Digg This Article


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