But, there is no inflation!

Thank you very much Bloomberg. If bonds are going up on inflation concerns, why is gold stuck in its tracks after a major breakout like we had yesterday? That was written with gold stuck at unchanged for the better part of the Comex trading period.

In a free market gold would have been up another $2 to $3 in the early going. When you have Orwellians controlling a market and rigging it on behalf of the major bullion banks in the US, gold has to be held in check to demonstrate to the naïve and clueless investment world that inflation really isn’t that worrisome. Same drill; these propagandists point to the calm gold price to prove their point. You would think a few dingbats in the mainstream financial market community would catch on to this repetitive deception.

The gold market is now closed. The farce worsens. Once again you could not have had a more bullish gold day, yet The Gold Cartel made sure reality was not allowed to reign. They sat on gold all both morning and afternoon. While other markets were surging, or swooning in fairly big moves, gold had to struggle for every dime on the upside. The crooks were on the case (gold) during the entire Comex trading session. Just like the other day, gold should have risen over $10 by the close. Instead we got crumbs.

My colleague and buddy Chris Powell was laughing at me this afternoon, saying I was the volcano about to blow. It’s just so hard to watch this all day long and take it without any of the nincompoops in the mainstream gold world saying anything about what is going on here.

It doesn’t get much more gold bullish:

CRB – up ANOTHER 1.05 to 313.70
April crude oil – up 18 cents to $54.77 per barrel
Dollar – down .35 to 81.58
March euro – up .56 to 134
10-year note – down 26/32 to 108 30/32
30-year bond – down a whopping 1 19/32, a new low for the move

The 10-year note breakdown is both dramatic and significant. Prices are breaking down (yields breaking out) after completing a MASSIVE top. The interest rate picture is worsening in stunning fashion even as the Doofuses in the Treasury and Fed continue to claim inflation is not a problem, nor is there any serious inflation in sight.

All that and gold pops a piddly $1.70 AFTER breaking out from a major support pattern. The euro gold price FELL .54 to 329.27.

I think it is important to pound away again on a long-held theme of mine. Those who say gold is the antithesis of the dollar are correct in some sense, yet have it all bass ackwards.

The way it really is centers around The Gold Cartel using the dollar action to cap the price of gold and keep it in check via foreign currencies. One of the reasons is to stifle Western investment demand. Those holding gold in foreign currencies are seeing a nothing market and have no incentive to buy. Gold never appreciates in foreign currency terms no matter what else is going on in the world.

Why bring this up again? Because The Gold Cartel is being found out. There is a zero component in the price of gold for anything other than what the dollar is doing, which defies its historical trading pattern (see Dan Norcini below). And, as we saw in December, when The Gold Cartel wants to bury the gold price even the dollar action doesn’t matter.

What I mean by that is commodity prices are going nuts and US interest rates are on the rise in a major league way. This combination, along with a falling dollar, should have the price of gold on a tear for many reasons, which is JUST THE REASON WHY THE GOLD CARTEL IS ALL OVER IT.

Gold has been panned over the years as this relic of a market, a tiny one at that, which is meaningless in this day and age of super financial market sophistication. Quite frankly, if it weren’t for The Gold Cartel, there might be no reason to think otherwise. Gold could have been viewed as just another commodity and one rising with all the other commodities of the day.

Instead, because of their devious and greedy price suppression scheme – one originally put in play to effect the US’ strong dollar policy, they have made it the most important market of all these days. These short-term thinking fools among The Gold Cartel have created a time bomb which will inevitably go off (Murphy’s Law says at the worst possible time). They are suppressing gold to hide the true reality of the US economy and financial markets and give the US dollar as strong a presence as possible. They point to the subdued price action as evidence inflation is not really a problem.

However, the soaring commodity markets and now rising interest rates, along with a falling dollar, all suggest otherwise. This has to have a substantial impact on US financial markets in addition to all the other problems oft-discussed in this column. Meanwhile, because of the cabal’s fraudulent scheme, which made them many billions at the expense of the unknowing general public, the central banks only have half the gold they say they have. The crooks are running out of available gold supply at the worst possible time (yep, Murphy's Law again) which is why the phony financial press in the US won’t allow GATA to be heard.

The point is the reasons to own physical gold are beginning to go off the chart. More and more investors around the world want IN. Silver too. The precious metals are going to go berserk when the bums are carried out on stretchers, when they lose control of their scam.

One of the other major reasons The Gold Cartel is sitting on gold is they are short so much gold, it CANNOT be covered. Their derivatives exposure to this mammoth gold short position must be staggering. When the gold price rises sharply, and it will some day in the not too distant future, our long waited gold derivatives neutron bomb should go off along with a Commercial Signal Failure. When this happens, interest rates will go that much higher as pundits point to a soaring gold price as evidence of horrific inflation in the US. Stock and bond markets will tank even further, along with the dollar.

Gold (and silver) will reign supreme in the developing troubled time. The Gold Cartel’s ploy will have backfired in the most ignominious of fashions. The cabal will be haunted by its own BEST LAID PLANS.

Silver remains explosive and yet the price managers are all over it too. The silver open interest rose 2,583 contracts to 101,960. The gold open interest gained another 5,786 contracts to 296,335, which is indicative of the specs piling in and The Gold Cartel doing all they can to keep the price from rising too fast.

Indian ex-duty premiums: AM $6.10, PM $7.34, with world gold at $439.80 and $439.70. Ample, and lavish, for legal imports. The Reserve Bank allowed the rupee to firm a little against the dollar this morning.

Reuters carries a story this morning that premiums in Singapore are staying firm:

"In Singapore, Southeast Asia's biggest centre for bullion trading, buying interest from jewellers in Malaysia, Indonesia and Thailand is keeping premiums for gold bars at a high level of around $0.60 an ounce to London spot prices… roughly double the premiums seen in mid-January.

"Stocks at retail shops have really gone down after the Chinese New Year in February. I think that's the reason why premiums are high despite rising gold prices," said one regional dealer.

"People have to replenish stocks," he added."

(Of course, these countries are commodity exporters: no doubt a wealth effect is at work.)

TOCOM, meeting the highest yen prices this year, liquidated. Volume leapt 153% to equal 34,256 Comex lots, the active contract closed up 10 yen and world gold went out 65c above the finish in NY, but open interest fell by 2,614 Comex equivalent (8.8 tonnes). Mitsubishi’s estimate implies that the "General Public" cut their long by 9.9 tonnes. TOCOM is no help to the gold bulls just now. (NY yesterday traded 67,374 contracts. Open interest surged 5,795 lots – 18.02 tonnes.)

Yesterday, of course, gold broke out of the range which had contained it for almost three weeks. Several commentators note the move was muted compared with commodities, and the dollar; Reuters this morning found a London dealer who offered an all too plausible explanation

"Dealers reported brisk two-way trade on bullion with selling -- possibly from central banks -- well absorbed…"

Others try to argue gold in merely reflecting the euro, but a glance at a euro/gold chart shows this is not so, either on a daily or – yesterday – an intraday basis.

Since gold did break out of a range, one has to assume the 18 tonne increase in open interest was net of a good deal of short covering. The buying effort must have been very substantial.

Dennis Gartman (and therefore presumably some of his powerful Hedge Fund friends) was extremely upset by the dollar’s action yesterday:

"Last week we wrote a Watershed comment regarding the US dollar. We were wrong to have done so. It was hubris of the first and highest order, and it was silliness of an every higher one. Nothing other than our wish to see the dollar strengthen, and to read far too much into the one-sided nature of the overt dollar bearishness, and the wish to be a proper contrarian pushed this hubris upon us."

With admirable flexibility, he has now bought back his entire gold position which he sold on Friday. If his disillusionment with the dollar is shared, this move could be serious.

Over the weekend, the perspicacious Australian commentator The Privateer drew attention to the importance of $440:

12:20 US unleaded gasoline futures hit record spot month high over $1.55/Gal - Reuters
* * * * *

LONDON BRENT OIL RISES TO NEW RECORD $54.05/BARREL

Among the significant economic news of the day was this news out of the ECB:

ECB's Wellink: High Liquidity Warrants Rate Hike - Report

FRANKFURT -(Dow Jones)- The European Central Bank will have to tighten interest rates at some point due to excess liquidity in the market, ECB Governing Council member Nout Wellink told German newspaper Financial Times Deutschland.

"There will come a moment when we will have to take action," he said.

Although he said short-term inflation outlook is "not bad," Wellink added that middle-term inflationary pressures have built up due to high liquidity, the newspaper reported Tuesday.

Wellink, who also heads the Dutch central bank, also said that developments in real estate prices aren't yet problematic for the euro zone as a whole.
-Frankfurt Bureau, Dow Jones Newswires

-END-

This is important because it means the Europeans won’t be easing interest rates which could take some pressure off the dollar dive.

Meanwhile, the US interest rate picture is really heating up, as it well should:

08:00 Treasuries under pressure again this morning
The10-year note is off (15/32) to yield 4.45%. We have not heard of any fundamental reasons for the decline. German industrial production wasmuch stronger than expected at +3.1% year/year in January. The report was released at 6 ET, well before the selling began in Treasuries, but it may have been the catalyst talk of continued rising rates in the US.Some are also citing continued technical selling; the 10-year has been under consistent pressure since 2/14 when the yield hit 4.07%.
* * * * *

Obviously, sharp interest rate rises in the US are going to have a dramatic effect on our bubbleized housing market. Mortgage applications are already on the wane:

NEW YORK, March 9 (Reuters) - Applications for U.S. home mortgages decreased slightly last week as a drop in home refinancing activity for the second straight week offset an increase in purchasing, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity decreased 0.7 percent to 704.8 in the week ended March 4, even as interest rates eased, after dropping 2.4 percent the week before.

Despite lower mortgage rates, U.S. homeowners continue to show little interest in refinancing their existing home loans, an indication that the refinancing boom may be slowing, economists say… - -END-

The Fed trying to having both ways, from Jesse:

-END-

That wasn’t enough for the day. The Orwellian spin machine is out in full force:

13:28 Chicago Fed Pres. Moskow says policy still accommodative; rates can rise at measured pace
Nothing incremental in his comments. Moskow says must be vigilant regarding inflation pressures, but sees little evidence that long-term inflation expectations have risen.
* * * * *

Very reassuring Moskow. Your nonsense reads like it came from Moscow!

The geopolitical agenda of the US is becoming clearer by the day. There is a worldwide hunt to secure natural resources. Everyone knows how China is scouring the earth securing supply. So are other countries. Worse, the US in its Gold Cartel-like arrogance has offended so many other countries, they are going out of their way to snub us. The latest:

Industry, energy deals to boost Iran-Venezuela ties
By Pascal Fletcher

CARACAS, Venezuela, March 9 (Reuters) - Iran and Venezuela will sign investment projects this week to build a cement factory and a car assembly plant in the South American nation in a growing economic, political, and energy alliance between the two OPEC oil producers, officials said Wednesday.

More than a score of cooperation accords, including broad agreements in oil, gas and petrochemicals, will also be initialed during a three-day visit to Venezuela by Iranian President Mohammad Khatami which starts Thursday.

The visit risks raising U.S. hackles as President George W. Bush's administration has both countries under close scrutiny.

Washington accuses Iran of seeking to develop nuclear weapons, a charge denied by Tehran. Ties between Venezuela and its biggest oil client, the United States, have also become tense as U.S. officials portray left-wing President Hugo Chavez as an authoritarian anti-U.S. troublemaker in Latin America.

Stoking fears that the longstanding multibillion dollar Venezuelan-U.S. energy marriage may be at risk, Chavez has sought alternative oil partners by recently signing supply and investment deals with Russia, China, Brazil and India.

Venezuelan officials said similar wide-ranging energy cooperation deals would be signed with Iran.

–END-

PS:

13:26 Venezuela's Chavez says OPEC has no current spare capacity -- Dow Jones
April WTI crude quoted last at $55.35.
* * * * *

14:01Fed's Beige Book reports that economy expanded at a moderate pace through 2/28
The Beige Book for the 3/22 meeting says that the economy expanded in all districts, and that prices for consumer goods were mixed but relatively flat. The report appears to be little change from recent Beige Books. Seeing little movement in stocks or bonds on the report.
* * * * *

Gold demand news … The Gold Cartel’s worst nightmare – coming drainage of physical gold supply:

-END-

Rhody with some insight on the rigging:

Bill and Jesse:
Take a look at these monthly closing price CRB levels and the monthly closing spot gold price to see the actual numbers were gold should conceivably be trading at a bare minimum. The months listed below are the only time when the CRB was above the 300 level. The lowest gold price was 591.30 and that occurred as the CRB was definitely on the way down due to the spike in interest rates brought about by Volcker to knock it down. Every other time the CRB had a handle of "3" in front of it, gold was over $600/ounce.

Today's close on the CRB was 309.25 - London PM spot Gold price - 437.25 (New York Comex $441.10) - depending on how you measure it; gold should be anywhere from $591/ounce - $647/ounce, and that does not even include adjusting it for the dollar's loss of purchasing power in the last 25 years.

............................CRB.......Spot Gold

Absolutely pathetic isn't it?
Dan

The spin coming from the establishment on the inflation front is out of control and emanates from almost all quarters. I caught CNBC briefly and heard one economist (Yardeni) say how the surge in commodity prices was terrific for US financial markets and our economy as it reflected surging growth around the world. Then, this similar commentary from the New York Times:

Published Wednesday, March 9, 2005

I realize you have much on your plate and don't have time to deal with all those facts. However, if you are so sure of yourself, why won't you, or Bloomberg, let what GATA has discovered be presented to your readership, along with dissenting views? I wrote the following in my commentary at http://www.lemetropolecafe.com/ last evening which covers eminent financial market people around the world who say GATA is correct.

Would you at least take the time to see who they are and respond to GATA's challenge?

All the best,

BILL MURPHY
CHAIRMAN
GOLD ANTI-TRUST ACTION COMMITTEE

March 8

After many of the mainstreamers in the gold industry, my biggest beef is with the US financial press and those in our government running around the world promoting democracy when we don’t even have a FREE financial market press in the US, nor do we have FREE financial markets. This particular rant touches on the lack of free press and I am going to focus on a highly regarded Bloomberg journalist, Caroline Baum, and Bloomberg itself.

Six years ago this coming June, Bloomberg gold reporter Claudia Carpenter came to a luncheon GATA gave in New York in which I explained to the attendees what GATA uncovered and what we had to say. The word GATA has not been mentioned once before then, or since, by Bloomberg. Not mentioned once even though we have received focused commentary on us by:

*Oleg V. Mozhayskov, Deputy Chairman of the Central Bank of Russia, who bluntly brought GATA to the attention of the mainstream gold world. Mozhayskov delivered the keynote address at the London Bullion Dealers Conference in Moscow on June 4th 2004. His speech was delivered in Russian. The only words he mentioned in English were Gold Anti-Trust Action Committee (or GATA).

*Sprott Asset Management in Toronto, which released its own publication in August 2004, "Not Free, Not Fair: The Long-Term Manipulation of the Gold Price," confirming GATA's work.

*Eckart Woertz, vice president of CFC Securities in Dubai, for the Gulf Research Center, who just last week published a study, "The Role of Gold in the Unified Gulf Cooperation Council Currency," by his research foundation in Dubai. The report endorsed the Gold Anti-Trust Action Committee's findings that Western central and commercial banks have rigged the gold market and have much less gold than they claim to have and so are vulnerable to rising demand for gold.

Yet, not one word from Bloomberg, who wouldn’t even mention our GATA African Gold Summit in Durban, South Africa, attended by 5 sub-Saharan gold producing nations, the SA Reserve Bank, trade unions, SA gold producers, etc. The South African Broadcasting Company featured us two days running. Bloomberg? Nothing!

***

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