The Gold Cartel had its chance to put gold away on Tuesday and Wednesday. What was so noticeable about those two trading days was their failure to do so, as noted by MIDAS. Well lo and behold, they got their third chance today and still shot blanks.

Gold came in unchanged with the dollar sharply higher against the euro. This alone had me ranting right after trading commenced on the Comex. Soon after the opening, the euro went down one full point, while gold ticked up 50 cents and more. The euro price of gold rocketed to 364+ after the first half-hour of trading.

As someone with 25 years of commodity trading experience, and at the highest level at times, this had me licking my chops, which is why I am writing this so early on in the day. It is rare that a market screams, "BUY ME" to you. This is what Tony Wilson of Refco in Toronto and I were jumping up and down about this morning with gold at the unchanged mark.

There is a significant reason to point this out – and that is to give you more confidence that the Planet GATA analysis of the gold market is the correct one and has been for some time. AND, that the historic gold/silver move is about to kick into high gear, just when most investors aren’t paying attention to what is happening and why.

One month ago you could not find anyone, anywhere who said gold could run like this without dollar weakness, much less dollar strength; nary a one, except MIDAS/Planet GATA and, of all people, Dennis Gartman. Of course, our reasoning for such an occurrence could not be further apart.

It has been Planet GATA’s contention the gold market has been rigged by a Gold Cartel taking physical gold from the central banks and clandestinely lending this gold into the cash market via their bullion dealers to artificially suppress the price by hundreds of dollar per ounce. They have done so to such an extent that the central banks probably have less than 14,000 tonnes of gold left in their vaults, instead of the 32,000 tonne figure bandied about by Planet Wall Street and the apologists of The Gold Cartel in the mainstream gold world.

It has been GATA’s contention the bad guys would eventually hit the wall, meaning run out of enough supply to meet demand, which is disappearing at a rate of 1500+ tonnes per year greater than mine and scrap supply. We, including the very savvy John Brimelow, have also pointed to a short-term gap in their supply chain this summer due to the European sellers of gold in the Washington Agreement having gone through most of their quota for this current selling year, which ends on September 25^th.

Is it any wonder then that gold is dazzling investors by running higher, even as the dollar continues to rise and rise? PRICE ACTION MAKES MARKET COMMENTARY. While NO ONE out there said this was possible a month ago, now everyone is leaping on board as to what is happening and why. The most popular reasons for gold moving like it is seem to be:

*Global interest rate yield drops.
*Increasing inflation (even as so many on Wall Street state on CNBC there is no inflation threat).
*Greater concern over fiat currencies.

All of these are valid to some degree, yet none are new. Only the "NO" votes over the Euro Constitution are a development not in play before the past few weeks. Matter of fact, the historic reasons for gold to move up have diminished of late with happy US real estate, stock market and bond investors everywhere. Over the past couple of years, at various times, you could have come up with many more powerful reasons for gold to move up like it is, rather than ones presently discussed.

Most of the commentary re gold seems to be more of a struggle to explain what is going on. For sure, we see one different explanation after another. The only consistent explanation over the past many months, even years, comes from Planet GATA. We have stated over and over gold will move much higher when The Gold Cartel begins to lose control over their price-rigging scheme. We already know they have LOST one of these tools – that being their using the dollar for manipulation purposes. You don’t hear this from anyone not in our camp. Whether exactly correct or not, we have it right so far and have been Steady Eddie with our analysis – just like we got it right when gold was below $300 per ounce – when so few others were bullish. As I mentioned the other day, this latest gold development is just one more reason for money managers and gold companies to attend Gold Rush 21. The Masters of the Gold Game will be there, all together for the first time ever.

GATA is on the money once again. More importantly, as a result of the nefarious activities of the white-collar crooks in the Gold Cartel, we know what lies ahead for the price of gold and why. The price move up in gold will ASTOUND the investment world. I believe this will be invaluable input for those taking the time to go north to The Yukon Territory in early August. Please take some of your time to send this part of the MIDAS commentary to your gold companies with a personal short note attached. Ask again, even if they said no the first time. Persistency rules the day.

While there is reasoned concern over the sharp gold open interest increase on Comex with The Gold Cartel stopping gold at the $440 level basis spot, of more trouble to the shorts is the 25,000 August $445 call position. This is a HUGE number and gold has to rise only a few more dollars for them to go in the money with a month left until option expiry. August gold closed at $443.20. As is, some of the trade who wrote these calls are covering as they must do as the price goes closer to the call price. Much of this buying is strictly based on delta hedging formulas, which means as the price of gold rises towards the call price, the writers of the calls must gradually buy futures to cover their upside exposure.

It is important to keep in mind by far the most significant buyer of these calls is a former trader for Goldman Sachs who now works for a fund. If anyone would have the inside track about what has really transpired over the years in the gold market and what lies down the road, it is a former trader for Goldman Sachs. The floor reported this trader doing a little bit of selling this afternoon, which is very normal.

Should August take out $445, which I expect it to do, all heck can break loose.

August gold
http://futures.tradingcharts.com/chart/GD/85

http://www.imd.ernet.in/section/hydro/dynamic/weelly-rainfall.htm

(which can be a slow loader). Those areas where the Monsoon is late show alarming yearly comparables, of course, but the latest news, according to Reuters this morning is:

"The monsoon struck the southern state of Kerala on June 5, after a delay of four days…It appeared to be stuck in Goa for more than a week before moving north…"The situation is much better in the last one week and rains have reached up to the Gujarat coast in the west," said the official of the Meteorological Department."

The premiums simply do not indicate any problem with import demand from the world’s largest gold consumer.

One might also consider what $60 oil will do to Middle East demand.

Japan lay low this morning. TOCOM volume did rise 7% to the equivalent of 16,575 Comex contracts, but the active contract slipped 4 yen and world gold went out 30c below the NY close. Open interest slipped 827 Comex lots to the equivalent of only 80,812 lots.

Yesterday was pretty much a non-event in the West, too. Comex only traded 32,767 lots, and open interest slipped 357 contracts. Macquarie grimly observed

"solid selling in late Asia capped gold at 439"

Not a surprise.

This morning, The Gartman Letter, which I regard as the best insight into key Hedge Fund intentions I have found, abruptly added a "unit" to its long gold position, in "euro gold" (Short euro/long gold). TGL divides its portfolio into "units". This move puts the TGL portfolio 5/7 in gold related plays – 6/7 if one counts a perennial, extremely unprofitable long gold/short oil play to which they inexplicably cling. From the discussion, it appears that a break in the Euro is anticipated.

Charmingly, massive buying in NY promptly drove up gold, which traced out a peculiar step function pattern, being stopped at $439.50 for a while, and then successfully at $441.50. Tomorrow’s open interest – possibly volume too – will be illuminating.

It remains the case that NY specs could add at least 140 tonnes to their long without exceeding historic levels.

JB

CARTEL CAPITULATION WATCH

The dollar rose .58 to 89.02, while the Sep euro gave up .84 to 120.81.

The US stock market remains a disaster waiting to happen. If MIDAS is correct, today’s stock market prices will be yearned for in the years ahead. The DOW fell 167 to 10,421 and the DOG dropped 20 to 2071. As has been the case for some time, all market rallies continue to fail.

Fed-Ex announced that higher commodity prices are beginning to pinch and will affect profits. Guess what Planet Wall Street? They are going to affect the US consumer too, contrary to your cheerleading prognostications. The Transport Index fell more than 100 points.

Here is a stock to watch from a Planet GATA perspective: GE. It is a massive player in the derivatives market and is regarded as one of the bellwethers for the US economy and financial markets. It just did a Tricky Dickey Do. After going sideways for a very long time, it broke out to the upside, which turned out to be a false move. Not only did the breakout fail, it is now breaking DOWN!

US economic news:

08:30 Jobless claims reported 314K vs. consensus 330K
Prior week revised to 334K from 333K.
* * * * *

10:31 EIA reports nat'l gas inventories +75bcf vs. consensus +75bcf
Forreference, year-ago data was +85bcf. Prior week was +73bcf. August natural gas futures are currently trading at $7.59/Mbtu.
* * * * *

The big hoopla in Washington was the testimony by Greenspan and Snow on China. There will be plenty of other commentary to read on this, however, time to put in my two cents since it relates to so much of what Planet GATA has discovered over the years.

Quietly, the United States has become one of the most hypocritical counties on earth. We say one thing, do another. We preach to the world about our free markets, free press and democracy - and then practice the opposite.

We ball out China about currency manipulation, after rigging the gold price (partly for dollar support reasons) for so many years. That is the height of hypocrisy, especially since the US camp has LIED to the world about what they have orchestrated. Certainly we know the IMF has lied as they have instructed member central banks to account for lent/swapped gold as true gold reserves in their vaults.

We preach free markets and globalism UNTIL the Chinese make a pitch to invest in one of our oil companies (see below).

What is so crazy is you have the politicians in Washington sounding off re China, playing to long-standing fears of a comatose US public. Are they nuts? All China has to do is to start withdrawing from our debt market and buy up the gold market, and the US economy/financial markets are TAPIOCA.

We do not object when the Chinese buy our debt, keeping long-term interest rates low, which fosters a real estate/housing boom – which has US homeowners smiling all the way to the bank when they are told of the latest selling prices of this real estate. Yet, they do something for their own self interest and bells and whistles go off with the politicians. These politicians had better think twice what they are talking about. What is good for the goose is good for the gander. America is very vulnerable at the moment. To unnecessarily tick off the Chinese, could backfire more than the know-nothings in Washington could ever imagine.

Greenspan, Snow warn against China sanctions

WASHINGTON (Reuters) - Imposing punitive trade sanctions against China may slow the drive to persuade Beijing to adopt a more flexible currency and won't protect U.S. jobs, Federal Reserve Chairman Alan Greenspan and Treasury Secretary John Snow warned on Thursday.

Clearly worried that spiraling U.S. deficits were driving Congress toward trade action, Greenspan and Snow sought to tamp down the angry mood by pointing out the possible consequences for the United States.

Both said China should loosen the peg it maintains for its yuan currency against the dollar, in its own interest and that of the global economy, but said it would be futile to try to force Beijing to do so through trade sanctions.

"A policy to dismantle the global trading system, in a misguided effort to protect jobs from competition, would redound to the eventual detriment of all U.S. job-seekers, as well as millions of American consumers," Greenspan said….

-END-

11:28 Greenspan testimony before Senate Finance Committee
With regards to the current deficit, Greenspan says the economy tends to gravitate towards full employment irrespective of the size of the deficit. Greenspan says that increasing the US national savings rate would help to reduce the deficit. China has a number of ways with which to reform its currency, and that China is best suited to choose its own way to become more currency flexible. Yen has advanced modestly against the dollar during the Chairman's testimony; dollar/yen quoted last Y1086.68.
* * * * *

10:00 May Existing Home Sales reported 7.13M vs. consensus 7.15M
Prior reading 7.18M. Initial knee-jerk reaction is lower in home builders, though data is close to consensus.
* * * * *

CLEVELAND, June 23 (Reuters) - An explosion in mortgage products that lowers payments in the early years of a loan have helped to extend U.S. home ownership, but carries risks, Federal Reserve Board Governor Mark Olson said on Thursday.

"To the extent that these new mortgage products promote homebuying decisions that are premised on unrealistic rates of home appreciation, they raise concerns," he told community development policy summit hosted by the Cleveland Fed.

His remarks were the latest in the Fed's pointed comments about surging U.S. house prices, which some fear is a bubble.

"Some borrowers may not be able to sustain such a loan over a long time horizon if the pace of home price growth moderates. In particular, when the payments on these novel mortgages adjust upward, the homebuyer may not be able to refinance such mortgages unless the home has increased in value," Olson said…

-END-

From The King Report on housing:

Ray A. Smith in yesterday’s WSJ writes, "The air appears to be seeping out of Chicago's bubbly condo market. In recent months, several luxury condominium projects have suffered slower-than-expected sales. A handful of high-profile projects narrowly averted foreclosure as banks came to the rescue with new loans…Unlike some other markets, Chicago isn't experiencing a pricing bubble but a supply bubble. Chicago ranks third in the nation in terms of condos that are expected to be completed this year, including new buildings and conversions of rental apartments. According to Property & Portfolio Research Inc. and Reed Construction Data, 18,586 condo units will be added to Miami's condo inventory this year. San Diego is expecting 10,875. Chicago could see 8,533 more units…The signs are literally out there. "If you drive around Chicago, you see big signs on the tops of buildings -- 'Condos for Sale' -- which I've never seen before," says Paul Barile, an investment specialist with real-estate services firm Grubb & Ellis Co…Mr. Nordby warns that Chicago may be a harbinger of things to come in other markets. In Miami, "we haven't seen too many bad deals," Mr. Nordby says, but the amount of speculators, or investors buying units to flip or sell quickly, concerns him. "The story is Chicago this week, but Miami is not far behind," he says." http://online.wsj.com/article/0,,SB111939287367765760,00.html

Although we are unable to make public statements due to market regulations, your management has been working diligently on the various important items you are all waiting for: the 43-101 compliant report and the future growth of the Company. As soon as those items are finalized you will be informed.

I realize that we have all been getting impatient with the delays related to the 43-101 compliant report. But to repeat an answer I gave a shareholder recently: I have evaluated hundreds of projects in my career and the most complex one had about 130 drill holes and 600 intercepts to include in the database, it was coarse gold ore, one simple metallurgical process and standard mining numbers since it was at the exploration stage. In Velardeña the database includes more than 100 drill holes, more than 5,000 intercepts, more than 5 mines, three distinct metallurgical processes, gold/silver/lead/zinc/copper ores of various types, historical data from processing large quantity of material in three different mills, mining and milling costs over a ten years period, etc. On top of that, the project kept changing as we ameliorated the metallurgical processes and found new high grade veins. Quite a task for people who are already overloaded in work.

Truly yours
Michel Roy

In my recap of my trip to the Vancouver conference, I mentioned that Ian Gordon was a raving bull, one of the few there who went out on a limb. His website:

http://thelongwaveanalyst.ca/htmlmail/invitation_munich.htmlGATA very much appreciates the quiet, yet active, support Ian is giving Gold Rush 21.

On the gold shares:

Midas,
Am I the only one worrying that gold shares will take another big hit this quarter when they report earnings suffered again due to high energy costs. Perhaps this is why your gold sentiment indicators are coming in low recently. It seems a given that the metal itself is going higher. The only problem is that if energy rises at the same rates as gold then margins either remain the same or fall. In this scenario it looks like exploration companies can outperform big miners as their overhead is lower. The silence is deafening on this subject.

RichK
Shredhq
Aspen, CO

Rich,
I would expect the profits of the gold producers to be lousy. HOWEVER, this is OLD news. Going forward the surprise to the markets will be the explosion in the price of gold. Few in the investment world can fathom what lies ahead, as they are clueless as to what The Gold Cartel has done. As gold moves up from here, while the other financial markets and the US economy start reeling, gold fever will strike. The tiny gold share market cannot handle buying like that without the shares going ballistic.

One other point; while rising energy costs are a negative for gold producers, gold rising like it is, with the dollar rising sharply too, is a BIG PLUS for many gold producers around the world.

Prejudiced commentary:

Brother Bill, Once again, gold is poised to break out. A close above 439 basis spot on Friday would indicate a breakout on the weeklies with an objective of 500+ this year. Once again, if we finish the week on a strong note, we have the possibility of a gap opening and big day on Monday. For those of us with the boat already loaded, all one can do is cross the fingers and wait. For those newcomers or investors who have cash to spare, this is the time to be on the edge of your seat. Whether it happens now or later is anyone's guess, but it is very clear that we're close. Gold coins and gold stocks are still near the lows of the year and offer great values. Even though oil is barking on the door of $60 and the dollar has a lot of room to move lower, the average investor is not excited. Gold has cried wolf so many times that hardly anyone cares anymore. It's the perfect environment for coins and shares to soar! Very soon, your tenacity is going to pay off when most others have lost faith. Keep up the great work! Brother Tim

Tim Murphy
Swiss America
800-289-2646 x1019
Trmurphy@swissamerica.comThe gold shares soared early and then spent the rest of the day selling off, seeming to sink in sympathy with the general market. The XAU was up .49 to 91.79 and the HUI rose 1.28 to 197.70, three points off its high.

Gold, silver and the shares are still THE historic investment opportunity of a lifetime.

GATA BE IN IT TO WIN IT!

Appendix

Hi Bill and Chris
I read with interest on The Son’s of Gwalia bankruptcy. I noted that the shareholders get nothing but the SoG’s creditors will get paid pretty much in full. I expect that if someone went over the list of SoG’s creditors they would see names very familiar to GATA supporters. No doubt the same banks that sold the toxic derivatives that finally ruined SoG are the first in the line of getting back their money.

As you know, in a bankruptcy there is a hierarchy of who gets paid first and who gets the table scraps, if any are left. First is the banks, then the bond holders and then last, the share holders.

Now this made sense when banks were lending out money deposited with them by "widows and orphans", but that is not the case these days with most of the money coming into a banking system comes via a central bank’s open market operations.

There is real evil in this system. We will see a replay of this liquidation in many companies that the retail investor hitched his hopes for a better future, and not just in mining shares of companies that hedged their future production.

After the retail investors get the big promotional push into anything and everything that Wall Street financed since Alan Greenspan came into town, everything these "investment banks" touch eventually turns into crap for the little guy. Internet stocks, telecommunication stocks, Enron, the list is long. What is currently hot, real estate!

Fool me once, shame on you, fool me over and over again and its time to make a move into illiquid real estate, with a No Money Down, Adjustable Interest Rate – Pay Interest Only Mortgage. Got to move fast as we are told in every commercial selling mortgages "we now have historic low interest rates" - created by Guess Who?

Bill, it never ends, it just never ends. What a bunch of jerks!
Mark

When it comes to lying, what took place prior to the recent Iraq War is going to haunt the US and those who perpetrated the lie for decades to come.

June 23, 2005

COMMENTARY

MemosBy Michael Smith, Michael Smith writes on defense issues for the Sunday Times of London.

It is now nine months since I obtained the first of the "Downing Street memos," thrust into my hand by someone who asked me to meet him in a quiet watering hole in London for what I imagined would just be a friendly drink.

At the time, I was defense correspondent of the London Daily Telegraph, and a staunch supporter of the decision to oust Saddam Hussein. The source was a friend. He'd given me a few stories before but nothing nearly as interesting as this.

The six leaked documents I took away with me that night were to change completely my opinion of the decision to go to war and the honesty of Prime Minister Tony Blair and President Bush.

They focused on the period leading up to the Crawford, Texas, summit between Blair and Bush in early April 2002, and were most striking for the way in which British officials warned the prime minister, with remarkable prescience, what a mess post-war Iraq would become. Even by the cynical standards of realpolitik, the decision to overrule this expert advice seemed to be criminal.

The second batch of leaks arrived in the middle of this year's British general election, by which time I was writing for a different newspaper, the Sunday Times. These documents, which came from a different source, related to a crucial meeting of Blair's war Cabinet on July 23, 2002. The timing of the leak was significant, with Blair clearly in electoral difficulties because of an unpopular war.


I did not then regard the now-infamous memo — the one that includes the minutes of the July 23 meeting — as the most important. My main article focused on the separate briefing paper for those taking part, prepared beforehand by Cabinet Office experts.

It said that Blair agreed at Crawford that "the UK would support military action to bring about regime change." Because this was illegal, the officials noted, it was "necessary to create the conditions in which we could legally support military action."

But Downing Street had a "clever" plan that it hoped would trap Hussein into giving the allies the excuse they needed to go to war. It would persuade the U.N. Security Council to give the Iraqi leader an ultimatum to let in the weapons inspectors.

Although Blair and Bush still insist the decision to go to the U.N. was about averting war, one memo states that it was, in fact, about "wrong-footing" Hussein into giving them a legal justification for war.

British officials hoped the ultimatum could be framed in words that would be so unacceptable to Hussein that he would reject it outright. But they were far from certain this would work, so there was also a Plan B.

American media coverage of the Downing Street memo has largely focused on the assertion by Sir Richard Dearlove, head of British foreign intelligence, that war was seen as inevitable in Washington, where "the intelligence and facts were being fixed around the policy."

But another part of the memo is arguably more important. It quotes British Defense Secretary Geoff Hoon as saying that "the U.S. had already begun 'spikes of activity' to put pressure on the regime." This we now realize was Plan B.

Put simply, U.S. aircraft patrolling the southern no-fly zone were dropping a lot more bombs in the hope of provoking a reaction that would give the allies an excuse to carry out a full-scale bombing campaign, an air war, the first stage of the conflict.

British government figures for the number of bombs dropped on southern Iraq in 2002 show that although virtually none were used in March and April, an average of 10 tons a month were dropped between May and August.

But these initial "spikes of activity" didn't have the desired effect. The Iraqis didn't retaliate. They didn't provide the excuse Bush and Blair needed. So at the end of August, the allies dramatically intensified the bombing into what was effectively the initial air war.

The number of bombs dropped on southern Iraq by allied aircraft shot up to 54.6 tons in September alone, with the increased rates continuing into 2003.

In other words, Bush and Blair began their war not in March 2003, as everyone believed, but at the end of August 2002, six weeks before Congress approved military action against Iraq.

The way in which the intelligence was "fixed" to justify war is old news.

The real news is the shady April 2002 deal to go to war, the cynical use of the U.N. to provide an excuse, and the secret, illegal air war without the backing of Congress.

-- Posted Friday, 24 June 2005 | Digg This Article