August 11 - Gold $448.70 up $8.70 - Silver $7.14 up 10 cents
"This Is The Finest Conference I Have Ever Been To." Andrey Bykov
What a day! Still up here in the Yukon Territory on a beautiful, hot sunny day on marvelous lakeside inn outside of Whitehorse. Will spend a few days in Vancouver and then head back to Dallas.
Gold Rush 21 was a spectacular success and went well beyond the expectations of Chris Powell and I. Nothing less than a historic gold conference was acceptable to us and I believe it fair to say that as time goes by it will be regarded as one.
We sold the conference out with delegates coming from 14 countries all over the over the world – including the US, Kuwait, United Arab Emirates, Chile, Panama, Switzerland, England, Australia, Russia, South Africa, Mexico, Spain, Hungary and Canada.
Over the next week or two Chris and I will bring you further coverage of the conference. Some of the presentations will be put up at The Café and the GATA web site, along with some pictures, etc. As you know, the entire conference was filmed. It will take us around two months to do the proper editing. When done we will present the highlights of this scintillating conference in DVD form to gold companies, governments, press, hedge funds and to anyone else interested in the truth about the gold market.
This can be huge because there was a real buzz in DawsonCity. However, as life goes on for the speakers and delegates, they will move on to their daily activities, as is normal. The Dawson buzz will fade. When the DVD is done, that buzz will kick in all over again and last for a very long time.
GATA was honored to have Mr. Andrey Bykov from Moscow, Russia as one of our delegates. You will get a kick out of his credentials, which you may retrieve by doing a Google search. From
http://cns.miis.edu/pubs/week/030421.htm"One of the most notable recent developments in this area was a private initiative presented by the little-known Nuclear Disarmament Forum AG (NDF). NDF was registered in Switzerland in 2000 and is managed by Andrey Bykov, who the Financial Times characterizes as a Russian media mogul. Bykov calls himself President Putin's economic advisor. He claims that NDF originated during the U.S.-Russia negotiations on plutonium disposition in the fall of 1999 and even played a crucial role in negotiating the U.S.-Russian Plutonium Disposition Agreement."
Andrey was most gracious and said the following to me at the end of the conference:
"This is the finest conference I have ever attended."
I will put up my presentations when I return to Dallas, however, I would like to mention my major point at the conference – the one I hope is eventually articulated around the investment world. It is very simple.
The central banks don’t have the gold in their vaults they say they have. The gold establishment and central banks proclaim they have 32,000 tonnes of gold. The work of the GATA consultants reveal the central banks have half of that and may only have 12 or 13,000 tonnes of available central gold left. The rest of the gold has been lent out (swapped) and surreptitiously fed into the market over the past 8 to 10 years to artificially suppress the price.
Since demand exceeds gold and mine supply by 1500+ tonnes per year, The Gold Cartel and allies cannot retrieve this gold without driving the price to the moon.
This is what GATA wants to the biggest money players in the world to know. We are referring to the Chinese, Arabs, Russians, and others.
Since Andrey Bykov attended Gold Rush 21, let us take a cursory look at the Russians. The reasons for them to load up on gold are off the charts. One need only refer to this recent news story to appreciate why:
Russia's Gold, Forex Reserves To Double: Finance Minister
05.08.2005 Russia’s Finance Minister Alexei Kudrin said Thursday that Russian gold and foreign exchange reserves could reach $200 billion by the end of this year.
Gold and forex reserves will grow by $80 billion this year, up from the previous forecast of $50.
According to statistics, Russia's gold and foreign exchange reserves stood at $124.5 billion on Jan. 1, and increased to $151.8 billion as of July 1.
Kudrin said that the reserves have swelled due to high market prices for crude oil.
As stated, the Russians have all these extra new reserves because of soaring oil prices and need to do something with them. Russia is the world’s second largest gold producer. The price of gold vis-à-vis its historic relationship to oil is hugely undervalued by more than two standard deviations. The logical play is to load up on gold at these cheap prices, especially with a number of the speakers at Gold Rush 21 predicting the price of gold to rocket far, far higher than $1,000 per ounce.
Not only will the Russians benefit by the increased value of their gold reserves, Russian buying would get them higher prices for the gold coming out of the ground on a daily basis. It is win-win all around for the Russians to make their move on gold here.
Will Gold Rush 21 have any impact on the Russian decision making process? We probably will never know. However, it is quite clear the Russians are paying close attention to GATA. First the Deputy Chairman of Central Bank of Russia, Oleg V. Mozhayskov, made the following statement at the LBMA conference in Moscow on June 4, 2004:
"Many have heard of the group of economists who came together in the society known as the Gold Anti-Trust Action Committee and started a number of lawsuits against the U.S. government, accusing it of organising an anti-gold conspiracy. They believe that with the assistance of a number of major financial institutions (they mention in particular the Bank for International Settlements, J.P. Morgan Chase, Citigroup, Deutsche Bank, and others), some senior officials have been manipulating the market since 1994. As a result, the price dropped below US$300 an ounce at a time when it should, if it had kept pace with inflation, reached US$740-760."
Then, Mr. Andrey Bykov contacts GATA re attending Gold Rush 21. I will let you make up your own mind as to the significance of these developments.
Surging crude oil is $65.84 per barrel, up 94 cents, as I go to press.
Indian ex-duty premiums: AM $3.29, PM $3.07, with world gold at $438 and $438.45. Quite adequate for legal imports. This was despite aggressive intervention by the Reserve Bank today to weaken the rupee, which closed at a one-month low. The Bombay Stock Exchange closed at an all-time high, and foreign funds are said to be pouring in.
India, the world’s largest gold importer, has been an unwavering buyer in the $430s (see below). Today’s NY move will certainly not be greeted with enthusiasm, but the country will underpin it – perhaps more, if the rupee is allowed to recover. The peak buying season is now beginning.
On Tuesday, the ECB announced an E87Mm sale – 7.49 tonnes at the current book value. This means there is less than 5 tonnes to sell between now and the end of September, if WAG2 is to be respected. While most serious observers presume that surreptitious Central Bank selling will continue unabated, a very shrewd observer told me last week that the idea of apparently diminished sales is catching the imagination of more casual hedge fund pools, in the same way as the launch of the ETF did last year.
TOCOM traded only the equivalent of 9,666 Comex lots (-45%) today, with the active contract rising 2 yen, and world gold going out $1.25 above NY. Despite the strong yen, there is a buyer active in Japan: open interest rose the equivalent of 1,251 Comex lots, and according to the Mitsubishi data the public added 5.6 tonnes to its long (1,800 Comex lots). I suspect Funds, possibly Western. Yen gold is at a 14 year high.
Yesterday on Comex, only 32,087 lots traded but open interest rose another 2,153 lots to 289, 992. This means since last Thursday, the day I last reported, open interest has risen 16, 361 lots, 50.9 tonnes, for a price gain of $4.10. Since gold started to move a week last Tuesday, open interest has risen 45,504 contracts (141.5 tonnes, or 18.6%). Gold in the same time was up $10.10.
Clearly, a very determined seller opposes/disbelieves any rise in gold. Based on today’s action – new 2005 high on massive estimated volume of 98,000 contracts with negligible switches – he will have to try harder.
Indeed, the technical situation has now become dangerous for the Bears. The magisterial long-term $US 5x3 Gold Chart maintained by Australia’s The Privateer website has now turned up once again – see http://www.the-privateer.com/chart/gold-pf.html . Any number of shorter term chart signals have been triggered Credit is due to Dennis Gartman, who is not only heavily long Euro/gold (the rise in which today clearly showed this is not just a "currency move"), but actually added yesterday:
"we have this urge to own gold and debt at the same time…we've been around long enough and seen enough strange market anomalies that we know that the truly great trades... the ones that become legendary years hence... are those trades that are supposed to move in contravention but don't; or those that are supposed to move in tandem, and also don't."
Gartman offers no theoretical rationalization for this trade, but it is of course the classic "flight to safety" stratagem. If this is what his powerful Hedge Fund friends think, the Bears face difficulties.
The Indian data on the missing days were:
Monday Aug 8 2005: AM $2.60, PM $2.52, with world gold at $436.90 and $436.95. Quite adequate for legal gold imports.
Tuesday Aug 9 2005: AM $3.92, PM $2.90, with world gold at $443 and $ $433.55. Ample, and adequate for legal imports.
Wednesday Aug 10: AM $2.87, PM $3.65, with world gold at $434.75 and $436. 15. Adequate, and ample, for legal imports
My congratulations to John B for his superb presentation at Gold Rush 21. It was a huge hit and drew lots of kudos from the delegates.
By the way, as you well know, John predicted over a month ago that gold would make its move in August. So Be It!
CARTEL CAPITULATION WATCH
The US stock market refused to go down, even with oil surging. Most strange. However, that is the way it is. The DOW gained 92 to 10,685 and the Dog leaped 17 to 2175.
08:30 July Advance Retail Sales reported 1.8% vs. consensus 2.1%; Ex-Autos 0.3% vs. consensus 0.6% Prior unrevised from 1.7%; ex-autos revised to 0.9% from 0.7%. * * * * *
10:00 Business Inventories reported 0.0% vs. consensus 0.1% Prior reading unrevised at 0.1%. * * * * *
0:30 EIA reports nat'l gas inventories +43bcf vs. consensus +46bcf For reference, year-ago data was +72bcf. Prior week was +37bcf. September natural gas futures are currently trading higher to $9.14/Mbtu initial reaction. Sep WTI crude last $64.90/barrel. * * * * *
8/11 JOHANNESBURG (Reuters) - Around 110,000 South African miners accepted an increased wage offer on Thursday and asked their members to resume work, ending the first industry-wide strike in the country's gold sector in 18 years.
The Chamber of Mines said the country's biggest mining union, the National Union of Mineworkers (NUM), was the first to call off its strike, asking its around 100,000 members to resume work on Thursday night.
The Chamber of Mines, which negotiates on behalf of South Africa's gold producers, late on Wednesday gave miners a new wage offer, raising wages by between 6 and 7 percent.
"Overall there was acceptance of the offer, the process has come to its logical conclusion, the strike ends," Gwede Mantashe, general secretary of the NUM, told Reuters.
"The first shift goes back to work tonight (Thursday), and there should be full normality by the Friday evening shift."
Comments about today’s substantial gold move:
Wow Bill, What did you guys talk about up there? Geez, it took just one day to break the $6 rule (although we still have an hour left). Regardless, congratulations on putting together GR 21. Andy
OK. Bill spill the beans! GR 21 has already had its impact and the world has come to its senses. Gold is running with a 2% increase today or 8 bucks. Wow!!!! Seriously, I was thinking today as I am seeing gold run above 6 bucks that perhaps GR21 is responsible for this breakout. Whatever the reason claim your spot in history and take credit for this. You deserve it. Well done hombre. Gil.
Hello Bill, You should leave the country more often. To bring about a free market in gold you only need to move to Antarctica. Hank Fellerman
Some early feedback for you from a delegate at Gold Rush 21:
Here is the last newsletter with news for July and perspectives for the future. I know it has been posted on our site a while back but I was in Yukon and could not send it to you then.
http://www.ecu.ca/newsletter/july_newsletter.htmA few of you might ask why I went to the GR21 conference when I barely have time to do all I need to do here in Mexico. There are a lot of reasons but the most important was that I wanted to hear what some of the best thinkers on the economics of precious metals had to say about the present and, more importantly, the future. As you know, we produce precious and base metals and can plan our future production to be gold-rich or silver-rich or lead or zinc or even copper.
The presentations were way beyond my expectations. Actually it was more an intensive short course in the economics of precious metals with glimpses at the various potential futures for our industry. I will need some time to integrate all that was presented and complete my researches on some of the most promising aspects. A very important consensus was reached: "The focus of action should move from demonstrating that the previous metals markets are rigged to informing people. The accumulated proofs are more than sufficient."
How does this impact ECU? Very simply; it means that the truth has reached a point were it is ready to break out even if standard information channels might be reluctant to follow at the beginning. Some are picking up the story, CBC North and TV Azteca for example, and others will follow because word will eventually spread. When will it happen? It could be today, tomorrow or in the next few months but we will not have to wait for years. I will certainly not try to predict future prices for gold and silver except that they will go up significantly and that it will only improve our bottom line. It confirms that our strategy of increasing production in the short term is the right one.
All of the conferences were interesting but those of Ferdinand Lips presented by JP Schumaker and Hugo Salinas Price would be a good start for those of you who want a better understanding of what is going on and what can be done in the precious metals sector. All should be available soon and I will keep you posted. If you like what you read, more information on the same topic will be available. Just tell your friends!
Michel Roy CEO, ECU Silver
Chuck checks in:
I first want to recap what I have felt was happening in the gold market. At the very bottom around 75 on the XAU and 165 on the HUI, the pessimism was palpable. From the sentiments to the Central Fund discount to the noveau technicians with their lines and breakout failures, and above all the sense that all of the exploration companies were about to go out of business were indications of a cyclical bottom. For our readers, how many sleepless nights did you go through or how much of your gold holdings did you sell here? That is the personality of a major bottom in a bull market.
Then as the listed stocks started to come out of their graves we had a couple of scary openings and intraday drops to keep everyone nervous. But what I saw was even during this some of the stocks were moving up. In particular, Goldcorp was regaining its preeminence as a holding in portfolios. Today GG hit an all-time high. Now most of the larger listeds are joining in and the smaller ones that have been having production problems such as GSS and BGO are moving up also. Still, the smaller ones are acting as though they have leprosy. To me that means that the gold complex, and most likely silver, are still climbing the proverbial wall of worry. I believe soon they will be in gear and if you want to buy them, you will find out how illiquid these little gremlins can be. Eventually, this will be the most speculative market in the history of stocks, as absurd as that appears to be right now.
As far as what is happening, my take is that the monetary situation has gotten out of hand. I don't pretend to know what that all really means or how it will play out, but when you seen some of the moves here in copper, oil, and the downward pressure on Citigroup and FNM, then something is afoot. Will there be a financial bomb or a derivative attack, it's possible, but I don't know?
I wrote a couple of weeks ago that the big move in the gold shares that day signals a likely break out to new high grounds. That is what happened in 1982 when the stock market propelled into new highs on high volume and a lot of gaps. I know because I was short at the time and not the least bit concerned or had any idea that we were entering the bull market of our time. That is what I see here in the gold shares. The shorts and the derivative holders have no idea what is going on, but they will. The hardest part of investing is to have patience and believe in what you are in. It is time for some payoffs. Chuck email@example.comPS from Chuck:
The one thing that I would add onto the scenario of an August-September rally in the shares is that we are overdue for a good rally into the new year, and that is my strong suspicion. This move is going to shock everyone.
GATA extends its profound thanks to Agnico-Eagle for auctioning of ten gold bars at Gold Rush 21. More on this later. You might like to know the ten coins raised $39,600 for GATA. Joe Martin of Cambridge House, our professional auctioneer for the evening, did a great job and had the delegates howling.
The $6 Rule was finally broken, only two days after the conclusion of Gold Rush 21. As mentioned at the conference and in MIDAS commentary, every time GATA has left the US to make a major presentation, the price of gold has made a significant move up on a percentage basis. Was this yet another fluke, coincidence? You be the judge again. GATA’s Wistar Holt noted today’s move is the largest since he became involved in the market four years ago.
Love, love, love the action in the gold shares today. The XAU rose 3.93 to 9.46, while the HUI popped 9.79 to 217.85. The gold and silver shares remain THE historic investment opportunity of a lifetime.
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