He that wrestles with us strengthens our nerves, and sharpens our skill. Our antagonist is our helper...Edmund Burke
GO GATA!!! Even though the dollar was firmer across the board, the London AM Fix came in at $472.65 and only slightly below the Friday close in New York. Time and time again we see cash market pricing which confirms considerable demand for gold above the $470 price level.
Like a broken record, The Gold Cartel wasted little time going after gold and silver following the Fix. Called lower, both gold and silver were hit early with gold falling more than $2 and silver 7 cents. There are major holidays for both the Indians and Muslims early this week. If The Gold Cartel is going to make a move, it should come soon.
One of the lead stories of all on Planet Wall Street was the hostile bid by Barrick Gold of Placer Doom:
07:38 PDG Follow-up: ABX offers $9.2B in hostile bid for PDG; $9.5B fully diluted; signs agreement with GG for certain PDG assets (16.56)
The stock/cash bid of $20.50, represents a 23.8% premium to prior close for PDG. Deal is expected to be accretive to ABX's NAV, earnings and cashflow. ABX says the bid is $9.5B on a fully diluted basis. PDG shareholders will have right to elect to receive $20.50/share in cash or 0.7518 ABX stock plus $0.05 in cash for each PDG share, subject to proration. The maximum amount of cash to be paid by ABX will be$1.224B and the maximum number of shares to be issued by ABX will be 303M, including the conversion of PDG's outstanding convertible debt and options.
Assuming full pro ration of these amounts would result in $2.65 in cash and 0.6562 of ABX stock for each PDG. Separately, ABX and GG have entered into an agreement where GG will purchase certain PDG subsidiaries and an interest in a development project which GG will pay ABX $1.35B in cash. The total synergies from ABX's purchase of PDG and the ABX/GG agreement are estimated to be $240M annually. GG expects that if the deal goes through, GG's annual gold production would increase by approx. 50% to more than 2M ounces ata total cash cost of $150/oz. RBC Capital and Merrill advised ABX. ABX is hosting a conference call at 9 ET. Dial-in: 800.215.1640 or 415.904.7360. GG is hosting a conference call at 10 ET. Dial-in: 877.888.4210 or 416.695.5259. Note that PDG has not yet commented on the hostile bid.
* * * * *
08:29 ABX ABX CEO Greg Wilkins discusses hostile bid for PDG (27.20)
Wilkins says the timing for the hostile offer is "perfect" for ABX, noting that PDG assets are a good fit and the companies operate in many of the same countries. When asked about the regulatory environment in Canada, Wilkins says that the Securities Commission will give PDG time to search for an alternative, but after that expires, the Commission has shown in the past that it can push for PDG to eliminate the shareholder rights plan. Wilkins says he was not aware of any other suitor for PDG.
* * * * *
What do these proposed dealings mean?
1. The first thing to do is discount much of the pundit analysis of what is going on here. The mainstream gold analysts will come up with their standard pabulum. If they are going to let Barrick get away with saying their hedge book is down to 6.6 million ounces if you don’t count their Pascua-Lama mine in South America, Barrick must realize they can say anything and get away with it from the lightweight mainstream gold pundits. These obsequious folks refuse to challenge anything really worth getting into. I say that because Barrick’s hedge book is actually around 13 million ounces, not the 6.6 million ounces CEO Wilkins says it is. When Barrick blows up some day, this disinformation should be used against them in another lawsuit.
2. No matter what the spin, it is bullish for the gold price. The proposed merger tells us The Gold Cartel (Barrick) believes the price of gold is going much higher and is scrambling to secure more supply.
3. Many of us on Planet GATA will spin the takeover as a desperate move by Barrick to secure more gold supply to balance out its hedgebook which is going further and further underwater as the price of gold readies to take out $500 per ounce. The general commentary from the mainstream gold pundit should spin this announcement as a bullish development for the gold market, but will not delve into the hedge book issue.
4. What doesn’t quite fit is Placer’s hedge book is very large, not in great shape, and probably toxic. This bid is in contrast with Barrick taking over Homestake years ago with all its unhedged ounces.
5. Goldcorp’s interplay in this takeover bid explains why their CEO Ian Telfer won’t give GATA the time of day. His interplay is with The Gold Cartel’s Barrick Gold….
6. Ah Ha! I think I’ve got it. Been scratching my head here to figure out what is actually developing behind the scenes. The light bulb just went off.
Barrick is in bed with JP Morgan Chase which is the US Government’s/Fed’s principal bank. Barrick’s hedge book has been structured so that it can be rolled over ad infinitum. Barrick delights in this fact and doesn’t mention its growing hedgebook liability in its public commentaries about the firm.
As we all know, Barrick is politically connected at the highest levels of government. Former President Bush, former Clinton power broker Vernon Jordon, former Canadian Prime Minister Brian Mulroney, Germany’s former President Helmut Kohl, etc., have all been on one of its Board of Directors at various times ... and some of them still are. When you mention Barrick Gold, you can include the US Government policy towards gold and those assigned to carry out that policy, such as JP Morgan Chase. It is one vast, insidious money/power/political club.
The Gold Cartel knows their ill-conceived scheme to manipulate and suppress the price of gold is going down. The price of gold is going to take off in the months and years ahead. While Barrick’s hedge book may have been given immunity from blowing up and causing gold derivatives problems, other large hedgers have not been accorded this luxury. Placer Doom’s significant hedge book is potentially one of the most problematic in that sense. By bringing Placer under the auspices of the protection of The Gold Cartel (Barrick), they are reducing the coming derivatives problems associated with toxic hedges. It also will give Barrick more maneuverability and clout as time goes on.
This is just a guesstimate on my part. However, it all makes sense to me now.
The PM London Fix just came in at $470.75. This is impressive as gold is under fire…
Not so fast. Right on cue, The Gold Cartel has made its move minutes after the PM Fix. Gold was just nailed for another $7 to the downside. Once again The Gold Cartel pulls off a blatant raid on the price after the physical market pricing was concluded for the day. Perhaps newer Café members will understand why I have such contempt for the mainstream gold world pundits who are so negligent about reporting what is actually going on and when.
The Barrick/Placer Dome news can only be analyzed as bullish for the gold price. MIDAS recently reported how even a former Gold Cartel bullion dealer has admitted the bullion banks will go all out to diminish excitement over the gold price and the shares … and do so all the time. Despite gold being $2 lower this morning, the shares were mostly higher as a result of the Barrick announcement. Not for long. They were just knocked for a loop when gold was sent to the dumpster. This is beyond sickening.
The intrigue grows that all is not kosher regarding this Barrick/Placer/Goldcorp deal:
NEW YORK, Oct 31 (Reuters) - Goldcorp Inc. on Monday said Robert McEwen resigned as chairman and a director, effective Saturday, and named director Doug Holtby as its new chairman.
Holtby has been a director of miner Goldcorp and predecessor company Wheaton River since June 2003, and has served as the chair of the audit committee of Goldcorp and Wheaton River.
Holtby is president and chief executive of two private investment companies, Arbutus Road and MKC Capital.
McEwen said in a statement that since giving up the chief executive officer role in February 2005 following Goldcorp's merger with Wheaton River, he has been seeking new business endeavours.
McEwen said he has assumed the role of chairman and CEO of two junior energy exploration companies.
-END-
As CEO of Goldcorp, McEwen actually was a financial supporter of GATA, and wished us well. Rob McEwen attended our cocktail party at Hy’s Steak House in Toronto a year ago.
This is all very fishy. Can’t see any way all of this proposed deal will not be approved and go though, not with the Canadian and US money and political power behind the proposed merger.
JUST IN – 10:30 AM EST
The Comex floor reported they have rarely ever seen anything like it. GOLDMAN SACHS has been bombing every bid in sight and burying the price. It is not the rest of the "trade" doing the damage. They are actually sitting on the bids. It is almost exclusively GOLDMAN SACHS doing the major selling. Never received such a definitive, exclamatory report like this from the Comex floor before re a lone seller ... not one other time as emphatic as this in the last 7 years.
Our veteran floor source relayed that the GOLDMAN SACHS bombing of the gold price was related to the Barrick/Placer announcement. The nefarious side to this besides my earlier MIDAS thoughts is that The Gold Cartel wants to keep the price as low as they can to demoralize the gold players/industry to make it easier for this deal to go through. This line of thinking (from another Café source) fits in perfectly with the rest of the thinking of many of us on Planet GATA.
Not only was it unusual for Goldman Sachs to stand out SO MUCH as the noted single-handed bomber of the gold price today, it was accompanied by the change of the trading pattern mentioned to you in this column these past many weeks. It was like the old days going into the close. No late rallies at all. The Goldman Sachs induced price butchering was followed by selling into the closes.
From a fellow Café member:
Well now didn't I say this to you last year ? :-) .........
"In that regard you have to wonder if The Gold Cartel and PPT read the MIDAS commentary for their clues when to attack?"
Well of course they read you! The PPT guys are cheaters and you are right at the front of the Gold crowd so what else would the PPT do?......in fact your site is probably one of the best indicators for them!
Paul
Perhaps so Paul.
The gold open interest fell 433 contracts to 346,308, while the silver open interest rose 1088 contracts to 142,778. The dichotomy of the two OI patterns continues.
Hudson River and Saban went after silver when gold was attacked. There were no bids. Morgan Stanley, a huge silver bull, was nowhere to be found.
** Keep an eye out for some possible significant management changes this week at a well known international bank, one which is also a bullion dealer.
The John Brimelow Report
Happy Diwali, & Eid - Happier TOCOM?
Monday, October 31, 2005
Indian ex-duty premiums: AM $2.72, PM $2.16, with world gold at $471.95 and $472.40. Adequate, and slightly too low, for legal imports. The rupee softened in the afternoon, counter-intuitively in view of a 2.69% rally in the Bombay Stock Exchange and softer Oil prices.
Tomorrow is Diwali, the most important Hindu festival of the year, and one which in my experience is the most scrupulously observed. No doubt today’s late trading was effected too. The Muslim world will be closed for the latter part of the week celebrating the end of Ramadan.
The Bears, in other words, have a pretty free paw this week, with the key physical markets out. The relative importance of the Islamic and Hindu markets to gold has, of course never been greater.
But of course any price set – or engineered – while such crucial buyers are unsighted is not likely to have lasting significance.
TOCOM, which missed Friday’s Western Hemisphere gyrations, was unimpressed this morning. Volume was static, equaling 19,357 Comex (+1.4%): the active contract rose 1 yen and world gold dipped $1.10 from the NY close. Open interest rose 1,008 NY contracts – according to Mitsubishi’s data the public added 1.1 tonne to its long.
Tomorrow could be a different story. With the yen down 70 bps from the Tokyo close – a new 25-month low - and world gold down some $6, the stage is set for some classical Japanese bottom-fishing.
As noted on Friday, gold ran into a classic post-Europe selling raid, which however was defeated apparently by the physical market. ScotiaMocatta observed:
"The price started to fall encouraging locals to go short as well which helped force a session low of 469.20/469.70. However, physical buyers soon came into the market taking the price back to the 471.00 area …until New York dealers entered the market on the buy side. The dealer buying caused an end of the week scramble to cover short positions and in turn took gold to the session high of 473.40/473.90"
On volume of 44,450 open interest, open interest edged down 433 contracts: not much in the way of long term shorts appeared to be covered.
Monday of course has seen an even more abrupt and more successful post-PM fix raid. Neither of the reasons advanced for it withstand analysis. The CFTC data in fact revealed a distinct moderation in the spec long. Barclays commented:
"In the week ending Tuesday 25 October, CFTC data revealed that the rising trend in gold’s speculative net long position was reversed with a reduction of 17.1K contracts resulting from long liquidation (17.6K contracts), and modest short covering (-0.5K contracts)."
The most insightful analyst on CFTC data felt moved to put out a piece this morning pointing out the large spec net position had fallen below 500 tonnes for the first time since mid September, and suggesting that liquidation might be almost over. While the dollar did continue to participate in the extraordinary outburst of Wall Street triumphalism of the past two sessions, the acute drop after 10 am NY time was actually in Euro/gold, suggesting a non – currency driven seller.
So the Bears have learned about Hindu and Muslim festivals. Have they grasped the propensities of TOCOM futures traders?
JB
CARTEL CAPITULATION WATCH
Here is a perfect example of why the mainstream gold world deserves such contempt. Their reporting on what actually is transpiring in the gold pits is nothing more than blatant disinformation:
DJ MARKET TALK: Fund Liquidation, Strong USD Pressure Gold Dn
1541 GMT [Dow Jones] - Comex gold is trading near its lowest level in a week at $468.30 an ounce, down $6.40 on the day, basis the Dec contract. Leonard Kaplan of Prospector Asset Management says funds are aggressively liquidating long positions ahead of the Federal Reserve meeting Tuesday where interest... -END-
Kaplan is such a Planet Wall Street stooge, the same guy who said for years gold could only go up because of a weakening dollar. Sure the funds sold late. However, that is not why the price was mauled.
The DOW rose early and then refused to advance further, closing at 10,440, up 37. The DOG soared 30 to 2120. After the close, Dell disappointed, like most of the big DOG names have recently. Jesse notes:
Mutual funds close their fiscal year today. I believe that the close this afternoon will determine many of the mutual funds' metrics, most likely including bonuses.
***
This column makes mention of Dennis Gartman from time to time because he has a vast following and is extensively covered by the media. He is short the stock market and very long gold. He also publicly mocks Planet GATA for our views on the PPT and the manipulation of the gold price by the cabal. A few more days like today and he will be forced to become a vociferous advocate of the Planet GATA line of thinking on the markets. From his commentary this morning:
"We know not what to make of this abjectly random violence in the markets, for we cannot recall a period when prices moved this swiftly, this markedly and this randomly. ...we find this randomness disconcerting ... and rather embarrassing given that we were short of US shares on Thursday and looked rather prescient, only to appear rather badly out-of-step by mid-morning Friday."
-END-
You are even more badly out of step this afternoon Dennis G. Rational analysis of the US stock market and gold market is useless in the short-term. It hasn’t done me any more good lately than it has done you. The difference is I know why my short-term market thinking is not panning out. You, on the other hand, refuse to deal with the obvious.
One plus for the market bulls today was a sharp drop in crude oil and a close below $60 at $59.76 per barrel. The dollar jumped to 89.97, up .47 with spot yen making new lows for its move at 116.39, down .73. The spot euro dropped .80 to 119.87.
US economic statistics:
08:30 Personal Income 1.7% vs. consensus 0.3%; Spending 0.5% vs. consensus 0.5%
Prior income revised to (0.9%) from (0.1%); no revision to Spending (0.5%). PCE m/o/m was 0.2% vs. consensus 0.1%. Prior PCE revised to 0.1% from0.2%.
* * * * *
WASHINGTON (Reuters) - Consumer spending rose 0.5 percent last month as post-hurricane insurance payments led to the biggest jump in income in 10 months, a government report showed on Monday.
Personal income jumped 1.7 percent, the biggest rise since December 2004, as insurance payments in the wake of hurricanes Katrina and Rita rose at a $120 billion annual rate, the Commerce Department said.
The gain in spending matched expectations on Wall Street, but the increase in income handily outstripped forecasts for a 0.3 percent rise.
The income gain, however, followed a downwardly revised 0.9 percent drop in August that reflected plummeting rental and personal business income after the storms. Rental and proprietors' income declined again last month, but not as steeply.
While spending rose last month, the increase was more than accounted for by surging energy prices. Adjusted for inflation, spending fell 0.4 percent after a 1 percent August drop.
The department's inflation measure - closely watched by policy-makers at the Federal Reserve - shot up 0.9 percent, the biggest rise since February 1981.
But excluding food and energy, the so-called PCE price index advanced just 0.2 percent. Over the past year, this core price index has risen 2 percent, a level considered to be at the upper end of the Fed's comfort zone.
The data released on Monday was incorporated in a report on third-quarter economic growth released on Friday, which could lessen its value to financial markets trying to determine the direction of the economy and interest rates.
The saving rate - the percentage of after-tax income Americans sock away - remained in negative territory in September for a fourth straight month.
The department said the saving rate percentage was minus 0.4 last month, after bottoming out at a minus 1.8 in August. -END-
9:58 Chicago Purchasing Manager's reported 62.9 vs. consensus 57.4
Prior reading was 60.5.
* * * * *
The latest input on the Chinese economy:
BEIJING, Oct 31 (Reuters) - China's current account surplus for the first half of the year rose ninefold, topping 8 percent of gross domestic product as booming merchandise exports swamped a deficit in services trade, official figures showed on Monday.
The data underscored the battle Beijing faces to cut the country's billowing balance-of-payments surplus, which is putting persistent upward pressure on the yuan despite July's 2.1 percent revaluation and fuelling trade friction with the United States, analysts said.
The State Administration of Foreign Exchange said China's current account surplus swelled to $67.26 billion, up from $7.47 billion a year earlier and almost as great as the $68.7 billion surplus for all of 2004.
"The message is already pretty clear: the current account surplus will rise significantly this year," said Yiping Huang, an economist at Citigroup in Hong Kong.
The first-half surplus was equivalent to 8.1 percent of China's first-half GDP, which totalled $832.37 billion.
China is under strong pressure from the United States to reduce the surplus by letting the yuan rise faster…
-END-
From Jesse:
The LBO of Main Street, USA
Leveraged Buy Out: a financial strategy involving the acquisitions of an asset or business,
utilizing a significant amount of debt, and little or no equity.
Now Playing at Jesse's Charts:
http://www.geocities.com/arthurcutten/jesse.html
-END-
From www.urbansurvival.com(George Ure):
Cheney to Court?
As we reported last week, only Scooter Libby was indicted by the Grand Jury which has been looking at the PlameGate case. Now, there's a report from the Drudge Report that Dick Cheney will be called in open court to testify - a move which sets up a major showdown on "executive privilege" and which may undermine Cheney's ability to lead the neocon agenda in DC (and the Middle East).
Meantime, as we have speculated in the past, there is growing speculation that the Fitzgerald Grand Jury is only foreplay to the McNulty Grand Jury which looks to be investigating the forged Niger uranium documents - documents that were key in getting the U.S. to march into Iraq.
All of which boils down to a confounding legal stew as we read it: Consider for a moment that the Fitzgerald Grand Jury may have merely found basic information which then opens up the wider probe of who told what lies to rope us into war. The report that Cheney may be called - and the resulting fight over executive powers - all leads us to the conclusion that "Official A" referred to in the indictment might be you-know-who.
Here's something to seriously ponder: If it was shown conclusively that forged documents and "doctored intelligence" was used to "sell" the Iraq war to the American public, would that constitute treason, breach of the public trust, or what....and would it be actionable against all those involved?
We have heard of foreign speculation that Presidential Succession might have to go all the way to Secretary of Agriculture Mike Johanns to find someone untainted by the smell that's beginning to emerge. Of course, the workout of this is now looking like many months, and perhaps a year or longer. Johanns sounds like our kind of folk: Works hard during the week, "relaxes poorly" according to his wife, and on weekends makes a serious contribution to housekeeping. Yup, interesting that news of him is percolating up around the fringes of mainstream media
-END-
AP - 50 minutes ago
BAGHDAD, Iraq - Six American soldiers were killed in separate attacks Monday and a Marine died in action the day before, making October the deadliest month for U.S. troops in Iraq since January. U.S. jets struck insurgent targets near the Syrian border and at least six people were killed. Four soldiers from the Army's Task Force Baghdad soldiers died Monday when their patrol struck a roadside bomb in Youssifiyah, 12 miles south of Baghdad in an area known as the "triangle of death."
-END-
How can anyone say the situation in Iraq is improving, with the war supposedly over for more than 2 ½ years? One point I would like to make clear, especially to newer Café members. I am not a Democrat, nor a liberal (not that there is anything wrong with being either). My delving into the war subject is because some day it is going to have a monumental impact on US financial markets.
Before the war started, I ranted against it because it seemed to me the trumpeting up of the reasons to go to war in Iraq were eerily like what was behind the manipulation of the price of gold … that both were bogus and un-American. As time goes by, it looks more and more like this is, and was, the case. The gold fraud has been apparent for a long time now. The Iraq one is just beginning to unfold and gain momentum.
What Goldman Sachs did to the price of gold today is essentially an effort to crush dissent for those who believe in free markets. The message is if you oppose them they will make you pay for it. It is very similar to what the Bush Administration did to those who challenged them on the reasons for going to war. If this doesn’t scare you to some degree about where America is headed, then I don’t know what will. It is nightmare time on Halloween day for all Americans!
When we review what occurred the past two business days in all the US financial markets, we can view the extent of the market engineering, which is phenomenal (not an exaggeration):
*The stock market went into a rocket ship mode rally.
*The dollar was sent back to the upside near its highs.
*The rise in intermediate/long-term interest rates was checked.
*Gold and silver were battered.
The Bush Administration and honchos are going all out to turn the opinion polls around and to build political momentum again. If the US stock and real estate markets go against them in a significant way, they know they are done for. Thus, they exploited the news the past two days to go all out and bulk up their standing with the American public. This included sending Goldman "Hannibal Lecter" Sachs to bury the gold price all by themselves on a day in which the featured buyers, the Indians and Arabs, were tending to festival and religious matters.
This will end very badly some day for the Orwellians and us Americans.
October could be worst for hedge funds since 2000
LONDON, Oct 31 (Reuters) - Tumbling stock prices and a high-profile bankruptcy in the United States mean October is likely to be the worst month for hedge funds since the 2000 equities crash, industry participants say.
However, they do not expect any losses this month to trigger a mass investor exodus from hedge funds, the investment vehicles which some see as risky because they can use derivatives, short sell and borrow or leverage to take bigger positions.
Expectations are that average losses will be between 2 and 3 percent, which would be the highest since March and April 2000 when the technology bubble burst and hedge funds were left nursing losses of 2.1 and 4.6 percent respectively, according to Credit Suisse First Boston Tremont Index…
-END-
This development is HUGE for us gold bulls as this new market will affect The Gold Cartel’s ability to maneuver as freely as they have in years past:
Dubai still enhancing its gold market position
Posted: '31-OCT-05 09:13' GMT © Mineweb 1997-2004
The gold futures contract will go live on November 21. When we last wrote on this subject, the Exchange was reporting considerable interest from a wide range of market members. The exchange will trade from 10:00am to 11:00pm local time Monday to Friday, thus overlapping with the Far East and North American markets. And a new development is that the Exchange will also open on Saturdays and Sundays as of early 2006 (although with shorter trading hours), thus giving traders access to a week-end market.
http://www.mineweb.net/sections/gold_silver/511515.htm-END-
Rhody on the lease rates:
Hi Bill:
Lease rates have changed little from last week. Only gold is in incipient backwardation, with the one month to one year spread easing to .08% Knowing what we do about the massive deliveries taking place on COMEX in gold and silver (35 Moz of silver have changed ownership and 1.1 Moz of gold, about one third of COMEX stockpiles were delivered this month or last), the lease rates patterns are just too benign to be true. It is my belief that lease rates are as managed as any other financial instrument in the western world, and the management has become more intense over the past 5 years. Lease rates in precious metals are pivotal in maintaining the illusion that everything is just fine in financial land. The lease rate curves are completely normal and benign, except in gold, but we know that the entire system is stressed to the limit. The problem here is that in contrast to ten years ago, the lease rates give no warning of commercial shorting blitzes, and I fear will give no warning when the CABAL begins to lose control. We shall see.
Regards, Rhody.
http://www.kitco.com/market/lfrate.html Hi Bill:
I just sent in my comment on lease rates, and then had another look at gold and silver. There was no advance warning in silver lease rates of this pending bear attack, so either this was accomplished entirely with futures or silver was leased at rates that were completely artificial and sold into the spot market.
Regards, Rhody.
http://www.kitco.com/charts/livesilver.html In case you missed it:
Click here: Mexico Mulls Silver Lining Against Currency Crash
***
A number of Café members have inquired about the Blanchard suit against Barrick Gold in New Orleans Federal Court: By MATT SEDENSKY and RUSS BYNUM, Associated Press Writers Sat Oct 29, 5:57 PM ET
NEW ORLEANS - In his third day back on the bench since Hurricane Katrina struck two months ago, Criminal District Judge Benedict Willard opens court by entering a plea of his own — for patience.
"We're going to do as much as we can, with the limited resources," Willard says of this battered city's struggle to resuscitate a justice system crippled by the monster storm.
-END-
Hard for anything to happen in that environment.
Kudos to GATA’s Chris Powell for his retort to the NY Times assault on the gold mining industry in this email sent to the Café membership:
[GATA] The gold issue is a lot more complicated than The New York Times lets on
*** Numerous well deserved complements were sent Chris's way:
"VERY WELL SAID AND WELL WRITTEN -- You should send this to the NYTimes."
"Powell should write an op ed piece for the NYT on this topic. BTW, he writes eloquently."
Chris did send it to the NY Times. We shall see.
John Brimelow called this afternoon to say the gold volume on the Comex surged in the last hour to 19,000 contracts. The Gold Cartel made sure gold closed on its lows.
From Eric Hommelberg:
Hi Bill,
The HUI held up quite well today in the face of a $8 drop in Gold.
In my article HUI – Not Dead Yet ! I said there’s no rush to sell gold stocks. I still stick to that!
Why ? The Gold/HUI chart tells me. Its one of my favorite indicators. Already since May this year the Gold/HUI ratio in trending down. This means that the gold shares are outperforming Gold… The month of October however showed an inversed picture which is a rally of the Gold/HUI ratio instead of the desired drop.. But it seems that the October rally is on its last legs and if the Gold/HUI ratio fails to breach its 200 dma to the upside it will continue its down-trend which started mid-May. The HUI performance of today is pointing towards a further decline of the Gold/HUI ratio indeed.
Below are the Gold/HUI ratio and HUI charts.. Notice the HUI chart, this formation should solve itself one way or the other within a week. My guess is to the upside for reasons mentioned above..
Furthermore I would like to let you know that we’ve just published our first monthly issue of ‘The Gold Discovery Letter’ which covers Gold/HUI analysis in depth and current exciting discovery cases.
Readers interested can download a free copy at :
http://www.golddrivers.com/GDRUpdates/gdrupdates.htm
All the best,
Eric
It was a nightmare Halloween for our camp with the trick on us, courtesy of Goldman Sachs and The Gold Cartel. It is an outrage on a day which the surprise Barrick news will be interpreted bullishly. No other Wall Street sector would ever trade like this. Unfortunately only the GATA ARMY will express outrage at what is going on and articulate why. While those of us who are infuriated have every right to feel this way at the moment, gold and silver should not stay down very long. The gold/silver fundamentals are too compellingly bullish. The assault on contract highs for gold and silver will resume shortly. Our treats are still to come and they will be bonanza ones.
Nightmare Halloween for my thoughts on the markets too. Bullish on oil, gold and silver. Bearish on the US stock market. Bad Day At Black Rock. Bowed, yet not broken. Big picture, nothing has not changed one bit. At least for gold, silver and the future direction of the stock market.
There is good reason to believe The Gold Cartel manages the gold shares as part of their manipulation of the gold price. The gold shares have acted unreasonably weak of late vis-à-vis the price. Now we know why. The Gold Cartel had planned to bury the prices of gold and silver today and sent in Goldman Sachs as their hatchet man to get the job done this morning.
Considering how gold and silver were brutalized, the shares held their own. Most likely due to the Barrick/Placer news and to covering of shorts by those manipulating the shares as part of The Gold Cartel's drill. The XAU rose 1.04 to 107.84, mainly due to the strength of Placer and the HUI only lost 1.36 to 222.84. Support at 220 held nicely. HUI
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hui&sid=0&o_symb=hui&freq=1&time=8
The bid by Barrick for Place is likely to inject some excitement in the gold share sector and even in the moribund explorations. This is a time to focus on the gold and silver shares, not run from them. GATA BE IN IT TO WIN IT!
MIDAS
Appendix
Hi Bill,
Hope you are holding up well during this most recent assault upon gold and silver. I am going to hazard a wild guess that today's $8.00 takedown in gold ($00.25 in silver) is connected to tomorrow's Fed meeting... Duh, can the timing of these interventions be any more obvious? These guys are broadcasting their power and control over perceived inflation and setting up their justification for no increase to the Fed rate. The energy villain has been mostly contained, so now the standard inflation benchmark, gold, must also be defeated. This will enable Wall Street to achieve their lustfully craved Santa Clause rally and improve the perception of the U.S. economy. It's a win-win situation for the establishment and the President's falling popularity. Economic fundamentals, a.k.a. reality, will just have to be put on hold till after the holidays. The script for this fairy tale world in which we live has been written to satisfy a naive populous, which has the mind set of a ten year old spoiled child. There is no accountability, no limit to deficit spending, no cause and relation, just fun, fun, and more fun for the children. Who needs hard assets and a hedge against inflation when the stock indices and government statistics are screaming prosperity? Everything is fine, matter of fact; it's wonderful! Makes me wonder what is really known about the ensuing Avian flu pandemic and other potential geopolitical, world changing events. It is all obfuscation and diversion, which supercharges my usually low paranoia. We sure do live in interesting times.
Rich C.
Good evening Bill,
Found some data on the U.S. Mint’s 2003 and 2004 annual report that you and fellow readers might find interesting. The following information was copied from the report:
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UNIT COST OF PRODUCING AND DISTRIBUTING COINS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Penny Nickel Dime Quarter Half Dollar
Cost of Goods Sold $0.0090 $0.0446 $0.0212 $0.0466 $0.1101 $0.0984
General & Administrative 0.0001 0.0006 0.0100 0.0257 0.0569 0.1114
Distribution to FRB 0.0002 0.0004 0.0002 0.0010 0.0027 0.0016
Total Cost per Unit $0.0093 $0.0456 $0.0314 $0.0733 $0.1697 $0.2114
DEPARTMENT OF THE TREASURY
UNITED STATES MINT
NOTES TO THE SCHEDULE OF CUSTODIAL GOLD AND SILVER RESERVES
AS OF SEPTEMBER 30, 2004 AND 2003
Note 2. Gold and Silver Reserves
The gold and silver reserves reported in this Schedule are exclusive of the gold and silver reserves considered to tie operating inventory in the United States Mint's financial records and of the Treasury gold held by the FRI. The custodial gold and silver reserves included in this Schedule are primarily in bar form, but may occasionally be in coin or other form. The custodial reserves also include foreign gold coins that have been held by Treasury for many years.
The gold and silver reserves are reported in this Schedule at the lower of cost or market value. Absent historical records to determine the acquisition cost of the gold and silver over the decades, the reserves are valued at the rates stated in U.S. Code Title 31, Sections 5116 and 5117 (statutory rates) which are $42.2222 per Fine Troy Ounce (FTO) of gold and $1.292929292 per FTO of silver. An offsetting liability is also reported for these assets.
At September 30, 2004 and 2003, the market value of gold was $415.65 per FTO and $388.00 per FTO respectively. Gold inventories consisted of the following at September 30:
FTO Statutory Value Market Value
2004 245,262,897.04 $10,355,539,091 $101,943,523,155
2003 245,262,897.04 $10,355,539,091 $ 95,162,004,052
At September 30, 2004 and 2003, the market value of silver was $6.6650 per FTO and $5.1150 per FTO respectively. Silver inventories consisted of the following at September 30:
FTO Statutory Value Market Value
2004 7,075,171.14 $9,147,696 $47,156,016
2003 7,075,171.14 $9,147,696 $36,189,500
The combined gold and silver custodial reserves consisted of the following at September 30:
Statutory Value Market Value
2004 $10,364,686,787 $101,990,679,171
2003 $10,364,686,787 $ 95,198,193,552
In prior years, custodial gold and silver FTOs were transferred to the PEF for numismatic operations. The PEF is responsible for either replenishing the custodial reserves with newly mined gold or paying the Treasury General Fund for the custodial reserves transferred to the PEF for numismatic operations. There were no such transfers during FY 2004 and 2003.
Supplemental Information per Public Law 107-201
Public Law 107-201 (July 23, 2002) authorized the United States Mint to purchase silver on the open market to mint coins when the Strategic Stockpile of silver was depleted. The law requires annual reporting of the amount of silver purchased on the open market by fiscal year. The following are purchases for FY 2003 and FY 2004:
Quantity (FTO) Market Value
FY 2003 9,709,426.5470 $ 45,663,721.33
FY 2004 12,968,078.1850 $ 81,939,233.25
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The complete report can be viewed at http://www.usmint.gov/downloads/about/annual_report/2004AnnualReport.pdf The above PDF file is more readable. My cut and paste imported some mistakes which I have hopefully corrected.
A couple of interesting points about this report. The cost of minting a penny is 0.93 cents and the cost of minting a nickel is 4.56 cents. The government will soon be minting these at a loss if they aren’t already. The paragraph which begins "in prior years" states that the Mint’s Public Enterprise Fund (PEF) used to get its gold from the treasury. They conveniently leave out where the have got the gold for the last 2 years. Either the Mint is drawing down their stocks or they are buying on the open market. Why the switch in procedure? In recent years they have used about ½ million ounces per annum (17 Tons). The last point is that they bought 12.9 million ounces of silver from the open market in 2004. This is more than the annual mintage of silver eagles for any year through 2003. It would be interesting to know how the CPM and Silver Institutes surveys compare to this quantity.
I have always enjoyed the daily Midas, but even more so recently. I think a storm is brewing in the west.
-Bryant
