-- Posted Thursday, 8 December 2005 | Digg This Article
December 7 – Gold $514.10 up $3.90 - Silver $8.78 up 10 cents
"You haven’t had a rush until you’ve had a Gold Rush" … Adrian Douglas
GO GATA And HAPPY BIRTHDAY ADRIAN!
When I woke up this morning, gold was $3.10 higher with silver 8 cents to the good. Our gold and silver rockets were maintaining and accelerating their upward thrusts.
As is almost always the case, The Gold Cartel and Comex locals could not wait to sell. Gold came in much weaker than expected, coming back to the unchanged mark, and then shot right back up, rising more than $3 in the early going.
The feedback from the floor is that while a number of bulls remain that way, most are looking for a correction. Gold is climbing the proverbial Wall of Worry. Since so few understand WHY gold is doing what it is (the dollar was up sharply this morning), they are even more worried than normal.
What struck me was how gold ground its way higher after the opening … very calmly … matter of fact-like … very little exuberance. It seemed like investors were watching the move in disbelief.
At one point gold went up the limit ($6 Rule), then sold off, yet did not break. Sure a correction (meaning a down day) can occur at any time, and should be expected, however, I doubt we will have a meaningful correction until the price of gold rises sharply from these low levels (as to where the price really should be).
Gold is accelerating out of its $458 to $478 base, as MIDAS expected. Then, it blew through significant $500 resistance as if it were not there. Now gold JUST made a new 24-year high with no important (historic ) short-term resistance in sight. The probability of a short-covering price explosion from here is far more likely than a correction of any technical meaning.
While there is little excitement on Planet Wall Street over the gold move, this is not the case in areas where a good deal of the physical buying is coming from:
Bulliondesk headlines:
*Gold trades at 24-year High in Asia as Demand Remains Strong
*Gold Fever" Hits Shanghai
*Japanese hedgers keep gold at dizzy heights
Both gold Fixes were higher than the prior Comex close:
AM: $512.30
PM: $515.40
From London, word has it:
Hi Bill,
Just heard that paper bought 3'000 of the Dec '07 700 calls for $20! That's $6 million in premium!
Rgds
M
(Later confirmed by my Comex sources) Now that is a gold bull!
Brother Tim tells me Jim Rogers is now telling people he expects gold to take out its 1980 highs. That is a fun one for me having had dinner with the legendary Mr. Rogers twice (same table) and listening to him pan gold for so many years. While he was never bearish, he always said almost any other commodity would be better, such as LEAD. That was his standard line. Nevertheless, GATA loves all the talk like this from the respected ones on Planet Wall Street. Eventually it will take hold and be a mega boon to the shares.
The gold open interest only rose 2297 contracts to 341,111 and still stands 30,000 below its old high. The press is full of talk of a correction due to massive spec profit taking. Sure we can get a short-term dump at any time. However, the specs have a LONG way to go before this is overdone.
The silver open interest went up 348 contracts to 141,571.
Silver continues to go up and up and up … and is doing so like Rodney Dangerfield. It gets no respect and little attention from the Planet Wall Street media. Of interest … when silver is taken down, it roars back with a vengeance. When it rallies, it never explodes with a vengeance. It is trading limply in a way, WHICH has lulled the shorts to sleep. The silver price explosion is still ahead of us.
One of the main reasons Planet Wall Street refuses to give gold the time of day is because the reasons associated with a sharply rising gold price are in conflict with the financial asset investments they are pitching to the public. Think of it. What are the standard reasons given when the price of gold rises?
*Inflation.
*Safe-haven buying
*Crisis buying
*Dollar falling
One, Planet Wall Street hates all of those reasons. Two, none of them fit now so many on PWS don’t know what to say. For example, how do they explain the gold rally is due to inflation fears when most of Planet Wall Street is saying the following to foster interest in the stock market?
Bloomberg: "U.S. Treasuries rallied, sending the 10-year note to its biggest gain in three weeks, after a government report showing labor costs fell last quarter. ‘You have no inflation in these numbers at all,’ said Mr. X, head of U.S. Treasury trading at Zions First National Bank in Jersey City, New Jersey." – END-
Planet Wall Street remains totally clueless as to what is happening re gold. For those who care to do so, please send this simplistic analysis to help them out:
A Gold Cartel suppressed the price of gold for nearly a decade, and did so in surreptitious fashion. This was accomplished by deceitful lending of central bank gold in order to add price-depressing physical supply into the market. The IMF, to accommodate The Gold Cartel, instructed the central banks to account for this gold as gold reserves in the vaults, not as lent/swapped gold they cannot retrieve. As a result, the central banks have less than half the gold they say they have. Since the supply demand deficit exceeds 1500 tonnes per year, they will not be able to get even part of their gold back without driving the price to the moon.
There is a massive gold short position out there with billions of derivatives of short side exposure, enough to send gold stunningly higher at any time when a gold derivatives neutron bomb goes off.
Traditional gold shorts, ones who played along with The Gold Cartel, are running for the hills. It is only a matter of time before we begin to see smoke re a Commercial Signal Failure as some short is forced to cover in fast market panic buying conditions.
-END-
That’s good enough for now. I eagerly await emails and calls from the mainstream financial market press for requests to explain what is REALLY going on in the gold market and to have this explanation presented to their public viewers and readers.
No matter what they think of GATA and how they want to hold their nose at us, we:
*Have predicted this price move
*Explained why
*And said gold would soar $100 and the dollar do nothing. It has now risen $96 and the dollar has gone UP fairly sharply.
You might let them know there are a lot of Johnny Come Latelies, which is great, however, who over the past years (outside of GATA) used supply/demand reasoning as to why the gold price would explode. The mainstream gold world (GFMS and WGC) did nothing but pan the supply/demand numbers for years. For example, Jessica Cross (long aligned with The Gold Cartel and GFMS) stated in her recent report that gold will average $430 next year due to poor supply/demand fundamentals. It was a non-issue for most every gold pundit outside of the GATA camp. Now look (internet post re a CNBC interview):
Pretty fair interview with Bob Walberg--of course they didn't mention the main point: that the rig is falling apart
(richard640) Dec 07, 13:05
They stressed many times that gold was NOT going up cause of inflation or currency worry--they MUST convey the idea that the integrity of paper is unquestioned.
Supply and demand is what they stressed--what I appreciated was that there were no smirks, no sly nudges and winks-Walberg said he could see gold over $700--no overt bad-mouthing of gold or gold investors-they "neutered" gold very discreetly--just another commodity going up--nothing to worry about.
-END-
Note the irony here. Because Planet Wall Street cannot, and WILL NOT, explain why gold is doing what it is, the latest is to say gold is going up for supply/demand reasons and gold is no longer moving so because of the ones which have been a traditional negative for Planet Wall Street. Fellini could not make this up!
Ah Ha … a fun development to report as I did what I asked Café members to do, but first:
Bill,
I was forwarded a Wachovia Securities newsletter with an article in it, Gold: Not An Inflation Story, But Its Own Story and I was struck by how they practically acknowledge the effect of Gold Rush 21 without ever mentioning it. Even the Gartman quote within it seems like the old hypocrite knows GATA made some serious traction up there. This is a part:
"We think the recent breakout in gold to $500 can be dated to Nov 16 when Maria Guegina, Russia's External Reserves Management Chairwoman, announced that Russia could double its reserve holdings in gold from 5% to 10%. Dennis Gartman of The Gartman Letter noted that "Russia presently has approximately 500 tons in reserve and given that Russia produced just a bit more than 180 tons last year it shall take nearly 2.8 years of Russian mining to meet that new goal. In other words, Russian gold will be and materially taken from the market for several years into the future if Ms. Guegina's statement can be taken at face value." We believe Guegina's comments ignited speculation that other central banks also intend to materially raise reserve weightings in gold. Asian central banks in particular have room to do so. According to Stephen Jen, Morgan Stanley's currency analyst, "Asian central banks with the four largest foreign reserve holdings (Japan, China, Korea, and Taiwan) have little more than 1% of their reserves held in gold, the global average is 8.7%. If these four central banks raised their gold holdings to 5%, it would be an additional 109 billion worth of gold purchases, (about three years of global newly mined supply) this would have meaningful effects on the price of gold."
* Perchance Andrey Bykov and Guegina chatted a bit?
* Gartman still skeptical of Guegina's comments? Maybe a little less skepticism on his part would have rewarded his trading position more.
* So where does thin Jen guy get such data- maybe from ... GATA?? His "meaningful effects" on gold price is a hoot. How about BALLISTIC.
* Wonder what Wachovia would model for a gold price if not just those four central banks but ALL central banks instead raised gold holdings to 15% instead of 5%? Oops, there isn't even enough anywhere for that to happen. Assuming somehow the gigantic short position somehow is a mirage and it's even there to buy right now.
* Gartman speaking on CNBC as I type, his lackey status remains intact.
The $6 collar looks tired. Soon they will regret ever having thought it up.
James Mc
After writing the MIDAS commentary above, I sent the following to ROBTV with a note attached:
1. In a stunning development, Oleg V. Mozhaiskov, Deputy Chairman of the Central Bank of Russia, bluntly brought GATA to the attention of the mainstream gold world. Mozhaiskov 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). Mozhaiskov stated:
"This dualism in gold price formation distinguishes it from other commodities and makes the movements in the price sometimes so enigmatic that market analysts need to invent fantastic intrigues to explain price dynamics. 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."
2. Andrey Bykov, a highly regarded economic consultant to Russian President Putin, requested to come to Gold Rush 21 and bypassed the concurrent mainstream gold conference in Perth, Australia.
As the conference concluded, Andrey Bykov told GATA chairman Bill Murphy, "This is the finest conference I have ever attended."
3. Two days after Gold Rush 21, the price of gold decisively broke The Gold Cartel's $6 price-capping Rule on the upside. Gold rallied $73 per ounce in the ensuing four months, even though the dollar rose from 87 to 92, leaving most of the mainstream gold world speechless.
4. In November, 2005 Russia's President Putin is shown with a gold bar in his hands, perhaps a first for a Head of State, while making this comment on November 22:
(Interfax) "The Central Bank should review its gold and forex reserves policy in favor of increasing the weighting of gold," Russian President Vladimir Putin said in Magadan.
President Vladimir Putin holds a
gold bar at a mineral resources exhibition in
Madagan in the Russian Far East, Nov. 22, 2005.
Itar-Tass photo.
-END-
ROBTV in Toronto got back to me and said they would give me as much time as they gave George Foreman, which is 8 minutes, a long time in the TV interview world. Show time: Friday, Dec 16th 11:42 EST.
GATA could use your help to check on other media outlets, like CNBC, which has blackballed me for 7 years. For goodness sake, they had Dennis Gartman on this afternoon talking about gold … the same gold market The Gold Cartel got him out of at $460. The last time I was live on TV was prime time South African Broadcasting TV at the African Gold Summit in Durban, South Africa on May 10, 2001.
Spread the word, Thunderbird!
The John Brimelow Report
Gold Comment: Funny time to sell
Wednesday, December 07, 2005
Indian ex-duty premiums: AM $3.82, PM $4.13, with world gold at $510.75 and $512.05. Adequate for legal imports. There simply is no numerical evidence that the world’s largest importer has backed away from the market.
TOCOM continued buying. On volume equal to 70, 897 Comex (compared to 49,679 in NY yesterday, and an estimated 60,000 today) open interest rose the equivalent of 2,454 Comex lots (7.63 tonnes). Mitsubishi’s data implies the public added 7.4 tonnes to its long. The active contract closed up 36 yen; world gold went out up $2.25 at $512.75.
The idea that Japanese traders buy gold futures in the face of a weakening yen is starting to spread: there is a faint glimmering in today’s FT. See
http://news.ft.com/cms/s/68c71ea2-66c7-11da-884a-0000779e2340.html
As remarked the other day, maybe we will eventually see western specs trading gold on the basis of $/yen, as they once did E/$.
Comex yesterday traded 46,679 lots, with open interest rising 2,297 contracts (7.15 tonnes). NY is simply not the key market right now.
The most germane comment on yesterday’s trading was made by Macquarie, speaking of yesterday’s TOCOM action:
"Again official sector selling was shopped around just before Tocom re-opened and gold dropped a very quick $1.25 before bouncing straight back out as soon as the seller was done"
Why would a proceeds-maximizing long sell during the 90 minute TOCOM lunch (9PM- 10-30 PM NY time)? Or indeed at all, before India and the Middle East activate?
JB
CARTEL CAPITULATION WATCH
As is often the norm, the US stock market put in another "Hail Mary" rally, just when it appeared ready to be shellacked. The DOW only closed down 46 to 10,811, while the DOG only lost 9 to 2212.
Did gold rise due to a weak dollar? No, it rose .46 to 91.58. The euro fell 3/4 of a point and has fallen all the way back to the 117 level. Did gold rise due to surging oil? No, oil dropped 73 cents per barrel to $59.21.
The longer term US interest rates rose, gaining back on they lost yesterday. The 10-year T note yield rose to 4.52%, staying within a broad trading range.
US economic news:
10:26 GM UAW says strike against Delphi more likely than not -- CNBC (21.99 -0.40)
Note the growing prospect of a strike has been getting more exposure, as noted in recent comments.
* * * * *
13:10 CRS CRS raises prices on premium melted specialty alloy prices by 10% (69.02 +0.85)
The increase is effective immediately on all new orders. Raw material and energy surcharges will remain in effect.
* * * * *
15:00 Oct. Consumer Credit reported ($7.2B) vs. consensus $5B
Prior reading revised to $4B from ($0.1B).
* * * * *
10:30 API reports crude oil inventories +686K barrels
Gasoline inventories +4.51M barrels, while distillate inventories +3.6Mbarrels. Jan WTI crude is trading lower in initial reaction.
* * * * *
10:30 DOE reports crude oil inventories +2.72M barrels vs. consensus (1.9M) barrels
Gasoline inventories reported +2.74M barrels vs. consensus +1.05M barrels. Distillate inventories reported +2.74M vs. consensus +1.75Mbarrels. January WTI crude is trading at $60.00 in reaction to thedata.
* * * * *
Copper Rises to Record in New York, London After Chilean Strike
Dec. 7 (Bloomberg) -- Copper rose to records in New York and London after railroad workers in Chile, the biggest producer of the metal used in pipes and wiring, went on strike, triggering supply concerns.
About 368 workers walked off the job at midnight at Ferrocarril de Antofagasta a Bolivia, said Luis Ortiz, a union secretary. The railroad carries copper produced by companies such as state-owned Codelco. Copper prices have climbed 50 percent in the past year as demand outpaced supply, forcing manufacturers to use inventories or pay more for metal.
-END-
March copper closed up 4.45 cents to $2.0315 per pound.
The King Report
M. Ramsey King Securities, Inc.
Wednesday December 7, 2005 – Issue 3286 "Independent View of the News"
Bonds rallied sharply on dismal economic news. Labor costs fell 1.0% in Q3, and Q2 labor costs were revised lower, from a gain to a decline of 1.2%. Also, for October, pending home sales fell 3.2%; a decline of 1.2% was expected. September was revised lower to -1.0% from -0.3%. ABC Consumer Confidence remained unchanged at -14 as of 12/4/05. The bounce in consumer sentiment readings that have occurred the past few months is meager given the stock rally and usual Christmas bullish banter.
Bloomberg: "U.S. Treasuries rallied, sending the 10-year note to its biggest gain in three weeks, after a government report showing labor costs fell last quarter. ‘You have no inflation in these numbers at all,’ said Mr. X, head of U.S. Treasury trading at Zions First National Bank in Jersey City, New Jersey."
This is archaic thinking – the concept of ‘sticky wages’ and the difficulty of thwarting inflation because it takes real economic pain to rescind wage inflation, and the consequences are politically troubling. Due to the industrialization of China, India and other developing countries, US inflation is not as wage centric as it was decades ago. For the past decade or so real wages and benefits have persistently declined without the Fed instigating the rollback. In fact, due to the past multi-decade decline in US living standards, the Fed has run the most promiscuous monetary policy for the longest duration. Furthermore, the US has lost control of oil and commodity inflation to demand from Asia. The inflation of services, notwithstanding hokey hedonic adjustments, and the necessities of life plague US consumers.
Productivity gains are only beneficial when aggregate living standards appreciate. This was the case for the US for most of the 20th Century. It is no longer true, and those that spin it as a positive are wrong.
Buried in yesterday’s WSJ on B-14: "Economy Grows, but Raises Won’t – White-Collar Pay Increases For "06 to Be Flat With ’05, Sibson Survey Dada Indicate." http://online.wsj.com/article_email/SB113383306765014719-lMyQjAxMDE1MzAzNjgwMzYzWj.html
More of the US productivity miracle from The Washington Post: "Verizon Communications Inc., the second-largest U.S. phone company, said yesterday that it will phase out defined-benefit pension plans for about 50,000 management employees to save money…it would take a $97 million fourth-quarter pretax charge as a result but expected to save about $3 billion over the next decade because of the changes." http://www.washingtonpost.com/wp-dyn/content/article/2005/12/05/AR2005120502082.html Is this productivity enhancement good for the aggregate economy?
The really big picture: Global leaders versus central bankers
Political turmoil in Canada and Germany, which are both anti-Iraq war, have felled leaders. Chirac, the head of the anti-Iraq war movement, is under severe political duress. Bush’s approval rating is abysmal. But all have the same underlying economic problems. The vast social spending and benefits programs cobbled together over the formation of the welfare state during the 20th Century can no longer be afforded AND the inexorable transfer of wealth to China, India and other emerging countries is facilitating the decline in western living standards and further crimping the ability to pay for promised benefits.
Central banks, even with bogus inflation numbers, realize that the series of bubbles that they spawned (stocks, bonds and real estate) to offset declining living standards have only prolonged the denouement AND inflation is no longer an ignorable problem – especially if oil aroused from its current retrenchment.
However, political leaders are desperate to keep the game going and want central bankers to continue to paper over the profligate spending. Even Japan is having a conflict between the BoJ and the Ministry of Finance over abandoning its zero-interest-rate policy.
Bloomberg: Housing Bubble Bursts in the Market for U.S. Mortgage Bonds – "In the U.S. bond market, the housing bubble has burst. Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default…The amount of bonds backed by these high-risk loans has more than doubled since 2001, to a record $476 billion, according to the Bond Market Association, a New York-based trade group of more than 200 securities firms…The slump in the bonds is one of the first signs the housing boom is ending after the Federal Reserve's 12 interest-rate increases. Real estate has accounted for about half the economy's growth since 2001, according to Merrill Lynch & Co." http://www.bloomberg.com/apps/news?pid=10000103&sid=aDSB370ItSJU&refer=us
-END-
From Brother Tim on Joe Granville on the US stock market:
He has a very interesting quote that never in the history of the stock markets has he seen his OBV indicator give such an EXTREME sell signal on the Nasd/Dow.
***
John Williams is very sharp and a friend of John Crudele of the New York Post.
NOTE: You can access John Williams' website at:
www.shadowstats.com/
__________
Summary
Following is a very, very brief abstract of the December edition of "John Williams' Shadow Government Statistics," which was published earlier today. If you are not a subscriber, or if you are not familiar with John's work, please pay a visit to his website at the above URL. If you think you might have an interest in subscribing, be sure to contact me; I'll see what we can do!
_____
>From John Williams:
In general, the broad economic outlook has not changed. The 2005 to 2007 inflationary recession continues to deepen. This outlook is predicated on economic activity that already has taken place and does not consider any additional risks from exogenous factors.
The Shadow Government Statistics' Early Warning System was activated in May. The EWS looks at historical growth patterns of key leading economic indicators in advance of major economic booms and busts and sets growth trigger points that generate warnings of major upturns or downturns when predetermined growth limits are breached.
Since the beginning of 2005 a number of key indicators have been nearing or are at their fail-safe points, with four indicators moving beyond those levels, signaling a recession.
Once beyond their fail-safe points, these indicators have never sent out false alarms, either for an economic boom or bust.
Significant deterioration also will be seen in corporate profits and federal tax receipts. Lower tax receipts will combine with disaster recovery spending and the ongoing war in Iraq to accelerate deterioration in the federal deficit.
However, negative GDP growth will not surface in regular government reporting until at least next year, now that it is clear that Katrina's impact has been neutralized in official reporting, and that political manipulation of the GDP, employment and CPI is rampant.
Risks of the current circumstance evolving eventually into a hyperinflationary depression remain extraordinarily high.
__________
-END-
From Easy Ed in Auckland:
Hi Bill:
The US Public Debt is out of countrol. See the Treasury site
http://www.publicdebt.treas.gov/opd/opdpenny.htm
As of Dec 6th it was $8,122 Billion
On Sept 30/05 it was$7,932 Billion
The growth of debt over the last 10 weeks was $190 Billion.
That equates at $514 Gold to 11,515 tonnes.
On an annual basis that would total 60,000 tonnes of Gold.
The treasury needs a good alchemist. Are they trying to turn copper
into Gold :-)
Cheers from Auckland, Ed
The Gold Cartel and friends are one sorry lot:
This was a direct quote from a Barclays Capital analyst that alluded to commercial bank gold capping:
"Obviously the next key level would be $515/oz and this looks quite possible.
Although some commercial banks are trying to push the price lower I think it’s not an issue for as long as it holds above $490/oz."
http://www.businessday.co.za/articles/markets.aspx?ID=BD4A123891
It's just stunning how blatant COT intervention has become. I can't wait until we start reading about some of the bigger ones blowing up when gold melts up...Dave in Denver
Barclays has been the most notable bear of all during the four year run up. They are still super bearish. Their gold analysis is a farce.
A fellow Café member sends us some commentary on gold that is circulating on Planet Wall Street:
Bill, a little comment here from a well-known pundit.
From: Carrie Butler
Sent: Wednesday, December 07, 2005 9:44 AM
To: ISI Client
Subject: ISI Significant Slowdown in Housing
Good morning!
The bull market in gold continues with prices at 25-year highs. Recently, the central banks of Russian and South Africa, two countries that produce a huge amount of gold for export, suggested they would increase their central bank holdings and today some reports from China suggest the central bank there, too, should increase its holdings of the yellow metal. In Britain, the Chancellor of the Exchequer, who sports political ambitions of his own, has taken a pounding in the British press over the sale of British gold, The Independent reports, "The first sale, (of the central bank) at $254 an ounce, caught the exact low-point of a 20-year slide in prices that had left gold vastly undervalued compared to equities. In total, 395 tonnes were sold at an average of $274.9 an ounce. The Swiss, Canadians, Dutch, and others also sold off bullion, but Mr. Brown's move was viewed as an act of treachery in the City, still host to the world's paramount gold exchange." The Old World is selling and the New World is buying.
With Newmont at a new 52-week high, Jason and Nick look into the gold trade. "Revision to the historical mean suggest either...oil is near the start of a precipitous fall ...or the (price) of gold is on the process of catching up." Relative to the market, gold shares have only started to shine.
Historically, Dr. Gold has had a view on a number of financial markets like bonds. Nancy insists that this time gold is responding to growing demand of all commodities and is not signaling a return to inflation. She lists a number of countries where CPI is flat to down.
Worries about fiat currencies abound with explicit policies to depreciate currencies in Japan and a policy in China of ignoring market pressures in the favor of trade. Gold is clearly in a bull market now in all currencies. In the US, budget prolificacy has lead to an early budget run rate of $539 billion! Hurricane Katrina has blown a hole in the budget, but interest outlays and entitlement spending were also up. Ominously, receipts have fallen. We are looking into why.
Andy gives a tax update this morning refuting the leaked Fed study on the impact of a dividend tax cut. He also notes the House will vote today on a stand-alone AMT patch that would avoid a $30 billion dollar tax increase next year. The AMT tax vote is today and the dividend and capital gains tax cut vote is tomorrow. Then on to the Senate where there is less support.
Our housing survey is down to levels associated with recession. Retail sales will surely follow.
Have a good day everyone.
All the best,
Carrie Butler
A GATA ARMY hoot from Jessie:
http://jessel.100megsfree3.com/Silver.jpg
***
Love, love, love…
Bill,
On November 28 Dennis Gartman told his readers of the TGL that their general public was not excited about gold and this was super-bullish. The following day on November 29 he changed his call 180 degrees and decided that the gold market was just brimming over with exuberance and he made the following call:
QUOTE-It is at these points when we remember the wonderful trading aphorism taught to us by our old friend, Burt Cohen, who once presciently said, "Dennis, when you are cryin', you should be buyin', and when they are yellin', you should be sellin'!" The gold bugs are yellin', and they are yellin' loudly.
Sell them your long positions and move to the sidelines immediately!-END
Assuming that his clients dutifully took his advice selling their longs "immediately" would mean that this would have occurred on November 30. This is supported by the gold price because it fell $4.4 to $494.8 on that day. Clearly with such a forthright and bold call a large number would have gone one step further and thrown short. This means they would have on average gone short at $497 because that was the average price of gold on that trading day. Given that the margin is $2025 per contract this would mean that the maximum loss per oz without needing more margin or having to sell is $20.25. This would occur at $517.25. The gold high today was curiously $517.3. A coincidence? I doubt it. This would suggest to me that the latest speculators to go short on Dennis Gartman’s advice may well have gone a little more short today to protect their margin call and to increase their bet against gold rising…after all the venerable Gartman is so well connected he surely couldn’t have got it this wrong! That must be worth throwing some more money at the short side. This is more than likely part of the reason why gold was taken off its highs late in the day.
From where I am standing it seems like they are juggling with cans of nitroglycerine!
There could well be some margin call buying tomorrow.
Cheers
Adrian
Knock that gold, knock that gold … the Economist …
Even at $500, it's still a barbarous relic
http://www.economist.com/opinion/PrinterFriendly.cfm?story_id=5246636First the Economist and then the Christian Scientist Monitor:
India's costly love affair with gold
Money spent on the precious metal could be cutting the country's economic growth by 0.4 percentage points per year
http://www.csmonitor.com/2005/1207/p07s02-wosc.html
***
The move up in gold and silver is reminiscent in some ways to what the DOG did in the late 1990’s and into the early part of this decade. Speculative frenzy kept the shares rising due to a shortage of stock to meet the surging demand…
*The DOG craze defied many fundamentalists who thought the move up in the internet/high tech stocks was unwarranted.
*The market kept going up and up and up, climbing the Wall of Worry … and each correction was bought up by a new round of momentum trading stock bulls.
Of course, what is going on in gold from a fundamental standpoint is somewhat the same, yet exactly the opposite. Gold is on the move:
*because there is too much demand for physical to meet a dwindling supply.
*While the DOG moved much higher because of a shortage of stock, gold is moving up because of a shortage of gold. The difference is the move in gold is fundamentally justified, while the move in the Dog was not.
*The moved up in the DOG lasted more than a decade, as will the gold move.
*The DOG went up to 5,000; then down to 1300 and change. The most speculative part of the DOG moved lasted 4 years. Gold has been on a move up for nearly 4 years. Yet, the move in gold has only begun. Because of what The Gold Cartel did, the price of gold should rally to $2,000 to $3,000 per ounce … who knows how high in the end when the real speculative frenzy starts. At the moment gold is undervalued by more than $400 per ounce.
*The DOG shorts were buried. So will The Gold Cartel shorts. A difference is there was talk back then about the shorts. There is none of that today re gold. Matter of fact the mainstream gold world goes out of their way to deny a huge short position even exists.
Congrats to Terry Krohn:
Bill,
Thanks for all your help! We made it to the bestsellers list in the early morning hours of December 2. Please extend my thanks to everyone at Le Metropole as well!
All the best,
Terry
703-359-7086
BTW - As soon as things settle down, we will select 2 names at random for your kind subscription offer. So far, roughly 68 books were purchased by GATA members. At minimum, Axiom House will send a check to GATA in the next few weeks for $200.
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A big thanks to Nick Laird for putting the multi-year gold charts up at his website with colorful Café/GATA backdrops. I will use them often to present the big gold/silver picture to you:
http://www.sharelynx.com/chartstemp/gata/GATA-WP.phpThe gold/silver shares … last night:
Howdy Bill--
Just a quick note FYI.
I've been tracking the major HUI moves since this new gold bull began back in '01. Today's HUI closing price was a new high for the latest leg (number 3) of the advance which began on May 16th of this year. Today's HUI closing was also the 2nd highest close since December 2, 2003, when the HUI completed the second of its modern gold bull legs and topped out at 256.84.
So we're only a couple of points away from a multi-year high, and only about four points shy of a new modern-day high. That would require any close above the December 2, 2003 intra-day high of 258.60. It could well happen this week, perhaps even tomorrow. If it does, we're nowhere near a top, in my ever-so-humble opinion (and over the past couple of years I've had PLENTY to be humble about!).
Derek
Then from Adrian:
Bill,
Good Morning, and what a morning!
The market action continues in ice-breaker mode and we know why.
It is very important to remember that EVERY short sale that exists in this market is well under water. The shorts are feeling sever pain. They have made a lot of money in the past on their nefarious maneuvers but they now risk losing everything they ever made and MUCH more in a very short period of time as this market takes out all remaining resistance in ice-breaker style and then heads skywards.
The short seller of gold and the short sellers of mining shares are not only, in the words of the Bank of England’s Eddie George, "staring in to the Abyss" I think they are likely to redefine Abyss. It is likely that in a few years time when one looks up the word "Abyss" in the dictionary one of the definitions will read as "the financial ruin suffered by the Gold Cartel of Short Sellers in the 21st century when gold reached a peak of $xxxxx.xx per oz!
Today is my birthday. I could not have asked for a better present to start what I think will be a memorable day!
Cheers
Adrian
The Birthday Boy is on a roll. In late at post time:
Bill,
You can still see in the share action that there are a lot of punters who can’t wait to get out in case there is a correction from passing the important $500/oz mark. I have news for them. Gold is 438 euros, it passed the psychological and technical level of 400 euros like a hot knife through butter and hasn’t even hinted at a correction. Gold passed 60,000 yen per oz mark and is currently 62188 yen and not looking back. Gold is CDN$595/oz challenging CDN$600, it is GBP296/oz challenging 300 GBP, it is AUS$687/oz challenging AUS$700.
There are a lot of psychologically and technically important barriers being crossed or about to be crossed around the world and many different punters are pushing up gold for their own local market characteristics. This is no longer a US$ driven market. It has decoupled from the dollar and is driven by supply and demand fundamentals. Those dollar gold bears expecting $500/oz to not be significantly bettered before a meaningful correction might be just as disappointed and squeezed as the Euro gold bear species.
Cheers
Adrian
Adrian D has built up quite the following and for good reason. I suggest all new Café members and our vets review his commentary re the gold shares, which was served at The Little Bear Table on November 13.
Explosive Rise in Gold Mining Shares Has Been Coming – Now We Know Precisely When
By Adrian Douglas
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It can be located in the Little Bear Library.Congrats also to Joey Freeze and Candente which keeps coming up with the goods:
http://biz.yahoo.com/bw/051207/20051207005203.html?.v=1
The HUI took out all major resistance by closing at 260.89, up 5.07. The XAU finished the day at 121.98, up 2.29.
There is a great deal of warranted frustration over the lack of performance by many of the smaller gold/silver stocks. It has become a phenomenon of sorts. For every action, there is an equal and opposite reaction. What we are going through is so bad (ridiculous), that the end result is going to be an explosion in these stocks like never seen before. WATCH! Hang in there and get ready.
The Gold Cartel lost their battle of Waterloo at $500 gold. They have been reeling ever since. Today's close into 24-year high ground and above its old 1983 high is their PEARL HARBOR. What a coincidence it came on the 64th anniversary of that fateful day of December 7, 1941.
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
Hi Bill,
Stock market has just opened and it looks like it will be an excellent day for ouside. This is only the beginning of our much deserved, long overdue rewards. Hallelujah!
I am passing along the following passage which has appeared in Dr. Joe Duarte's Market Intelligence Report (Free Version) for several days. While he is presently long gold, this is a recent development which tends to coincide with his being a contributor on Financial Sense's web site. I have underlined the statement within the passage which I believe depicts the prevailing Wall Street mindset, developed through years of Cartel Bullion Bank intervention and price control:
"For the last few days we’ve been writing: "If gold can take out the $500 area, on the spot price, convincingly, we could be off to the races. " And it looks as if they’re off, the gold bugs that is, quietly dancing in the corners, hoping not to attract too much attention, so that the central banks won’t hit the sell button and kill the rally. How high can this go? Who knows? But gold likes to trade around round numbers, or key fractions, so the $520-$525 area would seem to be a normal expectation for a target."
Seemingly, even when the establishment type analysts and newsletter writers recognize the gold bull market, they keep one foot at the door, ready to flee when the almighty Central Bankers decide to stop the rally. Clearly, these analysts are clueless to what GATA has uncovered concerning the greatly diminished supply of available gold, which in the past has been surreptitiously sold or leased into the market for the purpose of containing the price. These analysts are so brainwashed that they can't understand that in spite of the long term price fixing by the Central Banks, gold is in a powerful bull market which is still only in its infancy.
Moreover, their perception is that the Central Banks are in total control and merely allowing these price increases to happen, when in fact we (GATA) know that the Cartel has been fighting each step of this run up aggressively, but are losing because they don't have the physical gold to offset the tremendous demand. Hopefully, when the Gold Rush 21 DVD becomes available, more establishment type investors will learn what GATA has been reporting for seven years, and they too will join in the gold bugs dance celebration. However, they are going to pay up, considerably, for a piece of the action. Go GATA!
Rich C.
I have been a financial advisor for almost 20 years and am now firmly rooted in the GATA camp. You have helped me save my clients' portfolios. Thank you.
This morning's WSJ has a front page article about Ben Bernanke and the lessons he learned from studying the Great Depression. Number one on the lessons-learned list is: Beware of outdated orthodoxies such as the gold standard.
My first thought was, "He has learned the wrong lessons from history." My second thought was, "Oh, no. We have Captain Smith at the helm of the Titanic." As you may remember, Captain Smith was highly regarded, experienced, and known for his knowledge of ships and the sea. The problem was he was knowledgeable of the wrong kind of ships and was weak in the face of pressure from above (White Star Lines management wanting to set a trans-Atlantic crossing record.)
The results are duly recorded. Captain Smith went too fast in dangerous waters. He then used appropriate evasion methods for older ships to mis-maneuver the new ship into the ice berg.
Heaven help us.
GO GATA
Greg Zanetti
Albuquerque, NM
Hi Bill,
It's been a long time since my last correspondence so I thought that I would drop you a line. It sure is nice to see the Cartel in difficult times. Things really have changed since the Gold Rush conference. A big thanks to you and Chris Powell and your team of experts. One reason that I haven't written is because there is very little that I can add to what you and your team does. This new contributor Adrian sure is very impressive. His discovery of the large out of the money January call options is a very big development IMOP. While encouraging to shareholders it also raises troubling questions. If the calls were bought to hedge a large short position then it would seem that they would be spread out more over time. It is like someone knows something is going to go down before option expiration. Hopefully, it will not be something awful like another major terrorist attack. (The persons who shorted the airline stocks prior to 9/11 have never been identified to the best of my knowledge).
I was sorry to read about the difficulties that you went through several years ago. That mugging sure sounded like a set up to me. Since you live in Texas maybe you should consider getting a concealed carry permit. Send some hot lead the Cartel thug's way to go along with the margin calls. Thanks again for all that you do. If not for you I probably would have left the market in frustration long ago not realizing that the Cartel was the reason that gold and silver have underperformed for so long. Even now when I mention how gold and silver are doing my good friends typically respond, "Well, it's about time!"
Merry Christmas!,
Bill Osborne
-- Posted Thursday, 8 December 2005 | Digg This Article
