Abet Chichi2

[bob3]

Bill Murphy: LeMetropole Cafe *Must Read*

To:russwinter who started this subject
From: ajonesy Friday, Sep 5, 2003 7:20 PM
Respond to of 19481

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=19277181

September 5- Gold $377 up $4.70 - Silver $5.10 up 10 cents
Gold Closes in New Highs

Quite a day and one which made a number of things clear. Gold was once again bashed in London and was due to come in $2 lower in New York. It came in firmer than that and then ran when this news hit:

Sept. 5 (Bloomberg) -- The U.S. economy unexpectedly lost 93,000 jobs in August, the most since March, and the unemployment rate fell to 6.1 percent as more discouraged workers dropped out of the labor force, government figures showed.
Payrolls fell after a revised 49,000 drop in July, the Labor Department said in Washington. The jobless rate fell from 6.2 percent in July and 6.4 percent in June, the highest since 1994. –END-

The jobs picture in the US is worsening, not improving, even after all the 13 Fed interest rate cuts, tax cuts and government stimulus. Simultaneously, the Iraq quagmire is accelerating as US expenses mount.

When job numbers were announced, the dollar swooned and S&P futures sold off mildly. Gold reacted very swiftly and went up a few dollars on the day. Comments then surfaced from THREE different quarters that central/bullion banks were capping the rally. It is nauseating how Groundhog Day won’t go away. The movie was funny. This is an outrage.

Gold calmed down and got very quiet, holding $2+ gains. When the stock market began to weaken late in the Comex session, gold burst $5 higher out of nowhere, taking out stops, and rallied up to $379.50. Once again, cabal forces regrouped and instituted their $6 rule. How many times has MIDAS brought the $6 rule to your attention over the years? I have lost count.

Even as the desperate Gold Cartel gradually loses their war, they continue to fight one losing battle after another. This is exactly why I have ranted for so long that the gold price would never soar to where it should be until these low-life bums are carried out on a stretcher. Yes, the GATA stretcher-bearers are standing by.

It is GATA griping these days. When the stock market really falls apart and US investors lose a good deal of their money again, there will be outcries how it could have all happened. One need only go to Wall Street, various banks, the US political leaders and the US financial press. Together, they have facilitated a monstrosity.

Back to the gold action. One of the Gold Cartel rats may be leaving the ship. Yesterday, Morgan Stanley (as a firm) advised all their branch offices to get out of the stock market. Today, when the stock market made new lows, it was Morgan Stanley’s enormous buying which took gold up through the day’s highs. My take is MS sees the handwriting on the wall. The financial market managing by the Fed, ESF, bullion dealers in the cabal, and various other Wall Street houses is about to blow up. Morgan Stanley is running for the hills while they can. They know what can happen to the price of gold because they have been part of the rigging process for so long.

Another Ground Hogger: once again we see gold moving higher first, which leads a dollar move lower. That said, we can see how frightened The Gold Cartel is of gold taking out the $370+ area. The dollar fell 1.14 to 97.13 and the euro rose 1.75 to 110.97, yet gold was only allowed to rally $4.70. Over a two-day period the dollar has dropped 1 ¾ points with gold only allowed to rise $3.80. Obviously, the crooked ones are hoping they catch a break early next week to do what they can to take gold down again.

John Brimelow tells me the volume on Comex was 19,000 contracts the last half hour, or 1/3 of what it was for the entire session. That will give you some idea what kind of Gold Cartel firepower it took to keep gold from taking out the $378/$380 area. What a bunch of desperados!

The dollar completely broke down technically:
http://futures.tradingcharts.com/chart/US/93

Gold closed in new high ground, flying out of a small flag formation:
http://futures.tradingcharts.com/chart/GD/C3

The gold open interest fell a miniscule 7 contracts. There was no shakeout on the setback.

Yesterday, I mentioned how gold sells-off the day after The Gold Cartel knocks gold down purposely and noticeably on the close. It always comes in lower the next day and stays lower. However, the day after that, gold has continually risen and usually quite strongly, mostly after another lower opening. Happened again today. This is important to keep track off because it shows a pattern of strong hand buyers laying in wait for the predictable Gold Cartel. This powerful buying group knows exactly what they are doing.

The gold trading action over the last many weeks suggests the info I received about a $4.6 billion buy order is right on the money. These big buyers are toying with the cabal, buying as much gold as they can on breaks and keeping the futures market from liquidating. When they are ready, they will pull the plug and jerk the futures market through the roof. It will cause our long awaited Commercial Signal Failure and cause some major shorts to cover out of necessity.

Perhaps we will get our long awaited break gap opening on Monday. It’s long overdue.

Silver bolted sharply higher and then was held in check the rest of the session. When the price managers lose control of silver, it is going to blow sky high. I am still looking for a $1 move up in one Comex trading session alone.

Silver
http://futures.tradingcharts.com/chart/SV/C3

One of my reflections last night was on the Bernanke comments reported yesterday:

"The Federal Open Market Committee is likely to keep interest rates low even during a robust recovery because deflation remains the main risk to the economy, Federal Reserve Gov. Ben Bernanke said Thursday."

What could be more gold friendly and dollar bearish than a Fed announcing it is going to keep our short rates low regardless of how our economy is pumping along? To me it shouts, "BUY GOLD!"

The John Brimelow Report

Friday, September 05, 2003

Indian ex-duty premiums: AM $5.88, PM $6.67, with world gold at $373.25 and $370.70. Adequate for legal imports. India seems to accepting +$370 world gold. UBS, which has been stressing the possibility of physical demand faltering, conceded this morning:

"the market, finding decent buying each time the $370 level is breached, continues to surprise us and suggests that the market will be well supported into any selling pressure…".

TOCOM continued uninterested, with volume slumping a further 42% to the equivalent of only 15,767 Comex contracts and the active contract slipping 2 yen. World gold was firm in the Far East however, being above $373 most of the Japanese day and going out at $373.15, 55c above NY. One notes that The Shanghai Gold Exchange close, 90 minutes after Tokyo, reported local gold at a small (41c) premium to the world price, after showing discounts since mid August. (NY yesterday traded 33,418 contracts; open interest fell (finally!) by 7.)

Today, as on Thursday, attempts to get the gold price sliding in Europe ahead of the NY opening were ultimately routed by resolute buying in US hours, notwithstanding much heavy breathing about the size of the CFTC long to be reported later on Friday. One recalls the prominent Comex trader mentioned here a week ago saying "It feels different this time". Of course, those with truly long memories realize that an economic news pothole the size of the payroll news and revisions this morning would have caused a double digit move in gold prior to the 90s.

Consequently it is pleasant for the friends of gold to consider the extraordinarily ferocious attack on the Federal Reserve posted by Bianco Research on their invaluable "News Clips/Daily Commentary" today. Fresh off their triumph in correctly gauging the size of the Bond debacle this summer, the authors are unprecedentedly outspoken calling Greenspan’s Jackson Hole speech his

"worst speech since becoming Fed chairman in 1987. What made it so bad, in our opinion, was its unbridled arrogance. Essentially Greenspan said there are two outcomes to monetary policy (1) the Fed is right or, (2) the market doesn't understand and further transparency/ communication is necessary. Where is the option "the Fed is wrong?" (or, the market does understand monetary policy but thinks it is wrong?) This is often the case…."

"While this arrogance is bad enough, Greenspan then went on to defend the Fed's "make it up as we go along" approach to monetary policy by rejecting any kind of guidelines or rules. So the Fed's never wrong and doesn't need and guidelines. Scary."

"It appears the Fed now has its reputation (read: Greenspan's ego) on the line…..The Fed's chosen monetary policy is not about "the right policy". Rather, it is about "being right."… If the market senses that the Fed really means it will not change monetary policy anytime soon no matter what, the bond market vigilantes could send interest rates soaring until they either force the Fed to re-consider or take rates high enough to offset current monetary policy."

"Our hope is that it won't come to this, as a financial crisis could result." (BR emphasis)

"When it comes to Fed Governor Ben Bernanke (who has been (article-body)" href="http://online.wsj.com/article/0,,BT_CO_20030904_008677-searc... target=_blank called the primary intellectual force next to Chairman Alan Greenspan), his lack of understanding extends to a basic function of the markets……"

(This assertion is supported with a critique of Bernanke’s recent comments on the TIPS market.)

"The market is beating the Fed (and Mr. Bernanke) over the head with its message that a policy designed to hold the funds rate at 1% for a "considerable" or "significant" period of time is wrong. If Greenspan's "intellectual force" lacks a basic understanding of markets, no wonder he does not understand what the markets are telling him. Such ignorance should have every bond investor worried."

Lack of faith in the Authorities is of course meat and drink to the gold market. All this and Iraq too!

JB

CARTEL CAPITULATION WATCH

The US job news sent bonds soaring, almost two points, but didn’t phase stock buyers that much. The DOG fell 11 to 1868 after seven straight winning sessions. The DOW made it above 9500 RIGHT ON THE CLOSE at 9503, down 85.

I still say US stock investors are WAY too complacent. The big picture is worsening and we have had reports on these serious problems this week:

*Pension underfunding is growing.
*The US infrastructure is falling apart
*State budget deficits need to be dealt with.
*The Federal budget deficit is out of control.
*Credit and problems are mounting across the spectrum in America.
*Job losses are increasing in almost unprecedented fashion.

Stock investors and Wall Street touts have focused on the micro. Various economic numbers have been OK due to Fed and government policies. When they run their course, look out below.

GATA’s Mike Bolser this morning:

Hi Bill:
The fed has taken no action in repos today and let the pool fall to $20.25 billion. Perhaps the DOW is getting too far above its planned 30-day moving average?

While the administration touts a rising economy pointing to the DOW, even the mainstream reports that "The DOW is not the economy" in last night's edition of NBC Nightly News. Folks know something's afoot. Nearly 3 million unemployed [not counting chronically out of work] with a rising DOW?

China rebuffed yet again John Snow's pleadings for a higher Yuan, the US now faces a dollar devaluation. There is no escape. Greenspan will continue deep in denial to look for one or until things [all the rig jobs created to hide bad Fed policy] simply collapse.

All this under disintegrating geopolitical anarchy in Iraq. The US has "Gone it alone" and flopped. The multi-polar world of France, Germany and Russia is back on political steroids. Do not believe AP reports to the contrary.

It seems that the Fed, Treasury and Administration have been joined at their economic policy hips. This is an historical recipe for monetary mischief and mayhem. Bush's fiscal policies appear as unworkable as those in his geopolitics.
The DIVG closed at 341.79 while the EIVG closed at 376.99 closing in on a new high over 381. This action reflects a fierce battle between stubborn longs and weakening government gold sellers.

At Jackson Hole, Greenspan seemed under duress judging by his defensiveness which Bianco Research interpreted as arrogance. Combined with a number of anti-gold propaganda pieces one might conclude that the gold cartel is getting nervous and trying to marshal for a counter attack. But they already had time to launch one and here we are at DIVG 342 well inside their defense lines at 323. Our attackers aren't budging.

Their gold supply to sustain the charade is dwindling, hastening the arrival of whatever fanciful end-game escape scheme the Fed imagines this week.
Mike

Bill:
Going out on a limb. Today may declare the market even if it continues to try to rally as it has per usual. I think that the dollar is breaking badly, and the market will soon follow. It is incredible to believe that in spite of the amazingly poor technical condition that the street is still in there with their market orders as seen in the TICK figures, and with gold ready to explode here.

When the Israelites came out of Egypt, and complained against the Lord that they were sick of the heavenly fare he was graciously giving them, they demanded meat, and He gave them all that they could eat. But scripture says, that "While the meat was still between their teeth and before it could be consumed, the anger of the Lord burned against the people, and he struck them with a severe plague." Numbers 11:34

I don't mean to profane the Word of the Lord, but I am using this biblical lesson to show that those who are demanding to get even from the stock market bubble are getting all the stock that they wish now, primarily from the insiders of the companies, and soon will very painfully learn of their folly. We are very, very close to the unveiling of a new financial world.

This one cracks me up. The headline is about Smith Barney raising their target on metal stocks. Sounds bullish! You read on and they forecast gold to trade $360 for 2004 and $350 for 2005. So their BEARISH! Oh, I see, their bullish compared to The World Bank, which is looking for $300 gold. The gold market commentary and analysis out there in financial land is the most useless, pitiful and corrupt in history.

Smith Barney raises targets on metal stocks; copper, nickel strength cited; PDG upgraded

Firm expects copper to lead in nonferrous metals in 2004, while gold should test $400/oz. FCX target raised to $38 from $35; PD raised to $60 from $52; N to $28 from $24; NEM to $48 from $40; and ABX to $22 from $20. PDG was upgraded to in-line from underperform; target raised to $15 from $12. For gold, Smith Barney est. $360/oz. for 2004 and $350/oz. for 2005. Industry is rated marketweight…-END-

Insight from Australia:

G’day Bill,

"John Snow has again been rebuffed by the Chinese who insist on pegging the Yuan to the dollar and forcing the US to solve its many deficits via devaluation as the gold market keeps applying upwards pressure. The Fed appears to be attempting to perfume this smelly mess with a rising DOW."

Now, I may be a "wee" bit slow but it appears that China is ahead of the "game", the Currency Game .

China has now de-regulated Gold, and it currently produces the order of 3 million ounces per annum, and growing. China has produced Gold for over 3,000 years, and to my limited knowledge does not export Gold.

So, who has large reserves of Gold, China.

I would suggest that China has NO intention of re-valuing the Yuan. Why?

It has adopted the Swiss model, that is a duel currency system the Yuan and Gold. Thus it is creating a "double whammie" for the West, one the West cannot compete with.

GATA’s man in Italy:

Brit money managers are all over President Bush today about his comments with regards to China. Every manager believes Bush's words to be for "public consumption" due to the fact that the election cycle has started. Do Americans buy off on Bush's words?

Everyone knows that the US needs China to buy US assets (ie. bonds) or the US financial system is doomed and the busines of the US is finance.

No one believes China will adjust their currency peg anytime soon.

These types of imbalances are what wars are fought over.

The difference between the quality of people on CNBC Europe and CNBC in New York never ceases to amaze me.
Dave

From The King Report:

Fed Gov. ‘Weimar’ Bernanke surfaced to assure all that even though the economy is rebounding, the Fed will hold rates farcically low longer than previous economic rebounds because the Fed still fears deflation. What else does one need to know? The solons understand just how ugly the fundamentals are and fear debt deflation. They do not fear price deflation, which used to be called progress. Bernanke also uttered the mendacious comment that the Fed will make every effort to rectify its communication problem with the bond market. The Fed and some Wall St. barkers would like us to believe that the bond market collapse is just a Fed failure to communicate. We’re stunned that it took the bond market so many months to understand what Bernanke’s threat to ‘run the printing presses if needed’ meant for bonds. So there you have it. If bonds don’t rally soon, Bernanke will round up all the inmates and assert, "What we got here, is failure to communicate."

And we can expect warnings and threats from the Fed and its vanguard to the consequences of investor misbehavior: Any man who doesn’t believe that the economy is jiggy, spends a night in the box. Any man who shorts any dollar-denominated asset, spends a night in the box. Any man who buys gold or silver, spends a night in the box. Any man who suggests derivatives should be regulated, spends a night in the box. Any man who says ‘outsourcing’, spends a night in the box. Any man who mentions the words ‘deficit’ or ‘bear market’, spends two nights in the box.

If any trader or investor has ‘jackrabbit’ in them and tries to runaway from the stock or bond market, they will be chained to the markets. If you absolutely need to raise money to pay bills, you must first seek permission by saying, "Selling some stock/bonds here, boss". "That’s a cool hand, Luke."

If one takes the time to read the details of the factory orders report, they will understand why the market treated it as unsavory. Unfilled orders, which should indicate rebound and strength, fell 0.4% and the ratio fell to 3.94, the lowest ratio since Aug 2000. Inventories fell 0.5% to the lowest level since 9/97, but shipments fell faster, reducing the ratio to 1.31, the lowest reading since the bubble peak in Jan 2000. The gains in factory orders are due to a 3% jump in fabricated metals, autos, and a $3B jump in basic chemicals of which $2.5B are pharmaceuticals and drugs. Semiconductor shipments fell 10.7%; computer and related product shipments fell 3.8%.

Railcar loadings used to be closely watched to glean a true economic picture. These are industry numbers that are not seasonally, hedonically or chain-weighed adjusted. The Fed and administration have launched the equivalent of its nuclear economic missiles. And what is the result? Railcar loadings for 2003 YTD are DOWN 0.3% from 2002 YTD!

M2 fell a surreal $65.2B because savings deposits fell $43.2B and demand deposits (part of M1) fell $26.5B. Tax rebates passing through the system?

Goldie paid a $9.3m settlement for insider trading on the discontinuance of the 30-year bond. What’s the sense of hiring all those ex-Fed and Treasury officials if?

-END-

Veteran Café Café member James McShirley nails it with this commentary on lumber. Gold should have rallied $12 today and would have without cabal intervention:

Not to belabor the groundhog theme, but a couple points that keep sticking out:

Here are some OSB (oriented strand board) prices from Jan 3 based on Random Lengths 7/16 North Central Print:

Jan 3 - $148
Feb 14 - $197 +33%
June 20 - $282 +90%
July 1 - $352 +138%
Aug 22 - $380 +157%
Sep 5 - $425 + 187% (est., print out today at 3:30)

Pretty impressive, no? But wait, it is even better. You can't touch it for that print, everybody is so bullish they are getting closer to $550- closing in on the price quadruple. Why? I'll quote a couple sentences from a buying co-op market report:

"Mills continue to stay off the market with extended order files out until November.... record high new home starts and plywood being sent to Iraq has created a market unlike anything we have ever seen.... how much higher prices can go is anybody's guess".

A major OSB mill told me he wasn't even offering wood, he could make 2 phone calls and sell all of his production at practically any price. So different than the gold industry who will remain silent every time a gold rally begins or a gold trashing story like the World Bank's comes out. Also, curious that our government steps in to buy plywood for Iraq at the TOP of a raging bull market exacerbating a volatile situation. Apparently they couldn't forecast Iraqi reconstruction as a possibility when OSB was $148 instead of $550. It's the old $100 hammer again. When gold quadruples it will be in spite of the gold industry and their alleged industry analysts. The gold industry gets more profit from GATA for FREE than all the money wasted on the WGC and GFMS. Gratitude is not in their vocabulary.

Lastly, a quick point about the commercials and their supposedly being right all the time. I am a small spec gold trader (100 lot) and have been basically long since 1999 from $278. While I have been mostly able to defend the position and not get flushed out on cabal raids my account currently is handsomely rewarded. Have the commercials beaten me? I don't think so. My view is the trend is your friend and don't over trade your capital. There is a raging gold bull approaching and after watching an OSB quadruple I see at least the same for gold. Some day we won't wake up to a groundhog but a gold tiger that escaped his cage. He'll eat the cabal alive.

Best always,
James McShirley

The gold shares rose modestly with the XAU gaining 1.50 to 93.45, a new high and the HUI rising 2.40 to 198.35, a new high close. The HUI has run into big resistance at 200 three times now.

My Russian partner of the late 1970’s used to always say:

"Repetition is the mother of inventions."

Therefore, I repeat some things to keep in mind:

*Gold will explode out of nowhere.
*The Gold Cartel is being defeated.
*Investing in gold and the shares is the historic investment opportunity of a lifetime.
*We have a gold share buying panic ahead of us.
*Gold is going to $800/$1,000+ per ounce.