Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Gold related post ***

Excerpted from Monday evening's edition of Bill Murphy's LeMetropole Cafe column......

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"Sorry, some habits and patterns do not change very easily. While a good part of the gold market action was different on Friday and should lead to substantial moves higher in the weeks and months ahead if the physical market holds up as we expect, The Gold Cartel isn’t going to go quietly into the night. They are going to have to be kicked in the pants and sent squealing into the dumpster.

As par for the course, we are seeing their patented modus operandi. They cap, cap, capped gold up within their parameters the last few hours of trading on Friday in preparation for a regrouping today. Clearly, they were surprised and stunned by the enormous buying on Friday. So, once again the dollar was propped up for no apparent reason in Europe this morning and gold was sent to the cleaners.

What is so obvious about this is the consistency of their rigging pattern. Markets which break out like gold did last Friday, usually follow-through for a bit further – and then they might fail. Gold never does. Instead, it is always taken down before trading begins the next day in an effort to influence the trading on the Comex. The S&P does just the opposite. The Working Group on Financial Markets maneuvers it to come in higher on most mornings, as they don’t have to compete with any cash market and can prop up the US stock market by employing relatively modest amounts of funds.

Aside from the contrived Gold Cartel inspired price-capping, gold is due for a rest from a technical standpoint to consolidate its gains after its run-up the past month. Physical market buyers were the ones responsible for gold’s big jump last week and it is only natural they wait for pull backs to add to their positions.

However, the proof is in the pudding when it comes to gold's price, which should be correcting from $423, not $413. To give you some idea of how desperate The Gold Cartel is to keep that price from going to where it should, the open interest rose an astonishing 19,062 contracts to 257,077. With that sort of buying power hitting the market, gold should have rallied $16 on Friday, or more. Clearly, cabal headquarters put out the word to stop the gold advance at all costs (after they were kicked you know where in the early going). As John Brimelow constantly points out, no seller wanting to maximize profits would have sold gold the last few hours in such a manner as to keep the price from rising. The massive rise in the open interest with gold failing to move higher in the last hours of trading is PROOF how important the $6 Rule is to the crooks.

London checked in and is looking for a short-term pullback to $405/$408 as the cash market buyers take a breather. However, they are looking for gold to rebound by week’s end as the physical market buying picks up. They expect that demand to really pick up in September and for gold to take out $418 and go on from there.

Our sources also say there was a decent amount of junk gold which surfaced at the refiners in the US and Europe when gold took out $400 to the upside. Refiners like this sort of raw material as they can price it right. However, this recent supply has dried up and it will take higher prices to bring in the next tranche. Thus, the refiners are running low on supply at the moment and will have to pay up in the marketplace to secure new inventory.

The funds were the buyers again today, looking at the price setback as good entry points. Even with the astonishing open interest increase, there is room for another 50,000 contracts to pile in before we take out this year’s earlier high of 305,000+.

So this was not a good day for gold right? The gold price went down, yes? Nope, not necessarily. If you own gold in euros, it went UP! Matter of fact, it took out some key resistance at 337.40, a high made last December 1 when gold was trading around $430 in dollar terms. The only major resistance now is at the 349 level where it put in a quadruple top in late March, the last time gold approached $430.

This is a marvelous development. For the second day in a row, gold has traded with some independence from what the dollar is doing. Been that way for more than a week actually. However, the last two trading sessions have been more dramatic. This tells me The Gold Cartel is throwing all they have (plus the kitchen sink) at gold to keep from being routed, to keep the price from accelerating too fast - and they are having trouble doing so. The enormous buying in the physical market is giving them fits and certainly is hastening their DOOM!

The dollar closed at 89.18, up .95, while the euro lost 1.64 to 121.39.

September dollar
http://futures.tradingcharts.com/chart/US/94

September euro
http://futures.tradingcharts.com/chart/EC/94

Currency analysts we spoke to could give no clear cut explanation why the dollar was so strong today. It was up sharply against ALL major currencies. Most answers were of a technical nature. From a fundamental standpoint, this surge in the dollar makes no sense. Was the trade deficit corrected the past few days? This smells of ESF intervention of some sort and signals The Working Group on Financial Markets has some bigger problems going on behind the scenes which have them spooked.

The dollar's startling strength also blows out of the water those who contended it was holding up because of the strength in oil; that dollars were needed to pay for the higher oil prices. October oil closed at $46 per barrel, down 75 cents. Thus, oil and gold have gone in opposite directions, and substantially, for two days in succession.

Silver’s tired action of the last two trading sessions kicked in today with silver swooning almost 20 cents in the early going. It stabilized from there on in and actually closed near its highs of the day.

The silver open interest rose sharply too, gaining 5,008 contracts to 104,931.

The best silver news of the day was the warehouse stocks, after rising somewhat, fell sharply again and are close to making new lows for the move. They fell 1,260,115 ounces to 110,130,514."
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Fwiw, the above excerpt is prolly less than 20% of the gold/silver related text they offer on a daily basis.

A painless two-week 'get acquainted' free trial membership is available at:

http://www.lemetropolecafe.com/index.html

Be advised that Murphy (GATA) is very pro gold and if you are seeking two sided commentary, this is not the place!