Not sure if this has already been posted .... but, it sure gives a good directional fix on where gold is headed:
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EXCERPTS FROM 'MIDAS' COMMENTARY FOR WEDNESDAY, JANUARY 8, 2003
By BILL MURPHY
Gold $353.80, up $6.90 Silver $4.83, up 4 cents
Yesterday's Midas commentary headline, "Don't Expect Gold To Stay Down For Very Long," has to be my most understated ever. Twenty hours later gold not only moved back up, but blew into new high ground.
"What's going on?" I was asked during the day. HELLO!
The same thing I have been reporting for over a month now. The physical market is so strong it is eating the lunch of the Gold Cartel and other shorts. We keep seeing the same trading pattern. Gold rallies sharply and then is taken down by the cabal. The significant physical market buyers are waiting in the wings and pounce on gold during these setbacks. The cabal is trying to turn the black box big fund people into sellers by triggering selling at certain price levels. But the physical buyers, who are competing for supply, are pulling the buy trigger immediately after any sharp selloffs. Today's very sharp move up is the third time the market has shown us the same immediate reversal pattern since the release of the Howe/Bolser report on December 4.
The open interest pattern on Comex confirms this line of thinking. Yesterday it rose 528 contracts to 215,299, instead of showing a dramatic spec liquidation. Commercial Signal Failure here we come!
I want to stress again, the biggest gold trading money in the world knows what GATA knows. The Gold Cartel is short some 15,000 tonnes of gold and they cannot cover that sort of short position without gold rising many hundreds of dollars per ounce. Reg Howe's brilliant expose, "Gold Derivatives: Moving toward Checkmate," at his www.GoldenSextant.com has been read more than 20,000 times. Many of those viewers had to include some of the most significant investors in the world. This is SO IMPORTANT. Howe's analysis, using a completely different methodology, confirmed the same kind of humongous short position as Frank Veneroso's analysis.
Word is out that the gold shorts are in deep trouble. That word is fueling physical gold and large hedge fund type buying. Again, as mentioned in previous Midas commentary, it is like a wrestling tag team going after the cabal's vulnerable short position.
Today was also a perfect example of how the gold move HIGHER is triggering the dollar move LOWER. Gold popped early today with oil down $1 and the dollar on the firm side. After gold moved sharply higher, the dollar was whacked.
We also know why that is the case. The rigging of the gold price was the essence of Treasury Secretary Robert Rubin's "strong dollar policy." The Gold Cartel has run out of enough physical gold to continue their fraud, so the gold price is on a tear. The gold price moves up are signaling, in the most obvious manner, that the U.S. strong dollar policy is over.
$354, here we are. Amazing that we keep talking about that number as a pivotal gold price point and now gold closes 20 cents below it. The gold price explosion I keep talking about could kick in as early as tomorrow. We have an extraordinary technical set-up. Gold has moved all this way since December 4 and there are no gaps to fill. We have yet to witness the dramatic breakaway gap move -- a move in which gold opens $5 or so higher, and then soars, leaving a gap that will not be filled. That kind of sensational market action will alert the world that a rare market event is now happening. A short squeeze of epic proportions could materialize at any moment.
Morgan Stanley was the big silver seller today. They sold more than 1,000 contracts today. I don't know how the cabal and friends are controlling silver, but it could not be more obvious that someone is desperately trying to cap the silver price. The big silver shorts are going to be buried. Heck, the significant gold longs could take rinky- dink profits from their gold winnings and bury the silver shorts in a nannosecond. Look for a $1 move in the silver price in the very near future.
This comment from J-Pacific CEO Nick Ferris was right on the money:
"Today's price action was truly breathtaking. The physical market is now in complete control. As you have pointed out, the weight of the paper shorts and the selling of physical gold at the margin can no longer hold the market down.
"When the history books are written about our era, people will look back in wonderment at why the great powers tried to corner the gold market short. To corner short the marketplace of a tightly held commodity is utter insanity. But to corner the gold market short, the ultimate store of wealth! What words can possible describe such lunacy?
"The old trader's adage is now ringing loudly: A commodity in hand is infinitely more valuable than a promise to deliver.
"Got gold yet?"
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The John Brimelow Report
Wednesday, January 8, 2003
Indian ex-duty premiums: AM $1.84, PM $1.43, with world gold at $347 both times. Somewhat below legal import point, which requires an ex-duty premium of about $2/oz at present. Besides the usual moaning, reports from India point out that this (until the 14th) is one of the minor quiet periods within the main buying season. The rupee firmed again today: the authorities announced that India's FX reserves have topped $70 billion, up 47 percent in a year.
Although several commentaries speak of "general public" liquidation in Japan, open interest actually rose the equivalent of 3,150 Comex lots, suggesting that this may not have actually been the case. Volume was equal to 24,180 Comex lots. (NY traded 46,153 contracts yesterday with open interest rising 528 lots; today's volume is estimated at a heavy 62,000 lots ).
With spirited and powerful rally starting at 9 a.m. NY time more than reversing the usual reopening selloff, conviction seems to be growing that something unusual is afoot. Reuters quotes a puzzled Comex floor broker:
"Even though crude oil's weakness is giving us reason to sell it, which we are seeing dealers do, the fund buying continues."
TheMineWeb site (http://www.theminingweb.com/mineweb.htm ) runs a useful discussion the morning pointing out that by their method of valuing, gold share remain rather cheap in relation to bullion. See:
If one accepts that bullion can sometimes lead the shares, today was an opportunity.
After the gold rally was well under way, the dollar index started slumping, an event blamed by some on the posting on the Pimco website of a very dollar-negative essay by Bill Gross. This article was chiefly notable for suggesting that the U.S. might see a dollar depreciation as a means of forcing other governments to ease, and to adopt domestic changes of a type Washington favors:
"There's little doubt in my mind that a lower dollar might help to break up several current policy logjams both Japan and Euroland are dragging their heels on labor and bank related structural reforms… a weaker dollar would make their exports even less competitive, applying a reform hammerlock that forces them to cry 'Uncle' (Sam) much sooner."
This approach is unlikely to improve American popularity overseas.
A noted bullion dealer, in a complicated piece of reasoning, draws attention to the shocking divergence between the performances of NEM and ABX, and suggests this is likely to get worse if Wall Street continues to languish, since ABX is correlated to the S&P.
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One of the great chart patterns of all time:
http://futures.tradingcharts.com/chart/GD/23
While gold continues to forge into multi-year high ground on a weekly basis, the gold shares continue to lag way behind. For a very long time Midas said the gold price would soar with:
* Gold going higher and taking the dollar lower.
* The smart money spec longs burying the commercial shorts.
* A firm physical market leading the way up.
* The gold shares lagging the physical market because few in the investment world know about the real gold story.
On Point 4, I was right-on but way off. I thought that once gold took out $330, the investment world would realize there was a new game in town and pile into the gold shares. Instead the gold shares continue to underperform bullion the higher the gold price goes. Investors, it appears, cannot believe the gold move up with their own eyes. Thus, the gold shares are slowly climbing the proverbial "wall-of-worry." How perfect is that?
Wall Street refuses to let the real gold story be told to the investing public. Thus few in the investment world realize what is happening with the gold price and why. Gold share investors cannot wait to take profits.
Meanwhile, the physical buyers (Indians, Russians, Chinese, Iranians, Turks, and Arabs) could not care less what the share price of Newmont does. They want the gold. They know the real gold story and understand the price of gold is not going to a piddly $400 per ounce but hundreds of dollars higher than that. These buyers are laughing at the inept Western central/bullion bankers.
The gold share action today compared to that of bullion was pitiful. The XAU managed only a 2.43 gain to 77.85. The HUI was worse, rising only 3.42 to 146.64. Many of the smaller gold companies closed unchanged, or up only a few pennies. Can the investment world be any more clueless.
The price of gold is going to explode soon. It won't be long thereafter that we will finally witness the first of the gold share buying panics. The price action alone will bring in an entire new crop of investors, ones that know little about why gold is going up, but do not want to miss the action.
The quality gold junior/exploration companies are going to double and triple in the very near future.