a gold gata read for the sceptics

  1. 9,081 Posts.
    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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    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

    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?"

    * * *

    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

    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.

    * * *

    One of the great chart patterns of all time:


    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

    * 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

    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.

    Got to be in it to win it.


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