gold - "midas" update

  1. 9,081 Posts.
    FOR FEBRUARY 3, 2003
    Copyright 2003,


    Gold $370.40, up $3
    Silver $4.81 down 1 cent

    The daily gold chart reveals that gold has gone straight up in
    controlled fashion. The deepest correction was only around $6:

    Repeatedly, John Brimelow pointed out it was likely the
    Japanese would be buying gold again in a big way, due to
    their increasing financial market problems. That is just what
    happened last night as gold rose smartly, approaching the
    $372 mark. That technical resistance point has been a tough
    nut to crack, but it should fall prey any day now, to the
    ever-more-successful onslaught of bullish buying.

    The Gold Cartel attempted to sell gold down again, but was
    thwarted as they have been for the last $57 in the up move.
    Gold popped nicely overseas as the dollar gained ground
    (especially against the yen). Later, the stock market moved
    higher in the U.S. and oil was hit hard, but the dollar closed
    mixed. None of it mattered to gold. It was the physical
    demand increase that mattered a great deal, as it put
    increasing pressure on a desperately short Gold Cartel --
    which is slowly being carried out on GATA's stretcher.

    We have to be getting closer and closer to our awaited
    Commercial Signal Failure. The commercial sellers continue
    to lose as the specs continue to win. I thought the market
    would move this way because many of the commercials are
    part of the Gold Cartel and they are going down. Some are
    so arrogant, they don't get it yet. That must be so because
    we have seen no signs of a real panic. They keep waiting
    for gold to correct. Look at the poor silver and gold share
    action, they point out.

    The bottom line is gold has gone straight up since the
    Howe/Bolser report was posted on December 4 and
    Lawrence Lindsey and Paul O'Neill resigned on December

    The Comex open interest dropped on Friday's setback to the
    tune of 3,680 contracts. It now stands at 234,148 contracts.
    Technically, it has been textbook bullish action, as it generally
    expands on rallies and contracts on setbacks.

    Once gold closes above $372, it ought to shoot for the
    $410/$420 area.

    John Brimelow nails it:

    * * *

    The John Brimelow Report

    Monday, Feb. 3, 2003

    As presaged on Friday, Japan exploded into action in
    gold today. Even before a report appeared that the new
    head of the BOJ would be an avowed inflation targeter
    (which was later denied), TOCOM was bidding the gold
    market up. On record volume equivalent to 81, 931
    Comex contracts, the active contract rose 12 yen, pushing
    $US gold up $2.75 from the NY close. Open interest rose
    a huge 7,118 Comex lots (+5.2%).

    "We're seeing some fresh buying from funds and
    individual speculators" Reuters quotes a Japanese dealer
    as saying.

    Crucially, this was a widespread development. TOCOM
    as a whole traded a record volume, with kerosene and gasoline
    contracts being notably active. For once, the Tokyo stock
    market had a good day, with export shares being particularly
    strong. Clearly the Japanese investment community suspects
    its government of being about to engage upon a major
    weakening of the domestic and international value of the
    yen. This is a possibility which has been foreseen in an
    interesting discussion by AIG's Bernard Connolly. A
    confirmation of this suspicion will make what New York
    thinks about gold irrelevant, at least for a while.

    Certainly, by traditional yardsticks, there is reason for
    concern. Although MarketVane's Bullish Consensus,
    falling on Friday to 85%, is at its lowest level for three
    weeks.) And it is clear from the Bullion Bank comments
    that serious resistance, probably Official, is forming in
    the $370s. Nevertheless, given the stresses they have
    been through, this is not the time to ignore Japan.

    -- JB

    * * *

    On the yen:

    "Tokyo, Feb. 3 (Bloomberg) -- The yen may fall for a third
    day after Zembei Mizoguchi, vice minister for international
    affairs, said Japan could sell its currency in a 'massive' way
    to avoid 'rapid' movements.

    * * *

    Australia's Nick Laird points out:

    "Gold open interest for January was the sixth highest-ever;
    volume is the eighth-highest ever."

    * * *

    Yesterday I forwarded Chris Powell's GATA email alert about
    Dimitri Speck's commentary recently posted at:

    It is titled, "FED: Musings on the Eve of the Gold Suppression."

    Speck's wonderful effort is one more piece of the puzzle that
    solidifies GATA's claims that the gold price was rigged with
    great fervor by a Gold Cartel -- one that included the Fed and
    the Exchange Stabilization Fund.

    This new piece of evidence is especially gratifying to me as it
    was the basis for a major point in my presentation last week
    at the Vancouver Resources Investment Conference and will be
    again when I go back to Vancouver to speak at the World
    Outlook Investment Conference this weekend.

    We can now witness even more clearly how and why the price
    of gold was manipulated for a decade or more -- a manipulation
    that went into steroid-like high gear under the auspices of
    Treasury Secretary Robert Rubin in 1995. The rigging of the
    gold price formed the basis of his ''strong dollar policy.'' It
    astonishes Chris Powell and me that no reporter ever articulates
    how that policy was carried out if not by suppressing the price
    of gold.

    I thought I would go into this in some detail because once you
    understand what was done to gold, why and how the Gold Cartel
    carried out their scheme, you will know why the gold price is
    doing what it is doing today. It will also help to strengthen
    convictions that it MUST go far higher as a result of what the
    cabal put in motion.

    Dimitri Speck's discovery in the Fed minutes solidifies
    GATA's contention regarding the reason JP Morgan Chase
    has such massive gold/interest rate derivatives on its books.
    At last count, they had something like $41.8 billion in gold
    derivatives and $24 trillion in total derivatives, much of
    which are interest-rate related. The GDP of the US is $10
    trillion. It has been GATA's contention that the rigging of
    the price of gold was related to U.S. interest rates. It has been
    our contention that, as time goes by, a sharply rising gold price
    could set off a derivatives crisis and could harm financial markets.

    This takes us right to former Treasury Secretary Lawrence
    Summers' paper, "Gibson's Paradox and The Gold Standard."
    GATA's Reg Howe noted that the bottom line of Summers'
    analysis is that "gold prices in a free market should move
    inversely to real interest rates."

    Therefore, by capping gold and then tanking it, they constructed
    an abnormally strong dollar market situation, which is now
    blowing up on the Gold Cartel.

    Is it a coincidence that the price of gold has gone straight up
    since the Howe/Bolser report was issued December 4? Is it
    a coincidence that gold has gone straight up since Treasury
    Secretary O'Neill and Presidential Economic Adviser Lawrence
    Lindsey resigned on December 6?

    The price of gold is going to skyrocket because the Gold Cartel
    has been found out by GATA and they are being overpowered
    by surging demand for physical gold around the world. Half the
    central bank gold is gone. The current supply/demand deficit
    exceeds 1,500 tonnes per year. As such, the plight of the Gold
    Cartel is worsening daily and is moving into crisis mode. The
    situation is explosive. The bad guys have done themselves in.
    They are trapped and cannot exit their massive gold short
    positions gracefully, or without incurring enormous losses.
    Gold must rise hundreds per ounce to clear the market.
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