the latest goss from gata

  1. 374 Posts.

    Huge Physical Market Buying From
    Middle East Propels Gold to New Highs


    Gold $350.90, up $5.10
    Silver $4.87, up 8 cents

    GATA love it out there in Cafe land. All what
    Midas and many of the Cafe contributors have
    brought your way is coming to pass.

    I happened to wake up about 3 this morning
    and my curiosity about the gold price got the
    better of me, so I peeked: down $2.70. "Here
    we go again," I thought, as I went back to

    Here we went again indeed! The Gold Cartel's
    efforts to break gold down was thwarted for
    the zillionth time. This time HUGE physical
    market buying surfaced out of the Middle East
    while Comex was trading down on the day.

    Midas has brought their buying to your
    attention in the past, but today was
    particularly pronounced, according to my

    This did not go unnoticed, and certain big
    traders pounced on the long side to take
    advantage of the surging physical market. The
    most notable one was Goldman Sachs, of all
    people. They turned on Morgan Stanley, the
    aggressive short, so much so that Morgan
    Stanley made the highs for the day, running
    for the hills in a bout of panic short-
    covering. What goes around comes around. It
    was only yesterday that Morgan Stanley
    stopped out its own client on the downside
    and then turned aggressive buyer.

    This is a good sign. The Gold Cartel is
    falling apart as the rats are going after
    each other. We will see much more of this in
    the weeks and months to come. How delicious!

    The hot rumor of the session was that Sons of
    Gwalia, the big Aussie hedger, is imploding.
    Supposedly they have a big problem with a 310
    call position. I will track that one down as
    best I can. GATA's Chris Powell puts it best:

    "When their hedge book rips their manhood
    off, they'll be the Daughters of Gwalia."

    A good number of other hedgers are going to
    be in the same soup as gold moves higher
    (that is the word circulating in the bullion
    dealer world). All the inevitable hedging
    trauma we have talked about for years is
    bound to surface soon and cause much
    financial stress. Counterparty problems, here
    we come.

    In the last Midas commentary I stressed the
    growing volatility in gold trading. Today was
    a good example of why it is so important. The
    Gold Cartel is on its last legs and spent
    more than a week defending the $348/$354
    area, trying to break gold down. They have
    been taken on in furious fashion by a surging
    physical market and staunch speculators, many
    of whom are aware of the massive 15,000-tonne
    short position. The daily battle is like
    watching the tide go in and out. Fortunately,
    the tide is coming IN for our camp and OUT
    for the wretched cabal crooks and other
    reeling shorts.

    I have been calling for a $20 gold price
    explosion to stun the market one day. Such a
    dramatic move could come at any time now, as
    I expect gold to blow through $354 next week.

    Some gold market highlights:

    * The base below gold is an enormous one. It
    is powerful enough to propel gold hundreds of
    dollars higher. Almost all of Wall Street and
    the bullion dealer world continue to say
    little about the surging gold price. Some of
    their technicians are bullish because they
    HAVE to be, but their more important
    fundamental departments remain silent. They
    are silent because they are either short
    (from the gold carry trade) or they are
    afraid to tell the gold truth because they
    know a roaring gold price might wreak
    financial havoc in certain quarters.

    * There are no gaps to fill below the market.
    That leaves THE BREAKAWAY GAP still to
    surface ahead of us. Tick, tick, tick. Will
    the volcanic explosion of the gold
    derivatives neutron bomb create that gap next

    * As anticipated, the CRB made new highs in
    formidable fashion. It closed up 2.06 at
    240.19, another multi-year high. The move up
    was led by oil, which finished the day in new
    high ground too at $33.08, up $1.23. But
    supposedly there is no inflation! The oil
    news remains very bullish:

    * * *

    CARACAS (Reuters) -- Venezuela's strike-hit
    oil industry will need at least four months
    to restore operations to normal levels, foes
    of President Hugo Chavez said on Thursday.
    Earlier on Thursday Chavez told reporters oil
    operations in the world's No. 5 crude
    exporter would be restored in a few weeks.

    "In order to reach November 30 production
    levels, PDVSA needs at least four months," a
    press release from the Democratic Coordinator
    opposition grouping said.

    Striking employees from state oil firm
    Petroleos de Venezuela (PDVSA) have said
    Venezuela's month-long strike has cut output
    to under 200,000 bpd. The OPEC nation pumped
    about 3.1 million barrels per day (bpd) of
    crude in November.

    Venezuela's oil exports were slashed to
    around 520,000 bpd last week compared with
    crude and product sales of almost 2.7 million
    bpd in November, according to data from PDVSA
    and shippers.

    * * *

    * The Comex open interest stands at 207,213,
    rising another 299 contracts yesterday. The
    smart-money long specs are handing it to the
    increasingly crippled Gold Cartel crooked
    shorts. We ought to witness a Commercial
    Signal Failure next week or in the near
    future. Many cabal shorts will be forced to
    cover when gold takes out $354.

    $419 gold, here we come.

    The Silver Streak HAS left the station. Up,
    up, and away we go. Silver has broken out of
    a massive base too and ought to accelerate
    soon. A $1 or so daily move in silver is in
    the cards as the concentrated silver shorts
    will be forced to cover at the same time.
    Silver hasn't left any gaps either. That is
    very constructive. Expect silver to blow
    through $5 any day and head for $6 near term.

    * * *

    The John Brimelow Report

    Friday, Jan. 3, 2003

    Indian ex-duty premiums: AM $1.93, PM $2.06,
    with world gold at $344.60 and $344.20. At
    legal import level. India's willingness to
    follow the world gold price up some $30 in
    the past month has been impressive, and very
    bad news for bears. One also hears stories of
    Middle Eastern appetite over Christmas week.

    Clearly the last two weeks have been quite
    vigorous, notwithstanding the many appeals by
    bullion bank commentators to the traditional
    quietness of the season. Volume today was
    estimated at 44,000 contracts, yesterday was
    39,172, and New Year's Eve (an abbreviated
    session) 24,111. Several violent attempts
    were made to sell the market off -- including
    apparently a 10-tonne sale by an ECB
    subordinate Central Bank in the holiday-
    reduced week to Dec 27, way above the
    Washington Accord-implied weekly rate -- but
    all failed in the face of resolute buying.

    Japan, of course, closed early last Friday,
    and will not re open until Tuesday. While the
    result of today's $US-gold rally has been to
    restore yen-gold to essentially the level at
    which it closed on the 27th, there seems to
    be an important shift of opinion going on in
    Japan. Ross Norman's invaluable site --

    -- reports a significant article in the major
    Japanese newspaper The Daily Yomiuri, in
    which the deputy chief officer of the Yomiuri
    Research Institute bluntly demands a lower

    "The United States in the wake of the Great
    Depression in the early 1930s adopted a
    policy of having the dollar's value weaken by
    as much as 40 percent by raising the price of
    gold from $22 per ounce to $35. During the
    same period in Japan -- the period of the
    Showa Depression -- Finance Minister Korekiyo
    Takahashi, with a view to resuscitating the
    economy, dared to allow the yen rate to
    decline by 60 percent per annum, from the
    rate of 100 yen to $49.845 to 100 yen to $20

    "Given the current state of the economy, the
    current level of 120 yen to the dollar is
    definitely too strong. The yen rate, which is
    currently in the 120-yen range, or double the
    value of the Japanese currency at the time of
    the Plaza Accord -- about 240 yen to the
    greenback -- has savaged the economy. The
    root cause of the current economic woes is
    undoubtedly the unduly sharp rise in the
    value of the yen against the dollar since the
    Plaza Accord.

    "Japan, as a result of having faithfully
    cooperated with the United States to help
    extricate it from economic maladies, now
    finds itself in dire straits. Now, it is the
    United States' turn to help Japan out.

    "Yen-weakening measures now seem inevitable.
    The introduction of a government policy to
    allow a certain level of inflation is also


    Quite apart from the macro economic
    implications of this, gold's friends will be
    interested because of the strong appetite for
    gold futures and, perhaps gold itself the
    acceptance of such a policy is likely to

    Andy Smith has given an important interview
    on the MineWeb site, marking his very
    accurate gold prediction for 2002 gold. He

    "I felt quite strongly that something pretty
    dramatic did change [after September 11,
    2001). ... I find it very hard to be bearish
    gold -- at least on a three-to-six-month
    view. It's about geometry rather than
    geopolitics if we stay above $340. People
    have been asking me how long do I think it
    can go on. 'Longer than you think, if you
    think,' is my glib reply. Analysis at this
    point is almost totally counterproductive.
    We're in a technical territory that is likely
    to excite all sorts of behavior. Few people
    in the market can remember because we haven't
    been here for five years."

    -- John Brimelow.

    * * *

    Nick Ferris of J-Pacific Gold provides the
    follwoing observations about intensified gold

    * * *

    By Nick Ferris, CEO
    J-Pacific Gold
    [email protected]

    Today's news of the huge buying from Western
    Asia should be no surprise to Le Metropole
    Cafe subscribers. Over the past few years the
    cafe has been almost the only source of hard
    information from the Great Continent. The new
    gold markets of Dubai and Shanghai and the
    associated liberalization of gold prices are
    watershed developments. We are entering a new
    monetary order with gold at the apex.

    The definition of wealth is in profound
    transition. We are witnessing a devaluation
    of the dollar against the world's ultimate
    currency -- gold. It is an event that is
    largely being driven by the fears of the
    Asian investor.

    From the Near East to the Far East, Asians
    do not trust paper. This distrust is
    ingrained in the collective psyche of their
    societies. To your average Asian, gold is the
    wealth of the ages. Just try to convince an
    Arab or Persian or Indian or Chinese or
    Japanese housewife to sell her gold!

    Over the past 30 years there has been a great
    transfer of wealth from the West to the East.
    From manufacturing, trade, and oil, the Asian
    continent is now awash in dollars. Paper
    values are simply a function of confidence.
    Once the citizens of these Asian societies
    lose confidence in the dollar, they will move
    to convert dollar holdings to gold. In a
    panic, it will not matter how many dollars it
    takes to buy an ounce of gold -- they will
    simply want the gold.

    We have all the necessary incendiary material
    for a sudden and massive devaluation of the
    dollar against gold; a huge short position, a
    widening supply deficit, the announcement of
    the Federal Reserve's intent to mass-monetize
    America's bad debts, and the threat of two
    major land wars in Asia.

    The catalyst is the Asian investor. It
    appears that the fuse is now lit.

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