Maybe next week, can buy thru internet trades.
I am not going away , still buying for the long haul.
I want to find out what is down there 3,000 to 6,000 ft at Damoti.
great reading,
XXXXXXXXXXXXXXXXXXXXXX
Alex (35600 )
From: Bill Murphy
Sunday, Jun 20 1999 10:15AM ET
Reply # of 35610
Alex,
Thanks. That story really says it all. I am going to use it to send around.
The latest:
June 19, 1999 - Spot Gold $259.30 up 90 cents - Spot Silver $4.95 down 12 cents
Technicals -
The shorts are in big trouble. By today's action it is hard to appreciate that fact. A long
awaited Swiss amendment, that was to be utilized technically to allow the pro gold sale
faction in Switzerland to begin selling 1300 tonnes of gold, was surprisingly defeated.
Gold immediately shot up $5 yesterday as it encountered some panic buying. I know
this will surprise you but, lo and behold, Goldman Sachs and JP Morgan roared into
action with palms faced out in the pits, selling everything they could. Almost as fast as
gold rallied ( the most frenetic upside action in a very long time ), the leaders of the
Counterparty Risk Management Group "ensured" a quick retreat. In a few hours gold
was trading unchanged. Now that is what a gold capping, risk management group is for.
Well done, boys. The rest of your group must be proud of you.
Normally, failed spikish action such as we witnessed yesterday is short term bearish. It
may so in this case also, but this is not a normal market. The bullish consensus numbers
have been in the teens for 13 trading days- a record - and registering the lowest
readings since June 1976. Historically, whenever the gold sentiment has become this
bearish, violent moves to the upside have ensued.
To give you an idea of how extreme this has become, I just received an email from a
long time gold bug and market follower in South Africa. He informed me that he no
longer wanted to receive emails from Midas as he no longer has any interest in gold.
After 20 years of enduring analysis, he has thrown in the towel.
The open interest hovers around 210,000 contracts on Comex and the market is loaded
with spec shorts. The CFTC Trader Report released after the close on Friday showed
specs short to the tune of some 86,000 contracts. That is 8.6 million ounces of gold and
a very big number.
Since the market is being held down by some very powerful forces, it is hard to make
predictions by using standard analysis. But I will do my best below. I think the shorts
days are numbered even though they do think they own the casino.
Silver continues to confound and exasperate. The Comex silver stocks have dwindled to
just below 74 million ounces and could go into new low ground at any time. And
according to the ever vigilant Icarus ( our futures market eyes and ears ), the figures are
even more bullish than meet the eye. She says that 6 million of those ounces are not
re-deliverable and much of the remaining inventory is of very poor quality.
Years ago there was a scandal of sorts as a now, out of business metals firm managed
to deliver poor quality silver. Since then bundling has occurred - meaning the delivered
silver has been taken out of the warehouses, raked over - (the higher quality kept and
the pour quality silver returned ). Thus, the silver stock situation is much more bullish
than most people realize.
Our year end $9.78 price prediction seems a long way off, for sure, but as I have told
you and as I am sure many of you know, the price of silver can explode, and I mean
explode, when you least expect it to.
Fundamentals -
Why am I so positive now when the Angolgold's highly regarded veteran trader, Kelvin
Williams says " the gold market is ridden with apathy and fatalism"…as a result of
planned official sector gold sales? And we get more of the same press releases like this
one:
Reuters - June 18 - Cologne,Germany - Leaders at the World Economic Summitt
agreed on Friday that the IMF should sell around 10 percent of its gold reserves at the
right time to fund a poor country debt relief plan, German said.
"There was agreement in the G7 that gold would be sold ( at the right time ). That means
not necessarily at a time when prices are at a record low," Klaus Gretschmann,
Chancellor Gerhard Schroeder's chief economic advisor, told reporters.
Or comments like this after the Swiss politicians blocked a proposal that would have
allowed the proceeds from gold sales to be used for the Swiss Foundation for
Solidarity, a fund designed to help needy people in Switzerland and abroad:
Reuters - June 18 - London - The Swiss National Bank said sales will still proceed,
beginning in the spring of next year. "What the parliament has done doesn't change the
plans for the sale of gold," said Werner Abegg, an SNB spokesman. "With the new
constitution, Switzerland has already de-linked the value of the currency from gold".
The bottom line is the tide is turning. The shorts have been on counting on IMF gold
sales, the Swiss gold sale, and leased gold supply to bury the gold market and keep
their con game going. By the rejection of the amendment, it is CLEAR that the Swiss
sale is NOT a done deal, and if the financial market landscape changes between now
and next spring ( a la stock market swoons, etc. ) the Swiss gold sale proposal could be
defeated. In that case Bulls 1, Bears 0.
Then there is the IMF sale. It is in serious jeopardy too. We have told you in many
Midas's of the serious and growing Democratic and Republican opposition to the IMF
gold sales in the leadership of the U.S. Congress and without Congressional approval,
the proposed IMF gold sale will not become a reality. The latest from our team:
Nevada senator says sale of IMF gold reserves will not happen
By Scott Sonner
June 18, 1999
ASSOCIATED PRESS
RENO, Nev. - Sen. Richard Bryan is assuring gold producers in Nevada and around
the world that Congress will block the Clinton administration's attempt to sell off
international gold reserves to help some debt-laden poor countries. "It requires
congressional approval. It ain't going to happen," Bryan, D-Nev., said today from
Washington.
Bryan, a senior member of the Senate Finance Committee, outlined the dim prospects
for the International Monetary Fund gold sale during a confirmation hearing Thursday
for Lawrence Summers, the current deputy Treasury Secretary.
Bryan intends to support President Clinton nomination of Summers for the top treasury
job, but vowed to block any effort to sell off 10 million ounces of IMF gold reserves.
The selloff would devastate world gold markets already hovering around 20-year lows,
and probably hurt the heavily indebted countries the IMF is trying to help, he predicted.
Not to mention harm miners in Nevada, which is the world's No. 3 gold producer
behind South Africa and Australia. The state had a record output of 8.86 million ounces
last year, worth $2.6 billion. But low prices have led to layoffs.
"The recent drop in the price of gold has caused the layoff of over 1,000 mining
employees in the state of Nevada alone," Bryan said.
Other high-powered Senate opponents of the IMF gold sale include Minority Leader
Tom Daschle, D-S.D., and Frank Murkowski, R-Alaska, chairman of the Energy and
Natural Resources Committee.
A White House spokeswoman said today there was no immediate response to Bryan's
assurances that Congress would reject the sale.
The plan to sell the gold is intended to raise money for 41 poor countries included in the
IMF's Heavily-Indebted Poor Countries Initiative (HIPC).
Those 41 countries have a combined debt of $220 billion, Bryan said. Of the 41, at
least 14 produce a significant amount of gold. As a result in the decline in the price of
gold, they have lost $150 million in export earnings, he said.
"Not only do you create turbulence in the domestic gold-producing market, you
accomplish very, very little for the countries you are trying to help," Bryan said in the
telephone interview today.
"I'm not unsympathetic to what they are trying to do. But in effect, you disrupt a whole
industry in the process. It just doesn't make sense to me," he said.
Gold prices have been hovering the last week around $260 a troy ounce - the most
depressed level since Jimmy Carter was in the White House - and closed Thursday at
$259.30 on the New York Mercantile Exchange.
The metal had been trading for $270 just two weeks earlier.
Summers wouldn't say during the hearing Thursday whether the administration would
reverse course on the proposed sale. But Bryan thinks he got the message. "This is my
third conversation with Summers," the senator said. "I just wanted to send a shot across
the bow. This ain't going to happen." End
If the IMF gold sale proposal flops, then it is Bulls 2 Bears 0.
Then there is the natural supply/demand deficit which Frank Veneroso of Veneroso
Associates says is will reach 2,000 tonnes per year soon unless there is a sharp price
rally. That is 167 tonnes PER month and is probably the big reason the bears had to call
in the "English Poodle" brigade to announce the BOE gold sale the way they did. It is
hard for most folks to understand this, but the shorts were desperate to hold down the
price of gold around $290 and had to put out all stops. And they did! Look at how
demoralized the gold world is. The gold manipulating propaganda machine is at work 24
hours today. The press, of which only a few have a clue as to what is really going on,
continue to report the "bear" party line. It is having a numbing effect on gold market
participants. A bit like being in a concentration camp and listening to the enemies
diatribe day after day. It has its effects. Look at what it did to Patty Hearst during her
forced captivity.
But the real world is eating up the gold supply at a faster pace than they realized it
would. That is why the same crowd has "allowed" no real gold price rallies since the
BOE announcement. They know this is the "last hurrah" for them. And I think that is
exactly what it is- a last hurrah for the bears. Thus, the supply/demand deficit which is
greater that the bears anticipated brings us to:
Bulls 3 Bears 0.
It is time to start thinking about making money, not how do we survive this mess. Yes,
the tide is turning. But if you think my analysis is "pie in the sky" type thinking, I present
to you excerpt commentary from the renowned John Ing of the institutionally followed
Maison Placements Canada:
Psychology is Changing
So, what can change the psychology of the market? First we believe that we are close
to the bottom. We expect the upcoming UK auction will actually be oversubscribed by
ten times with the auction already factored in the gold price. In addition, the gold
producers are lobbying and reminding politicians and central bankers of the importance
of the respective gold mines to many of the economies that are seeking assistance from
the IMF. Gold is an important revenue generator for Russia, Chile, Tanzania, Peru, etc.,
and the list goes on. Gold's price decline has now fallen into the political arena. In the
United States, the Gold Anti-Trust Action Committee ( GATA ) led by Bill Murphy is
shedding light on the transparencies of the gold bullion dealers and the role of the central
banks. So with gold's decline becoming politicized, it is only matter of time before
sentiment turns.
For some time we have cautioned investors about the perils of the U.S. equity bubble.
However recent events suggest that at long last, the interest rate risk is being discounted
in equity valuation models and the final chapter of the great American bubble may be at
hand. Treasury Secretary Rubin already knows the ending so he has left the building.
We believe a classic late cycle monetary tightening is around the corner thereby
threatening the current "gold carry trade" as well as the great American equity bubble.
Asset price inflation is creeping into the markets as reflected by the recent pick-up in
energy prices and commodity prices. The Commerce Department's consumer price
index increased by 0.7% in April - the largest monthly leap in 9 years. Quietly, the
building blocks of higher inflation are being laid - that and the positive supply/demand
fundamentals will accelerate the expected turnaround in gold sentiment. Consequently,
we do no anticipate a gradual upturn but an explosive $100 move in the price of gold,
sparked by short covering and investor demand.
Potpourri and the Gold Shares
At what lengths will certain Machiavellian individuals and certain entities go to encourage
gold sales. This Bloomberg release is a bit unnerving. Does our camp need IMF action
to prevent more gold sales?
June 17 - Moscow - Russia may use its gold reserves to repay foreign loans if the
International Monetary Fund board in July doesn't approve new loans for Russina, said
Viktor Gerashchenko, chairman of Russia's central banks. Russia's Prime-Tass news
agency reported. "If we have to use reserves , we'll use reserves," Gerashchenko told
reporters.
Speaking of Machiavelli. Federal Reserve Chairman, Alan Greenspan said on Thursday
before the Joint Economic Committee in Congress that the decline in the price of gold
was more a reflection of a decline in global inflation expectations that the effect of
central bank sales.
Two thoughts on Greenspan's comments: 1 ) Does he follow bond markets anymore
and why is he considering raising interest rates? 2 ) He has telegraphed to the world one
reason why he made his increasingly visible comment, "central banks stand ready to
lease gold in increasing quantities should the price rise" and why the gold market is being
manipulated lower. And that is that he wants to point to a dismal gold market to show
how great a job he has done and how all is relatively OK in the U.S. financial scene.
Is all so well Mr. Greenspan?
London - June 18 Bloomberg -- The Bank of England cautioned commercial banks not
to relax lending policies after warning hedge funds seemed to be stepping up their
activities after last year's near-collapse of Long Term Capital Management. "More
recently, some market anecdote has suggested financial institutions may have been
rebuilding their positions this year and hedge funds activity in particular may have picked
up," the central banks said in its quarterly stability review.
Melbourne - ( Dow Jones ) - June 17 -- Reserve Bank of Australia Governor Ian
MacFarlane said Thursday the Central Bank has some concerns about over-the-counter
derivatives trading by global hedge funds.
I find it if of real interest that these comments are hitting the wire services after the
rumors of trouble in the U.S. hedge fund community last week.
From Counterparty Risk Management Group member, Credit Suisse; a Bloomberg,
June 17 story from Tokyo: "Credit Suisse Group, the sixth largest European bank in
terms of total assets, is preparing to dismiss as many as nine employees who blocked a
Japanese government inspection of its Tokyo business, said a person familiar with the
situation".
To rap it up for the weekend - an email to me from a very well know financial journalist
in South Africa:
Dear Bill,
There is a strong rumour to the effect that the day before, or a few days before, the UK
Chancellor/Bank of England announced his/its decision to sell 415t of gold through
auctions, Goldman Sachs took puts on US $1bn worth of bullion.
If this true, it make for a hell of a story and one I would dearly love to expose. Is there
any way in which you can verify the rumour?
Kind regards,……
Any leads for my contact in South Africa would be greatly appreciated.
Midas
Bill Murphy ( Midas )
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