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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Zardoz who wrote (36986)	7/16/1999 9:26:00 AM
From: Rarebird	Respond to of 116770

More On The Mysteries In The Gold Market: More on the Mysteries in the Gold Market July 15th, 1999 Professor von Braun The Rocket School of Economics I remember hearing a story many years ago about a mouse that was making its way through the jungle when it came upon a lion. Taken aback by the size and majesty of this huge creature the mouse meekly inquired “who are you?” To which the lion replied “I am the lion, the king of the jungle, who are you?” “I am the mouse and I have just been sick”, was the reply. The poor old mouse had of course been living in it's own little world and had thought that it was “king of the jungle”. Whoops! One of the (at this stage) unknown ingredients in the mystery that is the gold market, is who is the lion. With conspiracy theories flying about, with no good news on the horizon, with gold “bears” having a field day, while there erstwhile “bull” colleagues can't get their collective acts together, the “mice” of the gold market continue it seems to avoid the obvious. Most commentators, analysts and self proclaimed specialists who comment on the gold market fit the category of being the mouse that has not yet met the lion. We at the Rocket School of Economics have yet to see any real evidence of even the hint of a recognition of the fact that the lion could exist. Example after example of recent commentaries from both gold market bulls and stockmarket bears that refer to gold being ready to rally, have been consistently wrong. These guys just don't get it. Part of the reason they don't get it is they all seem to live in their own little worlds and do not interact with each other on any other basis than a mutual agreement that they are kings of there own little patch, small as it may be, and that obviously nothing exists that could be larger than them. They even ignore the fact that some of their members have simply disappeared, never to be heard of again. It may be safe to say that there is nobody out there in print that fully understands the gold market, its complexities, its intricacies, its subtle nuances and more importantly, that has any clue as to who is in charge. Who is dominating this market to the degree that, that domination is reflected in the price, which is where it counts. Its the price that is the market. The price is where the action is at. Being a gold bull in this market is like being a passenger on the Titanic who is convinced that it will not sink. “I guarantee this boat will not sink !” says one commentator the day before the gold price falls $5.00. In print, unbelievable, especially since this particular boat is now lower in the water. The reason they have it wrong may actually be very simple. They do not understand the gold market. Somebody does we are quick to add, because regardless of where the price is that somebody (the real lion of the market) has made a lot of money on the way down and continues to do so. To date nobody has clearly identified the lion. They may not even be aware that one exists. The “knowledgeable” comments that are supposed to explain what is going on in the market, yet have so far failed to do so and consequently are completely meaningless, will continue to come forth. An example of this is contained in a report entitled “Putting Central Bank Sales Into Perspective” by CPM group, dated July 8th, 1999. Quote: “The bulk of the London and Comex trades are speculative, short term and settled for cash - paper trades as opposed to transactions involving physical metal. Some observers point this out, saying that you cannot compare the two forms of transactions. While that is true on many levels, it would be naive to think that these massive paper trades, accounting for 99% of total market turnover, do not have a price effect.” It would indeed be naive to think that these “massive paper trades” do not have a price effect. Based on published supply and demand numbers the gold market should be “humming right along” yet the price continues to decline. If what is being said here is the fact that for every ounce of actual physical metal that is traded, there is 99 paper contracts written, then of course this will effect the price. Of note is the fact that the numbers CPM use do not refer to the OTC options market either. Another quote from the report: “An ineffective way to market a product to investors, or to encourage them (the investors) to hold equities of producers of that product, is to suggest that major world governments are conspiring against it.” Why would you want to own shares in a gold producer when the market for their product is saturated with paper contracts that overwhelmingly effect the price ? If the market is not a “natural” market, then why own the natural suppliers of the product when the price of that product is the result of activities in an artificial paper market ? ‘Tis better perhaps to accept the fact that the price will continue to decline until a clear understanding of exactly what is going on in this market becomes apparent. An understanding that takes into account the actions of all the participants and more importantly, understands what exactly is the lions game. Then a strategy that is both bullish and realistic may be able to be constructed. Professor von Braun may be contacted via email at profvonb @ aol.com. fiendbear.com