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Gold Cartel Smashes Bullion Right on Cue
Ahead of Fed Announcement/CFTC SCANDALE!
by Bill Murphy, Chairman
Gold Anti-Trust Action Committee
June 29, 2004
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June 29 - Gold $392.10 down $8.50 – Silver $5.85 down 3 cents Coming
together is a beginning; GO GATA!!! It is really an outrage that only the Russians will publicly acknowledge what GATA has been pounding away at for over five years. If the mainstream gold world would acknowledge the truth and come together to expose what has happened, the price of gold would be over $500 per ounce in short order. Fat chance! These lightweights would rather go down with the ship than take on the powers rigging gold. Can it be any more obvious that Goldman Sachs had a mandate to stop the gold price last Thursday on behalf of The Gold Cartel? Only one other time in recent years has the buying power of spec longs taken out the $6 Rule. The last time gold did so it was smashed the very next day. And now, three days later the entire gain of last Thursday has been obliterated over the past three gold trading sessions, with today’s loss alone more than negating Thursday’s advance. One of the tenets of the $6 Rule is that in the rare occasion the upper price limits of the rule are breached, the transgressors are to be immediately punished for their audacity. Mission accomplished by the bad guys, which is par for the course. With the dollar only slightly higher, gold was taken down hard for no apparent visible reason in Europe before the Comex opening. The cabal forces made sure both $400 and the 200-day moving average were taken out early, which would inhibit new buyers from stepping up to the plate. All those who bought the breakout above both key technical points last Thursday are underwater at this point. While all the new specs are underwater, Goldman Sachs has cleaned up and ripped you off again. This will give you some idea why their corporate trading profits are so high. All their sales between $402 and $403 are big winners. Once again they have picked the pockets of the speculators and made them look like chumps. That is not hard to do when you have the US Government backing your trades. There are three basic reasons to continue to hammer home the details of the gold price manipulation scheme:
I yearn for the day when this MIDAS diatribe about this un-American clandestine price rigging will not be necessary. We just aren’t there yet. The gold open interest fell 2902 contracts yesterday to 230,007. It should have dropped sharply today as The Gold Cartel buried all those who dared to get long and challenge their perceived arrogant right to keep gold subdued. The Working Group on Financial Markets and The Gold Cartel just do not want gold above $400. This is the third time in a row they have slammed it lower from this level. In each case they wasted little time in taking it down, never allowing bullion to gain much momentum on the upside. August
gold The two sizeable downside gaps were ignominiously filled in one cabal trashing. What is good for the goose is not good for the gander. Gold went up $8 on Thursday and was sent right back down. Gold went down $8+ today. Will it go right back up $8+? Not a chance! Silver held up fairly well considering the gold onslaught. All indications are that once this gold deluge is over regarding the Fed announcement, silver should begin to make a substantial move higher within weeks. The silver open interest rose 857 contracts to 92,596. Instead of contracting, the Comex silver warehouse stocks have increased a substantial 1.3 million ounces the past two days, going INTO the July delivery period. This is strictly a hunch, however, I think they are being put in there for delivery purposes because we are going to see large drawdowns as we get into the latter period of the July delivery process. Commodity prices have been tagged lately. Another mad cow scare has affected the meat and grain markets and crude oil has come down hard from its $42+ high. The CRB lost another .35 to 267.29 and is only a couple points above its 200-day moving average. The last time it bounced off that mark was in September of 03. Crude oil continues to be drilled, falling 58 cents to $35.66 per barrel. The dollar closed up .69 to 89.70, while the euro lost 1.03 to 120.67. The
John Brimelow Report Indian ex-duty premiums: AM $3.54, PM $4.59, with world gold at $399.80 and $396.60. Below, and virtually at import point. The Indian rupee unhelpfully softened this afternoon, but the subsequent subsidence of the gold price in NY will have put India back into import mode. A Reuters story from Singapore reports lower premiums and some small liquidation from some Asian markets (sales undertaken with world gold over $400, presumably). But Tokyo is still reported to have a 70c premium, the highest in the region, and a Standard Bank London dealer in Hong Kong is quoted as saying: "I was told (Japan demand) was cooling down a little, but it is still on the strong side" Kilo bar premiums in the Gulf continue very high. Some commentators report serious selling by the TOCOM public, but this is not apparent from the trading data. On volume equal to only 19,711 Comex lots (22% below yesterday), open interest fell only the equivalent of 445 Comex; the active contract closed down 1 yen and world gold was down only 80c from NY. It was as Europe got under way that pressure intensified. (NY yesterday traded 45,438 lots; open interest fell 2,912 lots.) Europe in effect saw a resumption of the dogged selling which stopped the rally in NY yesterday. In turn, this was, in reality, a continuation of the same character of selling which held gold under the 200 day moving average most of last week. ANZ suggests "…a mixture of suspected CB selling topside and some hedging by producers continues to cap the topside." (Why a hedger would sell to block a major technical achievement remains mysterious.) The difference now, of course, is that the trend following and short- term technical types are very upset: many writing early this morning predicted the moving average convergence would hold. The ANZ essay, significantly entitled: "Gold key day reversal –watch downside?" proposes: "…selling Spot Gold at 400 risking 407 targeting 390/385." As a consequence of this damage; they will not be alone. All in all, a very productive tactical retreat. However, given the posture of the physical market it seems unlikely that further shorting will be very remunerative. JB CARTEL CAPITULATION WATCH Yesterday’s stock market reversal to the downside was stopped dead in its tracks. Target came out today confirming Wal-Mart’s dismal retail outlook. US stock market players had the night to digest the disturbing news from Washington Mutual as far as how other financial institutions might be affected by rising interest rates in the months to come. The terrorists in Iraq went back to work killing 3 more US soldiers. Impact on the market? It rose as The Working Group on Financial Markets went into action to stabilize stocks ahead of the Fed’s announcement tomorrow afternoon. The DOW closed right where it traded all day long at 10,413, up 56, while the DOG gained 15 to 2035. Earlier I noted, “. . . gold was taken down hard for no apparent visible reason before the Comex opening.” At 10:00 AM EDT, a reason became apparent to those previously not in the know: June 29 (Bloomberg) -- Confidence in the U.S. economy rose this month to the highest level in two years, spurred by job growth and a decline in gasoline prices, a private survey found. ``Some of the concerns about Iraq and terrorism have taken a back seat to the good news on the economy and employment,'' said John Shin, an economist at Lehman Brothers Inc. in New York, before the report. The New York-based Conference Board's consumer confidence index increased to 101.9 this month, from a revised 93.1 in May. The figure exceeded the highest estimate in a Bloomberg News survey. Assessments of both current and future conditions rose. –END- As oft-mentioned in this column for many YEARS, the modus operandi of The Gold Cartel is to cap, cap, cap gold after a substantial move higher, turn it back gradually (taking on additional spec buyers on the quiet break), and then make their move in dramatic fashion like they did this morning. With gold already under pressure, they took full advantage of the consumer confidence news to put the killer kibosh on all those 12,000 specs who bought the breakout. Most surely exited the trade today leaving Goldman Sachs and the rest of the cabal to do some covering. It is revolting the way they continue to get away with this! By the way, the consumer confidence number is in direct contrast to what GM, Wal-Mart and Target reported the past couple of days. To give you a further idea how prevalent the US market manipulation is, look at what the bonds did ahead of the Fed announcement tomorrow. After dipping early, they WENT UP and closed at 105 14/32, up 18/32. If the consumer confidence number was such a big deal as to prop up the dollar and bury gold, why did the bonds rally? Why did the stock market rally too? Usually a real fear of higher interest rates sends the stock market lower. They rallied, of course, because we have a Fed announcement tomorrow and The Working Group on Financial Markets does not want them pressured technically ahead of that announcement. The Working Group On Financial Markets has cooked its Goldilocks scenario soup to be just the right temperature for tomorrow. Houston’s Dan Norcini, a skilled veteran commodity trader, puts today’s gold market action in perspective: Hi
Bill: I thought I had seen just about everything that can happen in markets - guess not.... The
gold trashing excuse du jour' is the consumer confidence number. I don't
know about you but I am sleeping better at night knowing that people are
feeling good enough so as to spend lots more money they don't have on
more imported goods blowing the current account deficit out even
further. Apparently that sort of thing no longer matters in today's new
paradigm. In the old days, the cure for a runaway CA deficit was a
weaker currency and an economic slowdown in which consumers retrenched
and began to save instead of spend. Not any more..... Why save when we
can borrow all we need from foreigners? Some things never change: PRESIDENT
BUSH'S INVISIBLE HAND President Bush grudgingly concedes that the U.S. economy is mired in recession, with stagnating personal incomes, falling corporate profits, and rising unemployment. As the stock market races toward new heights, some gloomy observers still predict even worse economic times in the months ahead, perhaps approaching levels of dislocation last seen during the Great Depression of the 1930s. Yet away from the TV cameras, Mr. Bush remains strangely unconcerned. The Dow has rallied in the last two weeks following the last cut in the discount rate by the Federal Reserve. The hunting trip and current Asian visit were not postponed, perhaps because the president believes official mechanisms used to ''stabilize" financial markets will keep the economy stable. Investors will remain calm and the economy will recover, the president proclaims privately. Does he know something the rest of us don't? In fact, maintaining "stability" in financial markets has been an unwritten national security objective since the Third World debt crisis began in 1981 and particularly since the October 1987 stock market crash. Scandals such as Iran Contra, BCCI and the Iraqi loans by Banca Nazionale del Lavoro illustrate Washington's proclivity for behind-the-scenes machinations. Examine the evidence. Intervention by the Federal Reserve in the bond and foreign exchange markets is now accepted as part of the regular routine of funding the federal deficit. As in the more authoritarian societies of Europe and Asia, short-term dollar interest rates are increasingly a function of political rather than market decisions. Fed moves to push interest rates to what arguably are negative real rates are but the most easily discernable examples of the "invisible hand" at work in the great financial bazaar. Beyond high profile Fed efforts to lower interest rates, the government uses other means to maintain the appearance of stability in the economy. The Treasury's secret placement of over $1 billion in taxpayer funds to prop up the doomed Bank of New England before it failed last January provided a graphic case in point. Moreover, since the demise of the New England bank, several of the largest East and West coast money center banks have been kept alive through a combination of deposits from the Treasury, discount window advances and "off- balance sheet" loans orchestrated by an increasingly politicized central bank. In an effort to disguise the full scale of official assistance to some of the biggest brain-dead banks, the Fed reportedly avoids high visibility discount window loans, preferring "indirect" support by extending verbal ''guarantees" to healthy banks, which lend to troubled peers - essentially ''off-balance sheet" financing by the central bank. With institutional investors avoiding transactions involving certain money center institutions, even for overnight deals, and little significant funding support apparent in weekly Fed statements, a combination of covert Treasury deposits and "indirect" support from the central bank appears to be the only way to explain how loss-ridden behemoths such as Chase, Citicorp and Wells Fargo remain open for business. Some may be skeptical of claims about secret government support efforts, but it is important to recognize that covert loans for brain-dead banks fit an evolving pattern of behavior within the government and the Fed. Based on experiences such as Nugan Hand in Australia, where the CIA ran a ''bank" as a front for covert operations, and more recent machinations involving debt in less developed countries, where behind-the-scenes manipulation and accounting forbearance are employed to help certain banks remain open, the goal of financial market stability has allowed the basic rules of finance - and some would argue the law as well - to be broken with impunity. During 1984-1985, for example, the Federal Reserve Bank of New York on several occasions asked futures brokers in Chicago to purchase Canadian dollar contracts in their own name, but acting on specific instructions from the Fed. Verbal assurances were provided by central bank officials, informing them of impending intervention and thus holding the brokers safe against possible valuation losses. But no written confirmations were ever exchanged in this troubling example of extra-legal government tampering in financial markets. If we know the government manipulates currency and money markets, that it keeps dead banks alive with hidden loans and Treasury deposits, and that it uses private surrogates to operate in currency futures, dare we believe that the stability game stops there? Traders in New York and Chicago suggest the answer is no, that government tampering in financial markets extends across the board - even including the all-important cash equity markets in New York. Traders and fund managers report mysterious buyers in stock index futures contracts over the past three months, on days and at times when cash prices for stocks were weak and under sustained selling pressure. Futures market purchases have, in the opinion of suspicious trading veterans, supported the cash market for stocks at times when offers badly outnumbered bidders. Such operations would be easy to finance and execute since small amounts of capital, deployed skillfully, can move prices for futures contracts higher in Chicago - and thereby support cash stock prices in New York. The Dow is the ultimate thermometer of Washington's political and economic performance. Cynics believe the government may be propping up stock prices. This is a question members of Congress should ask Mr. Bush. But the question may be answerable only by annual General Accounting Office audits of the Federal Reserve. -END- GATA’s Mike Bolser: Hi
Bill: As for gold, we see the "don't go there" message being sent by the Fed today. Some time ago I warned about the 29th of June and then refined that warning to the 6th of July. We may be seeing the results of that warning a bit early today. I also indicated that any late June attack would be a brief ambush with a later retreat by a weakened Fed.\ This counterattack is coordinated to match the putative Iraq "turnover", a staged entertainment event (Complete with puppets) if there ever was one. The Fed pressure on commodities including oil, is arranged to appear as if "inside traders" "know" that added supply of oil will be coming to market and that's why the oil price is falling. In reality there is no change whatsoever in the bleak supply picture from Iraq since there is no change in their security. The pipeline sabotage continues. The supply picture regarding gold hasn't changed for the better either. Indeed the Fed still acts as if they are in a retreat viewing the DIVG. So today and possibly Thursday and later on July 6th, may represent extraordinary buying opportunities for gold. Mike Chuck checked in last evening: I was out most of the uneventful day, but the obvious event is the failure of the stock market to hold onto its gains again. The put-call ratio continues at a very bearish point. This is usually a very reliable indicator. The disappointing sales in both cars and lower end retail are harbingers of a rapidly slowing economy that can't get its fix from refinancing anymore. That was a very enlightening contribution by the reader who investigated the S and P future manipulations (which I have called the "invisible hand." I thank him for something which I have only observed which rolled again even into today, and probably tomorrow-a relentlessly higher overnight. As the scripture warns, "the sin of the Amorites have reached their full." Given the shift in the precious metals by the commercials and the small speculators, we must be nearer than ever to the inevitable. I think that like the Old Testament prophets, many see the event as though it is imminent, but often the fulfillment took centuries before it came to pass. Hopefully, this shouldn't take so long, but I continue to be shocked how long this fraudulent market can be held up, and "fool most of the people all of the time." Bob Dylan said that. Chuck This is why I don’t bother to read any of the normal gold market commentary – this one I went looking for, knowing full well what to expect: SAN FRANCISCO (CBS.MW) -- Gold futures dropped almost $9 an ounce Tuesday to close at their lowest level in nearly two weeks, as an expected increase in U.S. interest rates dulled investors' interest in the metal. The pressure on gold is coming from the stronger U.S. dollar and expectations that the Federal Reserve will raise rates at least 25 basis points, said John Person, head analyst at Infinity Brokerage Services. A Conference Board report showing U.S. consumer confidence at a two-year high fueled a steeper decline in gold prices, according James Moore, an analyst at TheBullionDesk.com. -END- As usual, PRICE ACTION MAKES MARKET COMMENTARY. What a bore! If this were the real reason for gold to get clobbered, then why did the bond yields sink a fair amount and the stock market rally? This sort of pedestrian drivel has become excruciatingly inane, unsupported by what other financial markets are doing. The government manipulation of statistics is completely out of control, even George Orwell might have had difficulty dreaming up what the nouveau Orwellians have conjured up: 1 EDT ****Special Announcements**** June 29, 2004: Due to an error in the way we processed some account transfers, the CFTC will publish revisions to the Commitments of Traders reports dated June 22, 2004 for Comex Gold, Comex Silver, and Comex Copper at 15:30 Eastern Time today. -END- The MIDAS comment on Friday: The gold COT report was one of the strangest I’ve ever seen. The small specs went more short by the tune of 13,580 contracts, while the Commercials reduced their longs by 6,414 and shorts by 9,081. The large specs added 2,806 longs and reduced their shorts by 7,976. For the small specs to increase their short positions by so much in one week is close to unprecedented as far as I can recall. *** The CFTC changes just came out: Instead of increasing their shorts by a whopping 13,580 contracts, the small gold specs reduced their shorts by 2,861 contracts. YIKES! What was a super bullish report, actually was bearish. Houston’s Dan Norcini elaborates: Gee whiz Bill there's only a 16,000 difference in the short position in the commercial short category that got juxtaposed with the short spec category! I simply do not believe what I am seeing here. How in the hell does that category get confused with the small specs? What was an amazingly bullish setup with the huge boatload of small spec shorts supposedly put on now turns out to be net commercial selling instead of net commercial buying. I track the hogs, cattle and bellies regularly and there were no changes made to those figures. This is becoming surreal; like something out of the Twilight Zone. None of the data we are being fed is worth the paper it is written on anymore. How in the world is a trader supposed to approach these markets if we cannot even trust the veracity of the data we are getting. It is like flying in thick fog with uncalibrated instruments. You can't trust the readouts. I am too disgusted to even say anything else at this point. Dan It gets worse, Dan. This is a note GATA’s Ed Steer sent me early Friday evening (June 25, 2004): Ted Butler has advised me that the COT has some errors this week. Here's his message to me. "It's kind of surprising that no one seems to have caught it, but the COTs had a big clerical error in gold, silver and copper this week. They screwed up the commercial short position with the small spec short position. No
biggee, they're still OK, but there's no way this week's report is as
good as reported. Now, wait just a minute. If Ted Butler could spot errors in the CFTC report IMMEDIATELY, why did it take three days for the CFTC to correct their errors? Why weren't these numbers corrected before the Comex opening on Monday morning? Why did they let unsuspecting gold specs stay unnecessarily long the past two days while The Gold Cartel cleaned their clocks? Why did they wait to put this out going right into this so-called all important Fed announcement? Nothing less than a full scale investigation of the CFTC is required. No wonder Dr. Michael Gorham, the Director of Oversight for the CFTC, resigned recently. Jeff Newsome, CFTC Chairman, should be excoriated on this one. Here is a question for you: What do you think the SEC would do to a US firm who purposely withheld information from the public for two full trading days during which they lost hundreds of millions of dollars? Ted Butler’s email to Ed Steer last Friday has been forwarded to Chris Powell and GATA’s other two Board members (Mike Bolser and Catherine Austin Fitts) for safe keeping as evidence the CFTC has clearly conspired with The Gold Cartel to defraud the small investor in America. A couple of emails from fellow Café members on the increasingly disgusting and cowardly Gold Cartel: Bill Hi
Bill ! CBSMarketWatch: Coeur
d'Alene raises
Wheaton offer -END- Yesterday’s key reversal to the downside on the HUI proved prescient today at that index fell another 4.74 to 185.36. The XAU lost 1.43 to 84.58. It is no surprise at all The Gold Cartel would bash gold ahead of the Fed announcement tomorrow. By continuing to cream all gold rallies, they are sending more and more investors away from the gold and silver shares, which is one of their main objectives. More and more individuals can’t take the action and are fleeing, in similar fashion as the private contractors in the Mid East are fleeing in fear of the terrorists. Mahendra said it best last week. Spend some time with friends this week. Go to the beach. Don’t let developments bum you out and get you out of your long-term share positions. It won’t be long before they are flying again. This is a week to be endured. He's correct. Think long-term and understand what is happening near-term. GATA BE IN IT TO WIN IT! MIDAS Appendix More on the US financial market/reporting nightmare that has grown to one of epic proportions: MYSTERY
BEHIND LATE RELEASE OF PPI DATA The Labor Department's Bureau of Labor Statistics delayed release of the wholesale inflation number the PPI by half a week recently because, according to a press release, it needed to "resolve unexpected difficulties in calculating the index." A government agency doesn't produce a very important economic statistic on a timely basis and that's their best explanation? This is the same economic series that was delayed for months in early 2004. And it's a number that will prove important when the Federal Reserve meets today and tomorrow to decide if interest rates should be raised. Keep in mind that billions of dollars are wagered each day on whether inflation is increasing or falling. And remember that the PPI is one of the most visible gauges of this watched all over the world. Not only is the number important to the Fed, but it's also key to the presidential election if only because it can change the economy by forcing financial markets to make borrowing costs more expensive. "The BLS expresses its apologies to those who experience any problems as a result of this delay," the Labor Department said on its Web site. When the PPI was finally released it showed an increase of 0.8 percent in May, the biggest jump since March 2003. If you take out food and energy prices the increase was 0.3 percent. That the media didn't seem to care about this delay was as astounding as the government's ineptitude. So let me be one voice of indignation. (Pound fist on desk) We need to know what's going on! I called the Labor Department between the time the PPI was delayed and its eventual release. I got a little fuller explanation but one that was still completely unacceptable. Brian Catron, a BLS economist who works on the PPI data, says the number was delayed because "there was a calculation issue." What exactly does that mean? Does Catron mean that the PPI's jump, as originally calculated, was too large for the financial markets to handle? "You are implying that we are manipulating the number," Catron shot back when I asked. "I'm not going to dignify that with a response." OK, don't respond. I'm still wondering if that was the case. But here are some other things you might want to know. Catron assured me that the "mistake" that caused the PPI's delay had to do with the quality of the data that were provided by manufacturers. And he contended that Labor Department higher-ups had not seen the original number before it was pulled, so only lowly bureaucrats decided to rejigger the data. The raw data, Catron told me days before the PPI finally came out, didn't pass a quality assurance test. Prices as they stood on the day they were originally supposed to be released just weren't "appropriate" for public viewing. A little editing and they apparently become appropriate. Which makes me wonder: shouldn't someone be keeping an eye on the stat-amagicians?
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