"The last duty of a central banker is to tell the public the truth."
Alan Blinder, Vice Chairman of the Federal Reserve
… stated years ago on PBS's Nightly Business Report

Out of South Beach later this afternoon so I can get back to Dallas and greet Hurricane Rita there on Saturday. Can’t get away from this thing.

Gold took off for $470 again when The Gold Cartel (probably cabal ally Bank of England) took it down with a vengeance, even though the dollar was hit hard and the price of oil was up over $1. Yet another contrived maneuver by the cartel to do what they can to take the steam out of the gold stampede.

With the dollar under pressure, oil firm, and the stock market futures weak before the opening for a change, gold was due unchanged in New York. The bulls were not to be deterred and gold was soon up $2.50.

What struck me this morning was the query by CNBC to a White House spokesman about the budgetary effects of Katrina and what they all mean. His mantra was to focus on the notion it was a one time event and would be nothing which couldn’t be handled. Not even Planet Wall Street is going to handle this hooey. 

• Iraq is a one off-budget item, which is costing over $200 billion.

• Katrina is a one-time event costing $200 billion.

• Now Rita is bearing down on Houston. Who knows what damage it might do?

Thus, it is likely the US will have three one time events in play at the same time. There is only one way all of this may be "handled." Every American is going to have to ante up and reduce their standard of living. While this is a no no for politicians and Planet Wall Street, there is no other realistic way for this to be sorted out.

The problem with that for the Bush Administration is once this becomes apparent and takes hold in the US psyche, Americans are going to revolt over the money spent in Iraq. We went there on lies and now over 1900 US soldiers are dead and around 12,000 maimed and wounded with no end in sight. The only outcome in sight is Civil War. The reason for touching on this is the coming turmoil among the American public is going to bury the dollar and send more and more investors around the world into gold.

It is very difficult to know at times whether the movements in the various US financial markets are due to manipulation or normal market forces. One thing I don’t want to do is overdue the intervention analysis (gold can never be overdone). What I try to do is ask what makes sense. For example, with oil near $70 per barrel, it makes no sense for gold not to be hundreds of dollars per ounce higher. With the Planet Wall Street pundits all citing the rise in the price of gold due to increasing inflation concerns, it makes no sense for bond yields to be so low. At the moment bonds are up 2/3 on the day. Any time the 10-year notes approach 4.3% yields, they fall precipitously, just as gold is bombed every time it approaches $470. It also makes no sense that US stock market volatility would be minimal with so much tension and economic turmoil riling the key US Gulf Coast.

We are back to the Stepford Wives bit again. With Iraq a mess, the aftermath of Katrina a mess, and a potential Rita disaster, the Orwellians (when asked, "How is everything?") keep responding, "Everything is fine." The PPT and Gold Cartel are intervening in the US financial markets to foster that illusion.

To accomplish their objectives, The Working Group on Financial Markets (PPT) are employing zillions of dollars worth of derivatives and market maneuvers to keep "order." Yet, Murphy’s Law is operative everywhere. One can compare their activity to the proverbial boy trying to plug the Dutch dykes with one finger at a time. Plug one hole and another shows up.

It is only a matter of time before this massive derivatives operation blows up and causes extreme chaos in the US economy and financial markets. This is when the bums lose control of their farcical gold rig. Remember, these low-lifes are short 12,000 tonnes to 16,000 tonnes of gold and have lied to the world about it for many years. They are trapped as badly as those poor souls in New Orleans were.

The major point I would like to make again is the risk/reward ratio of owning gold/silver and the shares is off the charts. Gold is headed many, many hundreds of dollars per ounce higher. Eventually more than $1,000 per ounce higher. Its future price action will blow people away just as Katrina did and Rita will. Batten down the hatches and spread the word.

The PM Gold Fix was $ 469.10, indicating physical market demand continues to surge despite the price rise. The Gold Cartel has lost control of the monster they have kept under control the past few years. That monster is European and other investment demand for gold. As mentioned here till the cows come home, The Gold Cartel used the dollar to suppress the gold price. They knew if gold were allowed to do what it is doing now in foreign currency terms, they could not handle the demand. Now that foreigners see gold rising in a meaningful way, they want in. Love, love, love it. The gold open interest rose another 4224 contracts to 363,315, as The Gold Cartel continues their panicky attempts to stop the gold advance. Hey, Planet Wall Street, who are they selling for and why? What’s the big deal about gold advancing? Might hurt your bond propping efforts after a rate hike, eh?

The silver open interest put on 522 longs to 117,410.

Copper is soaring at press time, up 4.10 cents to $1.7070, basis DEC. The Comex floor continues to point out how sluggish silver is. When copper was retreating, they pointed to copper as a reason. Now what floor? This is beyond absurd. Somehow The Gold Cartel still has control of silver and is sitting all over it. PERIOD!

The John Brimelow Report
Indians, and someone in Europe buying: Advantage Bulls?
Wednesday, September 21, 2005

Indian ex-duty premiums: AM $3.26, PM $2.27, with world gold at $466.35 and $466.10. Ample, and adequate, for legal imports. The rupee helped India’s gold importers by being much more stable today.

Although TOCOM volume leapt 148% to equal 51,945 Comex, liquidation was, surprisingly, quite modest (open interest only slipped 1,211 lots or 1.3%). One Japanese commentator suggests the public is being drawn in by the dynamic action of oil. Perhaps so.

Since NY closed last night, world gold has made three violent attempts to clear $468 – successfully for a couple of hours in the early European morning. As suggested yesterday, there appears to be strong buying interest emanating from the region.

Macquarie’s comment on yesterday lends support to this concept:

"More fund buying in London via three banks. Traded up to 471, with some good volume crossing up above 470, before the sellers and profit taking saw it sell off."

With the Indians and probably the Arabs rapidly adjusting to these prices, the advantage lies with the Bulls.

More later.

JB

CARTEL CAPITULATION WATCH 

The winds last night in South Beach were furious, well after Rita passed by. This gave me some understanding of what it means to be on the right side of a major hurricane (and this was only a category 1 storm when it came through the keys). Seems to me even if Rita holds its path and misses a direct hit on Houston, the right side winds will do enormous damage to this critical oil producing area.

07:47 Bullish sentiment rises to 54.3% from 53.2% in latest Investor's Intelligence poll
Bearish sentiment declined to 25.5% from 26.6%.
* * * * * 

10:31 API reports crude oil inventories (158K) barrels
Gasoline inventories +2.1M barrels, while distillate inventories rose 3.2M barrels. Nov. WTI crude is currently lower in initial reaction; quotedlast at $67.40.
* * * * * 

10:30 DOE reports crude oil inventories (322K) barrels vs. consensus +1M barrels
Gasoline inventories reported +3.47M barrels vs. consensus (250K) barrels. Distillate inventories reported +820K vs. consensus (500K)barrels. November WTI crude is trading lower in reaction to the data.
* * * * * 

FED'S FERGUSON, IN FINANCIAL STABILITY FORUM STATEMENT, SAYS MANY MARKETS MAY BE UNDERPRICING RISKS

GATA continues on a roll. 

This email came in last evening from an Australian Café member:

Just witnessed an interesting gold interview on cnbc asia at approx 10am Wednesday morning Sydney time. Didn't catch the name of the interviewee but he was from Swiss Asia Capital. Covered all the gata arguments and did everything bar mention the name gata.

He stated quite categorically that HALF the central bank gold had either been sold short or leased into the market and the current rise in the gold price could not be put down as speculation - perhaps shorts beginning to cover.

Also made the comment on STUPID central bank policies of leasing out their most valuable asset at .5% also spoke of the gold oil ratio currently about 6 historically 17 and expects the gold oil ratio to settle somewhere in the middle.

It was the most sensible gold commentary I have ever heard on cnbc but I guess cnbc asia and cnbc europe aren't part of the control of the US.

Very interesting and hugely gata supportive.

Rhody on the lease rates:

Good morning Bill:

There were no increases in any of the one month terms for any of the metals this morning, while terms from the two month out mostly rose. Gold is out of its minor backwardation. Palladium is unchanged but remains in severe backwardation, all at rates under .20%. Silver's rates rose marginally in the three month on terms. This is interesting as it may be related to delivery obligations on CRIMEX for December and January. If later terms rates continue to firm, this becomes more likely. Near term lease rates suggest there is no delivery crunch in silver this month, where another 2 contracts were stopped yesterday. We are on trend for 30 Moz of physical silver transfers this month on Crimex. The Bank of Nova Scotia took both and continues as a prominent stopper. There were no lease rate changes in platinum.
Regards, Rhody http://www.kitco.com/market/lfrate.html 

A number of queries have come my way re what happens to gold when the new Washington Agreement kicks in on September 26?

• Very little because The Gold Cartel has already pre-sold a sizeable amount of the allotted gold to sell by using the futures market. They will deliver gold against those shorts to waiting and willing buyers.

• There are other major buyers beginning to line up to take this central bank gold off their hands.

• It is important to keep in mind that demand for gold is 1500 tonnes+ greater than mine and scrap supply. Mine supply is shrinking, as we all know. Available gold for lease is on the wane. The bums are gradually looking like trapped rats in a corner.
  
  Another question I keep receiving is what if there is a 29 type of crash? How will it affect the gold shares?
  

• On a very short-term basis anything could happen in a margin call, liquidity crunch. However, gold is going to go berserk, crash or no crash. Most of the investment world, and many of the gold bugs, are out of the share market, especially the smaller golds. The tiny gold market will not be able to handle voluminous buying which will surface from all over the world. Gold Rush 21 was aptly named.

GATA’s battle plan to defeat The Gold Cartel was patterned after the brilliant strategy of Africa’s greatest general, SHAKA. See:

2/5/99 - Invitation To a Lawsuit- SHAKA ... ZULU

2/14/01 - THE KING AND I 

One of the ways SHAKA built his considerable empire was to offer peace to former enemies as his army advanced. It was either acquiesce and live a wonderful protected life, or be slaughtered by SHAKA’s army.

Let us have some fun here GATA ARMY and propose a peace offering to CNBC. Let’s send all their different commentators the above email about CNBC ASIA. Let them know in your own words:

• Bill Murphy, Gold Anti-Trust Action Committee chairman, was interviewed by Ron Insana and banned ever since.

• GATA has been more right predicting what the gold price would do and why since 2001 than anyone.

• GATA predicted the gold price would soar without the aid of a weakening dollar. We said why too. Hardly anyone else out there even imagined as such.

• Point them to our recent Gold Rush 21 international conference attended by delegates of 14 countries, including one of President Putin’s economic advisors, Andrey Bykov. http://www.gata.org/GoldRush21Menu.html 

• Include this quote from a September 20 Bloomberg article, which coincides what the guest on CNBC Asia said:
  
  On central banks gold reserves:
  
  ``Almost every time the price of gold rises there's a debate about how much the central banks hold. All the central banks plus the IMF together hold gold worth $400 billion, that's less than the U.S. new debt issuance in a six-month period. So that's not much. And it's said that about half of gold reserves on the central banks' books have in reality already been sold via gold leasing.'' ...Martin Hennecke, Bridgewater Associates Ltd.

• This was one of GATA’s major points of Gold Rush 21: the central banks have less than half the gold they say they have; that other have used in various clandestine leasing/swap operations over the last decade to artificially suppress the price.

• Ask them if CNBC is part of a US free financial market press, or a controlled one? Should they be fair … peace. If not … no mercy down the road.

As I go to press here, the gold shares are on fire. Because the shares were hit so badly in 2004 and early 2005, many investors can’t wait to dump their positions on this strength. What a mistake!

What we have here is an investment opportunity that truly is a once in a lifetime event. Sure gold and silver could get bopped here by the increasingly desperate Gold Cartel, but the desire to own gold is growing and growing all over the world. They MIGHT be able to turn the spec fund longs again, but they are fighting a tide as powerful as these horrific Gulf hurricanes. Whatever they are able to accomplish in the very short-term, it won’t last very long.

One other item the bad guys are fighting is the spec longs have huge profits and many won’t be forced out on small setbacks. Some will be looking to buy more gold. Thus, the bad guys will have to take on new physical buyers waiting for corrections and other specs waiting for the same. This is a powerful combo they have never faced before. Their loss of using their dollar/gold manipulation tool will prove disastrous for them.

This is a time to be all over the gold and silver shares.

Comex gold just closed. Once again gold surged on the opening and was held in check by the gold gorillas all session long. Meanwhile, the reasons for exiting the general market is overwhelming and finally giving the PPT some trouble. The DOW is down 90, the DOG off 21.

The Orwellians are running out of Hail Marys. They are also running low on physical gold to keep the price of gold from exploding.

GATA BE IN IT TO WIN IT!

MIDAS 

© 2005 Bill Murphy
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