June 18 - Gold $394.90 up $6.20 – Silver $5.97 up 7 cents
Two qualities are indispensable: first, an intellect that, even in the darkest hour, retains some glimmerings of the inner light which leads to truth; and second, the courage to follow this faint light wherever it may lead. ..Carl von Clausewitz
(Prussian military philosopher 1780-1831)
GO GATA!!!
It is a rare day lately when the MIDAS gold market commentary cannot be written after the first hour of Comex trading. Rarely does anything change for the gold good in this managed market. The highs are almost always made within the first hour. Gold is then either held at those highs, any new highs are modest at best, or it is sold off.
OOPS, that was my exact opening commentary in yesterday’s MIDAS. Oh well, as is normally the case on almost all gold up days, it fits perfectly for today too. I can’t stand the buggers that keep capping the price. The Deputy Chairman of the Russian central bank, Oleg Mozhayskov, can see the gold market is rigged and said so in front of those in the gold industry who attended the LBMA conference in Moscow in early June. He even had the audacity to mention GATA in public company and say we were right. We are talking about a G-8 central banker here! That is astounding and monumental for GATA's credibility!! What is the matter with the morons in the mainstream western gold industry? What a bunch of powder puff patsies!
Gold rose $6 and change (virtually limit up as far as the $6 Rule is concerned) in the first minutes of trading and did so with euro DOWN 30. Gold went completely on its own, which is a WONDERFUL development. The euro only rallied when the US current account number was reported at 8:30 EDT and it was worse than expected. The euro then took off, eventually closing .76 higher at 121.21, while the dollar fell .52 to 89.43. The effect on gold? Zip. Gold actually SOLD OFF slightly by day’s end even as the euro rose an entire point.
The fact that gold rallied so strongly without outside market support is marvelous news. It tells me there is a VERY strong hand buyer out there who wants gold come hell or high water. I have heard a couple of extraneous comments about gold that might fit together. The first is from one of the most highly regarded gold traders on the floor. He told my source that he smells somebody dumping a large hoard of dollars to buy gold. Perhaps it is the Arabs. My STALKER source says STALKER number 2 is active and he believes the business is coming out of Asia, perhaps even Malaysia, in preparation for the Dinar's inauguration later this year. This is all speculation, however, it makes sense.
What we do know is somebody went after physical gold with a vengeance this morning, sending gold soaring until the crooks showed up like they always do.
What is also exciting is gold is on the move with many specs and investors on the sideline. The Café Sentiment Indicator is a 3 or 4 and the Comex open interest is at its lowest levels in about a year or so at 223,015. It only went up 2759 contracts yesterday. In years gone by we would get a 77,000 spec open interest increase over a period of many weeks and gold would only rise $10.
Even The Gold Cartel and other commercials are exiting the scene. The COT revealed they got out of 3,522 longs and 7,190 shorts, which is why the open interest has contracted.
Reg Howe, Bob Landis and I were to speak in front of a group of money managers in Boston next week. Collectively, they manage over $100 billion in funds. A month ago the room was packed to hear about the dollar from Dave Lewis. Our meeting was cancelled on Wednesday due to lack of interest. Either that, or the attendees were to scared to be in a room with a few people who are not afraid of confronting the establishment.
Anyway, gold is close to popping through its 200-day moving average and taking out $400. We are only a hop, skip and a jump away.
On a positive note, gold has closed on the firm side two days in a row, on its highs yesterday and not far off today.
One fine looking gold chart:
http://futures.tradingcharts.com/chart/GD/84
Silver had trouble holding $6, however, like gold, it was firm all day long, selling off modestly on the close. Like gold, the silver open interest is very low. Yesterday on its surge, the open interest only rose 138 contracts to 86,922.
Still room for 88,000 spec longs to take gold through $430 and 36,000 spec longs to take silver back above $8.50.
Oil closed up 19 cents to $39 per barrel.
The John Brimelow Report
Gifts from the Middle East?
Friday, June 18, 2004
Indian ex-duty premiums: AM $3.03, PM $0.11, with world gold at $387.90 and $392.20. Below, and well below, legal import level. India reacted with more that the usual unenthusiasm to abrupt jumps in the world gold price ($9 up this afternoon on the previous morning.) The rupee exacerbated the response by falling to a 5 1/2 month low against the dollar, with Indian sentiment damaged by noises the new Government is making about higher taxation. The discreet qualities of gold are likely to be increasingly valued by affluent Indians in the future, a reverse of what was generally expected before the election.
Prices on the Shanghai Gold Exchange have slipped to a narrow (10-20c) discount this morning.
TOCOM responded to finding world gold $4 higher on the opening with no excitement. Volume did rise 21% but only to equal a wretched 14,911 Comex lots, while open interest was static (+89 Comex lots). The active contract was up 5 yen, but world gold slipped $1.65 from the NY close. There appears to be no Japanese initiative in gold at present. (NY traded yesterday 41,981 contracts; open interest rose 2,759 lots.)
Obviously, however, someone is supplying initiative, with the perennially bearish Barclays commentator complaining of yesterday:
"Aggressive buying catapulted the prices for gold, silver and platinum higher yesterday…gold is now softening…However the market will be wary of selling the market aggressively with the potential for another burst of buying this afternoon. In the event, after a $2 lull in the Asian morning, powerful buying started quite early in the European day. TheBulliondesk had noticed a big surge in traffic by 8am NY time, by which point the price was already up $3.70 at $392. And of course it has continued since, with estimated Comex volume standing at 52,000 by 1pm, far ahead of yesterday.
This looks like a conscious effort by a large capital pool to overcome the defence offered so freely below the key technical levels in the mid $390s. The timing and apparent preference for the physical market suggest the possibility on Middle Eastern orientation. Assuming the leaders of this effort are reasonably well informed, this fight will presumably resume next week.
In the meantime, as weekend reading, I commend the latest essay by The eXile correspondent War Nerd concerning the last but one outbreak of terrorism in Saudi Arabia :
"But it doesn't look to me like these Saudi terrorists were looking to die… It reads to me more like terrorist collusion with the local cops -- either that or the cops and soldiers of the Saudi government are so totally intimidated they're not a factor any more.
And that means Saudi Arabia probably isn't going to last much longer. When the government troops won't leave their barracks, when the cops run every time the rebels fire a shot...well, church is about out. Think Tehran when the Shah fell, or Cambodia in '75… this didn't happen overnight. It's been building up as long as I can remember. And it's going to have to get worse before it improves. I'm going to be writing a lot of columns with "Arabia" in the title this year.
http://www.exile.ru/192/war_nerd.html
JB
CARTEL CAPITULATION WATCH
The US stock market continues to meander. The DOW finished up 38.89 at 10,416, while the DOG gained 3 to 1987.
June 18 (Bloomberg) -- The U.S. current account deficit widened to a record $144.9 billion in the first quarter as Americans bought more foreign-made goods, a government report sh...