Price drops from $318.50 in Asia to $311 in the USA
By James Sinclair
Gold investor/traders were shocked this morning by the drop in gold prices under relentless gold lease conversion dealer selling in the US. I have said, time after time, that this is a Battle of the Titans devoid of any public between the gold dealer's derivative cartel versus Asian bullish interest. Once again you see this war being fought as if it was a last ditch attempt at survival. Well, it is!
This is not a war to prevent a melt down in the $300,000,000,000 gold derivative pyramid but a war to prevent a crack in dike of $72,000,000,000,000 total notional value of all derivatives granted on all trading items. It is a market axiom that if one form of an item fails, pressure builds gradiently on all other forms of the same item i.e. derivatives. That means if the gold derivative fails then you can be sure you will have significant pressure on equity derivatives, thence interest sensitive derivatives, thence last risk bond derivatives and so on. Because of this fact, you can expect that this war will be raged every day for the foreseeable future with the forces of the short gold derivatives facing off the forces of the Asian longs that have been buying all the sold gold for the last five years.
The hope of the gold dealer derivative short is that if they can fight the good fight each day than in time everything in the world of markets will come right for them. Will it? My answer is absolutely, NO! This Bear market in equities is not short term. It may well be sold out in certain sectors, but probabilities do not support a significant economic recovery starting before mid 2004. There is no chance, IMO (in my opinion), that the gold cartel can keep up their efforts to sell as much gold as they have been selling every day for the next two year. What is being forgotten is the Asian Bull Interest is the answer to the question, "Who bought all the gold sold by all the gold producer hedgers, the gold cartel and every gold bear for the past 5 years." Gold fundamentals, as I have outlined to you are, IMO, improving daily. Look at the commodity market to see the birth of the long-term bull market in the making. In my opinion, bonds will top out in November. The dollar is having another heart attack. JPM just broke down from it up wedge which I believe indicates a test of the recent low. I know this comes at a hard time for public gold bulls, as Bob Prechter is advertising his deflationist - gold bear thesis, which I don't support as correct. If it were correct, why has Japan been the largest consumer of physical gold over the past two years whilst in an undeniable and continuing deflation period? I believe we are in a gold bull market that is both long term and headed for substantially higher prices, regardless of the life or death play being made now by the gold dealers cartel. The gold Cartel is fighting a brave fight but is going down.
