gold index falls 16 percent, page-30

'I cant fathom why people are flocking to the USD as it the country with the most unstable finacial system its under real pressure and could crack. The safe haven of Gold just hasn't lived up to its reputation. I can't figure it out .... its driving me crazy!'

How many times does it need to be spelt out I wonder.....
'People' are not flocking to the US dollar. Co-ordinated intervention by Central Banks is supporting it. And before any naivety is expressed in response to that, it has occured, it is occuring and it will continue to occur throughout history. Central banks have no problem admitting that they have interevened in a currency. With all that is going on in the US (the system is on the verge of imploding) why do you find it so difficult to accept.

This is what Paulson said just the other day:
Sept. 29 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson will use ``all the tools at our disposal' to protect financial markets after the House of Representatives rejected his $700 billion rescue plan, his spokeswoman said...

When he says 'All our Tools' THAT MEANS INTERVENTION! If you can't recognise that you lack the ability to interpretate what people are saying....really.

If I hear of one more person who suggests that intervention is a conspiracy theory, I'm going to puke. It is happening across many markets as we speak, yet for some reason if it happens in the gold market (the ANTI-DOLLAR!!) it must be a conspiracy. Short selling bans, nationalisation of private companies, central bank support for currencies, the bailout (where the government will enter the market as a buyer), the FDIC illegally transfering a company to JPMorgan. They are all direct interventions into the market place. But my god, it must be conspiracy theory stuff if gold was sold to support a currency that is under fire from every angle. Personally I couldn't care less whether people believe it or not because it doesn't change the fact that it is happening.

The US administration is fighting for political and economic survival. Look and you will see. Bernanke and Paulson told congress less than a fortnight ago something along the lines of 'the banking system is insolvent/facing imminent collapse etc.' The whole system is creaking yet gold is $200 less than when Bear Sterns folded. These are not normal market machinations. Gold was forced down (you all know it took three banks in gold and two in silver - its there before your eyes from the CFTC's own report yet many still wont see it) because Paulson et al could see what was approaching down the road and there was no way in HELL they could have this hit the tape with gold at all time highs. It would have broken out and become the GO TO investment.

They want to avoid this at all costs, not only because of the cost to their short positions, but because it would mean that their precious treasuries would not recieve the bulk of funds in a flight to safety.

The footprints are in the access market. Gold is being pounded down in the access market almost every night. This is a time when there are very few market participants. Sophisticated hedge fund longs DO NOT wait until the Comex is closed to sell gold/silver to raise cash.

And another thing - no gold index falls 16% in a night in the current environment without some kind of assistance. So stop wondering why the dollar climbs when Europe doesn't cut rates, when initial jobless claims are far greater than expected and when every peice of ecominc news is worse than the last lot and worse than 'analysts expectations'. Remember also that when news is worse than 'analysts expectations' it HASN'T been priced into the market - The answer is simple, obvious and right in front of you. They are using 'All Their Tools!'

Oh and watch how much of a doozy the jobs report tonight will be. Gold ALWAYS gets bashed the night before a very bad economic report. And after last night it must be a shocker

Sit tight, and accumulate on the dips because the fundamentals for gold are only getting better. And fundamentals ALWAYS win in the end.