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Bill's opening comments in todays MIDAS
For those who are "bewildered" still about why the price of gold has crashed and want to get a clue as to what is going, take a look at the daily gold charts at Kitco for the past many weeks to see the repetitive nature of the market … and note how often the market is nailed at 3 AM NY time. It happened again today…
This morning, with the dollar slightly lower and oil slightly higher, gold was bombed down to $697. It managed to storm back to close to unchanged a couple of times, but on each time it did so, it was met with a wall of selling on HEAVY volume. As one of my colleagues noted, "Funny how volume explodes when gold is trying to rally."
The Gold Cartel went into serious attack mode after the AM Fix of $726, taking the price below $700. The reason we rallied so sharply was due to huge physical demand, as the PM Fix came in at $720. Gold kept going, almost making it to unchanged, and then twice met a WALL of selling.
Silver has exhibited some relative independent strength of late and appears to have put in a significant bottom. It appears to be SOLD OUT! The silver price managers aren’t going to get much more bang for their buck and are exposed to a spectacular price rally in the very firm REAL silver market, which has held up even better than gold in the REAL world. Yesterday, when I referred to the bombed silver price, I was referring to the Comex paper price, which affects everyone in the silver investing arena who doesn’t own various silver coins or bars.
That said, the silver price managers were able to take silver 40 cents off its Comex high, as gold was repelled.
Something to ponder…
In 1999 bullion banks such as Goldman Sachs and Chase bank were going around the globe earning huge fees by talking the major gold producers into hedging, forward selling their future production. At the time the price was below $300 per ounce, so the hedging made no sense from an economic standpoint, as gold producers couldn’t make any money at those prices. Did the oil producers hedge when the crude price slumped to $10+? Of course not.
GATA made a name for ourselves at the time by railing against these hedging practices, saying they were facilitating a scheme by the bullion banks to rig the gold price … as they could borrow gold from the central banks for next to nothing to fund their own operations. And it facilitated Robert Rubin’s Strong Dollar Policy.
We created havoc at the time, sending faxes to the gold company CEOs at the Denver Gold Conference, putting out press releases, and gaining attention of the FOREIGN press, especially in South Africa, whose miners and economy were devastated by the manipulation scheme.
At the time many in the GATA camp felt another reason to drive the price down was to force a number of the gold producers into the hands of a Barrick Gold, or AngloGold, who were allied with The Gold Cartel. In other words The Gold Cartel wanted to own more and more of other gold producers, and production, at very cheap prices. (You don’t think a Goldman Sachs would do something as nefarious as that would you?)
If that was the case, it failed when the disturbed Europeans, led by the Germans, signed a surprise Washington Agreement which limited European gold sales and lending. This caught the shorts by surprise and the price soared causing havoc in the gold derivatives sector. You see the likes of Goldman and Chase wrote all sorts of "exotic" hedges using options. They never expected to get bagged liked they did and wrote zillions of them for the gold producers. When the price of gold exploded in days, the option volatilities went bonkers, causing hedge books to blow up (Ashanti was at the top of the list). Back then, the tiny gold world came close to causing a banking crisis.
Even the Europeans were horrified and got together with the US to bring the gold price back down again, and it slumbered for nearly two more years.
Fast forward nine years later.
It’s very possible The Gold Cartel and allies are up to a similar drill. If they are ever going to revisit their efforts to acquire gold resources on the cheap, this is it, for they must strike now, or give up on this aspect of their scheme. The reason is they are going to hit the wall soon with their ability to surreptitiously supply available central bank gold to meet the surging demand. This was forecasted by Frank Veneroso at the GATA African Gold Summit in Durban, South Africa on May 10, 2001. Frank laid out a brilliant presentation in which he showed why this would happen between 2008 and 2010.
Why The Gold Cartel and sycophants could be on the case again…
*The price of gold has been slaughtered and TAKEN down just at a time when the price ought to be soaring.
*The retail physical market is as tight as can be (see even more below), yet the Comex paper market is pilloried day after day.
*The inane, constant bashing of the price in the Access Market, following the Comex close, makes no sense unless someone is purposefully trying to DRIVE the price down. No hedge fund manager would wait until after the close when he can sell into volume before the close. One time could be a margin call fluke, but day after day, no way.
*The gold shares have been absolutely annihilated of late and could be purchased on the super cheap, even if that alone is part of The Gold Cartel’s agenda. In many cases the price of various gold producers are back to 2000 and 2001 levels.
*If this keeps up much longer, various gold producers, ones with decent reserves, are going to be scooped up for a song and a dance. There are no brainer buys out there, facilitated by the liquidity crunch and panic raising cash selling.
*It is no coincidence that the US Mint cut back its gold coin production and then the Mexican Central Bank cuts back its Libertad silver coin production in Mexico. Nobody can concoct any other reason for BOTH countries to cut back production within months of each other unless they conspired with each other to do so. I mean Mexico can’t supply silver coins? Meanwhile, reports continue to circulate that bullion banks and dealers have fewer and fewer coins/bars to sell. There is an organized effort to limit gold and silver sales to the western countries' public and to reduce demand.
*Central banks have leased out some 15,000 tonnes of gold they cannot retrieve when the market is in such a deficit. One reason for driving down the price now is to prevent some central banks from breaking ranks and doing so. The ramifications of such an event would create havoc for other banks that are short and foul up Comrade Paulson’s bailout routine. A subdued gold price is deflecting interest in the staggering amounts of dollars being printed to keep our financial system afloat.
The Gold Cartel has to know their jig is up soon. The only way to secure some of that leased gold on the cheap is to buy into the future gold production still in the ground. Yes, whatever goes back to the central banks will further exacerbate the annual/supply demand deficit of between 1,000 and 1,500 tonnes, but it would be a way to secure supply at cheap prices, especially when the price of gold is going to soar and soar.
This probably is not the case for all the gold leases, but the ones engineered and owned by those in The Gold Cartel, like JP Morgan Chase. They will be covering their butts before all heck breaks loose. No one knows what the real gold deal is better than Comrade Paulson, who has been a key Gold Cartel figure for some time.
*The Gold Cartel knows their scheme is on its last legs and when it ends the price of gold, and silver, is going to soar … and I mean soar towards $3,000 to $5,000 per ounce. They have been slyly stealing from the longs, and gold investors, for many years and now want to be a part of a historic investment opportunity, one they manufactured. No one knows better how bullish the gold/silver picture is for the next couple of years. The sad part is they are knocking so many of the veteran gold/silver shareholders out of the game in the process.
The gold open interest fell 3,546 contracts to 315,926, which is 45% off its highs. Think about what The Gold Cartel has done. At a time when interest in physical gold and silver is as high as it has even been, the OPEN INTEREST on the Comex has collapsed. This is what they do.
The silver open interest rose a scant 57 contracts to 95,930.
I just got off the phone with a VERY highly regarded, veteran bullion dealer. Here is the gist of what he said…
*The physical market is being flooded by 400 ounce bars, the kind traded on the Comex.
*The markings on the bars suggest it is IMF gold, or similar gold owned by various central banks.
*Much of the gold is of the "Fed melt type," from the gold which was confiscated by the US government in the 1930’s. He went on to say this could be US gold, or Fed melt gold bought by other central banks from the US.
* 1 Kilo bars, which are 32.151 ounces of gold are trading at $50 premiums to the kilo bars, which is more than extraordinary, perhaps unprecedented.
*What we are witnessing in the gold market IS unprecedented in many ways. One of them is that during the price run up in 1980’s, the public was selling gold; now they are buying. Back then, the price on the Comex was HIGHER than the retail prices.
*The gold refineries are going flat out to keep up with demand.
*Regarding the "blanks" the Mint says it doesn’t have to keep up with Gold Eagle, Buffalo coin demand, even normal demand. They are available, but the Mint won’t pay the premiums others will to get the supply. There is NO shortage of blanks. What a farce!
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This data confirms our input from the Swiss banker about central banks, or bank, dumping gold to suppress the price.
