Steve Quayle News Alerts

January 9, 2003

Gold Takes A Rest

If you want to get somewhere you have to know where you want to go and how to get there, then never, never, never give up--- Dr. Norman Vincent Peale

(I am still a member of Dr. Peale’s Marble Collegiate Church in New York. I was fortunate to join Marble right as Dr. Peale was winding up his career. The lines to hear him were as long as those to get in the discos way back then. He was quite the guy.)

This will be one of my shortest MIDAS commentaries in some time. There is very little to add to what I said over the past few days.

Gold rose in London a bit and then was squashed as the day rolled on. However, all attempts to smash gold in New York were thwarted. We have seen the same pattern all the way up. There is no follow through on big rallies and all dips are supported by a rising tide of physical gold buyers. The large specs are also very patient and wait for cabal sell-offs to do their significant buying.

While today was a bit of a bore, it had to be somewhat discouraging for the shorts. They tried to break gold all day long and it would not break. It is not a time to be lulled to sleep. The upside fireworks could commence at any time. The breakaway gap opening is still to come.

The Gold Cartel continues to walk on thin ice. Twice now, gold has settled above pivotal $354 in the London AM Fix only to be turned lower than that in the PM Fix. A good chunk of gold business around the world is based on the PM Fix.

Commodity prices continue to make new multi-year highs. That is very constructive for the gold price. The CRB rose to 241.33, up 1.35. Crude oil soared back up to $31.99. That is bullish for the gold physical market, as the Arabs have turned sizeable gold buyers.

The Comex open interest rose 4,973 contracts yesterday to 220,272 contracts. I can remember a time a few years ago with gold trading about $285 when the open interest rose 75,000 contracts over a period of weeks and gold only rose $7. That was when The Gold Cartel exerted ironclad control over the gold price.

FYI: A Commercial Signal Failure is when the traders categorized as Commercials get massively short and get blown out by the big specs. The blow out results in panic short-covering by the Commercials.

The John Brimelow Report
Thursday January 9 2003

Indian ex duty premiums: AM 30c, PM (92c), with world gold at $353 and $355.20. Well below legal import level. A normal response, at last, to yesterday’s startling gold price action. The rupee broke out today and hit another gold- cheapening high, but against the magnitude of the gold move this means little.

TOCOM in essence validated the NY close, trading the equivalent of 34,469 Comex lots (43% above Wednesday). The active contract was up 12 yen and $US gold closed down only 55c from NY at $353.25. The yen however was firm, and local enthusiasm was tempered: open interest shaded off the equivalent of 1126 Comex lots. (Gold subsequently reached a new high for the move, $356.50, in early European trading.) Japan is neither leading nor opposing gold at present.

In brief, yesterday was a shockingly disastrous day for professionals and the gold Trade, and their commentaries are filled with complaints about how the usual manipulations failed (these are the ones they normally deny exist). Particularly poignant was Reuters’ quotation from Tokyo:

"Of course, it's totally nonsense," a trader said. "We have lots of experience, from Black Monday and the Gulf War and 9/11. It (any gold rally) won't last for long (after an attack)."

One wonders which kindergarten grade he was in during 1979-80.

Forgot to mention that Ross Norman reported this morning all time record traffic on his site. Surges in traffic have been positive indicators in the past.

http://www.thebulliondesk.com/default.asp?load=true

JB

Elliott Waver Robert Prechter issued a sell on gold and silver today. His stop out point for gold is $390. His right hand man Steve Hochberg has said if gold breaks $400, then it is going to $1350.

Dave Lewis:
Bill;
Yesterday, I wrote a blurb on the epistemic lags which complicate economic forecasting for those looking for a simple cause and effect relationship. Today I thought to apply those ideas to a subject a bit nearer home, so to write, Gold stocks. Judging from some of the emailed comments I get, I imagine a small crowd has breathed a sigh of relief, "finally something we can use".

Presuming the average investor is not well acquainted with investing in Gold mining, I guess that he or she might be skeptical of claims that Gold is where your money needs to be. This skepticism is likely to be augmented by the newly learned fear of investing in the new and unknown, such as the "B to B" or "networking" "spaces" were a few years ago. Further, even those who might have some knowledge of Gold miners and their price relationship to Gold are likely to rely on past price action as their guide. This is to argue that many investors will be skeptical and a large proportion of those who are not will base their trading on past trends being indicative of future results. Those of us who have read CTA disclosure documents might be familiar with the fallacy of this notion but I imagine many are not.

Those "past results" embedded in the recent (5 years) data series indicate an inclination for Gold stocks to fare worse than Gold itself, and within the mining community for the hedgers to outperform the non-hedgers. More recent price action is unwinding some of this from the more sophisticated black box trading systems, yet there is still a tendency, based on the data, which includes a Gold downtrend, to fade the stocks as bullion nears resistance. I expect this to change in fairly dramatic fashion this year.

As we know, Gold traded well above the $310 mark for all of Q4 with a weighted average north of $320. Thus far in 2003, Gold has yet to trade south of $340. Even if Gold trades within a $340-$357 band for the rest of the quarter, profits for the unhedged miners will be robust. I'm not a good enough seer to argue that Gold stocks won't fall from current levels, however, I won't be selling any if they do, but rather be looking to add to my position so long as Gold stays north of $330. Unlike the Tech Stock metrics of clicks and page views, these numbers require no arcane formulae to incite investment. Gold miners are producing a product whose price and volume demand is rising, what more can an investor ask for?

regards

Dave Lewis
http://www.chaos-onomics.com

Some input on the gold rare coin market:

Bill,
My source at the Fun Show in Florida this week says the rare coin market is "white hot" with broad based demand and limited supplies. As I reported to the cafe several months ago the Double Eagles, Liberty and Saint Gaudens in mint state 63 and higher are seeing consistent price gains due to the increased demand from investors seeking to profit from the rising gold price. As you mentioned many times in your Midas commentaries gold collectible coins will take off and I believe the train is leaving the station. Bill, what can I say once again you wereright! Any cafe members who would like further info can reach me at 1800289 2646 (800 buycoin) or email at FIG@buycoin.com Regards, Dr. Fred Goldstein senior broker Swiss America Trading corp.

http://www.lemetropolecafe.com/