Steve Quayle News Alerts

February 24, 2003

"Youth is the first victim of war; the first fruit of peace. It takes 20 years or more of peace to make a man; it takes only 20 seconds of war to destroy him." -- Baudouin I of Belgium

Lookin’ good:
http://futures.tradingcharts.com/chart/GD/43

Gold came in firm, then was taken down by cabal forces. But, as has been the case recently, buying showed up from all quarters above unchanged and gold surged higher. However, as has also been the case for MANY years, The Gold Cartel capped gold once it reached $6+ higher on the day. For the life of me, I don’t know why $6 is so important, but vet Café members know I have brought this to your attention for a very long time. As they are wont to do, cabal forces then sold the close.

Silver, on the other hand, closed on its high and was firm all day long. It looks more and more that the comment from the floor that was brought to my attention, "don’t be short silver under any circumstances," or as it was also put, "don’t be short silver the rest of your lifetime," could be extraordinary advice.

Silver has no gaps to fill below. That is very bullish in my book. Sometime soon, silver is going to make like "The Road Runner" and blow through $5.

Lookin’ very good, too:
http://futures.tradingcharts.com/chart/SV/33

The CRB move has real power in it. Led by soaring natural gas prices, the CRB closed at 251.20, up 3.11. The breaching of 250 is considered to be of significant importance to a very highly regarded Café member, who also happens to be a market technician.

For quite some time, MIDAS has brought up the notion that a gold derivatives neutron bomb would go off at some point because of the massive short exposure to an upside move of various big hedgers and bullion banks. Was that notion a right one, or not?

After the announcement of the Washington Agreement on September 26, 1999 (15 European banks agreed to sell no more than 400 tonnes of gold per year and to limit further lending increases for five years), gold soared some $87 in less than two weeks. That sent option volatilities through the roof and put certain hedge books, like that of Ashanti Goldfields, way off side. Panic set in all over the bullion-banking world. Bank of England Governor Eddie George summed it up best, "We were looking into the abyss." The bullion/central banks were staring at the visible mushroom cloud of a gold derivatives ATOMIC bomb. The Gold Cartel regrouped with the help of the US Fed and came up with enough physical gold to drive the price right down again.

The recent move up by gold was a bit different. While just as stunning to some, gold rose more gradually, seemingly capped as best as possible along the way by The Gold Cartel. Specs kept piling in. Then, the cabal crowd changed the Comex margin rules and launched an all out attack, bringing gold down $46.

There were no distress outcries from the gold industry this time, like we heard in 1999. However, little by little the evidence is starting to pour in that a gold derivatives NEUTRON bomb is indeed going off. There is no mushroom cloud in a neutron bomb, nothing to point at for all to see. Yet, the destruction from that sort of bomb is far more devastating, from what I am told.

Gold is ONLY in the $350 to $360 area and look at the damage the detonating bomb has done already. Barrick fired its CEO, the Daughters of Gwalia is on the ropes and may not make it, and now troubles at Ashanti are flaring up again. Don’t these people ever learn:

Ashanti Goldfields plans £50m rights issue
By Edward Simpkins (Filed: 23/02/2003)

Ashanti Goldfields, the London-listed mining group, is to raise about £50m in a rights issue within the next few weeks as part of a plan to stabilise its balance sheet. The company has been struggling to recover from huge losses caused by its policy of hedging the price of gold.

Executives hope that the rights issue will be the final step in restructuring Ashanti, Ghana's largest company and one of the biggest gold producers in Africa. Sam Jonah, the chief executive, said the company had reduced its gearing by 300 per cent and cut the size of its hedge book by 5.7m ounces.

Ashanti's accrued losses on its gold derivatives contracts three years ago caused a financial crisis at the company. However, Jonah said Ashanti is now looking for acquisitions and is reviving gold prospecting projects around Africa.

He added that the wars which have plagued the continent in recent years were now subsiding and that many of the world's best gold reserves were becoming accessible.

Jonah said that the company would be keen to participate in joint ventures and that the Ghanaian government's golden share and power of veto over disposals should not deter foreign investors.

"The Ghanaian economy desperately needs fresh investment," Jonah said. "The point I have been making is that the consequence of government intervention in the event of anybody showing an interest in Ashanti would be dire for the Ghanaian economy."

Jonah said he expected global economic uncertainty to help the price of gold remain strong and added that demand could be boosted by several Islamic countries that were exploring the introduction of a gold dinar as a trade currency to replace the US dollar. –END-

Gold is going hundreds of dollars higher. As it rises and when it takes out $388, we can expect to hear a myriad of problems with various hedge books and also from certain bullion banks and option writers. It is going to be a mess. The financial world will feel the stress thanks to The Gold Cartel and friends. There won’t be any mushroom clouds, but there will be financial entity casualties all over the place.

The John Brimelow Report

Monday Feb 24 2003

Indian ex-duty premiums: AM ($0.47), PM $1.02, with world gold at $352.70 both times. Well below legal import levels. Reuters carries a useful story today saying that the local trade does not expect duty abolition in the Indian Budget on Friday. The Bombay Bullion Association has, however, apparently, been lobbying for a significant duty cut to stem smuggling out of Pakistan: perhaps some hope of this is detectable in these premiums.

The most dramatic and positive physical market news today is in fact from Turkey, where imports reported by the Istanbul Gold Exchange for the week 17-21 Feb exploded to 7.2 tonnes (231, 000 ozs) raising the cumulative total for 2003 by a huge 74%. The Exchange attributes this to the lower prices: suggesting interesting price elasticity. (The Exchange also notes that it was closed the entire previous week, for the Muslim Eid holiday, underlining what a good week it was to stage a bear raid.)

TOCOM staged another quiet but interesting day. On low volume only equal to 24,853 Comex contracts (14.6% down on Friday’s) open interest rose another 1534 lots. The active contract slipped 2 yen but $US gold rose 45c above NY. Towards the end of the morning, rumors started to circulate that the new BOJ chief was about to be announced; the yen started to weaken and in Mitsui H-K’s words

"slippage to 350.50 at opening was quickly restored by Tocom-led buying, trapping a few shorts below 351…at the close a bout of short covering shifted gold to the high."

Unfortunately for this interesting scenario, the BOJ chief actually announced after TOCOM closed was judged by the market as unlikely to be decisive. This has triggered a powerful rally in the yen, said by Reuters to be short covering by parties who had expected an inflationist to be appointed (and who might also have nibbled on a few TOCOM contracts). In fact, the rally is so powerful – up over a yen since TOCOM’s close - that one suspects tomorrow’s story might be Official harrumphing about intervention. ( NY volume on Monday was estimated at 30,000 contracts.)

In what could be an extremely important development longer term, Finance Minister Shiokawa has told the Japanese media that he received "acknowledgement" from the G-7 of Japan’s increasingly loudly voiced contention that China’s privilege of being allowed to persist in drastic undervaluation of its currency is too disruptive and must end. Since it seems clear that the quid pro quo China has accepted is otherwise irrationally excessive US Treasury holdings as FX reserves, a development which might trigger shifts in this policy has to be of great interest.

On CBSMarketWatch, an analysis of Mark Hulbert’s sentiment survey, claimed to be less subjective to the better known Investors Intelligence survey, reveals that gold sentiment is now quite favorable (on a contrary concept), having fallen to -11.5% from 50% in two weeks.

"Mark Hulbert's reading: gold is in a bull market correction rather than the beginning of a bear market."

JB
It was the announcement by the British in the first week of May 1999 that alerted many smart gold investor folks that there was a concerted effort to keep the gold price from rising. It was the one important single event that brought many into the GATA camp. To announce what you are going to do in advance is not the way to get the best price for something you are going to sell. Would Warren Buffet announce what stock he was going after before buying it? The repercussions of the Gold Cartel advised sale of the English gold will be sorely felt by the Blair administration before all is said and done.

http://www.lemetropolecafe.com/