Steve Quayle News Alerts

September 19, 2003

GOLD

I wonder if when all is done
Anyone heard my voice
But from the start we have no choice
Our journeys just begin

I'll never know if I was right
Did I fight hard enough?
When the battles grew too rough
Should I have given in?

But here I stand and swear to you
I did the best that I could do...

I know my voice was just a whisper
But someone may have heard
There were nights the moon above me stirred,
And let me grab ahold
My hands have touched the gold

My heart's been driven by extremes
Blind with dreams, tight with fear
But still God knows that I was here
And I was so alive

And now I lay the past to rest
For in the end I did my best

You have to live the life you're given
And never close your eyes
You hold on, and stare into the sky,
And burn against the cold
For any moment, you might find the gold!

And there was joy
Through it all
And I am standing tall

I know my voice was just a whisper
But someone must have heard
There were nights the moon above me stirred,
And let my light take hold
I'd rode across that sky
And once I touched the gold

Here in my own two hands
I once had the gold .....Music and Lyrics by Linda Eder

GO GATA!

Gold came in stronger than expected on the Comex opening, which is almost always a very constructive development. It left a $1 gap and quickly shot up all morning, topping $383 at one point. Then the requisite Gold Cartel $6 price-capping rule went into play. That was all she wrote. The cabal regrouped and held gold in check the rest of the trading session and then did their requisite slam, knocking gold down a buck ON THE BELL. These no-good low-lifes are pitiful. Ah for the day when we can get our stretchers out, pick them off the mat, and then dump them in the sewer!

The big news is for Café members only. I received a call from London about The Stalker and learned a bit more about this "gold buying group." Two goodies for you:

*In addition to the $4.6 billion order, The Stalker is buying well in excess of another billion dollars worth of bullion and gold coins. The MIDAS analysis over these past months of huge new buying interests entering the gold arena looks better by the day.

*The orders are emanating out of New Zealand and Australia. My source believes it is Asian money and most likely CHINESE!

This is wonderful news as it would mean the Asian (Chinese) gold buy program is competing with Indian, Turk and Arab buying. Put them all together and it is easy to comprehend why The Gold Cartel has not been able to flush out the massively long specs. The Eastern buyers are always there on dips competing against one another for a diminishing supply of gold.

It also explains why gold has been moving up in price with a corresponding, but lagging, move in the dollar. Gold is leading the way and doing so for the reason John Brimelow and I have articulated for so long. The key to the gold price is the surging physical gold market taking on the corrupt and devious Gold Cartel.

These buyers are very sophisticated, worldly and certainly know what GATA knows. They could ascertain the veracity of the work of Reg Howe, James Turk, Frank Veneroso and the rest of the GATA camp in a week. It is all on the Internet. These big new buyers know half the central bank gold is gone and they are making their move.

Contrast their maneuvering to that of the West, which continues to lie and deceive the investing public about the true state of the gold market. You have nothing but disingenuous gold propaganda coming out of The Gold Cartel, bullion banks, Western central banks, and the Western financial market press. They are a disgrace as they have, for the most part, censored free speech by not allowing GATA to be heard or read in the mainstream financial press.

The Café Sentiment Indicator works again. It is has only moved up to a 4 or 5. Never seen anything like this in all my years of commodity trading. The efforts by The Gold Cartel to keep excitement over gold to a minimum are working. This is very good news for Café members. It means stupendous excitement over the gold shares is on the way as duped western investors will simultaneously stampede into gold and the shares when they realize what they're missing. A GOLD SHARE BUYING PANIC IS COMING. There is no way the little gold share market will be able to handle this buying without the shares SOARING, "To The Moon Alice, To The Moon!"

The funds, led by Refco, were big buyers today, probably adding to their positions on the renewed gold strength, just as I suspected they would.

The gold open interest fell yesterday by 2402 contracts to 282,294, while the silver open interest fell 475 contracts to 115,775.

Gold lookin’ good
http://futures.tradingcharts.com/chart/GD/C3

Yap, yap, yap. That is the best the bullion dealer world can do these days when it comes to dealing with the rising gold price. All week we heard ruminations of gold sale talk to be discussed at this weekend’s G-7 meeting. The latest:

DUBAI, Sept. 19 (Reuters) - Central bankers from Group of Seven industrialized nations meeting in Dubai will on Saturday initiate talks on a new gold deal under which sales could rise in stages from 400 tonnes a year, a G7 official said on Friday.

"It would be for another five years and they will discuss it tomorrow (Saturday). They did a market survey and the numbers were wide apart, so at best, they'll get an incremental increase from 400 tonnes a year," the official said on condition of anonymity.

Central bankers agreed in Washington in 1999 that 15 European central banks would not sell gold on the market, with the exception of already planned gold sales, for five years -- a pact that expires in 2004.

Reporting by Gilbert le Gras, Writing by Lesley

I repeat: this is all a smokescreen. The real talk is going to be, "What do we (Western central banks) do now that we have squandered half our gold?" The Eastern buyers are eating their lunch and they know it. Behind the scenes, the talk has to be when are the 15 European central banks who participated in the Washington Agreement going to STOP selling any gold. At some point, some of these banks are even going to turn BUYERS!

It is only a matter of time before the outrageous gold scandal is exposed.

Silver was rather subdued. The floor still feels a silver retreat is in order. They believe too many funds bought the rally near the highs and may be vulnerable. Hard to say. Big picture: silver remains EXPLOSIVE!

The John Brimelow Report

Friday, September 19, 2003

Indian ex-duty premiums: AM $5.03, PM $4.97, with world gold at $376 and $376.25. Narrowly adequate for legal imports. The Shanghai Gold Exchange indicated a small continuing premium too.

Although TOCOM volume did jump 38% to the equivalent of 37,196 Comex lots, the strong yen cannot be encouraging to the normal Japanese speculator, and indeed UBS suggests market initiative emanated from bullion dealers in Australia. Open interest did rise by the equivalent of 2,038 Comex contracts, however, and although the active contract dropped 10 yen, world gold edged up 25c from the NY close. (NY yesterday traded 45,804 lots; open interest fell by 2,401.)

Yesterday, of course, a very serious effort to take gold over $380 in NY was defeated by serious selling. Today, outflanked by a more troubled dollar, the Bears have had to give more ground. If one believes the gold equities, a new trading range is imminent.

If so, this will be yet another time when a move higher has been preceded by ominous heavy breathing by Central Banks. The discussion of the possibility of a Washington Accord renewal at the IMF meeting this weekend is an example. As the Luxembourg Central Bank chief points out this morning, since the Agreement runs for another year, there is no particular reason to do anything right now.

In any case the importance of the Washington Accord stemmed from the utter panic created amongst gold miners by the UK sale announcement the previous spring. Heavy hedging caused a derivative build up clearly not fully understood by the Central Banks, such that their agreement to cap leasing under the Accord triggered a melt-up. Such a panic to hedge seems unlikely to follow any renewal or non-renewal: Miner managements are quite aware of the Ashanti and Cambior disasters which followed the Accord, and anyway the gold share market will not tolerate heavy hedging. This is why lease rates are so low (unlike summer ’99).

The possibility remains of some sort of "homeopathic" counter attack, which is clearly what Mitsui is hoping for – along with the fathers of Indian brides!

JB

CARTEL CAPITULATION WATCH

Even a tanking dollar could not effect a serious retreat by the DOG (1905, down 4) and the DOW (9644, down 15).

The dollar was shellacked and has been especially weak against the yen. Yesterday, the yen broke 115 support and closed today at 114.26 with a 113.56 low, despite massive intervention by the Japanese to weaken their currency.

Banzai – the disappearing dollar
http://futures.tradingcharts.com/chart/US/C3

The dollar fell quite deeply against most currencies. The euro rose 1.20 to 113.35.

One day soon this WAY overpriced US stock market is going to go KERPLUNK!

GATA’s Mike Bolser:

Hi Bill:
The Fed added $2Billion in temporary repos today while expirations caused the repo pool to fall to $24.99 Billion. This action was expected since there have been many, many days of above-the-moving-average action.

The DOW appears on the chart to be getting a bit too far above its ma so the Fed is reining in the pool slightly.

The DOW is down a bit at this hour [11:30 AM] with gold pushing up to $383 and the dollar plunging a full point. The volatility I spoke of a few days ago has manifested itself in currencies and not the DOW. Recall that in addition to the ESF [Exchange stabilization fund] the Fed and Treasury have the repo pool to "stabilize" markets.

China still has not agreed to raise the Yuan's value and there is a finite limit to the ESF's interventional power, so we may at last be seeing another steep down trend to the dollar in recognition of the inevitable.

While there is "no meaningful limit" [Bernanke] to the number of dollars to be printed by the Treasury, there is a limit to the gold that can be sold by the Fed in order to save the master's face and hide his inflationary policies.

Beyond that golden limit there is only what in 1999 Sir Eddie George referred to as ... an "abyss".

Webster's New Universal Unabridged dictionary defines the word as "A deep
immeasurable space, gulf or cavity; vast chasm".

So it will be.
Mike

Chuck checks in this morning:

Bill:
Veddy interesting. Do you think the $6 cap will come into play? The pervasive free fall of the dollar affecting all currencies is surely the story. The move in gold is happening without the kicker of the turn down in stocks and the bond market which will come. Also, we still are not seeing any real speculation and moves in the small, exploratory companies which also is very positive. They will be the biggest movers one day.

I can't imagine that this thrust will be over quickly to cement a near term top unless we have an across the board deflationary sell off such as in 1929. No matter what, lacking the speculative fervor that will hallmark the tradable tops, I believe any correction will be short and a mistake to attempt except for the most nimble and skilled trader. This is an exponential move in motion. Chuck

Well Chuck, you know by now the $6 Rule was implemented, as always. These desperados are doomed. Couldn’t happen to a nicer bunch of guys!

Chuck checked back in later:

Fraud closes

You know how rigged that close is by the continued weakness in the dollar, and yet gold is bopped so it looks like nothing special. Whoever is buying plays the game and lets them sell them cheap gold. Both are happy. It is sort of like Claude Rains in Casablanca as he rounds up the usual suspects and then releases them. Everybody is satisfied. But not for much longer. The gloves will be off soon. Chuck

Last evening, David Tice of the Prudent Bear Fund held a dinner reception at the Royal Oaks Country Club in Dallas for world traveler/market guru Jim Rogers. The event was a sellout with 380 attendees.

I had the pleasure of sitting at the head table with David and Jim. The best part was there were two Café members also sitting at the same table. What a pleasant surprise! In addition, several other Café members came up to say hello during the evening. When David Tice hosts an affair, it is always classy. This event was no different.

Six years ago I sat down randomly at Jim Rogers' table at the New Orleans Investment Conference. It was only Jim, his new girlfriend, a friend of his and myself. I remember our conversation well. The new girlfriend is now his wife and he has a 16-week old baby.

He is a remarkable man, doing so well in the markets and living such a full life. For those who don’t know him, he used to be George Soros’ partner and recently toured around the world with his wife for three years in a yellow Mercedes. He regaled the trip during his presentation and then signed copies of his new book before the night ended.

As we discussed at that table in New Orleans in 1997, his big thing is to invest in raw materials, which is why he is creating his own Rogers Raw Materials Index Fund, including commodities such as rice, silk, etc.

Nevertheless, he is only slightly more enamored with gold than he was six years ago. Still repeats one of his favorite lines about the alchemists always wanting to turn lead into gold. Better, he says, for the alchemists to find a way to turn gold into lead. Had the alchemists been successful, they would have a lot of angry customers at this point.

The ironic thing is he presented the most bullish case to buy gold I have ever heard by someone in the mainstream financial world. Extraordinary how many reasons he mentioned that were VERY gold supportive. Here’s what a fellow Café member who attended the reception had to say about that subject:

hi bill. was thinking about your comment that jr's speech was really very gold-bullish even though he wouldn't connect the dots for the audience, and i think (surprise!) u're rite. he sed "just buy what the chinese will have to buy". we know that the countryside is covered up in u.s. $$ bills which they must convert to yuan (due to currency controls). but interestingly the chinese gov't is about to allow the people to hold one alternative currency, gold. will the gov't allow - or maybe even encourage - direct swaps of chinese exporters' dollar holdings for gold? this would make some sense for many reasons. and once that currency swap genie is out of the bottle it will surge out of control (which may be why the gov't is doing it in the first place). The chinese people - so committed to hard work and saving - will "have to", as jr sez, protect the fruits of their labor; and there will be a wild rush to convert confetti dollars to gold safekeeping.

somehow we didn't finish that discussion, and i didn't know where u were going with it. but this is at least one possibility. it was certainly a pleasant surprise to see u last nite. on other matters we were discussing, u mite want to listen to the cia interview, "the crazies are back."

http://www.lemetropolecafe.com/