Steve Quayle News Alerts

December 16, 2002

The positive gold action is classic and textbook perfect. First, the move up to key $330/$332 MAJOR resistance. Then, the teacup breakout. That was accompanied by the textbook, stunning LATE close on Friday. Clearly, the big league buyers have the upper hand and are toying with The Gold Cartel and the mentally challenged, gold establishment groupie crew. Today, we saw the same, furious very late buying pattern as the trapped shorts continue to suck on their thumbs in disbelief. As said in past MIDAS commentary, the smart money is BUYING and they are toying with the cabal crooks.

There are no near-term gaps to fill either. That is a healthy positive from a technical standpoint. We are still due for the major breakaway gap opening, as the gold derivatives neutron bomb continues to ignite.

The Comex open interest only grew by 1950 contracts on Friday and now stands at 200,039 contracts.

The news was gold friendly all over the place;

*The CRB soared AGAIN today, closing at 237.16, up another 2.38 and another multi-year new high. But, there is no inflation!

*The bonds were down almost a full point, reacting to the big day in the stock market and sharply rising commodity prices.

*Gold rose once again, while the dollar was flat. All along I have said the gold move up would lead the dollar down, not the other way around, as commonly written. Facts! Facts! Facts! That is the way it was the first half of this year and that is the way it is now.

*Gold moving sharply higher with a flat dollar and strong stock market is the BEST KIND of gold action, again as oft-repeated here. Almost the entire investment world remains completely oblivious as to why gold can rise without a weak dollar and weak stock market.

Gold is soaring and the Wall Street bullion dealers continue to be neutral to bearish. Are they that stupid? Are they that corrupt? Are they that inept? In toto, they have earned their new nickname: Bullion-Banking Bozos!

Finding out about and exposing what Frank Veneroso and Declan Costelloe presented at The Fifth International Gold Symposium in Lima, Peru
http://www.lemetropolecafe.com/dospassos.cfm?cfid=361871&cftoken=40775605&pid=2680
could not come at a better time. We have Dennis Gartman to thank for that.

The critical point is that Frank’s gold loan/swap work confirms the analysis of the recently published Howe/Bolser report. I worked with Frank and know he really believes his gold loan/swap numbers to be around 15,000 tonnes, or on the higher sides of his estimates. That is around the number that Reg comes up with. Both did their calculations differently.

This is staggering news for the gold/investment world. They are going under the assumption that the gold loan/swaps are less than 5,000 tonnes, as per the numbers of Goldfield Mineral Services and the World Gold Council. The Venroso/Howe gold loan/swaps number are three times that of the gold establishment. The ramifications of the discrepancies of the two are extraordinary and will play a significant role as to the major reason why the price of gold is going to go sharply higher in the weeks and months to come.

I spoke with a colleague of ours who, after being asked, gave his opinion last week to a wire service gold reporter about why gold was moving up. He told this person that one of the reasons for gold moving was the dissemination of the Howe/Bolser report. This person scoffed at him. It is inordinately pitiful the manner in which the establishment, and those that cater to them, refuse to "get it."

Christopher Columbus was an Italian, like Frank Veneroso. His own "establishment" people would not even listen to him about whether the world was round, so he went to the Spanish for financial assistance. When CC discovered the world was indeed round, he came back and wrote a report of his discovery.

In essence, the Howe/Bolser-Veneroso revelations have revealed the size of the gold loans/swaps to be leap-years higher than those of the establishment. This means demand for gold has been much higher than reported for a decade, or more. It means the central banks do not have the gold in their vaults they say they do. It means the monthy, gold supply/demand deficit is much larger than acknowledged by the gold establishment. It means The Gold Cartel is running out of physical metal to continue their scam. And, it means the price of gold has to EXPLODE TO CLEAR THE MARKET!!!

Yet, when confronted with the work of Howe and Veneroso, the establishment/gold world exclaims: "Sorry, the world is flat." They go into complete denial. They refuse to deal with facts, the truth and the real gold story. When asked to debate the Christopher Columbus-like GATA camp, they refuse. Recently, I was told they refuse to do so because we know too much, we focus on the subject too much and our experts are too smart! HUH????

Something else! Whether the central banks let the bullion banks out of their short positions to do what they can to keep the gold derivatives neutron bomb from going off is open to debate (this still won’t help the big hedgers like Ashanti). Regardless, that will not negate the fact that the central banks do not have the gold they say they have and will no longer will be the threat they have been for so long.

We cannot say what most of the central banks have in their vaults as reserves and how much has been lent out. What we can say is they are running out of ways to continue on with their fraud. The jig is up. My logic:

Gold certain central banks have stated they have:

US – 8400 tonnes – GATA has extensive communication in which the US has denied any gold mobilization.

IMF – 3000 tonnes – they were forbidden to sell their gold by the US Congress a few years ago and have stated they have not lent their gold.

France – 3000 tonnes – it is in their vaults and we know they have not lent their gold via official statements.

England – the sadsack British still say they have 300 tonnes.

Switzerland – approx 1800 tonnes. We have a pretty good idea what they have lent and sold.

As a result of recent sales, the new official number of central bank gold holdings should be around 32,000 tonnes. The above numbers total 16,500 tonnes. Subtract that from the CB holdings and it means the central banks only have 15,500 tonnes to work with. The analyses of Howe and Veneroso reveal that around 15,000 tonnes is gone. That only leaves 500 tonnes with a yearly supply/demand deficit of at least 1400 tonnes.

The reality of the predicament of The Gold Cartel worsens when you realize the above little ditty means the Italians and Germans must have sold all their gold and so did every other central bank in the world. Now, we know that cannot be. Therefore, somebody is lying and those lies will be exposed because they are running out of gold.

That is why it is so important that the work of Reg and Frank be disseminated as much as possible to the big money world. Those types will "get it" and will want to own as much gold as possible when they have finished doing their own homework. That is why gold is running at this particular point in time. WORD IS OUT AND SPREADING!

The Gold Cartel’s blunder is they have been working with the wrong numbers. In addition, they did not count on the likes of the GATA ARMY to show up via the internet to spoil their scam.

TOO BAD! The world is round, not flat!!

The John Brimelow Report

Monday Dec 16 2002

In general the physical, price sensitive markets are tolerating gold’s strength surprisingly well.

Indian ex-duty premiums: AM $0.91, PM $2.47, with world gold at $333.50 and $332.50. Below and above legal import point (which needs a notional ex- duty premium of about $2 at present). Remarkably strong given the world gold price action. The Indian rupee closed at a high for the year, which cheapens gold to some degree, FX reserves are ballooning as money from expatriate Indians pours in, yet on the other hand the sweeping victory of the BJP in the Gujerati elections do little to assuage fears of upheaval. Reuters carries the usual story about demand falling away, but the best the trader they quote can say is

"The sudden rise in world prices has almost halted imports."

(My italics). Usually on such a price move insinuations would have appeared of sales from India.

A similar story from the Gulf suggests that dealers there may be getting worried about their own trade-credit-created short position. The weekly Istanbul Gold Report reveals that Turkish imports were a notably robust 3.154 tonnes, 15% above the previous YtD average. Perhaps there is substance to the stories of Middle Eastern accumulation.

But even more remarkable has been the behaviour of the Japanese. Faced with a yen up Y2 against the dollar since their close (negating what is usually the main reason to go long gold futures) and a $US gold price which from their point of view had lost momentum, the public nonetheless bought:

"A flurry of selling on opening quickly found forceful support at 332 from a firm Tocom fixing. Volume proliferated so considerably fast that unruly buying spilled over to the OTC ring and caught trade market short. Buying out of Tokyo persisted throughout the entire session only to slow down in the afternoon, yet finishing gold around 334, a dollar off the intraday high."

In Mitsui HK’s words. Open interest rose the equivalent of 1,485 Comex lots on the Comex equivalent volume of 36,726 contracts. (NY estimated volume on Friday was 54,000). Gold closed 95c above NY, having at one time being up 80c more. Very unusual action

There are the usual reports of mysterious heavy selling on the highs, and much worrying about the Spec long position. But one notes the astute Futures merchant Refco issued a buy on gold today. They could be right: this feels different.

JB

John Brimelow has nailed this market as much as anyone, alerting us to the real strength of the gold physical market these past weeks. Congrats to him!

Reuters
ANALYSIS-Dollar at risk as global investors quietly exit US

Monday December 16, 1:48 am ET

TOKYO, Dec 16 (Reuters) - The Japanese government has long been the world's largest and most loyal holder of U.S. Treasuries, but Japanese private-sector investors are no longer committed buyers of U.S. bonds, regarding the returns as too low for what they see as the risks inherent in U.S. markets.

This illustrates a potential threat to both the dollar and the smooth financing of U.S. debt, as not only Japanese but also Europeans are quietly pulling out of U.S. markets.

On Friday, the euro rose to $1.0260, its highest rate against the dollar in nearly three years, as increasing concern about geopolitical risk associated with Iraq and North Korea undermined the greenback.

But analysts say the dollar's appeal to global investors was dimming well before the geopolitical risk set in.

"The United States has successfully lured global capital into its financial markets for the past seven years on the back of the strong dollar policy and the stock market boom," said Kazuo Mizuno, chief economist at Mitsubishi Securities….

- END-

"Seven years on the back of the strong dollar policy" – which was what? What did the US do to implement its "strong dollar policy?" No one ever comments on how this policy was implemented. I can’t find anyone who even asks the question except the GATA camp.

Answer: the strong dollar policy was set in motion by former Treasury Secretary Robert Rubin. It’s main feature was the rigging of the gold price. The work of the GATA camp all comes back to around 1995 – 7 years worth of extensive gold price manipulation. But, the earth is flat, not round!

Some good input from Italy:

Bill,
Just took a quick look at OI for Gold.

At the 1975 low of $105 the OI was 11,000 contracts.

In Dec, 1979, near the peak the OI peaked at 248,000 contracts. This was
when the price hit $540.

In Dec, 1980, one year AFTER the bubble burst the OI hit 299,000 contracts
with a price of $600. Another example of the crowd coming late to the party.
This is a 27-fold increase from the low of 1975.

210K to 240K has marked peaks in the 90s. The low OI of the 90s was 81K in
June, 1991. A 27-fold increase of the 90s low would put OI at over 2 million
contracts or 200m ounces. This is what the mania might look like when the
public gets a sniff.

200,000,000 ounces is about 2.4 years production or 6240 tonnes. This is
much less than what the cartel is short.

Dave C

More on Jim Sinclair’s teacup from Aussieland:

G’Day Bill,

Now I will be the first to admit that I may be a wee bit on the "slow side" on certain occasions, but I noticed a chart pattern that has developed since September 11th, which is common to the Global Markets (Dow, Cac, Dax, Ftse, Nasdog, Sp500, Aussie All Ords, Hang Seng, Straits Times Index, and to a certain extent the Nikkie).

The common pattern developed since September 11th is THE INVERTED TEA-CUP PATTERN, which may break to the down side this coming week.

James Sinclair noted a TEA -CUP PATTERN related to Gold, which has broken
to the upside.

The INVERTED TEA-CUP PATTERN bodes an ominous sign for the Global Markets

It is starting to look that Gold and Silver will be the only ones sitting
on a chair when the music stops !!

"Scots wha hae wi’ Wallace bled,
Scots, wham Bruce has aften led,
Welcome to your gory bed or to victorie".

Rabbie Burns

Go Gold
Och aye
Haggis

A Café member speaks out on oil:

Bill, I have to alert you to the incredible Barron's cover article saying the Big Oils are on their way out, hydrogen fuel is coming in. This is incredible. Either these guys are stupid or they are driving down energy stocks to get in. Let me explain(I'm a ScD chemical engineer from MIT and this is my field; I know what I am talking about.):

Hydrogen WILL eventually be the automotive fuel of the future. BUT, where do you get the hydrogen from? There's all you want in water, BUT there is
only one minor problem, it has already been burned and is at a low energy state. It takes a high energy state fuel (oil, coal, natural gas—or nuclear energy) to convert that water to high energy hydrogen (or metal hydride) that WILL burn in or out of a fuel cell.

THE DAMNED DOLTS! Fuel cells will be more efficient but the same cast of energy providers will still be out there in slightly changed form. So, are the 'big boys' getting more arrogant in their manipulation of markets or am I just getting senile?
-END-

Chuck checks in:
Today's rally from the opening bell has the smell of a bounce rally which might a selloff until the new year. Isn't it interesting that both Goldman and Lehman put out buys for the US averages over the weekends? It reminds one of the two students who took a test while sitting next to each other. Or as a dear friend once observed, great minds think alike. In any case, the market rallied and, per usual, never attempted to come off. The lemmings were armed with cash and couldn't wait. Quite amazing how persistent this trend is!

The other interesting part of the day was the sharp rally in gold near the close. I think that most of us thought there might be a good consolidation after breaking through the $330 resistance point last week, but as in the market, there appears to be something more than just a typical technical pattern. From the stocks that I follow, the move did not really affect the small juniors. I construe this as positive since it indicates that a speculative element has not yet entered into this break out.

Given that gold did not shrink back in the face of a strong market today might portend something out of the ordinary. The gold charts continue to be reflecting breakouts from the correction of the past few months. They have the look of an exponential pattern. (Look at GG, RGLD, and HMY)

Finally, if you have nothing to do, tune in the Donahue Show tomorrow. The subject will deal with Jesus and the Jewish people. My close friend Mike Brown will be featured and you might see and hear me asking a question. The spiritual realm is where the real battleground is taking place. Gold is the material equivalent of the truth. Yours, Chuck ICNNY@AOL.COM

MAHENDRA MANIA

Four days ago Mahendra predicted in Midas commentary that gold would rise for five days in a row. He has four of them in the bag, one to go. The magical Mahendra man is still looking for a North American publisher. That has to be a winner.

http://www.lemetropolecafe.com/