GOLD

[Aussie]

To all; the coming next few weeks should be very telling. The action witnessed last week in my opinion was the market beginning its dicounting process of the future hyperinflation to come. Because of the size and scope of current "malinvestments" globally, we could watch "paper values" literally disintegrate over a very short time frame. For those that have not done the math, when a currency implodes and approaches zero a cup of coffee approaches infinity in that destroyed currency.

The way I see Bonds, the Dollar, and Gold both fundamentally and technically is that paper is gasping its last breath by trying to stay ahead of the financial tsunami while Gold has spent 9-10 months in a coiling phase. If the system holds together, I can envision the famed $1,650 number coming into play on this run. If the system fails, you might as well pick a number. If the Dollar is headed to oblivion and a cup of coffee is approaching infinity then what kind of number do you suppose an ounce of Gold will sport?

Last summer everyone was "short the Dollar", I believe that the short speculators have been blown away and now we will witness the most gigantic and over owned long in history go to the slaughter house. This Dollar long position took years and years to create and the Fed is doing it's damnedest to continue "spreading the wealth" [ha ha]. Now we will get to see what happens to a market when there is only ONE BUYER. In the Treasury market this one buyer is none other than The Federal Reserve. The Fed will have the job of buying gobs and gobs of Treasuries, the only problem will be that the Fed must actually "print" [digitally create] the Dollars for these purchases. This monetization will occur at the same time that the rest of the world is also selling Treasuries. We will witness humongous new supply along with secondary supply as the world regurgitates their current "safe haven" holdings. But what to do with your "safe capital" once you have exited Treasuries? Jump to another frying pan made of paper?

I see no other mathematical possibility other than a mass inflow of capital into Gold as petrified capital scurries for cover. The current setup for the greatest transfer of wealth in all of history could not be more obvious now, yet before every major market move in history the obvious was ignored. I guess it was ignored until it became "too" obvious. For those who are looking, WE ARE THERE!

The current market capitalization of the global mining industry cannot be much more than $250 billion, this is chump change when you consider how much has already been spent and how much more has been pledged by governments across the globe. The fact that this industry is so small will create massive dislocations in price when large players want to enter the arena. I can envision $20 stocks moving a point or more on less than 1,000 shares changing hands. I say this because the weak hands have already been washed of their shares, all that remains are the strong hands and firm minds. The moves witnessed in early '06 by the mining shares will pale in comparison to the phase I believe we are now entering.

If it weren't for the social and economic chaos that I believe is right around the corner, I would suggest that owning metals and the miners will be more fun than imaginable. It will probably turn out to be a matter of survival!

Regards, Bill H.

[Aussie]

"When Treasury yields start to rise, the jig is all but UP."
(Gold This Week - January 16, 2009)

Since you are reading this you will almost certainly know that Gold's upward trajectory steepened dramatically on January 23, the spot future price climbing above $US 900 in intraday trading in New York and closing for the day up $US 37.00 at 895.80. Over this shortened trading week (January 19 was the Martin Luther King Jr holiday in the US), Gold rose almost $US 56 and climbed back into the "black" for the year in $US terms. On top of that, trading volume and open interest both increased markedly (especially on January 23) on US markets.

With January still having a week left to go, Gold has now been through an almost $US 100 trading range on the month, sliding fairly dramatically over the first two weeks only to recoup all those losses and more since January 15 when it closed at $US 807.30. Of course, the global financial system has once again worsened since then with the growing crisis in financial stocks and banks all over the world. But something else has worsened, and this one is far more potentially damaging than any crash, however severe, in the stock prices of the world's major banks.

On December 18, 2008, two days after the US Fed in effect eliminated its "Fed Funds" rate by cutting it to a target range between ZERO and 0.25 percent - US Treasury 30-year bond yields hit an all time low of 2.54 percent. By the beginning of 2009, the yield had risen to 2.79 percent. On January 15 as Gold hit its January low, the 30-year bond yield was creeping higher, closing at 2.87 percent on the day. By the end of last week, the yield had not moved, it closed at 2.87 percent on January 16.

But THIS week (January 19 - 23) the yield on the US Treasury's 30-year debt paper has SOARED - rising from 2.87 percent to 3.31 percent! That has led to the biggest plunge (don't forget with debt paper, yields and prices on the secondary markets go in opposite directions) in the 30-year bond since 1982! Yields at the short end of the Treasury yield curve where the Fed has more control have not (yet) moved up. The same is NOT the case in the longer-term debt paper.

Remember, especially in times of fiscal and/or financial strife, Gold and the yields on debt paper - especially longer-term debt paper - go in the SAME direction. This week has provided a stellar example of this principle. On the week, $US Gold prices are up 6.66 percent, the price of the US Treasury's 10-year bond is down 5.09 percent and the thirty-year paper has fared even worse than that.

What most followers of Gold know is that the stellar decade for the metal in US Dollar terms was the 1970s. What some of them forget is that the 1970s was also known as the (all but) "fatal decade" for US Treasury debt paper. Yields rose throughout the decade as higher and higher rates were demanded by domestic and international investors alike to compensate for the "profigate" (for the time) spending policies of the US government and the downward pressure put on the US Dollar as a result.

Last week, Fed Chairman Bernanke was quoted as saying that "our economic system is critically dependent on the free flow of credit." Of course it is, "our economic system" is a CREDIT MONEY system, its underpinnings are debt, the flip side of credit. Confidence in the money stands or falls on confidence in the debt which "supports" it and that, in turn, stands or falls on the perceived ability of the debtor to service and eventually repay the debt. Consider the amount of debt that the US Treasury is expected to "sell" this year to fund the US government AND the US banking and financial system. Consider the perceived capacity of the US economy to service this debt. We'll leave aside the question of repayment, the last time that US Treasury debt actually FELL year on year was 1969. In 1969, the TOTAL of funded US Treasury debt was about ONE THIRD of the $US 825 Billion "stimulus package" Mr Obama is promising his nation.

Every new US Dollar created by whatever means lessens the value of every existing US Dollar. Worse, as the amounts of new Dollars issued grows, they erode the facility of the US Dollar as a medium of exchange, a MONEY. The principle is the same for any credit-based money - and there is no other kind of money in circulation anywhere in the world.

The spike in US long-term Treasury interest rates this week is ominous in the EXTREME! It is literally not possible for the rest of the world to "buy" the quantity of new debt proposed by the Treasury even if ALL global savings were marshalled for the task. The quantity of such savings would not buy more than 30 percent of it. This points with deadly accuracy towards a situation in which the Treasury, in order to sell the debt, is going to have to offer a higher rate of interest to potential buyers to offset the rapidly growing risk of holding the paper. The same thing happened in the 1970s, but the fiscal, financial and economic situation of the US in 2009 is VASTLY worse than it was in those days.

As the amount of Mr Obama's "stimulus package" is revealed and as more and ever more bailouts are deemed "required" by those so desperate to keep the financial system and debt-based monetary system standing upright, the pressure on interest rates in the US and everywhere else will grow. As the HUGE spike in Treasury yields at the longer-end this week make perfectly plain, the process has already begun.

Gold has simply done what it always does in times of growing doubt and fear over the future purchasing power of what is issued by governments as "money". It has risen in terms of that same "money". In $US terms, Gold rose sharply this week. In terms of the Euro, the Aussie and Kiwi Dollars, the British Pound, the Russian Rouble and MANY other global currencies, Gold hit new all time highs on January 23.

[dumbass]

stopped out on last trade having another nibble on the short side

downtrend line hit

divegent rsi

61.8 fib level hit , 892 sl 930 target 800

[Aussie]

Attachment 1221

It is not normal corrections which grates many of us in the GATA camp. It is that The Gold Cartel makes their moves at the same times, in the same places, for the same reasons. As a result, gold is training at $1,000+ per ounce less than where it would have been had they not been around.

As happens so often of late, gold was hit in the Access Market yesterday, but came back to go above $900 when London opened. Enter The Gold Cartel at their usual time, with the dollar lower, and aided by rumors of potential German central bank selling, the same rumor which surfaces on a yearly basis whenever gold has put in a big run . . .

. . . I was trading this morning in London when a rumor suddenly appeared that the German Bundesbank was selling Gold. The timing was of course perfect, and hit 30 mins after London came out buying. The rumor hit at exactly 8.30 am London time and caused gold to drop from 901.38 to 883.04 in a matter of 50 mins. Its amazing how these rumors come out when the boyz are under pressure.

Still waiting for that old treasure of a rumor of IMF phantom gold to get wheeled out! Its uncanny how they come out at rollover time LOL! Then of course the news breaks.. 'Bundesbank spokeswoman Madleen Petschmann said market rumors were unfounded that the Bundesbank had increased its activity in the gold market'.So it turns out they are buyers!

What I love about those dirty tricks is that it shows they are scraping the bottom of the barrel. Not too smart showing your hand like that.

However The black boxes don't understand rumors as the boyz well know so the funds mindlessly get milked yet again.

After plummeting to $881.40, gold recovered to $895.25 for the PM Fix due to strong demand for physical market gold. As Plan A hadn’t worked out like they planned, The Gold Cartel reverted to their standard Plan B, which is to nail the price following the PM Fix, which is just what they did … despite a continued lower dollar at the time. Treasury Secretary Geithner has not skipped a beat conducting his cabal orchestra, just like Paulson ... no surprise here, as he has been perfectly groomed with his Goldman Sachs/Treasury background.

[arco]

For balance.

It may be a while before gold makes a BIG move higher. The problem is that gold jewelry demand (the biggest source of demand for gold) is falling even as investment demand rises. The SPDR Gold Trust, the largest exchange-traded fund backed by bullion, just expanded its holdings to a record 832.88 metric tonnes. Gold holdings at SPDR are now more than 50 tons higher than a month ago. This battle of forces could slow gold's rise for some time.
Sean Broderick 28th Jan 09

____________________________


From a commodity adviser sent today to me (30/1) by e-mail
THERE IS A GOOD RUMOR IN THE WORLD MARKET THAT GERMANY IS GOING TO SELL OFF IT'S GOLD RESERVES. SO SELL GOLD IF BREAK $870 WITH SL $ 920 TARGET $ 820 - $800

[Mysterybox]

stopped out on last trade having another nibble on the short side

downtrend line hit

divegent rsi

61.8 fib level hit , 892 sl 930 target 800

Got stopped out on the same move, oh well

[Aussie]

Hey Arco, a couple of thoughts . . .

1) The jewelry industry is a large consumer of gold but from what I understand it also it also sources a lot of it's material from the scrap market. In many Asian and Middle Eastern countries jewelry and investment gold demand are the same thing - that's why people buy it over there. We buy coins and ingots, in their culture they buy chains necklaces, pendents etc. It serves the same purpose. Western demand for investment gold as well as central bank demand (China) will skyrocket in the months and years ahead - all against a backdrop of declining gold production.

2) The German rumor was a beat up, nothing more.

"THE PRICE OF WHOLESALE SPOT BULLION bounced from an early 2% drop in London on Wednesday, picking up to $889 per ounce after the German Bundesbank denied rumors it was selling bullion to help fund the federal government's new €50 billion economic stimulus package . . . "

http://www.fxstreet.com/fundamental/...009-01-28.html

3) As far as The SPDR Gold Trust is concerned, HSBC is it's custodian and investors of GLD have plenty to be worried about . . . here's a review of their prospectus from a contributer to Le Metropole Cafe.

_______________________________

HSBC is the custodian of GLD. (I am using the S1 prospectus filed with the SEC on 11/16/04). If it is the case that GLD is leasing out the gold in GLD, and if HSBC were to go bust, the GLD Prospectus clearly states on page 13 that "gold held in the Trust's unallocated gold account and any Authorized Participant's unallocated gold will not be segregated from the Custodian's assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant.

In addition, in the event of the Custodian's insolvency, there may be a delay and costs in incurred indentifying the bullion held in the Trust's allocated gold account. The unallocated gold accounts are the accounts used to hold gold being deposited into the Trust, or being redeemed from the Trust. That is not "segregated" from the Custodian's assets means that bars of gold are not specifically identified as gold that belongs to the Trust vs. assets that belong to HSBC.

The prospectus further states that in the event of insolvency by HSBC, the Trust becomes an unsecured creditor of HSBC with respect to unallocated gold. Leased gold would either be held in unallocated accounts moving in and out of the Trust, or the physical gold might not even be in the Trust, as subcustodians as described below, could lease out the gold and no one would know or would have the legal ability to find out.

As for the "allocated" gold - that which has been specifically identified as property of the Trust and held in a segregate account - in the case of HSBC going insolvent, the Trust can claim ownership of the properly allocated gold, but will be subject to the liquidator freezing access to ALL gold in ALL accounts held by the Custodian, including gold held in the Trust Allocated Account.

It gets worse. HSBC has the ability to appoint subcustodians to hold gold for the trust, and the subcustodians can appoint further subcustodians (page 12-13). From page 12:

Because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may hold the Trust's gold, failure by the subcustodians to exercise due care in the safekeeping of the Trust's gold could result in a loss to the Trust.

Worse yet, the Prospectus states that there will be no written contractual agreements between subcustodians and the Custodian or the Trustee (page 11-12). AND the Trustee has no right to visit the premises of the subcustodian to inspect the gold or examine the subcustodians records.

Essentially, what all this says is that in the event of insolvency by HSBC, the shareholders of the Trust may in fact have no ability to capture ANY part of their investment in GLD shares. I have further work and analysis to do, but given what I have researched so far, I am quite stunned that anyone would invest money into GLD, as there are absolutely NO shareholder protections against the gold in GLD not being there, or for the shareholders to assert specific claims of ownership. Given that HSBC may be on the brink of insolvency as per Jessel's source, anyone who buys GLD thinking they are buying gold is risking losing everything - that is, being "Madoffed."

[peat]

Got stopped out on the same move, oh well

has it actually hit 930?

[shasta]

has it actually hit 930?

Nope not yet....

[dumbass]

Where's the Gold Cartel, when you really need them to manipulate that gold price lower?

stopped out for nada.

anyone fancy going to auckland sharetrader meeting , we havent caught up for a while , Peat Arco anyone ?