Thursday, April 26, 2007

Deja Vu All Over Again

Nothing goes straight up. I've said that here more than once. What we saw today was nothing we haven't seen before. Dem Rat Bastids and da PPT pulling bids and running the stops below the original. How desperate. Prudent investors/traders, in order to protect a portion of their profits, had their stop loss orders in as advised, and as they saw fit, below our lines of support at the 50 "day" moving average and 13.39. Yes, we have given up some ground. But the battle rages on. Always forward, never straight.

The Precious Metals Bulls had the wind knocked out of them today under the weight of that fetid gas bag Rosie O'Donnell. Her ghastly girth hurled at us in a last ditch effort by dem Rat Bastids to thwart our assault on $700 Gold and $14.50 Silver. Having the wind knocked out of you in ANY sport is minor injury. I consider today's Bear Raid by the PPT just that...a minor set back.

This morning we get the first look at the First Quarter GDP numbers. Estimates are for +1.8%. This dead cat bounce in the U S Dollar may not get very far off the ground...

Later today I will try and post a current look at "The Big Picture". Until that time, please consider the following from Blanchard and Company, Inc. posted this afternoon on

ECB banks have sold over 76 tonnes of gold into the market over the past five weeks. This is in sharp contrast to the past 6 months when ECB banks had sold only 112 tonnes of gold into the market. We believe that we are still experiencing increased levels of sales this week, so we may yet revise the 76 tonne figure higher in the coming weeks. This huge influx of supply into the market has, in our opinion, been the one drag on the market, but it certainly has it's upside.

So what's the upside?

History has shown that pressure is certainly applied on top of the market during each period of elevated CB sales. This can be no clearer illustration than what happened after the Bank of England and Gordon Brown announced they would sell over 400 tonnes of gold reserves, causing prices to hit 20-year lows in what most traders now refer to as the Brown Bottom. In the last decade, we have also seen the Bank of Canada sell off all of it's gold holdings, the Banks of Switzerland, Australia, Denmark, Spain, Portugal, Norway, Sweden, and France, amongst others, also sell off a major percentages of their gold holdings into the market. The one thing that has held true is that the gold price has continued to bounce back and head higher as these sales have concluded.

In the past, increased sale levels have had a significant impact on the market, most recently when 80 tonnes were sold into the market over 4 weeks in May of 2006, we saw prices fall from $730 per ounce and test the $575 level. To a lesser extent, we saw +50 tonnes of sales hit the market in September of 2006, sending prices from $605 to $565 per ounce. What we are seeing presently is that sales have increased considerably without the bottom falling out of the market as has been the case in the past. The market is experiencing some price weakness as it struggles to continue to digest these massive sales, but the price has continued to trend higher in the face of these increases. This is a watershed event for the market and investors need to understand what this means to them. The days of massive bank sale increases tanking the market are coming to a close for two reasons.

1. The market has finally demonstrated the ability to gobble up these sales and continue trending higher, even if the increased supply is keeping us from the major price increases we have been expecting.

2. Central banks have shown that they are simply running out of the gold they will part with via sales into the market. It is our belief that the Bank of France is the lone seller of any magnitude left out in the marketplace. Other ECB captive banks have completed their announced sales programs. The two others left with any sizeable gold reserves, Germany and Italy, have never sold gold of any significant amount under the CBGA agreements.

Silver Resistance: 13.39 / 13.55 / 13.69

Silver Support: 13.20 / 13.03 / 12.92
___________________________________All prices SPOT

Gold Resistance: 675 / 681 / 686

Gold Support: 670 / 666 / 660

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