Saturday, May 26, 2007

Weekend Reading

Below I have posted three fascinating pieces about the Gold Market that should be read by anyone, and everyone, interested in being invested in Precious Metals. Enjoy them at your leisure, and have a happy and safe Memorial Day Weekend. See you at the races!

Gold Futures CoT 2
By: Adam Hamilton, Zeal Intelligence LLC

The bottom line is the US CoT data on gold futures is interesting, but it doesn’t drive the gold price. Global gold physical supply and demand does. The CoT data merely offers a tiny nebulous view into classes of traders that aren’t very well defined and constantly shift. And it ignores all the other non-COMEX gold trading worldwide. Therefore gold futures CoT reports should be taken with a big grain of salt.

International Forecaster May 2007 (#4) - Gold, Silver, Economy + More
By: Bob Chapman, The International Forecaster

In the last ten weeks ECB central banks have sold 130 tons of gold. This is the most ever in any short time period. In the previous six months they sold only 112 tons. That leaves 250 tons left for sale by 9/30/07. We do not expect Germany and Belgium to be sellers, so that leaves about 140 tons to go over four months or about 35 tons a month. The bad news is behind us. It is possible that France could complete part of Germany’s unused quota, but that is a long shot.

The battle in the gold pits goes on as the spec longs refuse to be big sellers and the cartel goes naked short out of London. At the rate the longs are holding even if the 200-day moving average was hit at $638 we doubt now there would be a further break. The cartel’s work is seen by more and more and understood for what it really is – the tactics of a corporatist fascist government. Worse yet, more and more communicators are calling the government and its market manipulation fascist. As you can see we are making headway.

The cartel is scrambling, terrified they won’t be able to find enough physical gold to hold off the gold buying hoards.

US Housing Discounting and the Gold Bull Market
By: Adrian Ash

"Gold rose 600% in the 1970s and then went down nearly every month for two years," remarked Jim Rogers in an interview with Financial News earlier this week.

"Most people gave up – but then gold went up another 850%."

Fast forward three decades, and the market's giving up on gold yet again. Punters in StreetTracks GLD have shed 6% of their holdings from this time last month – the first ever drawdown since it launched in 2005. Gold futures traders cut their net long positions by 16% last week alone.

"That's what happens in bull markets," shrugs Rogers, author of Adventure Capitalist and co-founder of the Quantum Fund that gained 4,200% during the inflationary '70s.

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