Stick A Fork In The Dollar

Oil Futures Settle Below $70 a Barrel After Rising As High As $70.52 on Supply Concerns

Federal Reserve Holds Interest Rates Steady; Policymakers See Improvements on Inflation

WASHINGTON (AP) -- The Federal Reserve held interest rates steady Thursday, extending a yearlong breather for borrowers. Although policymakers observed improvements on inflation, they made clear they were not ready to declare victory on that front.

US Q1 GDP growth revised up to 0.7 pct, core PCE price index up 2.4 pct

WASHINGTON (Thomson Financial) - The US economy grew slightly faster in the first quarter than last reported, but inflation was also higher, according to Commerce Department revisions.

The Federal Reserve "policymakers" [aka: boobs] observed improvements on inflation. While on the other side of town the Commerce Department "statisticians" tell us that inflation is higher. Who should we believe? GOLD! Why Gold? Because Gold is the Truthsayer. In spite of everything the PPT and dem Rat Bastids have thrown at Gold, Gold is $65.30 higher today than it was one year ago as I type this... +11.2%. Core inflation is fiction!

'Sub-prime Chernobyl'

Nouriel Roubini, economics professor at New York University, said there were now concerns about "systemic risk fallout" from the Bear Stearns debacle as investors look more closely at the real value of CDOs.

"These highly illiquid securities have been priced so far on unrealistic and distorted credit ratings as the ratings industry has been complicit," he said.

"They have not been rerated in a way that is consistent with rising subprime default rates," he said. "That is why Wall Street is in a panic. Losses will be massive once these assets are correctly priced to market."

Lombard Street said the Bear Stearns fiasco was the tip of the iceberg. The greatest risk lies in the "toxic tranches" of lower-grade securities held by the banks.

Much-trumpeted claims that banks had shifted off the riskiest credit exposure on to the asset markets was "largely a fiction," said Mr Dumas.

The worst of the US property crisis has yet to hit since there is an overhang of $2,000 billion of mortgages with adjustable rates that have yet to be reset. Many borrowers could see payments jump by half, or even double.

http://gata.org/node/5198

Gold made a surprisingly quick move to 648 today. Efforts to sustain a move higher ran out of gas. A revisit to 645 before we move higher should not be unexpected. Silver ran into a wall at 12.48. Resistance at 12.46 was expected as Silver worked it's way back to it's 65 week moving average. Both have laid the foundations to their respective bases today. This base building could persist through The 4th Of July.

All technical analysis aside...the fate of the Precious Metals rests with the US Dollar. (please see chart above) It always has, and will continue to, as these metals grind ever higher. Technically however, the Dollar appears to be approaching a crossroads as it's Bear Market mini-rally runs out of gas. Absent the weak handed bears in the Dollar, nobody would want this generic toilet paper...most folks would probably opt to use their bare hand... Should the Dollar lose support at 82.02, a commodity rally could ignite swiftly, carrying the Precious Metals higher. Further decay in T-bond prices and a swamping of Wall Street may also result.

Folks should be selling their Dollars to "avoid risk", not their Gold.

The Truth Is Out There

Gold touches 3-month low as investors cut risk
Wed Jun 27, 2007 6:50AM EDT

http://www.reuters.com/article/hotStocksNews/idUST5734620070627

If you recently sold your Gold to "avoid risk", I hope you use your proceeds to pay to have your head examined. Yes Gold is a metal...it is NOT a commodity. If you ask me, the "risk" is having your money sitting in cash. Ahhh, the fool and his money...

Oil finishes just shy of $69 a barrel

June 27, 2007, 5:26PM

http://www.chron.com/disp/story.mpl/ap/business/4926121.html

The Energy Department reported Wednesday that gasoline inventories dropped by 700,000 barrels in the week ended June 22, contrary to the 1.1 million gain that had been expected by analysts polled by Dow Jones Newswires.

Shocking! I could have swore we were told for the past week that refiners were getting more gasoline from a barrel of Oil.

Refinery utilization rebounded 1.8 percentage points to 89.4 percent, higher than estimates of a gain of 0.8 percentage points.

Shocking! Higher refinery utilization and less gasoline...but aren't we getting more gasoline from each barrel of Oil? Geez, I guess not. Oh, and what's this little note?

...gasoline imports, which had propped up supplies the previous week, dropped by 300,000 barrels last week.

Just as I had suspected a week ago. LOL, more gasoline from a barrel of Oil. The sad part is, is that people believe this crap. Who was it that said there's a dumb ass born every minute? Wait, I'm sorry, that was "...a sucker born every minute..."

Speaking of suckers...were we not told two weeks ago that yields on T-bonds were rising because the economy was going to be so much stronger going forward? Yes I believe we were. Of course, this is what "they" wanted you to believe. Yields are rising on T-bonds because nobody wants to buy the USA brand toilet paper anymore. Seems nobody wants to buy "durable goods" either:

ECONOMIC REPORT
Demand drops for business-investment goods
Orders for durable goods decline 2.8% on broad-based weakness

2:50 PM ET Jun 27, 2007

http://www.marketwatch.com/news/story/demand-business-investment-goods-falls/story.aspx?guid=%7B7A072527%2D0328%2D407A%2DA155%2DA7DAAC97F040%7D

The figures throw some cold water on the theory that business investment will be strong enough to power the U.S. economy out of a slow patch that's lasted more than a year.

"You can't look at these results and say the economy is becoming overheated," wrote Ken Mayland, chief economist for ClearView Economics.

I Can See Clearly Now...

Orders for all durable goods fell 2.8% in May, led by a hefty 22.7% drop in orders for civilian aircraft. Orders for all sorts of durable goods were weak in May; only electronic and defense goods recorded an increase.

Isn't it amusing how quickly "civilian aircraft" orders are mentioned in "the story" when durable goods numbers suck...but when they beat estimates that civilian aircraft orders number is buried somewhere near the bottom of "the story"?

There are now countless reasons for Gold and Silver's weakness of late. The more I look into this the more convinced I am that this little item may have been a heavier hammer than many first thought:

Japanese Finance Minister Koji Omi has reportedly warned the markets against making "one-way" bets, in an apparent reference to the recent massive popularity of carry trades that have caused the recent slump in the yen. This is a risky strategy where investors borrow in low-yielding currencies in order to invest in higher-yielding assets elsewhere.

To add to that, the Nikkei Kinyu Shimbunm reported that the MoF has changed its currency stance, alongside rumours that Japanese currency spokesman Hiroshi Watanabe -- who has been a proponent of yen weakness -- is set to leave his post.

"In light of what appears to the first signs of a sustained campaign of verbal intervention from the MoF in support of the yen, this change (Watanabe departure) looks potentially meaningful," said Neil Mellor at the Bank of New York.

http://www.fxstreet.com/news/currency-focus/article.aspx?StoryId=913be572-d440-47d4-b77a-cbd05948cf33

The "yen carry trade" is too often wrongly blamed for declines in Precious Metals...but then we have people dumping Gold to avoid risk. Go figure...

Want some real insight into the Bear Stearns Collateralized Debt Obligations fiasco? The fuse has now been lit on what Warren Buffet has most often called the financial derivatives WMD. Talk about risk! Please take the time to read William H. Gross', Managing Director of PIMCO, Investment Outlook, July 2007.

Those that point to a crisis averted and a return to normalcy are really looking for contagion in all the wrong places. Because the problem lies not in a Bear Stearns hedge fund that can be papered over with 100 cents on the dollar marks. The flaw resides in the Summerlin suburbs of Las Vegas, Nevada, in the extended city limits of Chicago headed west towards Rockford, and yes, the naked (and empty) rows of multistoried condos in Miami, Florida. The flaw, dear readers, lies in the homes that were financed with cheap and in some cases gratuitous money in 2004, 2005, and 2006. Because while the Bear hedge funds are now primarily history, those millions and millions of homes are not. They’re not going anywhere…except for their mortgages that is. Mortgage payments are going up, up, and up…and so are delinquencies and defaults. A recent research piece by Bank of America estimates that approximately $500 billion of adjustable rate mortgages are scheduled to reset skyward in 2007 by an average of over 200 basis points. 2008 holds even more surprises with nearly $700 billion ARMS subject to reset, nearly ¾ of which are subprimes.

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+July+2007.htm

People, when this bomb goes off, you'd better own some precious Metals. And folks...the bomb Will go off.

Are you sure you want to sell your Gold to avoid risk?

Booms Were Made to Go Bust

China's advantage is that it learned from Japan's mistakes. That's why the Chinese stubbornly refuse to revalue their currency -- they don't want to make it more expensive the way the Japanese did theirs.

Currently, the Chinese yuan is pegged at 7.6 yuan to one U.S. dollar. This makes the United States accuse China of being unfair; we'd like to see the yuan float the way the Japanese let the yen float. This would make it easier for us to reduce our balance of trade, as well as pay back our debt with cheaper dollars.

The problem is that the Chinese know from the Japanese experience that we can talk tough but not act tough -- they simply hold too much of our debt for us to take measures. And if the Chinese started dumping U.S dollars and bonds on the world market, the world economy might well crumble, just as the Japanese economy crashed nearly 20 years ago.

Time for a New Standard

While it's tough to predict the future, one thing is for certain: The U.S. dollar will continue to go down in value, and savers will be losers. With people all over the world piling debt upon debt and spending like fools, it might be best to follow the Chinese.
They've never trusted banks, but have always trusted gold. Maybe it's time we started doing the same.

http://finance.yahoo.com/expert/article/richricher/37414

Once again Gold and Silver should have been up today. Yesterday's blah-blah that the drop in Oil prices lessened inflation fears was hogwash...as a matter of fact, yesterdays drop in Oil prices was hogwash. Oil is going higher, Oil is going higher, Oil is going higher...there, I won't mention it again. The big "Fed rate decision" will be the nonevent of the week. The Fed has lost control of interest rates...the market controls them now. Gold is the Truthsayer, and the PPT will do anything and everything with the aid of dem Rat Bastids to try and keep the shine off Gold.

Silver today caught up to Gold and printed bullish divergence on it's hourly charts. Both metals will attempt to build bases here...success in that matter remains to be seen. A "new" bottom could be in if Gold closes above 648. 645.50 may, or may not, slow Gold in that attempt. As for Silver, the repair work needed is extensive. Silver needs to close back above 12.60-5 to suggest a "new" bottom is in. 12.46 may, or may not impede the work necessary to repair Silver. I would not be surprised if both metals fished for this bottom through the 4th of July. I would also not be surprised if the US Dollar gets hammered on the Fourth as we celebrate our long since forgotten Independence.

Gold and Silver have now both revisited their respective 65 week moving averages...this moving average has proven since the beginning of this secular bull run in these Precious Metals to be major support and a superb opportunity to buy and profit in these metals. In other words...you couldn't ask for a more "low risk" opportunity to purchase these metals.

Sell your Gold to avoid risk? Perish the thought!

STOP! THIEF!

Foaming at the mouth and spitting four letter words like a wood chipper, I have but one word to say that I think all who are reading this can agree on: CRIMINAL.

I posted yesterdays charts for a reason. You could almost smell this BS coming... Look closely at both charts. Trace back along the 65 week moving average to the last time both Silver and Gold breached this line to the downside. The summer of 2005. Both briefly breached their respective 65 week moving averages and then launched colossal run-ups. Ted Butler alludes to this in his post today commenting on today's mugging. His observations and insight, as always, are on the money imo.

The current sell-off in silver and gold is a result of tech fund and other speculative selling (both long liquidation and new short selling) and dealer buying (T. rex short covering and raptor long accumulation). In addition, the sharp decline in silver today can also be traced to a large number of put options that suddenly went into the money on today’s option expiration. Bullish silver investors who sold these puts undoubtedly found themselves in sudden loss situation and had to take the only corrective action they could take to protect themselves, namely, sell silver futures. This was not accidental, but a designed strategy by the dealers. The dealers, large and small, can buy on the way down because they are disciplined and collusive, and are keenly aware of how the markets work. The tech funds and leveraged speculators are not. The current sell-off will end when the last tech fund and speculator sells.

My sense is that we must be close to that point, especially with today’s option expiration. In fact, it feels like the dealers are almost wringing blood from a stone, trying to uncover and engineer the very last sell contract from the non-commercials and non-reporting traders on the COMEX. These dealers seem to be using every trick in the book, including using the overnight markets to their advantage. This engineering has taken on the aura of the last big clean out before the real move up.

It is always important to know, in a broad perspective, the general nature of what you are studying. The recent sell-offs in gold and silver have nothing to do with real fundamentals like supply and demand, and everything to do with dealers’ activities on the COMEX. The most appropriate term to describe this activity is manipulation, because the paper trade is dictating the world price of gold and silver. This is against the law, but that matters little if the regulators won’t enforce the law. The good news is that the market structure only improves on these sell-offs, while the bad news is that it necessarily involves interim pain.

Of course, knowing why and what the sell-off is about can’t tell you precisely how much may be left, so you must govern yourself accordingly. Are the metals a great buy here? Absolutely. Should you buy them on such an extremely leveraged basis that you could lose your position on lower prices? Absolutely not.

One last point. Today’s sell-off was particularly offensive in that there were no outside influences to explain it. It was all COMEX and option expiration related. This is like a mugging in broad daylight with the police just watching. Forgetting the police (the regulators), perhaps even worse is that anyone who follows the market should be aware of what happened. To remain quiet and say nothing and pretend no crime has taken place is morally offensive. If you are a letter writer or advisor, you should speak up. The free market is at risk.
http://news.silverseek.com/TedButler/1182880797.php


Gold showed bullish divergence in it's RSI this afternoon as price made a new low but RSI made a higher low on the hourly chart. 648 is our immediate target. We must ascend to and surpass this number in short order to deter further criminal activity against us.

If you sold your silver today in a panic...I hope you have the good sense to take your money and leave...never to return! Silver has significant repair to do compared to Gold. If you feel like you have been raped, you should...because you have. Silver has fallen all the way back to test it's January lows. Today's mega dump was unusual in that it came following a "downtrend" ...most often when Silver endures an episode like today's it is following an "uptrend". Perhaps as Ted Butler speculates above "this is the last big clean out". A move back to and through 12.65 is imperative. It is tempting to add to positions here, but prudence dictates waiting for a close back above 12.65 .

And if Oil's hokey Crude Invetory numbers don't show a rise tomorrow? Who cares! Oil will be at or near $80 a barrel by Labor Day.

Should I Stay, Or Should I Go

U.S. Dollar Bulls Turning Bearish on the Buck

For whatever reasons traders classed as “commercial” on the New York Board of Trade (NYBOT) who trade large numbers of U.S. dollar index futures contracts have been vigorously exiting what had been a considerable collective net long dollar position just a few weeks ago.

In the latest Commodity Futures Trading Commission (CFTC) commitments of traders report (COT) issued Friday, covering trades through Tuesday, June 19, those veteran commercial interests reported what has to be viewed as a massive exodus out of long-dollar positions, which means that the commercials are no longer confident of U.S. dollar strength following a move up for the greenback of mediocre proportions (against a basket of other fiat paper currencies).

In a one-week period the commercials repositioned OUT of a huge 7,042 USD net long contracts (from 9,853 to 2,811 contracts net long). In other words the commercials were getting out of a bunch of long positions even as the index was headed south! Since the Tuesday COT cutoff the index followed through 20 bps lower, showing a last trade Friday 6/22 of 82.34.

Since May 1, when the NYBOT commercials were then a colossal 23,380 USD contracts net long with USD at 81.63 they have all but gone net neutral as the index itself only managed to test the 83.20s to the upside and only turned in an overall gain of 130 basis points as measured on COT cutoff days (81.63 to 82.93).

Who can say why the commercials saw fit to get the heck out of “USD Longville,” but we can certainly say they have done just that as of Tuesday, which means that the largest traders of U.S. dollar index futures are no longer confident of a higher greenback. If they are right, then the buck should head lower which would in theory be more supportive than not for gold metal.

http://www.resourceinvestor.com/pebble.asp?relid=33292

It is amusing that all the "reasons" for Gold being down lately, today were reversed, and Gold was down again. Something STINKS! Sentiment couldn't be more bearish. The PPT has you right where they want you if you're considering bailing out on your position. The two simple weekly charts above speak for themselves.

Charts courtesy of USAGOLD.com Please click on to enlarge.

Should I Stay, Or Should I Go ---the Clash

The "clash" of the Bulls vs. Bears for the control of Gold, and the Truth, is upon us. It may as well be Good vs. Evil. Gold is the Truthsayer...the only "real" barometer of Inflation. Many lies will soon be exposed. A nation will be shocked, dismayed, and then desperate as its economic house of cards and US Dollar hegemony implode.

Silver Resistance: 20 WEEK moving average at 13.37

Silver Support: 65 WEEK moving average at 12.64

_____________________________________All prices SPOT

Gold Resistance: 20 WEEK moving Average at 665

Gold Support: 65 WEEK moving average at 637

One Little Victory

On Friday, for the first time in quite a while, Gold Stocks did not tank with the Market Indexes. They held there own quite admirably. It's a small, little noticed victory, but sometimes big things come in small packages. Could this signal that we are finally nearing the end of this never ending consolidation phase in Precious Metals? The HUI Index was down a scant 0.63 to the Dow's plunge of 185.58. 0.19% vs 1.37%. One has come to expect the HUI Index to fall as much or more, percent wise, as the Dow does on down days.

The Bear Stearns hedge fund debacle is picking up steam and may prove to be the catalyst for an economic tremor that will rock the foundation of Fed manufactured liquidity that is holding the US Stock Market Index House Of Cards up. Could this be the flight to quality demand scenario we have been awaiting to finally push Gold past the $700 barrier and steamroll dem Rat Bastids into the pavement?

Gold Stocks have been held in check by the same villains that are trying to thwart Gold's rise and subsequent confirmation of the "truth" about inflation. Core Inflation is a crock, a fantasy, a flim-flam. Gold is the only true barometer of Inflation. Gold Stock investors buy Gold Stocks when they believe the price of Gold will be rising...this is why Gold Stocks often lead the metal higher. General investors move to Gold Stocks and Gold when they seek a flight to quality when facing market meltdowns or geopolitical events detrimental to general equities.

The chart above confirms that Gold Stocks have been continually pressured as the Dow rises. Gold stocks cannot be allowed to rise, so that cold cannot be allowed to rise. The Villains of Wall Street will do anything and everything to convince you that Gold is a bad place to be. Why? Because Gold is their arch enemy. Gold is the truthsayer that can expose dem Rat Bastids for what they are...THIEVES!

A break of resistance indicated on the chart by the green arrow could be a signal that a breakout in Gold may be imminent. Much like the HUI/Gold Ratio chart posted here Friday.

Bob Chapman, The International Forecaster had a few choice words this weekend regarding Gold and the predicament the PPT is facing:

Two very odd things happened today. First, the USDX lost a whopping .405 to end at 82.326 based on a basket of six major currencies, but gold after being up by about 6, from 650 to 656, pulled back about 3 to 653 toward the end of the session, with only one central bank sale of any significance registering in today's action. This was a very modest gain under the circumstances. Hardly what one would expect when the Canadian dollar, euro and pound are pounding (forgive the pun) the dollar so sharply, and with the yen weakening only slightly. On top of this, oil was up .49 to 69.14, and long-term treasury bond rates moderated only very slightly to Wednesday's levels, with the tens at 5.14 and the thirties at 5.25, the thirty year rates being the same as the Fed funds rate. Neither of these developments is even remotely gold negative and both should have been gold positive, along with a host of other factors.

Second, the number of yen to one euro set yet another all-time high today of 166.752. The euro strengthened against the dollar and the yen weakened slightly against the dollar, increasing the spread between the euro and the yen versus the dollar. The yen broke above 124 yen per dollar today, going to 124.13 before settling at 123.88, a level which is almost unheard of. Under such circumstances, the stock markets have spiked upwards in most cases, as these movements are very carry trade friendly for European and US investors alike. Yet the Dow plummeted 185 points today. Not what you would expect when the difference between Friday, with a big loss, and Thursday with a modest gain, in terms of economic news was not a whole lot different. Wednesday also was a big loser for the Dow despite exchange rates equally friendly to carry traders.

This all seems rather confusing at first. But what is really happening here, when you think about it in terms of what the cartel's objectives are, is really quite obvious. And these two oddities are interconnected.

First, notice that on Tuesday of this week, gold made a huge jump from about 654 to almost 662. The cartel thought they had gold under control for the summer, so this sudden increase must have shocked and scared them substantially.

And on top of this, the cartel has some big problems developing. The stock markets and the dollar are in big trouble due to both rising bond rates and mounting evidence that the real estate market has barely even started its decline and has a lot further to go before it reaches a bottom, a bottom which could best be described as a bottomless pit. The determination of long term bond rates, and hence mortgage rates, is now being determined by world markets and large foreign treasury holders. The Fed is now completely irrelevant and powerless when it comes to determining long-term bond rates. In addition, the Bear, Stearns hedge fund subprime mortgage-backed securities debacle is really starting to scare traders, and who knows when and where the next victim will show up, as "the Ripper" in the form of mortgage defaults and chain reaction derivatives failure stalks unsuspecting hedge funds around the world.

Then there is the extremely elevated PPI at .9 % for May of this year. The core PPI is irrelevant because rising food and energy costs will be distributed across the board, either by elevating both the CPI and core CPI as the higher costs are passed on to consumers, or by drastically reducing corporate profits if the costs are eaten by producers. Either way a disaster is looming in the not too distant future. And with all these developments, who on earth wants to continue to fund our trade deficits by purchasing US treasuries, knowing that dollars are worth little more than monopoly money. Due to the lack of interest in acquiring new treasury bonds, the Fed will have to start monetizing outstanding treasury bonds to fund growing trade deficits, which will lead to hyperinflation and an intensification of stagflation as the death spiral of the real estate market drags the economy into financial oblivion.

The downward pressure on the stock market is now so great that the PPT alone can no longer hold it up. The PPT must constantly enlist the help of carry trading hedge funds to support the stock markets by creating conditions favorable to the liquidity of carry traders, such as an astoundingly weak yen, which has set all-time highs for weakness against the euro this week.

Bearing the above in mind, we can now see what has happened in the days following gold's rocket ride on Tuesday.

On Wednesday, the PPT once again used a declining stock market to put a hit on gold. Only one central bank sale of any significance showed in the charts on Wednesday. The yen was kept very weak against both the dollar and the euro to keep carry traders in the market so it would not go into free fall and the PPT substantially withdrew its support of the stock markets to cause margin calls and ensuing gold liquidations to cover. They also sent a message to carry traders: 'Use the liquidity we are giving you to buy stocks instead of gold or you will be punished.'

On Thursday, the PPT stepped back in to avoid market panic, which had already begun earlier in the day, taking the Dow from a 90 point loser to a 56 point winner. To keep pressure on gold Thursday while it was supporting the stock markets, several central bank sales registered on the charts (they take the form of precipitous drops on the charts, as opposed to choppy oblique lines that are created by naked shorting and general liquidations to cover losing stock positions).

On Friday, despite the cartel's best efforts on Wednesday and Thursday to suppress gold prices, gold was rising nicely again early on, shooting from 651 to 656 from the middle of the London session to the beginning of the New York session. So the cartel, which is clearly running out of gold, both in terms of actual physical gold and in terms of cartel members willing to sell any more of their gold, the Swiss National Bank being the latest victim of this shortage, decided to hit the stock markets again by withdrawing the support of the PPT, thereby also hitting the gold market by way of gold liquidations to cover margin calls. Just like on Wednesday, Friday saw only one central bank sale of any significance, as the declining stock markets took care of the rest.

You might also note that the current hit on gold described above is reminiscent of the first full business week of this month where the yen per euro rate of exchange reached on all time high (up to that point in time) of 164.61 on June 5, 2007, which was the day after the Dow hit its all time high of 13,676.32 on June 4 before starting its gold-bashing plummet over the subsequent next several days. Like the current crash, the early June crash was controlled with the help of the PPT and the weak yen so it did not get out of hand, while gold was diabolically suppressed once again after spiking up to 674 on June 4. Much of the liquidity provided by the weak yen was being pumped into gold, and the large spec hedge fund carry traders were thoroughly punished with a devastating 409.59 drop in the Dow over the ensuing three days.

The current conditions and the manipulations described above are the end product of all the machinations and nefarious activities of the cartel over many decades. This has been a planned and orchestrated descent into financial oblivion to destroy the prosperity and sovereignty of the US and to create a corporatist, fascist one-world government, where the "Lords of the Universe" will lord it over their gruel-swilling serfs. Remember to show your appreciation to these megalomaniacal whackos after they take us down. The final destruction is coming soon to a theatre near you, so be ready for it, and buy gold, silver and their related stocks like they were your last hope, because they are.

http://news.goldseek.com/InternationalForecaster/1182710291.php

Silver Resistance: 50 DAY moving average @ 13.29

Silver Support: 50 WEEK moving average @ 12.75

______________________________All prices SPOT

Gold Resistance: 50 DAY moving average @ 666

Gold Support: 50 WEEK moving average @ 641

Watching The Gold Stocks

Unfortunately I must be brief today. Jim Sinclair made an excellent observation today, and I would like to pass it along to you and add a picture to it so that you may visualize the potential standing befor us. It helps to know that it is commonly believed that Gold Stocks often lead the metal higher and lower. That being the case, Jim's observation may be quite poignant at this time.

As the price of Honest Money, also known as Gold, approached $647 it was moving towards what has a very high probability of being the bottom of this black box retreat. What would seal a bottom would be a firming in the blown out gold share sector. You can be assured that firming in gold and related shares would not be a product of the gold community already in position, but a combination of short covering and long taking by our dear friends at Black Box City. There was some indication of this today. The barrel may well be rolling in our favor. I believe the gold shares now to be more of a forward looking indicator than the technical position of gold itself.

I feel the pain is nearly over.

As distasteful as the past few weeks have been it is only noise as the major trend is up with $761, $887.50 and $1000 coming.

http://www.jsmineset.com/home.asp

Silver Support: rising 50 WEEK moving average at 12.74

Gold Support: rising 50 WEEK moving average at 640

Bang Your Head

The dead cat bounce in the US Treasury makets may have reached it's apogee. Falling treasuries again set sail to the Dollar and this in turn crosschecked the Precious Metals. Oil's retracement looks brief, trading at 68.82 as I type this. Despite this "triple threat" of negativity, Gold and Silver held up remarkably well today...in comparison to the last bungee jump in the treasury markets. Had Oil not retreated on these suspect inventory numbers, I believe Gold and Silver would have been much firmer. Investment demand is growing by the day...along with the realization that rising interest rates are Gold Positive in the long run.


Unprecedented dishoarding by central banks fails to push gold down


Dear Friend of GATA and Gold:

Neal Ryan's daily gold market note for the Blanchard Economic Research Unit today added up the desperation of the world's central banks to prop up the U.S. dollar system by rigging markets. Ryan finds central bank gold sales of more than 240 tonnes in just the last four months, dishoarding at an unprecedented rate. "Seeing the gold price hold above the $640 level during this period of increased sales should be the best demonstration of just how robust the physical demand side of the market is at present," Ryan writes.


Oil, Gas Futures Fall After Government Reports Jump in Inventories of Both
http://biz.yahoo.com/ap/070620/oil_prices.html?.v=16


The EIA report was bearish for the energy market for several reasons, Evans explained. First, with oil inventories at a level not seen since May 1998, there is a glut of crude on the market. Second, despite the fact that refineries were processing less crude last week, gasoline inventories rose. That suggests that refiners are doing just fine with less capacity, and are getting more gasoline out of each barrel of oil, Evans said.


Yeah, right... If you read the entire EIA report here: http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current/txt/wpsr.txt

It is interesting to note that with an increase in imports and a decline in refinery inputs Crude inventories rose. A decline in refinery inputs means that refinery capacity fell AGAIN last week. And since the capacity to refine oil is lower, more of it "sits" in inventory. Gasoline inventories rose in spite of reduced refining capacity...well that's because we imported 127k more barrels of gasoline each day last week...not because refiners are doing just fine with less capacity, and are getting more gasoline out of each barrel of oil as this clown above, Mr. Evans would have you believe.


Stocks Plummet on Soaring Bond Yields
http://biz.yahoo.com/ap/070620/wall_street.html?.v=54

Larry Peruzzi, senior equity trader at The Boston Company Asset Management, noted that while high yields are worrisome, the yield curve is more normal now, which should be positive for stocks going forward.

The yield curve is the difference between short-term yields and long-term yields; the rise in long-term bond yields has made the relationship more typical, rewarding long-term risk with higher returns. The pattern now suggests "steady growth -- not spectacular, but somewhat steady," said Peruzzi. Before, the yield curve had pointed to a slowdown in growth.

Larry, Stocks do NOT like rising long-term yields, period. [But Gold does.] I hate to say it Larry, but I think "the pattern" now suggests that the rest of the world can't get far enough away, fast enough, from The US Debt Bomb.

Troubles at two of Bear Stearns Cos.' hedge funds also weighed on the markets, especially financial firms: Bear Stearns, JPMorgan Chase & Co. and Merrill Lynch & Co. all fell more than 2 percent.

Subprime sector hit by $1bn assets sale
http://www.ft.com/cms/s/6ca1b14c-1f51-11dc-ac86-000b5df10621.html

The giant market for securities backed by US subprime mortgages was thrown into turmoil on Wednesday as lenders struggled to sell more than $1bn of assets seized from two Bear Stearns hedge funds that suffered heavy losse on subprime bets.

This is only the tip of that iceberg folks...

Rate Rise Pushes Housing, Economy to `Blood Bath'
http://www.bloomberg.com/apps/news?pid=20601109&sid=akV2sasSGUY8&refer=home

June 20 (Bloomberg) -- The worst is yet to come for the U.S. housing market.

``It's a blood bath,'' said Mark Kiesel, executive vice president of Newport Beach, California-based Pacific Investment Management Co., the manager of $668 billion in bond funds. ``We're talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.''

Have you been buying Gold at these "Sale Of The Century" prices?

Alas, it is still to early to call June 8th an interim bottom in Gold and Silver. Should Oil quickly regain it's mojo, and the Stock Market slide from this potential double top accelerate, Gold may soon realize that rising interest rates are in it's favor. However, we cannot discount the Dollars influence over Gold. Continuing "noise" in the Dollar will be disruptive to the Precious Metals, but not detrimental. Trading opportunities will persist going forward as Gold and Silver should continue "drifting" higher on balance. Remember, Gold is the barometer of inflation. Central bankers will do almost anything, and everything, to keep Gold from exposing their lies.

Silver Resistance: 13.26 / 13.33 / 13.39

Silver Support: 13.16 / 13.05 / 12.95
________________________________All prices SPOT

Gold Resistance: 658 / 662 / 666

Gold Support: 655 / 652 / 649


Gold/Silver Ratio at 49.82 [target <49]


For questions or comment please email me at mau-mau@ec.rr.com .

Housing Weakness? Shocking!

Gold, Silver Rise on Speculation Housing to Pressure Dollar
http://www.bloomberg.com:80/apps/news?pid=20601081&sid=a_QqMycJdORc&refer=australia

June 19 (Bloomberg) -- Gold and silver in New York rose on speculation a slump in the U.S. housing market will hurt growth, weakening the dollar and boosting the appeal of precious metals as alternative investments.

Seriously? A slump in the housing market may hurt growth? I am shocked by this revelation. This is the kind of news that could absolutely shock people...from another planet.

``The biggest positive for gold would be a lowering of interest rates,'' said Frank McGhee, head metals trader at Integrated Brokerage LLC in Chicago. ``Gold is up because of the weaker housing number, which has allowed the 10-year Treasury bond to rally.''

Frank is a genius. This is THE GUY you want managing your money. Rising interest rates are ultimately good for Gold. I think we've beaten that horse to death here. Actually Frank, the biggest positive for Gold would be a falling Dollar. Oh, and look the Dollar fell again today.

If 82.50 on the USDX gives way the Dollar could be in a heap 'o dung. This of course would put a nice bid under Gold and Silver and really pressure dem Rat Bastids. A lot of shorts piled on as the Precious Metals tanked on June 8th in the face of the T-bond rout. A major short squeeze could be in the works as Ted Butler intimates in his latest "Raptors" update: The Raptors Rule .

Gold has retraced 61% of the June 8th dump. A bit of back and filling here would be expected. Should 655 serve as solid support, a run to the battlefront at 666 could be quick. Expect dem Rat Bastids to put up a good fight for that piece of turf.

Silver has retraced 50% of the June 8th dump. Silver's 50 DAY moving average [13.33] stands in the way of it's next target at 13.39. It's interesting that the same numbers we fought dem Rat Bastids for several weeks ago lie in our path once again. Keep a close eye on Silver's WEEKLY MACD. A bullish crossover will must likely lead to liftoff. Silver is always slow to get started, but once it leaves the station...she's a tough train to catch.

Oil moved further over 69 today...The round number 70 should spook the Dow.

``Gold is cooked,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``The dollar is not going to get buried.''

I love these clowns Bloomberg digs up to quote. Leonard, the Dollar is already buried...they just haven't finished throwing all the dirt back in the hole. It's grave has been declared a toxic waste dump and must be approached with caution. A move thru 1.3468 in the Euro could figure big in the fortunes of Precious Metals holders. The Euro cracked key resistance today at 1.3420. Gold lately has had a bit more of a bias towards Euro technicals.

Issues with my PC today prevent me from having any charts today...I hope to have this resolved soon.


Silver Resistance: 13.33 / 13.39 / 13.50

Silver Support: 13.26 / 13.16 / 13.08
______________________________all prices SPOT

Gold Resistance: 662 / 666 / 673

Gold Support: 658 / 655 / 652


Gold/Silver Ratio: 49.71 [target is sub 49]

US Dollar Strikes Out Swinging, Gold On Deck

Home builders' confidence falls to 16-year low
Contractors say market probably won't improve until next year

WASHINGTON (MarketWatch) -- The outlook for U.S. home building is the worst in 16 years, the National Association of Home Builders reported Monday. The builders' housing market index fell by two points to 28 in June, the lowest since February 1991.

The market probably won't turn around until next year, said David Seiders, chief economist for the builders. "We expect housing to exert a drag on economic growth during the balance of 2007."

http://www.marketwatch.com/news/story/home-builders-confidence-falls-16-year/story.aspx?guid=%7B44171FF5%2D1FA7%2D4E66%2D8B0A%2DC8B96EF44F75%7D

Jeepers! I could have swore we were told back in March that the housing sector has hit it's low...guess not. This news was Dollar negative, and helped treasuries bounce off their morning lows keeping interest rates in check.

Oil tops $69; benchmark contract at 9-month high

SAN FRANCISCO (MarketWatch) -- Crude-oil futures climbed past $69 a barrel Monday, with the benchmark contract marking its strongest closing level in nine months as further violence and threats of an oil-worker strike in Nigeria renewed production concerns and traders continued to worry about the slower-than-usual pace of U.S. refinery activity.

http://www.marketwatch.com/News/Story/Story.aspx?column=Futures+Movers

Oil is accelerating higher after finally breaching resistance at $67 last week. The battle at $67 lasted for 2 1/2 months. Old resistance should now become new support for Oil at $67. This does not bode well for those looking for a deceleration in inflation going forward. Rising Oil prices are historically bad for stocks. Coupled with rising interest rates, rising Oil prices may be the straw that breaks the Dow's back. An obvious double top is forming in the Dow. It could be the "Mother Of All Double Tops". The one that sends stock investors fleeing from the markets and into the Safety of Gold. This bears watching closely (pun intended). A lot of dumb money poured into the Dow last Friday

As noted in April's TIC report Friday. Most foreign inflows of capital have been into stocks and corporate debt. Should the Dow tank, this money will flee quickly. And as the foreign investors retreat back to their own shores, they will leave their Dollars behind...A falling Dow will be very bad for the Dollar.

Rising interest rates, rising Oil prices, and foreign investment capital fleeing the Dow. Three strikes against the Dollar right there. Doink! And the Dollar goes down swinging. Next up Gold. Gold will be swinging for the fences this trip to the plate. Dem Rat Bastids will have to work overtime to quash whats ahead for Gold.

GOLD and SILVER had solid moves overnight that were faded by the crooks in New york as the COMEX opened. The weak housing survey and strong Oil prices put a floor under both as the day progressed. Both continue with the technical repair of their respective charts. Expect this choppiness to continue for the balance of the week...with prices higher, on balance, by the end of the week.

Silver Resistance: 13.26 / 13.39 / 13.50

Silver Support: 13.16 / 13.08 / 13.03

________________________________All prices SPOT

Gold Resistance: 655 / 658 / 662

Gold Support: 652 / 648 / 643

Gold/Silver Ratio at 49.65

A good read for those still sitting on the fence, waiting to enter or add to their Gold and Silver positions:

A Unique Era

By: Mary Anne Aden and Pamela Aden, The Aden Forecast

The gold market has been under pressure lately and some investors are feeling a little nervous. But the major trend is clearly up. That being the case, let’s stand back and look at the facts...

Gold has been rising for over six years and it’s gained 158% since then. That works out to 26% per annum, which has consistently been better than most other markets. The recent weakness is a bump in the road and it’s not unusual. We continue to believe that gold will likely rise for years to come, eventually reaching at least $2000 and it’ll probably go even higher.

http://news.goldseek.com/AdenResearch/1181935337.php

US Dollar Bulls Up The Creek Without A Paddle

US Dollar Bulls got a wake up call on Friday following the latest Treasury International Capital report. The "headline" numbers were positive, and coupled with the CPI numbers should have kept a bit of a breeze in the Dollars sails. But inside the report we find numbers that not only spell doom for the Dollar, but a catalyst for falling US Treasury bond prices and rising interest rates.


FXstreet.com (Barcelona) – Net buying of long term U.S. securities have reached an amount of $84.1 billion in April according to the latest report by the Treasury International Capital report, known as TIC.


Net foreign acquisition of long term securities was $76.5 billion in April up from $39.9 billion in March. Foreign buyers continued purchasing corporate bonds and U.S. equities, but treasury notes and bonds fell to $376.0 million in April, down from $30.5 billion in March.


The monthly tic flows, which includes non-market flows, short-term securities and changes in banks' dollar holdings increased to $111.8 billion in April, up from $30.1 billion the previous month.

Virtually NOBODY was buying US Treasury notes in April. China actually decreased their US Treasury holdings to $414 billion from $419.8 billion last month.


The Current Account data was also released Friday morning by the Commerce Department. It showed a deficit of -$192.58 billion for Q1 2007 which was the equivalent of 5.7% of GDP for that quarter. That was in comparison to -$187.94 billion for Q4 2006 which was 5.6% of GDP. The current account deficit continues to grow, and that is not good news for US Brand toilet paper either.


Peter Schiff, Euro Pacific Capital, Inc. sheds some light on the cause and effect of a lack of buyers for US Treasury IOUs:


At a commercial real estate conference earlier this week, Alan Greenspan downplayed concerns that the Chinese might sell their significant holdings of U.S. Treasuries. The former Fed chairman based his opinion not on the inherent investment merits of Treasuries, but rather on their lack of them. His confidence stems simply from his belief that the Chinese have no one to whom they can sell. Furthermore, Greenspan sees this as a problem for the Chinese and not the U.S.

Although the performance of U.S. Treasuries has long been regarded as poor vis-à-vis other classes of sovereign debt, its overriding virtue has always been its supposed unrivalled "liquidity." As the most heavily traded asset in the world, it is argued that massive investors like the Chinese have few other markets in which they can operate. However, if there are no significant buyers to whom the Chinese can sell, then there is no real liquidity at all. If there is no performance or liquidity, why would they continue buying?

True to form, Greenspan is completely wrong. The Chinese are not the ones who are stuck, Americans are. In order to exit their positions in U.S. Treasuries, the Chinese do not have to sell, they only need to stop buying and let their existing bonds mature. Then the U.S. government, not the Chinese, will be the ones forced to find new buyers for its debt.

Most of the debt that the Chinese own is short-term. Therefore all the Chinese need to do is simply not re-purchase new Treasuries when the U.S. pays them for their existing notes. Perhaps Greenspan should rent a copy of the 1981 Kris Kristofferson movie “Rollover,” where the fear that Arab countries would not rollover maturing treasuries sent gold prices soaring.
http://news.goldseek.com/EuroCapital/1181926579.php


Dollar negative, Gold positive. The US Dollar's days are numbered, and Gold's days are infinite.


To really get a grasp of the "China Factor" as it relates to the demise of the Dollar please read the latest from John Mauldin, Millennium Wave Advisors:


Be Careful What You Wish For
http://news.goldseek.com/MillenniumWaveAdvisors/1182092400.php


The sum of all fears The Fed and The Treasury Department harbor for the Dollar may be beginning to unfold right now before our very eyes. Core Inflation numbers aren't going to fool the American Public much longer. Gold is about to become a very hot commodity as investment demand across the globe continues to grow as containment of an impending US Dollar crisis begins to unravel.


GOLD and SILVER

On Friday Gold and Silver came very close to breaking their shackles at 655 and 13.26 respectively and confirming recent lows as interim bottoms. With renewed Dollar weakness ignited Friday and a lack of potent economic data this week, the potential for both Gold and Silver to make some positive progress towards technical repair on their charts is high. And let's not ignore the price of Oil, it closed over 68 on Friday. This could be a good week to kick a few of dem Rat Bastids asses.

Adam Hamilton, Zeal Intelligence LLC said it best in his weekly post:

Gold is in a full-blown upleg! Since its latest major interim lows in October, it has already risen 23% at best in April and was still up 15% even at its lows this past week. Over these same periods of time respectively, the flagship S&P 500 stock index was only up 9% and 12%. Thus gold has handily beaten even the benchmark stock-market performance!

Is this bearish? Is gold outperforming a widely-respected stock-market rally a bad thing? You’d certainly think so when listening to gold-stock traders lament gold’s performance of late. Yet all the Ancient Metal of Kings has done is make an orderly retreat within its uptrend from upper resistance to lower support over the last couple months. This is totally normal behavior as all uplegs flow and ebb, taking two steps forward then one step back to rebalance sentiment.
http://news.goldseek.com/Zealllc/1181923377.php


Silver Resistance: 13.26 / 13.39 / 13.50

Silver Support: 13.16 / 13.08 / 13.03
__________________________________________All prices SPOT

Gold Resistance: 655 / 658 / 662

Gold Support: 652 / 648 / 643

"IF" Core Inflation Is Under Control

Stocks Extend Rally After Inflation Data

Thursday June 14, 6:19 pm ET

Stocks Rally Again After Core Wholesale Inflation Shows Slight Rise

NEW YORK (AP) -- Wall Street surged again Thursday, launching the Dow Jones industrial average to its best two-day advance since last July after data showed that wholesale inflation, excluding energy and food costs, is rising at a gentle pace.

The market was unfazed by the Labor Department's headline producer price index, which rose 0.9 percent in May due to surging gasoline prices -- a bigger increase than in April and higher than economists predicted. Investors instead were pleased that the core PPI, which strips out often-volatile food and energy costs, posted a small 0.2 percent rise, as expected, after a flat reading in April.

If core inflation is under control, the Federal Reserve is unlikely to lift interest rates, a possibility that started dogging the market last week, when the yield on the benchmark 10-year Treasury note passed 5 percent for the first time since last summer.

If core inflation is under control? ...slight rise? Forget Goldilocks...this is Alice in Wonderland. Hello! Welcome to America...where bad news is good news and few economists are smarter than a 5th grader...

"The aggregate of all the statistics of the last month, except those related to homebuilding, has pointed to a stronger economy," said John Merrill, chief investment officer of Tanglewood Capital Management in Houston.

I bet this guy can't even define the word "aggregate". Forgive me for asking, but wasn't the housing industry the fuel for all of the past five years of "growth" here in America? Haven't we seen countless tales of woe for the past 9 months warning us of the growth consequences a "slowdown in the housing sector" will have on the economy? Mr. Merrill better live on an island, because I have a hunch that by this time next year his "investors" are going to be outside his door with clubs and torches. What a dumb ass. How can a supposedly responsible news service quote such obvious hogwash?

If core inflation is under control... LOL!

Dan Norcini, who's commentary on Jim Sinclair's JSMineSet website http://www.jsmineset.com/home.asp is some of the most astute, and brutally honest, found anywhere on the Internet, had this to say this afternoon:

Wheat prices continue to soar this morning with both CBOT wheat and KCBT wheat notching a “6” in front of the bushel price. One would have to have been trading grains for some time to realize just how lofty a price this is for a bushel of wheat. It is stunning! Wheat is leading the entire grain complex higher right now and we have not even yet seen a weather scare that might effect the corn and bean price this season! Should a dry weather pattern settle in over the corn belt this summer, Katy bar the door!

Again, as I commented yesterday, we are talking about the basic food supply – not specialty items or exotic foods but essentials. Consumers are going to be reeling in disbelief when these higher wholesale prices work their way into the supply chain and this is not even considering what is going to be the effect on beef, pork and chicken prices. With crude and natural gas roaring today, it is pretty safe to say that food and energy are going to provide a double hit on the American consumer this summer and unless things change quickly (which I do not see) they are going to get hit with a price tsunami all the way into the fall and winter. I am predicting that milk prices are going to reach $5.00/gallon before the year is out at some locations if corn prices move up much further.

All of these short term gyrations in the gold market associated with the ups and downs of the bond market are going to soon be eclipsed by the awful realization of an inflation beast that is about to be set loose on the public. The feds can monkey with their bogus CPI stats and massage their data all they want to but nothing they do is going to hide the truth from the public who are not quite as dumb as these disconnected elites believe. When you see polling data that a whopping 68% of the public believe the nation is on a wrong course and both the President and the Congress’s approval ratings are in the toilet in spite of record highs in the stock market, something is seriously wrong with the la-la land of illusions that these ivory tower dwellers inhabit. Rest assured that gold is sniffing this out in its own manner. While the blind hedge funds who genuflect before their black boxes upon entering their offices in the morning continue to throw away the yellow metal, astute investors and traders who can read the tea leaves for themselves are happily taking all of it off their hands.

If core inflation is under control... LOL! It won't be for long...not that it really is now.

OIL

Oil Prices Pass $67 a Barrel on Concerns About Domestic Gasoline Supplies

NEW YORK (AP) -- Domestic crude oil closed above $67 a barrel Thursday for the first time since September on continuing concerns that the refining industry is not producing enough gasoline to meet summer driving demand.
http://biz.yahoo.com/ap/070614/oil_prices.html?.v=16

OIL has finally cracked $67 a barrel. I have focused on Oil clearing the hurdle at $67 several times here, and the potential problems it doing so poses for the Dow Index. If Oil stays above $67 thru the next "Crude Inventory Report", look for it to accelerate quickly higher from there. Then we'll see "if core inflation is under control" or if it is out of control.

CPI numbers print Friday morning. Jeeze, would it be a stretch to expect that "core inflation" in consumer prices is "under control" too?

Core Inflation, which excludes Food and Energy... For one week, keep a diary of all your expenses. Keep two lists. One for "core" expenses and one for "Food and Energy" expenses. At the end of the week divide the total Food and Energy side by the core side. I think you will be shocked at how much of your hard earned income goes to keep your belly full, your vehicle's gas tank full, and your house comfortable. Just for gasoline alone, it cost me TWICE today what it cost me 18 months ago just to drive to work every week.

If core inflation is under control... Core Inflation is a deception, a magicians sleight of hand... Gold is the ONLY true barometer of Inflation. Buy it!

GOLD and SILVER

Gold and Silver today continued to pursue their technical repair. Internal indicators on the hourly charts continue to show bullish divergence. The CCI eeked out a new all-time high today. The CCI is the Continuous Commodities Index...it is a much truer commodities index than the revered CRB Index because it is not so heavily energy weighted as the CRB Index. Despite the denials Inflation is becoming VERY real. And the more REAL Inflation becomes, the higher the price of Gold will go. To see a picture of the CCI go here: http://stockcharts.com/h-sc/ui?s=%24cci

Again, ...until Gold clears 655 and Silver clears 13.26 we are fishing for an interim bottom here. Gold and Silver both have proven to be excellent buys at or near their 200 DAY moving averages throughout the course of this secular bull market. Major support remains at the respective 50 WEEK moving averages for each:

Gold Support: 640

Silver Support: 12.71

To comment or ask questions please email me at:

mau-mau@ec.rr.com

Are Retail Sales Really Up?

I've got a bone to pick. ...excuse me if I pick it to death.

From Bloomberg

The retreat in 10-year Treasury yields from yesterday's five-year high eased concern that rising borrowing costs will reduce takeovers and corporate profits. A Federal Reserve report showing a pickup in economic growth helped stocks add to gains sparked by the steepest increase in retail sales in more than a year.

``Positive retail sales numbers improve the prospects that the second quarter is going to be stronger than the first, which is what investors are looking for,'' said Steve Neimeth, who manages about $850 million at AIG SunAmerica Asset Management in Jersey City, New Jersey. ``With bond yields down, that should add more support to the market.''

Hmmm... For the past week we've been told by the "talking heads", and their poison pen brethren, that Treasury Yields have been rising because of "the increasing prospects for global economic growth". Today a Federal Reserve report showing a pickup in economic growth appears and Treasury Yields drop? Any reasonable individual, or 5th grader, would have to reason, following the release of a "government report" that claims the "speculation" about a pickup in economic growth is justified, that bond yields would keep rising. But they did not.

Why not? I'm guessing because the babble these media pawns have been spewing about "economic growth" is all blah-blah. It's in the vested interests of the puppet masters at the Fed and the US Treasury to continually make the populace believe that "things are better than they seem". To be sure, the "Global Economy" is growing, quite well in fact. The US Economy, on the other hand, is not. Despite every rigged statistic, every upbeat sound bite from the good Capt. Bernanke, the US Economy is in the crapper.

The real reason the Treasury bonds are tanking is because "world investors" are losing faith in the "good faith and credit of The United States". That is, they see the US Dollar for what it is: a bad hair piece covering up the bald truth...THE UNITED STATES IS FLAT BROKE.

"But retail sales were up the most in over a year." Comes a voice from the herd. Yeah right, retail sales were up...Bullshit! Let's go to the source of these "retail sales numbers" and shed a little light on 'em for all the herd to see.

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $377.9 billion, an increase of 1.4 percent (±0.7%) from the previous month and 5.0 percent (±0.7%) above May 2006. Total sales for the March through May 2007 period were up 4.2 percent (±0.5%) from the same period a year ago. The March to April 2007 percent change was revised from -0.2 percent (± 0.7%)* to -0.1 percent (± 0.2%)*. http://www.census.gov/svsd/www/retail.html

My first thought after reading this blather was: "...they've adjusted the number for everything BUT inflation..." Then I noticed that the margin of error for this advance estimates of U.S. retail and food services sales for May is + or - 0.7%. Advance estimate? Margin of error? Can you say "shot in the dark"? And people "trust" the accuracy of these government reports? Then I started thinking about what this "report" actually measures. U.S. retail and food services sales... So somewhere in a high tower in la-la land a group of government surveyors "estimate" how many dollars were spent each month. Seriously, they're really just "guessing":

The advance estimates are based on a subsample of the Census Bureau's full retail and food services sample. A stratified random sampling method is used to select approximately 5,000 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms. Responding firms account for approximately 65% of the MARTS dollar volume estimate. For an explanation of the measures of sampling variability included in this report, please see the Reliability of Estimates section on the last page of this publication.

The key though to understanding this report and giving it some face value is this: Without adjusting for inflation the number is a bald faced lie. If retail and service prices are rising MoM and YoY, any 5th grader could quickly figure out that "Dollars spent" would rise commensurately. I've worked in the retail grocery business my entire adult life. Every year, month after month, I hear the same thing, "...sales were up 15% over last year...", or some such claim.

And I always say to the boss man when he boasts like this, "That's great, but how much were food prices up in the last year? Were our 'sales volume' numbers up as well?"

"Greg, why do you always rain on my parade? It's all about 'sales growth' baby. How many times do I have to tell you that?"

"Yes, sales growth. We're rockin' boss!"

But have "sales" really grown? Or do things just cost more? The answer is simple...they cost more. Need proof?

Sales would have been strong even without last month's big jump in gasoline prices, which saw prices top $3.20 per gallon. Excluding sales at gasoline stations, overall retail sales would still have been up 1.2 percent. http://www.sltrib.com/News/ci_6129967

0.2% of the "unexpected" rise in retails sales in the month of May came from an increase in the "price" of gasoline. How much did the increase in the cost of everything else attribute to the "increase" in retail sales. Did we sell more stuff, or did it just cost more?

I'm anxious to compare this Friday's May CPI numbers to May's retail sales numbers. But then again, those numbers are rigged to...

THE METALS

Resilient bounces in Gold and Silver were once again swiped by dem Rat Bastids on the COMEX as both metals promptly faded after the 11AM close of the LME in London. I could retire if I'd shorted both metals at 11AM over the past week. These cocky vermin need a royal ass whuppin. Of course, this 11AM dump is getting so predictable now, I wouldn't be surprised if traders are just cutting and running in anticipation of these daily Rat Bastid raids. Perish the thought.

Technical repair remains for both metals. Bullish Divergence has appeared on the internal indicators of the 'hourly' chart above. An intra-day test of Friday's low has printed. But to confirm Friday's low we still need to see Gold close above 655 and Silver above 13.26.

Support at the 50 WEEK moving average of both remains key:

Gold: 640

Silver: 12.71

Questions and comments are welcome by emailing me at:

mau-mau@ec.rr.com

The Damage Has Been Done

Excuse me please if I remain bullish in the face of this onslaught. I've survived worse, and I'll survive this as well. Hopefully those reading this will too. Through March, April, and May the Gold Market absorbed 170+ tonnes of central bank gold selling. All of it bought at prices higher than we are staring at today. Investor demand grows by the day, as supply shrinks. In retrospect, today's "drama" feels like a walk in the park compared to the nightmare we all lived thru (and survived) last Spring as Gold collapsed between May 11 and June 13, 2006.

Oh my, look at the calender, today is June 13th, 2007. What a bizarre coincidence.

Yes, once again the picture isn't pretty. The bulls are hanging their heads, sentiment at a low. What a pity party we are reluctant to attend.

Baby steps. Gold and Silver will repair their despair. It will take time, and only add to our frustration. Six months from now we can all look back and laugh at our sorry asses as we stomp on dem Rat Bastids and squeeze da piss out of them.

We must walk before we can run. It remains to be seen if Friday's low was the bottom. We should know by the end of this week. On the one hour charts Gold and Silver both broke their free fall from Friday on Monday. Tuesday they revisited Friday's lows in what so far appears to be a retest of those lows. To confirm the Friday low and Tuesday's retest, Gold must clear 655 and Silver must clear 13.26 on a closing basis.

The 10 year T-bond has been in a reverse parabolic dump for several days now. That's a wordy way of saying the 10 year T-bond has fallen off a cliff. However, with key support within spitting distance, and the 1o year now at parity with the Fed Funds rate, it would not surprise me to see a bounce in the 10 year note here. Who will be buying those notes? Ben Bernake and friends. He has admitted to such a reaction should the world begin to dump our bonds. Ben and Company cannot afford to let this rout in the bond market get out of hand and take down the stock market and the economy. They'll print some more money, buy some treasury bills, and hope for the best. Meanwhile, the Precious Metals will get a choppy reprieve until the sh*t (the Dollar) hits the fan this fall and the Stock market revisits 1987.

All Aboard!

Gold and Silver Support continue to be at their respective (rising) 50 WEEK moving averages:

Gold Support: 640

Silver Support: 12.71

FUNDAMENTALS, Damn it!

Over the years I have become a chart junkie. One of the pitfalls of being beholden to your charts, is that sometimes you can be misled by them because you have ignored the simple "fundamentals" that underlie the object of your chart. All a chart really is, is a picture of the sentiment of a given market based on the interpretation of known fundamentals and/or concurrent news affecting the particular market. Bearing that in mind, one must wonder if Gold and Silver are really breaking down here technically, or just being pushed around at the behest of the evil Gold Cartel, aka PPT...Rat Bastids in an attempt to steal your metals from you.

I have been scouring the Internet for "thoughts" on the Precious Metals current predicament for the past five days. Well respected technical analysts are suddenly all doom and gloom, but the fundamentalists seem to be very serene about the current situation. Being the chart junkie that I am, it should be difficult for me to switch camps here from charts to fundamentals, but folks...it really is all about the fundamentals now when it comes to Gold and Silver. In the end, the crooks on the Comex are going to get steamrolled by the fundamentals no matter how hard they try to "paint the charts" after the LME closes each day in London at 11AM.

Below are some of the more interesting pieces I have come across in my "research". Perhaps one of the most intriguing "pictures" I came across during my reading was the correlation between Gold and the Japanese Nikkie Index. That was a bit revelation for me. The picture is posted above.

No other national stock market tracks Gold the way the Nikkie does. And Greg Silberman makes an interesting hypothesis about this relationship as it pertains to falling bond prices:

Why Falling Bonds Are Good For Gold

http://gold.seekingalpha.com/article/37760

So what’s happening? Why are bonds tanking? ...why are interest rates rising in the face of a slowing economy?

The major holders of long-term US bonds are Japanese investors. A slowdown in the USA is causing Japanese investors to sell US bonds (raising rates) and repatriate their funds back home to invest in Japanese stocks with offer more promising prospects. More promising because Japan is a net exporter and the weak Yen is a boon to Japanese Corporations.

The upshot for gold investors (as the above chart shows) is that gold is very closely tied to rising Japanese stocks. Interest rate sensitive banks and housing stands to be the most negatively effected.

A slowdown in growth is causing a shift out of US long-term debt into the Nikkei and by correlation into counter-cyclical gold.

Peter Grandich is a very well respected commentator on the prospects of Gold. In a special post to gata.org this weekend he explains and expresses why "Golds fundamentals will trump technicals. This is an excellent read and I encourage you to read the entire post here: http://news.goldseek.com/Grandich/1181574060.php

Now the recent argument is that interest rates are rising and that’s good for the U.S. Dollar. It would be if they were just rising here, but they aren’t. And unlike in Europe, for instance, where the main reason for the rise is strong economic growth, the U.S. is possibly entering the worst of all worlds last seen in the 70s-stagflation.

There’s absolutely nothing but hot air to support the argument that the U.S. Dollar is going much higher. Not only has it been on a continuous long-term slide from 120 basis the U.S. Dollar index, but there’s nothing to suggest on the weekly chart that it’s doing anything more than correcting a very oversold condition. The testing and eventual breaking below the 80 level on the U.S. Dollar Index is, in my mind, not a question of if, but when? Believing this and knowing how well the inverse relationship has worked in the past, the single most bullish factor for gold remains staunchly bullish.

James Turk is another well respected commentator on Gold. He is the founder of Gold Money. His brief post this weekend hits the nail on the head fundamentally and technically as well. He alludes to the Gold/Silver ratio I spoke about last week. I said a close below 49 would signal an explosion is Silver prices, he says 48.70. Hey, I like this guy! I have included the entire text of his post below because I believe it's important that everybody read what he has to say. His entire post with charts can be found here: http://goldmoney.com/en/commentary.php#current

Will History Repeat?

What do January 5th, March 2nd and June 8th, 2007 have in common?

The answer is that all three are Fridays, and gold dropped like a rock each day. Also, each day marks the end of the week in which gold incurred its three largest weekly losses this year. Gold dropped $30.30 the week ending January 5th, $41.60 the week ending March 2nd and $25.70 last week.

These three days have other similarities. All three have elements that are typically present in a selling climax. Importantly, as one would expect from a selling climax, both January 5th and March 2nd marked important lows in gold at $604.90 and $641.50 respectively. Will history repeat, with June 8th becoming this year's third important low?

Only time will tell of course, but the odds favor gold for many reasons. To name a few of these reasons:

- rising inflationary pressures worldwide,

- strength in commodity prices in general and crude oil prices in particular,

- a weak dollar, which people are fleeing in order to hold safer assets,

- growing federal deficits that need to be funded by dollars created out of thin air,

- central banks diversifying out of the dollar, etc.

Also, the technical patterns favor gold...

Gold is still climbing within its uptrend channel. Importantly, this year's two previous selling climaxes I refer to above were stopped on the bottom line of this uptrend channel. We will know within a few days whether the June 8th decline also proves to be an important turning point. I expect that it will.

Silver also is very strong from a technical point of view. Silver is testing support around its 200-day moving average. If gold turns higher from here, we can expect silver will lead the way, given its better relative strength. Therefore, a decline in the gold/silver ratio will signal that a rally in the precious metals has begun.

So watch the gold/silver ratio carefully here. The key level is 48.7. When the ratio falls below this level, the rally that I am expecting will have begun in earnest, and it will mark June 8th as the third Friday this year that made an important turning point.

Lastly, you may be wondering, why gold has made these lows on a Friday? There are two main reasons. Both are contrived, with one based on practical factors while the other is aimed at inflicting an adverse psychological impact.

Trading gets very thin and illiquid on Friday afternoons, particularly after 4.00pm London time, which is 11.00am in New York and 2 1/2 hours before Comex trading closes. If you want to "paint the tape", that is the best time to do it. The following intraday Kitco chart shows that the tape was painted last week on both Thursday and Friday.

It doesn't take a lot of selling pressure on the Comex (i.e., from paper promises to deliver gold) to drive gold lower when the market for real, physical gold is closed in London, particularly on Friday after many traders have already left for the weekend. This observation in turn touches upon the second reason lows are often made on a Friday.

Big sell-offs are purposefully intended to cause gold holders to worry over the weekend. The thinking goes that one is so filled with angst by Monday morning worrying about their position that they can hardly wait for trading to begin on Monday to dump their gold, which will of course be bought by whoever was "painting the tape". And who could that be? Of course it is the gold cartel looking to cover their short positions by preying on those selling their gold for the wrong reasons. Don't let that be you.

The Precious Metals look to be struggling a bit here this morning on the back of the "slowing inflation" numbers out of the UK this morning. Things will get really interesting Thursday and Friday as the CPI and PPI numbers come out here is the States. The most important number will be the the TIC report and the first quater Current Account numbers. The media will of course focus on the inflation numbers. TIC and Current Account may firther expose the US Dollar for what it is...CRAP.

Key numbers for Gold and Silver to overcome to move higher are:

GOLD - 655

SILVER - 13.26

Key support numbers remain the 50 week moving averages:

GOLD - 639

SILVER - 12.67

Quit Yer Bitchin'

Yeah, this sucks. But let's look at The Big Picture and gain some historical perspective. The daily markets are rife with NOISE. If you allow your emotions to be dragged around by the "daily noise" in the markets you're going to become a basket case staring out the window wondering how hard the pavement is down below. Ignore the noise! Rising rates are GOOD for Gold!

No market goes straight up...not even the Chinese Stock Market has gone straight up. Gold's and Silver's run up to their highs in May of 2006 did not go straight up. The Gold Market and especially the Silver Market will rip your heart out if you let them. But the fact is, Gold and Silver have been rising for the past six years...in spite of all the noise...and rising interest rates.

Just about everyone and their brother have thrown in the towel and that’s what a gold bull market does best. It sucks you in when you have no business buying and it pushes you out just when you should be in. --Enrico Orlandini

DON'T throw in the towel. I've posted four charts above: Gold, Silver, US Dollar, and 10 year US Treasury Note. I have kept the technical analysis to a minimum on purpose because right now facts and fundamentals are what is ultimately going to lead Gold and Silver thru this period of Precious Metals uncertainty. Please click on the charts to enlarge them.

It should be quickly apparent to any observer that over the past 2 years that the 10 year T-bond has been steadily falling. As it has been falling, so has the US Dollar. Conversely, Gold and Silver have been rising.

July 2005 to June 2007:

10 year Treasury Note - 8.2%

US Dollar - 8.6% [ USD since Nov. 2005 top -10.4% ]

GOLD + 61%

SILVER + 94%

Remember...Falling treasury note prices equals rising interest rates, and rising treasury note prices equals falling interest rates. Keeping this in mind, it is obvious then that rising interest rates ultimately are NOT good for the Dollar...but they are good for Gold and Silver.

Well then, why is the Dollar rising as the 10 year note tanks today? I think Chuck Butler over at the Daily Pfennig has some great perspective on that:

The long-term bond yields in the U.S. have finally moved above 5% with the 30-year bond now yielding close to 5.30%. The theory is that investors, seeing yields rising in the U.S., are selling off risky assets (namely emerging market equities) and bringing money back into US$. The rising bond yields are a prediction of global inflation, which will be negative for stock markets. Those markets, which have had the biggest gains, are also some of the riskiest. With rising global inflation, investors are selling these equities and are moving back into cash. The US$ is still seen by the world's investors as the safest place to park cash. With global equity markets moving down, I believe this is the most likely explanation for our sudden rally in the US$.

So where does it go from here? As I said above, the world's investors are currently flocking to cash. Eventually this cash will need to be put back to work, or will be used to pay off the loans that many of these investors have used to create the explosion of liquidity we have seen over the past few years. As I have said in the past, many loans are denominated in the lowest-yielding currencies, the Japanese yen and the Swiss franc. If/when investors finally decide to pay back these loans, they will need to buy both of these currencies and the "carry trade" will be reversed. As I mentioned above, I think blaming a reversal of the carry trade for the move in currencies overnight just doesn't make sense. But at the same time, I do believe we have seen the first step in a reversal of this trade.

The sell-off in the Asian markets last week has been followed up with more selling in other equity markets. Carry trade investors haven't yet given up on the trade, and right now are parking their cash in the US$ waiting to see what happens. After all, with short-term U.S. treasury rates just over 5% they can hold US$ in cash and still make a small spread since interest rates in Japan are at or below 1%. But there are costs associated with these loans, and with interest rates slowly creeping up in both Japan and Switzerland, I don't think they will sit in US$ cash for very long. These investors are either going to have to repay the loans, buying back the yen and Swiss francs, or they will move this cash back into higher-yielding markets.

So this latest move by the dollar is just temporary. Investors are using the US$ as a parking spot while they are waiting to see where to invest next. Europe and Asia continue to grow at a better pace than the U.S., so I believe investors will be returning to these markets. The higher long-term rates here in the U.S. will make all of the adjustments on mortgages impact U.S. consumers even more. A slumping housing market and rising interest rates will continue to make U.S. consumers tighten their spending. The US$ will continue to trend down vs. the currencies of economies that are better off.

http://www.kitcocasey.com/displayArticle.php?id=1427

Excellent explanation Chuck! I think it also means that there are no "real" buyers of Dollars out there. American investors can't bring their money home from overseas markets with out first buying back the Dollars they sold to buy the foreign assets. They have to buy the Dollar. The Dollar is ca ca, and this recent bump up in the Dollar has needlessly spooked Gold investors. It's interesting once again to note that the brunt of Gold's whupping this week occurred after the "physical trading" on the LME in London closed at 11AM and the crooks [aka dem Rat Bastids] on the COMEX could have their way with Gold and Silver in the "futures pits".

What Will the Fed Make of the Bond Market Panic?

What will the Fed chairman make of this week's panic on Wall Street? Well, inflation expectations are "well contained" said Michael Moskow, president of the Chicago Fed, in a CNBC interview Friday morning. But "that doesn’t mean we’re not concerned about inflation. It doesn’t mean that we don’t think inflation is the predominant risk going forward."

Put Moskow's comment into context – the context of this week's bond-yield panic – and you'd be forgiven for thinking the Fed is happy to see Wall Street hiking long-term rates at last.

After all, no one believed Bernanke was serious when he raised short-term rates 17 times in two years – least of all bond investors, leveraged hedge funds, and speculators in the gold market. Only the sub-prime mortgage market fell for the Fed's "tough on inflation" play-acting. Now the bond market's caught up, however. Should the sell-off in 10-year US bonds continue next week, the yield curve threatens to flip itself right-side up – and stay there – with a vengeance.

The yield curve might even steepen, in fact – making long-term money much more expensive than short-term debt. Most especially if the Fed seizes this chance to start cutting short-term borrowing costs once again.

"Our objective is to have maximum sustainable growth and price stability," Moskow went on.

"We look at the entire economy. We look at the financial markets as part of that.

"We look at all this data and then decide what’s best for the American people."

You won't have the Fed to kick around, in other words, if it was the bond market that raised the cost of borrowing. And now that all the cheap money's piled up – on Wall Street, in home prices, junk bonds, fine art and mortgage-backed notes – what's best for the American people will soon come to look like lower Fed rates. Because if Washington and the US consumer can't borrow cheap at the long end, then they'll just have to go to the short end for cheap money instead.

And as the Fed gets busy destroying what's left of the Dollar, gold below $650 today could soon come to look like the sale of the century. --Adrian Ash

http://news.goldseek.com/GoldSeek/1181334869.php

Brilliant! The Fed will blame Wall Street when the economy tanks, and then ride to the rescue with a rate "cut", and then blame Wall Street again when the Dollar implodes and destroy's the Stock market. Remember folks...the fed can do no wrong. Yeah, right...

I hope sharing these observations of mine help get ya'll in "off the ledge", and help you quit thinking of "throwing in the towel". The sale prices on Gold and Silver have been extended. Tell your friends and loved ones to buy some of both today.

I'll give Neal Ryan over at Blanchard the last word:

The funny thing is that as this technical breakdown is taking place in the market, the underlying market fundamentals for why precious metals prices should continue a multi-year bull run are only getting more and more bullish. So we might be caught in a trap right now where technicals are moving the market, but the fundamentals are only continuing to improve. We're going to hit an inflection point in the future where the technical trade points aren't going to matter any more; the fundamentals are going to be so attractive for investors, the technical trading picture will get tossed out the window and prices will simply be forced higher; paper trades be damned.

http://news.goldseek.com/GoldSeek/1181315070.php

AS we begin the week, let's stay focused on the 50 week moving averages in Gold and Silver for SUPPORT.

Gold 50 week moving average: 639

Silver 50 week moving average: 12.67