Sunday, June 24, 2007

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.

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

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