Stop Your Sobbing

World Gold Council Reports Demand for Gold Thirty-One Percent Higher Than Last Year

Santa Monica, CA (PRWEB) June 7, 2007 -- The World Gold Council has reported a thirty-one percent increase in the demand for gold from last year. This thirty-one percent increase is due to consumer demand in China, India, and the Middle East for gold coins and gold jewelry. These driving factors already in force have most analysts forecasting higher gold prices. According to Lear Financial.

http://www.emediawire.com/releases/2007/6/emw531737.htm

INVESTOR DEMAND. Investor demand is how the Gold market can absorb 170 million tons of central bank Gold selling the past three months and still hold it's head above water. Investor demand is the single most important variable in the continuing upside in the price of Gold. And it is growing investor demand that will ultimately CRUSH dem Rat Bastids seeking to discredit Gold and prevent it's rise back to it's rightful place as the World's ultimate currency.

So what the hell happened to Gold today? Simple...the interest rate boogie man was unleashed on the market. Apparently since the rest of the World is raising interest rates, then the US Fed must be thinking about doing the same. The flaw in that thinking is that the rest of the world has "local" growth rates that warrant an increase in "local" interest rates.

Last year the United States ranked 148th in the World GDP rankings:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html How pathetic is that? I'll tell you...even poor bankrupt Spain is ahead of the United States on the list at 144.

And suddenly with a fear of rising interest rates, the US Dollar catches a bid. LOL, they could raise interest rates to 20% and the US Dollar would still be ca ca. And with the Dollar rising, Gold and Silver fell...of course.

There's some interesting facts about the relationship between interest rates and Gold that I think are being over looked by many. Gold can and will go up in a rising rate environment. The 1970s proved that. Let's look at some numbers that make the case for Gold rising in a rising interest rate environment. Please click on the charts above to enlarge...seeing is believing.

January 1977, 10 year T-bond = 6.84%

January 1980, 10 year T-bond = 10.50%

Interest rates on the 10 year T-bond increased 53.5% between Jan 1977 and Jan 1980.

January 1977, 30 year T-bond = 7.70%

January 1980, 30 year T-bond = 10.11%

Interest rates on the 30 year T-bond increased 31.3% between Jan 1977 and Jan 1980.

January 1977, Gold = $136 an ounce.

January 1980, Gold = $512 an ounce.

The price of Gold per ounce increased 276% between Jan 1977 and Jan 1980.

Surprised? You should be. The media today would have you believe that the sky was falling because interest rates were rising. Even more surprising is the fact that the stock market performs worse when interest rates are falling than when they are rising. The stock market was down from 2000 to 2003 as the Fed cut interest rates and was up from 2003 to 2005 as the Fed raised interest rates. Oddly, the Stock market has moved sideways or up over the past two years in hopes of renewed interest rate cuts. I think this says but one thing about the Stock market highs we have seen recently...they are clearly the result of inflation, purely liquidity driven. Interest rate cuts usually coincide with a recession. A recession pressures corporate profits and results in lower stock prices. Today's Stock Market is built on exponentially compounding lies spewed by false government statistics and the spin of the financial media. This is why Gold has out performed the Dow over the past six years, and why it will outperform the Dow for the next six years as well.

The Dollar was up today because the 10 year T-bond took out the psychologically important 5% yield threshold. But it was up on short covering nonetheless...this bump-up in the Dollar will be short lived [no pun intended]. There still exists no fundamental reason to actually buy the Dollar, and overwhelming fundamental reasons to sell it.

Meanwhile, the dollar's strength is not expected to be long-lasting.

"The further bond yields rise, especially in the US, the more likely the negative impact on the economy, so at some point the situation should stabilise," said Ian Gunner, currency analyst at Mellon Foreign Exchange.

Analysts at BNP Paribas agreed.

"We would reiterate that current market developments are ultimately dollar negative," they said.

http://www.fxstreet.com/news/currency-focus/article.aspx?StoryId=761cc4ec-3411-4a18-9760-626dff86fe93

As to interest rates...The fed has three choices: Raise interest rates, cut interest rates, leave interest rate unchanged. At this point in time, all are good for Gold.

Cut Interest Rates: destroy the Dollar, prop up the economy and the stock markets.

Raise Interest Rates: prop up the Dollar, destroy the economy and the stock market.

Leave Interest Rates Unchanged: watch the rest of the world kick sand in our face.

There is one indisputable fact in all this interest rate blah-blah...the price of Gold and Silver have been steadily rising since the turn of the century. For the past six years Gold and Silver have been rising along with the potential to rise much further. In three years from 1977 to 1980 gold rose 276%. Gold began 2007 at $640 an ounce. If history were to repeat itself over the next 3 years, Gold would rise $1766 to $2406 per ounce by January 1, 2010. Let them raise rates...Gold will not care.

Cheer up peeps. Today was just one day. Isn't it interesting that Gold held it's own today until the LME in London closed at 11am est.? Dem Rat Bastids at the COMEX can't get an ass whuppin soon enough... PATIENCE. Conviction. Good things come to those who wait. Below, I have added a link to an "uplifting" piece everybody should read so they can turn that frown upside down:

Gold: Where to Now
By Enrico Orlandini

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. Next stop, gold at $775.00!

http://www.kitco.com/ind/Orlandini/jun062007.html

Silver Resistance: 13.53 / 13.58 / 13.63

Silver Support: 13.40 / 13.28 / 13.15

____________________________All prices SPOT

Gold Resistance: 660 / 663 / 665

Gold Support: 658 / 656 / 652

The Toast Is Burning

Dollar firms on reports North Korea has test-fired short-range missiles
Thu, Jun 7 2007, 10:56 GMT

LOL! Woe those that buy the US Dollar in a "flight to quality". If the only reason for this mornings "firmness" in the dollar is this "news", then it shouldn't be firm for long. Why would anybody buy the US Dollar? Where's the quality? BUY GOLD.

Investors have yet to wake up and smell the toast burning. The Dollar is toast. When they do wake from their decades long slumber, and realize that the Fed has robbed them blind, they will begin what will become a stampede into Precious Metals. The mad rush of the "investor class" into these tiny markets will send the metals to heights never seen.

Jason Hommel in his piece The Tiny Size of the Gold Market http://www.silverstockreport.com/2007/tiny_size_of_gold_market.html explains with numbers how small the Gold Market is relative to all the money in the world. It really is quite an eye opener. Especially in light of how quickly the world's central banks can print money in relation to how slowly Gold is pulled from the mother earth.

...the world is creating new money at about a rate nearly 100 times faster than the world's value of new gold.

With gold now rising since the bottom in 1999 or 2001, people are now beginning to look at gold, and paper money, they are beginning to discover the relative size of these markets...

...investors, the world over, may have about $40 trillion worth of investments to allocate and spend on gold. What if 5% of that went into gold? That's $2 trillion dollars...

What will happen when that much money is going to move into gold, when the world's annual gold production is a mere $54 billion?

Today, we have many confirmations of major gold buying, on the horizon. China will be buying someone's gold. CalPERS manages over $234 billion for California employees, and is bullish on commodities now, including gold.

I read that "Barclays Capital did a survey of their institutional clients and 70% of them said they would have 5% of their assets in gold in three years time."

I don't know what these money managers are thinking. If they knew about the relative size of the gold market, the price would be $2000/oz. by tomorrow morning. As it is, the gold price is likely to hit $2000/oz. within 3 years, and most will still miss the big easy gains.

Novartis' recent announcement that it intends to invest 4% of its nearly $11.5 billion pension fund in gold, silver, platinum and palladium is just the tip of the investing iceberg that will sink the US Dollar and crush dem Rat Bastids that are propping it up. As inflation continues to heat up globally, the strategy to diversify into something of real value is likely to gain new and unexpected buyers of gold and the other metals.

PATIENCE. Axl Rose may be a nut case, but Axl said it best in the Guns 'N Roses classic, "...all you need is a little patience..." PATIENCE. Just a little patience will go a long way in containing any frustrations you may have with the Precious Metals markets. These markets are NOT for day traders, they are for "swing traders" if you must trade. Sell a portion of your position into strength, and buy it back on weakness. Otherwise, sit on your hands and watch as Gold steam rolls the US Dollar.


Silver Resistance: 13.66 / 13.70 / 13.78

Silver Support: 13.58 / 13.49 / 13.42
________________________________All prices SPOT

Gold Resistance: 672 / 675 / 681

Gold Support: 668 / 664 / 662

Don't Give Up Your Seat

The Bank of Spain updated May sales figures this morning and no surprise, Spain sold another 28 tonnes of gold in May after having sold 40 tonnes in March and another 40 tonnes in April. In three months and via an unannounced sales program, Spain has sold over 25% of their total gold reserves into the market. The interesting point to keep in mind is that this might not necessarily being done to grab the best price…no, this "sales program" which has merited no public comment from the bank could be forecasting a much larger problem on the horizon in the fiat currency of Spain. While we are no expert on the Spanish economy, this fire sale of gold reserves looks much more like an attempt to raise quick cash to solve banking and housing issues rather than a program of diversification.

http://news.goldseek.com/GoldSeek/1181055840.php

Neil Ryan from Blanchard and Co. makes an astute observation above about Spain and her Gold sales. These voluminous Spanish Gold sales are less about trying to "cap" the price of Gold, and more about a desperate act by a desperate national government in dire financial straits. According to an article in London's Daily Telegraph, the Spanish government is running out of money. The Banco de Espana now has less than $17 billion in foreign currency and gold reserves left. This is enough for just 12 days of imports. The only nation in the world with a worse current account deficit is the United States.

Ryan went on to say:

The 133 tonnes in total sales over the past 3 months has not included the 37 tonnes in sales from the ECB umbrella organization as of yet. Looking at updated figures this morning showing less than 2 tonnes of sales last week by ECB captive banks, that 37 tonne figure has yet to show up in reports. So all told, the gold market in the last 3 months actually digested 170 tonnes of gold sales from ECB banks. We have no updated figures yet on banks outside of the ECB system because they report on a 3-6 month lag.

For a point of reference, even during the Bank of England and Bank of Switzerland gold purge from 1999-2004, no three month tally during the CBGA has been as high as 170 tonnes of sales into the market. The fact that the price has held up during this sharp increase is nothing short of remarkable and should highlight for even the market novice the underlying strength in the market.

In other words, recent news of more gold sales by Spain should not be spooking the Gold market. And the fact that the market has been able to absorb this huge supply should give the Gold Bulls some confidence going forward from here.

_____________________________________

I recently referenced the record highs in the Dow Index and that at break of $67 in Oil could be the catalyst that crushes the Dow. A piece by the venerable James Turk posted on Kitco.com yesterday exposes these "new highs" in stocks for what they are...an illusion.

"...when measured in (Gold) the S&P 500 (today) is 71.19 goldgrams, well below the July 16, 1999 peak of 173.53 goldgrams. In other words, if you held the S&P 500 during this period instead of gold, you would be 59% worse off. Even allowing for dividends received, you would still be almost 50% worse off had you held the S&P 500 instead of gold.

More importantly, the real reason for the so-called ‘record high’ in the Dow and S&P is being ignored. A flight from the dollar into safer stores of wealth has been underway for years, but is now palpably gaining momentum.

What does the US have in common with Argentina in 1999, Russia in 1998 and Weimar Germany in 1923? They all had rising stock market prices when measured in terms of these countries’ domestic currency before the currencies of those countries collapsed.

http://www.kitco.com/commentary/turk.htm

Federal Reserve Chairman Ben Bernanke Expects Economy Will Rebound in Months Ahead

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke predicted Tuesday the economy will rebound from its anemic start of the year even if the housing slump persists. Wall Street slid, taking the news as a sign the Fed won't lower interest rates.

http://biz.yahoo.com/ap/070605/bernanke.html?.v=14

LOL! Like he's going to come out in front of the world and tell everybody that the US Economy is about to go down the toilet. A snowball has better chance in hell, than the world has a chance that this clown will ever tell it the truth about the US Economy. And these jokers on Wall Street continually pandering for a rate cut. FOOLS! The Dow is going to go down regardless of what Capt. Bernanke and his cronies do with interest rates. In fact, historically, a rate cut by the Fed usually signals a recession is at hand. And in today's world, a recession and rampant inflation equals STAGFLATION. A slower economy with rising costs equals LOWER corporate profit. And LOWER corporate profits equals LOWER stock prices. So Fools on Wall Street...be careful what you wish for.

Gold and Silver bugs, there is but one word for you to pay attention to "ACCUMULATE". As in buy all the Gold and Silver you can afford...A "perfect storm" of economic chaos fast approaches.

_______________________

SILVER

Briefly, silver has run into some "overhead supply" here as we close the gap from the April 26 dump in Silver that lead to our recent bottom at the 200 day moving average. The overhead supply is made up of buyers around 14 that got stuck holding the bag when Silver tanked. As you can see by the volume leading up to the gap down, supply looks thin and should only pose modest resistance here at 13.75. Every move thru 13.75 the past two days has been met by selling. Those weak bulls in Silver that are just happy to get out near even are dumping their metal just when they should be buying it. A solid close above resistance here should propel Silver towards another cage match with dem Rat Bastids at 14.04.

Please click on the chart above to enlarge.

Silver Resistance: 13.75 / 13.83 / 14.04

Silver Support: 13.69 / 13.55 / 13.49

____________________________________All prices SPOT

Gold Resistance: 672 / 675 / 681

Gold Support: 667 / 664 / 662

If you would like to contact me with questions or comments please email me:

mau-mau@ec.rr.com

The Countdown Has Begun

SMART TRADERS

"Having broken from its $655-to-$665 range, gold is likely to generate some further momentum in the week ahead," said James Moore, metals analyst at TheBullionDesk.com, in a research note.

“The dollar weakness should give gold a boost,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “People are looking for gold to go higher.''

“The market is focusing on inflationary concerns,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York. “We have a lot more investors looking to trade gold as a hedge against their stock portfolio.''


DUMB ASSES

“There isn't a real reason for gold to move higher from here,'' said Ralph Preston, a senior market analyst at Heritage West Financial Inc., a futures brokerage in San Diego. “Momentum is petering out. The dollar needs to make another low, and oil needs to start mounting a challenge on its record.''

"You don't have a lot of really bearish news and you also don't have a lot of bullish news. I would be surprised if we broke out of a trading range of $660-$680 in the next few days," said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank.

"The dollar is still important because it limits the upward movement of gold prices. The currency gained a lot in the last few weeks, and there is little indication that the dollar will fall again substantially in the near term."

Well Mr Widmer, the Dollar on Monday crashed through it's up trendline and continues down this morning, Tuesday, June 5th. The Euro has cracked 1.35 to the upside, and traders there eagerly await tomorrow's ECB interest rate call and accompanying "words".

Monday's consolidation of recent gains in both Gold and Silver should not be of a surprise to any one...especially when considering the trepidation that swirls around any "fall" in the Chinese Stock market. It is odd though that the Chinese market can have such a "psychological" effect on world traders when the world is virtually banned from investing in the Chinese Stock Market. There are Chinese stocks that trade on "world markets", but the world markets can't trade Chinese stocks in China. Follow me?

What was surprising was that with the Dollar firmly down and Oil again rising, the metals didn't get a bit of follow thru Monday. I suspect they will shortly, and Gold $700 headlines will not be far behind.

Some very interesting reading below. Please follow the links to enlightenment.

Gold: $666 and Rising? By: Adrian Ash
Anyone wanting to bet on a cheaper Dollar – or simply hedge themselves against the grinding decline in all currency values – might do well to avoid Euros, Sterling and Yen. Gold remains the only world currency not open to debasement, competitive devaluation, or the excessive promises of overspent governments. And at $666 per ounce on average right now, it also remains within spitting distance of the highs for this bull market so far.

We're Mad as a Hatter By: Charleston Voice
Now that we're back on the bull track, several have asked what I've been asking myself - "How high is up?" Answer: We don't know. Even in timeframe terms we don't know. Especially in time how long we'll rally in gold, we don't know. There have been an abundance of commodity cycle runs which seem to cluster around the 17-25 year timeframes. Even when they begin is debated. It only makes a difference if you don't recognize the end of it when it's upon you.

Silver: The Long Term View By: Roland Watson, The Silver Analyst
Back in the depression year of 1932 silver was suffering. It had hit a low price of 24 cents per troy ounce as the forces of deflation assaulted commodities across the board. Could things get any worse as no end seemed in sight to the widespread massacre of assets across America and the world?


Silver Resistance: 13.69 / 13.83 / 14.04

Silver Support: 13.55 . 13.49 / 13.37
____________________________________All prices SPOT

Gold Resistance: 672 / 675 / 681

Gold Support: 667 / 664 / 662


If you would like to contact me with questions or comments please email me:
mau-mau@ec.rr.com

Dem Rat Bastids: On The Eve Of Destruction?

"It does seem clear from yesterday's Fed minutes that the Fed is downgrading its outlook for the economy," reckons Michael Woolfolk, currency strategist at Bank of New York, "which is not seen returning to trend growth until 2008."

"We could see some further Dollar weakness," he adds – and as ever, the Dollar is the United States' currency, but it's the world's problem.

And the world is awash in US Dollars...

What the Dollar Means for Gold...

- Lance Lewis

The trade-weighted dollar made another new multi-year low yesterday and closed on a monthly basis below its 200-month moving average for the first time since the 1970s (see the chart here).

Is it a coincidence that gold has suddenly awakened just when everybody was convinced that it was time to get bearish because the "US dollar Index" was bouncing and anybody with a ruler saw a trendline on the metals chart get broken? I think not.

The US dollar Index is irrelevant for gold. The trade-weighted dollar index holds the key to future inflation and the purchasing power of the dollar, which is what determines gold prices at the end of the day, and the trade-weighted dollar continues to tank.

Don't be fooled by the euro-heavy "US dollar index" that the folks in the media keep yapping about. The "dollar" isn't bouncing. It's collapsing, and that's bullish for gold...

http://www.minyanville.com/articles/DXY-US-ChinaFed/index/a/12881

________________________________________________

Gold Rises as ECB Cuts Sales

6/1/2007 12:01 PM EDT

The ECB said it had completed its planned sales of 60 tons of gold and receivables already this fiscal year and wouldn't offload any more until the new period starts Sept. 27.

"I think this ends up helping the market a tremendous amount because sales will dry up," says Neal Ryan, director of economic research at New Orleans coin dealer Blanchard.

http://www.thestreet.com/_yahoo/markets/metals/10360131.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Let's also not forget, as these sales are disappearing off the market, we're still looking at the increasing likelihood of a major strike action in the largest platinum and gold producing country in the world. This is indeed going to be a much different summer than years past.

-Neal Ryan

http://news.goldseek.com/GoldSeek/1180710240.php

In effect, I believe this announcement by the ECB throws the gold shorts under the bus. If you sold your GLD shares in the Gold ETF to chase the Dow over the past two weeks, God bless you. The shorts in the Dow have thrown in the towel, how unfortunate for them as well. Just as the Bulls so often throw in the towel at the bottom, so to for the shorts at the top of a market. This sudden announcement by the ECB may just be the straw that breaks the world of fiat currencies back. A "perfect storm" of economic chaos may be on the World's door step as I type this.I have a number of charts today. Please click on each of them to enlarge.

OIL

In their complacency, I think the geniuses on Wall Street have completely underestimated Oil's effect on the stock market. Historically, falling Oil prices have lead to rising stock prices, and rising Oil prices have lead to falling stock prices...today is no different. Let's travel back to July of 2006. Please refer to the charts above...

On July 14th, 2006 Oil peaked at $79.88 a barrel. On July 18, 2006 the Dow double bottomed at 10683.32. At it's low on January 17, 2007, Oil had retreated 36%. To date, the Dow has advanced 27.5% since Oil peaked. On March 22, 2007, Oil breaks the neckline on a Reverse Head and Shoulders Bottom and has traded in a tight range between 63 and 67 in an Ascending Triangle consolidation ever since. The Dow made a new all-time high, and has been overbought and rising since April 18, 2007. It is my contention, here and now, that when Oil finally cracks $67, a major top in the Dow will be in, the US Dollar will plummet, and the prices of both Gold and Silver will never be this cheap again...EVER.

US DOLLAR

Some of us use Charmin, some of us use Northern, and some of us settle for the "store brand"...but no matter what you wipe your ass with, it's probably worth more than the US Dollar is today. As noted above by the "Trade-weighted Index" of the US Dollar, it is today reaching ALL-TIME lows. The media, of course, [and too many Dollar Bulls] focuses on the US Dollar Index. It is hovering just above all-time lows, hanging by a thread...and some weak handed Dollar shorts. The jig is just about up...

COPPER

Speculation that China was over supplied with copper was just that. Falling stocks in Shanghai and on the LME should put that thought to rest. The chart above speaks for itself...

The GOLD/SILVER RATIO

This ratio and it's chart has clearly shown it's value in pointing out intermediate tops and bottoms in Silver. The chart above may be telling us that we are on the cusp of a major move up in Silver. The next 6-8 weeks in Precious Metals could be breath taking.

SILVER

As shown on the chart above, Silver posted a major breakout Friday. Our next hurdle, as it has been for weeks now, will be 14.04. Clearing this major resistance line held by dem Rat Bastids could propel Silver to a near term-top in the vicinity of 16. This "could be" an opportunity to take some profits in the likely hood, and anticipation of a quick and violent retrace back to the mid 14's. This retrace would set the stage for a run to a possible intermediate top in the 17s prior to the Sept/Dec contract rollover period in August. This is purely speculation on my part, but I believe the chart above says the possibility that this scenario may develop exists. Time, as always, will tell.

GOLD

Today's Gold picture reminds me more and more of the summer of 2005 as each day passes. Should history repeat itself, [And of course there is no guarantee that it will.] Friday's ECB announcement may have lit this rockets fuse. WARNING...doubters will be left at the station. Once this baby leaves the pad, $650 Gold will be history. You can never say you didn't have a chance. Bearish sentiment in Gold and Silver has been overwhelming for the past month...you'll know we're near an intermediate top when Bullish sentiment becomes equally overwhelming. Could $750+ Gold be just weeks away?

As you can see by ALL the charts above, a number of "technical" scenarios may be about to coalesce into a "perfect storm" of economic chaos that may destroy the US Dollar and launch Precious Metals skyward. They won't go straight up, of course...but this next leg up in the metals could shock even the most die hard Gold Bugs.

Silver Resistance: 13.69 / 13.83 / 14.04

Silver Support: 13.55 / 13.49 / 13.37

__________________________________All prices SPOT

Gold Resistance: 672 / 675 / 681

Gold Support: 667 / 664 / 662