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GATA issues worldwide press release on Treasury Dept. correspondence
By Peter Brimelow
CBSMarketWatch.com
Monday, August 22, 2005
http://www.marketwatch.com/news/story.asp?guid=%7B16F775FE%2D0DAB%
2D41FD%2D9D5B%2DD6518D46BAC8%7D&siteid=mktw&dist=
NEW YORK -- Gold bulls were snorting with rage and grinding their
teeth at the end of last week.
Record prices for oil and copper, unexpectedly high inflation
numbers, nothing but alarming news out of the Middle East -- and
Comex gold closed down $8.70 an ounce on the week, slipping away
from the promising post-June high of the previous Friday. This
pullback came despite the gold contract making a new 2005 high on
Tuesday, to boot.
Only inattentive observers offered summer doldrums as an excuse.
Volume was actually quite heavy for the time of year, averaging over
50,000 contracts daily. Open interest, representing the total number
of contracts outstanding, rose by nearly 4%, which is quite a lot.
Fresh buying was evidently overwhelmed by fresh selling. Why?
The Privateer, Australia's omniscient gold Web site, was unusually
blunt:
"When the 'higher-than-expected' 0.5% CPI number was announced on
Aug. 16, gold climbed $4.70 to a new high in this cycle of $446.10.
But the next day, when the much worse 1.0% PPI number was announced,
Gold fell $6.20 to $439.90.
"Something had to be done about the ultimate 'inflationary
indicator,' which is the gold price. On Aug. 17, faced with the
worst official measure of inflation for years, it was. ... You
should find it in any way surprising. After all, governments have
been getting away with their unemployment and 'price inflation'
measurements for even longer."
Since gold started the move off its Aug. 2 low, Comex open interest
has risen 36%, one of the steepest rises for many years. Gold's up
just over 1%. On the face of it, the bulls have something to be
disgruntled about.
(Readers of my June 27 column "Is GLD as good as gold?" will be
interested to know that the volume of gold acquired by this bullion-
holding ETF over this busy upswing was ... zero. It did accurately
track the gold price, which numerous annoyed e-mailers told me was
all they care about. But gold analysts must clearly discard the
concept that heavy demand for GLD shares translates fairly directly
into buying of physical gold.)
Several hard-core gold bug newsletters -- for instance, Jay Taylor's
Gold & Technology Stocks -- unhesitatingly point to the "official
sector" -- central banks -- as the culprit.
Right now this is a particularly sensitive topic. On Tuesday, the
European Central Bank will publish its weekly consolidated balance
sheet, which involves announcing how much gold the group of central
banks subordinate to it have sold.
Last week's announcement indicated they have slightly exceeded the
quantity under the selling agreement that they have bound themselves
to respect. On the face of it, they can sell no more until October.
The imagination of some traders has been caught by this. If there
are more sales, they might be upset. The conspiracists in the gold-
bug world will feel vindicated, if possibly poorer.
On the other hand, India, the world's biggest gold consumer, is a
resolute buyer, according to data published on the Lemetropolecafe
Web site (compiled by my brother -- please, does anyone else publish
this?).
Gold stands in relation to oil massively at its lowest ratio since
it was freed in 1968, as vividly documented recently by Adam
Hamilton of the Zeal Intelligence webzine. A correction's screamed
for, in other words.
Very unusually, gold-mining shares edged up on Friday even though
gold was soft -- they often seem to have predictive power. And The
Gartman Letter, often seen as offering insights into the thinking of
hedge funds, has nearly half its model portfolio in gold.
In the gold world, the possibility of sneaking away for some rest
and relaxation as summer draws near a close looks likely to be
difficult.
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RECOMMENDED INTERNET SITES
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http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
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http://www.resourceinvestor.com
http://www.goldpennystocks.com/
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http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
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