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A report on GATA''s participation in the New Orleans Investment Conference

Section: Daily Dispatches

Gold bulls gather, suspiciously

By Peter Brimelow
Monday, November 11, 2002

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NEW YORK -- Richard Russell has finally,
indisputably, said it: The gold market is
being manipulated.

The septuagenarian technician, who has been
publishing Dow Theory Letters for more than
40 years, has had a great year. He has even
caught the recent stock market rebound.

But he thinks it's a bear market rally -- and
was beginning to worry about it this weekend.
(Of course, he worries a lot).

Long-time Russellologists have been sensing
for some time that their oracle was getting
interested in the widely rumored gold
manipulation hypothesis most forcefully
advanced by Bill Murphy's

Thursday, after gold started strong and was
driven back below $320 an ounce, Russell took
off the gloves:

quot;It's obvious that someone, some group,
somebody, does NOT want gold above 320. Who
the hell are they? Is it the Fed that wants
to cover up its frantic attempts to
reinflate? Is it the gold-mining companies
that are still hedged and therefore don't
want gold to rise until they can get rid of
the hedges? Is it the commercials who are net
short? Just who are they?quot;

But Russell takes the long view -- maybe
that's the advantage of age: quot;Look, I believe
gold and gold shares are in the early
accumulation phase of a bull market... [I]
tell subscribers, 'Use this area to
accumulate whatever gold and whatever gold
shares you want to hold. Take this obvious
gold manipulation as a chance to buy gold at
what I consider dirt cheap levels.'quot;

Russell's long-standing view: All such
attempts to control market forces fail.

Commenting on Friday's action, Russell wrote:
quot;Gold now on a 'buy' signal, being well above
its 50-day M[oving] A[verage]. Nevertheless,
the resistance to gold moving higher is
incredible. You can almost feel it.quot;

Actually, it didn't take much quot;feeling.quot; The
end of the week saw a huge COMEX volume
spike, with kamikaze sellers crashing onto
buyers, so that, after a lot of smoke and
flame, the actual price barely moved.

One persistent rumor is that major banks,
notably JP Morgan Chase, are in trouble with
their gold derivatives positions, and that
their death throes are bloodying the waters.

If the great 1990s bubble saw market
manipulation, above all with official
collusion, the resulting scandal will dwarf

Meanwhile, Mark Hulbert reports a remarkable
jump in the bullishness of the gold timers
that he follows -- 57.69 percent invested.
Many gold-timers have mechanical, trend-
following systems. But this is in sharp
contrast to their reluctance to get on board
when gold rallied earlier this year.

In response to my prodding him Sunday night,
Hulbert wrote:

quot;I can't be certain about my categorization
of the gold timers into the trend followers
vs. fundamentalist camps. Some don't divulge
their methods, for example. And there are
some technical approaches that I'm not sure
about -- e.g., is [Bob Prechter's super-
bearish-on-gold] Elliott Wave a trend-
following approach?quot;

quot;Qualifications aside, we follow 13 gold
timers for the daily updates to our gold
sentiment index. I classify seven of them as
trend followers, of whom four are outright
bullish, a fifth is 50 percent invested, with
the final two bearish. Of the six
fundamentalists, five are bullish and one is

Hulbert is an instinctive contrarian. But
this consensus is impressive.