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Richard Russell essay on gold at Gold-Eagle
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EXCERPTS FROM 'MIDAS' COMMENTARY
FOR WEDNESDAY, JANUARY 8, 2003
By BILL MURPHY
Gold $353.80, up $6.90
Silver $4.83, up 4 cents
Yesterday's Midas commentary headline, quot;Don't
Expect Gold To Stay Down For Very Long,quot; has
to be my most understated ever. Twenty hours
later gold not only moved back up, but blew
into new high ground.
quot;What's going on?quot; I was asked during the
The same thing I have been reporting for over
a month now. The physical market is so strong
it is eating the lunch of the Gold Cartel and
other shorts. We keep seeing the same trading
pattern. Gold rallies sharply and then is
taken down by the cabal. The significant
physical market buyers are waiting in the
wings and pounce on gold during these
setbacks. The cabal is trying to turn the
black box big fund people into sellers by
triggering selling at certain price levels.
But the physical buyers, who are competing
for supply, are pulling the buy trigger
immediately after any sharp selloffs. Today's
very sharp move up is the third time the
market has shown us the same immediate
reversal pattern since the release of the
Howe/Bolser report on December 4.
The open interest pattern on Comex confirms
this line of thinking. Yesterday it rose 528
contracts to 215,299, instead of showing a
dramatic spec liquidation. Commercial Signal
Failure here we come!
I want to stress again, the biggest gold
trading money in the world knows what GATA
knows. The Gold Cartel is short some 15,000
tonnes of gold and they cannot cover that
sort of short position without gold rising
many hundreds of dollars per ounce. Reg
Howe's brilliant expose, quot;Gold Derivatives:
Moving toward Checkmate,quot; at his
www.GoldenSextant.com has been read more than
20,000 times. Many of those viewers had to
include some of the most significant
investors in the world. This is SO IMPORTANT.
Howe's analysis, using a completely different
methodology, confirmed the same kind of
humongous short position as Frank Veneroso's
Word is out that the gold shorts are in deep
trouble. That word is fueling physical gold
and large hedge fund type buying. Again, as
mentioned in previous Midas commentary, it is
like a wrestling tag team going after the
cabal's vulnerable short position.
Today was also a perfect example of how the
gold move HIGHER is triggering the dollar
move LOWER. Gold popped early today with oil
down $1 and the dollar on the firm side.
After gold moved sharply higher, the dollar
We also know why that is the case. The
rigging of the gold price was the essence of
Treasury Secretary Robert Rubin's quot;strong
dollar policy.quot; The Gold Cartel has run out
of enough physical gold to continue their
fraud, so the gold price is on a tear. The
gold price moves up are signaling, in the
most obvious manner, that the U.S. strong
dollar policy is over.
$354, here we are. Amazing that we keep
talking about that number as a pivotal gold
price point and now gold closes 20 cents
below it. The gold price explosion I keep
talking about could kick in as early as
tomorrow. We have an extraordinary technical
set-up. Gold has moved all this way since
December 4 and there are no gaps to fill. We
have yet to witness the dramatic breakaway
gap move -- a move in which gold opens $5 or
so higher, and then soars, leaving a gap that
will not be filled. That kind of sensational
market action will alert the world that a
rare market event is now happening. A short
squeeze of epic proportions could materialize
at any moment.
Morgan Stanley was the big silver seller
today. They sold more than 1,000 contracts
today. I don't know how the cabal and friends
are controlling silver, but it could not be
more obvious that someone is desperately
trying to cap the silver price. The big
silver shorts are going to be buried. Heck,
the significant gold longs could take rinky-
dink profits from their gold winnings and
bury the silver shorts in a nannosecond. Look
for a $1 move in the silver price in the very
This comment from J-Pacific CEO Nick Ferris
was right on the money:
quot;Today's price action was truly breathtaking.
The physical market is now in complete
control. As you have pointed out, the weight
of the paper shorts and the selling of
physical gold at the margin can no longer
hold the market down.
quot;When the history books are written about our
era, people will look back in wonderment at
why the great powers tried to corner the gold
market short. To corner short the marketplace
of a tightly held commodity is utter
insanity. But to corner the gold market
short, the ultimate store of wealth! What
words can possible describe such lunacy?
quot;The old trader's adage is now ringing
loudly: A commodity in hand is infinitely
more valuable than a promise to deliver.
quot;Got gold yet?quot;
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The John Brimelow Report
Wednesday, January 8, 2003
Indian ex-duty premiums: AM $1.84, PM $1.43,
with world gold at $347 both times. Somewhat
below legal import point, which requires an
ex-duty premium of about $2/oz at present.
Besides the usual moaning, reports from India
point out that this (until the 14th) is one
of the minor quiet periods within the main
buying season. The rupee firmed again today:
the authorities announced that India's FX
reserves have topped $70 billion, up 47
percent in a year.
Although several commentaries speak of
quot;general publicquot; liquidation in Japan, open
interest actually rose the equivalent of
3,150 Comex lots, suggesting that this may
not have actually been the case. Volume was
equal to 24,180 Comex lots. (NY traded 46,153
contracts yesterday with open interest rising
528 lots; today's volume is estimated at a
heavy 62,000 lots ).
With spirited and powerful rally starting at
9 a.m. NY time more than reversing the usual
reopening selloff, conviction seems to be
growing that something unusual is afoot.
Reuters quotes a puzzled Comex floor broker:
quot;Even though crude oil's weakness is giving
us reason to sell it, which we are seeing
dealers do, the fund buying continues.quot;
(a href=http://www.theminingweb.com/mineweb.htmhttp://www.theminingweb.com/minew... )
runs a useful discussion the morning pointing
out that by their method of valuing, gold
share remain rather cheap in relation to
If one accepts that bullion can sometimes
lead the shares, today was an opportunity.
After the gold rally was well under way, the
dollar index started slumping, an event
blamed by some on the posting on the Pimco
website of a very dollar-negative essay by
Bill Gross. This article was chiefly notable
for suggesting that the U.S. might see a dollar
depreciation as a means of forcing other
governments to ease, and to adopt domestic
changes of a type Washington favors:
quot;There's little doubt in my mind that a lower
dollar might help to break up several current
policy logjams both Japan and Euroland are
dragging their heels on labor and bank
related structural reforms a weaker dollar
would make their exports even less
competitive, applying a reform hammerlock
that forces them to cry 'Uncle' (Sam) much
This approach is unlikely to improve American
A noted bullion dealer, in a complicated
piece of reasoning, draws attention to the
shocking divergence between the performances
of NEM and ABX, and suggests this is likely
to get worse if Wall Street continues to
languish, since ABX is correlated to the Samp;P.
* * *
One of the great chart patterns of all time:
While gold continues to forge into multi-year
high ground on a weekly basis, the gold
shares continue to lag way behind. For a very
long time Midas said the gold price would
* Gold going higher and taking the dollar
* The smart money spec longs burying the
* A firm physical market leading the way up.
* The gold shares lagging the physical market
because few in the investment world know
about the real gold story.
On Point 4, I was right-on but way off. I
thought that once gold took out $330, the
investment world would realize there was a
new game in town and pile into the gold
shares. Instead the gold shares continue to
underperform bullion the higher the gold
price goes. Investors, it appears, cannot
believe the gold move up with their own eyes.
Thus, the gold shares are slowly climbing the
proverbial quot;wall-of-worry.quot; How perfect is
Wall Street refuses to let the real gold
story be told to the investing public. Thus
few in the investment world realize what is
happening with the gold price and why. Gold
share investors cannot wait to take profits.
Meanwhile, the physical buyers (Indians,
Russians, Chinese, Iranians, Turks, and
Arabs) could not care less what the share
price of Newmont does. They want the gold.
They know the real gold story and understand
the price of gold is not going to a piddly
$400 per ounce but hundreds of dollars higher
than that. These buyers are laughing at the
inept Western central/bullion bankers.
The gold share action today compared to that
of bullion was pitiful. The XAU managed only
a 2.43 gain to 77.85. The HUI was worse,
rising only 3.42 to 146.64. Many of the
smaller gold companies closed unchanged, or
up only a few pennies. Can the investment
world be any more clueless.
The price of gold is going to explode soon.
It won't be long thereafter that we will
finally witness the first of the gold share
buying panics. The price action alone will
bring in an entire new crop of investors,
ones that know little about why gold is going
up, but do not want to miss the action.
The quality gold junior/exploration companies
are going to double and triple in the very
Got to be in it to win it.