You are here

James Turk: Dollar''s bear-market rally is over

Section: Daily Dispatches

4:20p ET Wednesday, July 7, 2004

Dear Friend of GATA and Gold:

Not much is likely to be said better today than what
was posted at their Internet sites by Michael Kosares,
proprietor of Centennial Precious Metals in Denver
and the USAGold site, and by Jim Sinclair of, so their commentaries are appended
with thanks.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Manipulation and a Short History Lesson

By Michael Kosares
Centennial Precious Metals, Denver
Wednesday, July 7, 2004

We know that someone is expending an effort to cap
this gold market, but we should keep in mind that
someone else is expending an effort to put a floor
under it.

For a war to occur -- and there is a war on gold --
there need be two sides. Elements on Main Street are
pro-gold. Elements on Wall Street are anti-gold. And
the battle between the two goes on.

If the group attempting to keep the price down is so
powerful, how did gold get from $260 to $400 over
the past couple of years? Who's winning? Who's
losing? Who has the strong moral position? Who
the weak? Who has history on their side? Who
has only pop culture superficiality?

Assess this to the core. Don't dwell on the superficial.
And then you will come to the reasons why you should
own gold, why it would be foolhardy to give up and give
it up, and why, in the end, we win.

Keep in mind that the London Gold Pool of the late
1960s and early 1970s did break down after an
enormous effort to keep gold at $35. At the time most
in the financial world, including most investors,
believed that the powerful pool would never fail -- that
gold would be contained.

Also keep in mind that the great contemporary bull
markets in gold have followed elections in the United
States -- 1973-75 and 1977-1979 and the lesser bull
market of 2001-2003 (which I see as a prelude to
bigger and better things.) There are reasons for that
as well.

The stage is set. Accumulate. Watch. Wait.

* * *

Higher Gold is Friend of the U.S. Economy

By Jim Sinclair
Wednesday, July 7, 2004

It may be hard for the enemies of gold to get it
through their heads, but the last thing the equity
guys should want is a lower price of gold.

The reason is crystal clear if one can be objective
about the price of gold. Gold has become a
currency. If you hold the market as the final
determination of what an item is worth, then you
have to see that gold trades completely in line
with the U.S. dollar but in the inverse. Any
attempt to deny that is impossible, as it occurs
even to the second when the dollar changes in

For Americans who have little understanding of
what gold is all about, you must observe Asia
and Europe, because they know the answer.

Last night after the gold bombers made total
fools of themselves hammering gold down
intra-day by $10, gold in Asia and Europe
climbed as much as $8 an ounce into
Wednesday morning to trade back above $400
an ounce with a sharply weaker U.S. dollar
sparking renewed investment interest in the

It is understandable that there must be a
learning curve, as even the World Gold
Council, a lobbyist group for gold supported
entirely by the major producers, continues to
insult gold by considering jewelry demand --
not investment demand -- as the primary
driver of the gold price. The gold council is a
continuing embarrassment to gold, which
shows that the people who least understand
gold are those who dig it out of the ground.

The market has established beyond doubt that
gold is a currency, which is why a higher price
of gold is friendly to the general economy and
therefore to equities, which depend on a positive
economic background for appreciation.

Whether the equities guys know it or not, a falling
dollar at some point must benefit the U.S. balance
of trade, thereby stimulating economic activity.

Arising dollar as the momentum of the U.S.
recovery stalls is the last thing any rational
economist should wish for. Yes, a rising dollar
would cause gold to fall whileincreasing the U.S.
trade deficit, hurting exports and acting as a
break on the U.S. economy. Since gold and the
dollar are tied together in the inverse, no central
bank or COMEX maniacs can break that
relationship as the world market for gold as a
currency grows.

So higher gold, which implicitly means a lower
dollar,is good for the U.S. economy, and lower
gold prices, which implicitly mean a higher dollar,
are bad for U.S. economic activity. In time even
the num-nuts on the COMEX will wake up to this.

You can bet that the funds selling yesterday got
reamed quite nicely and like the goofs they are
will learn by the Pavlov method that what I have
told you is true. Eventually even the army of
knuckle draggers will wake up and discover that
putting your hand into the fire is not good. Then
the COMEX bombers will finally be on the long
side -- probably at a gold price of $1,064,
because they are really, really thick.


To subscribe to GATA's dispatches, send an e-mail to:

To unsubscribe, send an e-mail to:



Free sites:
(Korelin Business Report -- audio)
(In Spanish)
(In English)

Subscription site:

Eagle Ranch discussion site:

Ted Butler silver commentary archive:



Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112

Centennial Precious Metals
3033 East 1st Ave., Suite 403
Denver, Colorado 80206
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
Don Stott, Proprietor

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889

178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Fax: 514-875-6484

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
Ed Lee, Proprietor

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
Dr. Fred I. Goldstein, Senior Broker



If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541

By credit card (MasterCard, Visa, and
Discover) over the Internet:

By GoldMoney:
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $750 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled "GATA."

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.