Thursday, October 05, 2006

Huge Gold Price Bear Trap

The gold price and silver price moves since Labor Day are all about the coming US elections. These are wonderfully low gold prices to be buying at but few in the English speaking world realize it. A second chance. A second gift.

"Driving gold down via the US futures market is not much of a trick. Keeping it down will need a great deal of physical." - Bill Murphy, Le Metropole Cafe It looks like the central banks did not sell the full 500 tons (WAG2, the 2nd World Gold Agreement) that they were capable of:
"... latest figures from the ECB covering the year to September 22 showed total sales by central banks had reached only 398 tons.

According to Numis Securities analyst John Meyer, European central banks, particularly Germany, had decided to retain some gold reserves.

"This is an indication that banks in developed economies see a need to hold back on gold sales, perhaps to protect against economic risk or for higher price levels," he said."

Paul Volker, former head of the Fed, is one of the few that talks reality. His past statements:

"There are disturbing trends: huge imbalances, disequilibria, risks -- call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot."

"I don't know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change."

"We are skating on increasingly thin ice".

Bush and the Republicans need a rising US stock market, low interest rates because of the bursting of the real estate bubble in the US, low commodity prices to suggest that inflation is under control (when actually inflation is the "money" supply, not prices), to keep Americans deluded and to maintain the illusion to foreigners that everything is alright with the US economy so that the Republican representatives and senators have a better chance of winning the elections in early November.

Paulson was brought over from Goldman Sacks to orchestrate the markets from the US Treasury via the Counterparty Risk Management Group, Exchange Stabilization Fund, the Fed, and The Gold Cartel. As an orchestrator he is doing pretty good. Not to worry. This is all just temporary. The US economy is going down the tubes and the Federal government's revenue will be taking a huge hit putting huge pressure on the Feds to create huge amounts of USD out of thin air to pay its bills thus continueing the devaluation of the USD, thus increasing the USD price of gold. Remember, basically, there are no free markets in the US anymore.

Good article here in a .pdf file by John Embry: Despite Fed talk, there'll be no more rate hikes

"Either you think - or else others have to think for you and take power from you, pervert and discipline your natural tastes, civilize and sterilize you." - F. Scott Fitzgerald

The gold price "C" uptrend line on the "Gold Price Break Out" post was broken to the downside by at least 3%, so it is diffinately broken.
We are going to have to simply wait to see when a new dependable one developes. It will probably develope after the US November elections. It should be a good guide for 2007 and 2008. 2007 should be an outstanding year for the gold price and the silver price.

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