Peter Brimelow: Gold moves fuel cartel theories

By Peter Brimelow
MarketWatch.com
Wednesday, June 13, 2007

http://www.marketwatch.com/news/story/story.aspx?guid=%7B8135A85E%2D0D00...

NEW YORK -- A bad day for stocks -- and for gold, which closed Tuesday in New York at $647.10, down over $7 on the day and sharply down from its April lunge at the $700 level.

First a proprietary word: The Hulbert Gold Newsletter Sentiment Index, which represents the average gold market exposure among a subset of short-term gold-timing newsletters, stood at a reading of 21.4% on Tuesday night. That's not dramatically low -- gold exposure can go well into negative territory. But it's a change from the over-enthusiasm (50%) that Mark Hulbert thought gold-timers were displaying earlier this month, when gold reached $671.

Bottom line: Gold is no longer under serious contrary opinion pressure.

For a really radical view on gold, I like to turn to Bill Murphy's subscription website www.lemetropolecafe.com.

Murphy believes gold has long been manipulated downward by what he calls ""the Gold Cartel," a private-public sector alliance with a joint interest in engineering a stock market bubble and suppressing evidence of inflation. He wrote Tuesday night: "The Gold Cartel is nothing less than white-collar criminals ... an organized, highly sophisticated bunch of politicians, bureaucrats, and bullion bankers who are manipulating the price of gold to suit their own agendas.

"Yesterday, I queried what the lousy gold share action might mean. Now you know. There are some in our camp who believe these shares are manipulated along with bullion itself, while others are not so sure. The last two days left NO DOUBT in my mind it is the former. On Friday gold was slaughtered and the shares did not budge. Then gold rallies sharply on Monday. The shares rally at first, but then fail miserably to respond to the bullion strength. Today gold is mauled. The bullion banking gangsters are playing the shares like a fiddle and taking your investment money from you in the process.

"Gold was taken down $2 immediately after the Comex close yesterday and stayed that way through the London Fix, which came in at $652.80. Then, with the yield on the 10-year T note rising to 5.22%, the cabal's hit men went after gold to calm down the increasing inflation fears, as they did on Friday. They did so despite the dollar hardly moving ... pound higher, yen unchanged, and euro off only about .15."

"The floor reported there was one huge, mysterious seller emanating from the electronic market again. Their 200-lot orders were hitting every bid. When they let up, gold rallied $3. Then they started all over again.

"When the U.S. stock market, Dow down 90, began to react badly to the rising rates, gold was mauled further. The 'gangsters' were not about to let the gold price hang in there with their beloved market under such pressure, better to kill the messenger of higher inflation, that being gold."

Where should gold be? Tuesday night Murphy posted a fierce argument by Eric Hommelberg of The Gold Discovery Letter that, for a variety of fundamental and technical reasons, the yellow metal should reach $2,000.

Murphy might sound wild but, at the risk of revealing my age, the wild men got the best of the argument when gold broke free of government controls and blew off into last great bull market in 1980.

Lemetropolecafe does provide one valuable service that no one else seems to have picked up on: data on whether India, the world's largest gold consumer, is importing gold at current price levels. As of Tuesday night, it was.

That means the Gold Cartel, if it exists, will have to cough up serious physical gold to hold the price down.

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