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''Midas'' commentary for June 29 posted in the clear at GoldSeek.com
8:54p ET Tuesday, June 29, 2004
Dear Friend of GATA and Gold:
Jim Sinclair's commentary tonight calls for gold adherents
to buy real metal to break the forces suppressing the gold
price, and he echoes Ted Butler's call for mining companies
to withhold some production whenever the bad guys pound
gold down, as they did today. A slightly edited version of
Sinclair's commentary is appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
The Attack of the Rotten Killer Tomatoes
By Jim Sinclair
Tuesday, June 29, 2004
Cool your tubes and relax. I am complimented that COT
spends so much time on www.jsmineset.com. If you think
an all-out effort to depress the price of gold on June 29 is
coincidence, then you believe in fairy tales.
This is a clear reason why I must go smaller and private. I
am thinking about commenting on fundamentals in the open
but doing specific market analysis in a closed,
limited-access club by password only, assuming that this
is technically possible.
I would retain the right of service, taking applications from
the good folk. No charge, of course. But if we are smaller
and therefore less of a factor in the markets, COT will tire
of their constant effort to make the one trader who knows
gold better than they do a smaller influence. I simply will
become smaller but only for the reason of not inviting their
charades in the marketplace.
I believe that I know the exact bottom and what gold will
do thereafter, but if I state that to the many, COT will do
everything possible to screw you up. I am here to teach
you and not to hurt you. If you have used trend lines and
Fibonacci those of you who are traders would have nailed
COT's intentions almost to the penny.
Now if you really want to do a number on these COT pros,
all that is required is for every member of this community
to put 5 percent of his net liquid assets into gold itself in
whatever form you wish. It was a slow taking of delivery
by the Hunt Brothers of both silver and gold regularly and
constantly that drove the pros to the wall the last time.
They are fighting us by writing paper gold. You can beat
them by buying physical.
The paper stands on the physical, and if you do take
physical, you will strangle the paper. That is a fact of
gold life in terms of the mechanics of the marketplace.
The Hunts never squeezed the futures market as they
rolled from delivery month to delivery month in a most
gentlemanly manner. I know because my clearinghouse
was one of their brokers. However, what they skillfully
and legally did was always to take a small delivery for
their children every delivery month without fail and this
little effort put the paper writer into the outhouse. The
sooner the community gets real, the sooner COT gets
real.
The final answer to the Threat of the Rotten Killer
Tomatoes:
Now if the good gold producers like Newmont and others
would simply withhold production each time gold reacts
they would significantly improve the price they receive
for gold. Aluminum and copper producers do this but
the management of many gold companies consists of
youngsters who are accountants, attorneys, and
geologists who haven't a clue what gold is all about.
So you are the shareholders who made these
lightweights stop hedging and saved your and their
bacon. Now get cracking on withholding gold from the
marketplace on each decline of $10 or more from any
high, and $500 will be here so quick you will not be able
to see it.
I call on the best minds in the gold investment business
to assist me in beating COT. John Embry is one such
person.
All we need is producers to stop working against their
stockholders and to start helping rather than hurting
gold. Other metal producers do this all the time and have
rid themselves of what gold is peopled with -- an active
bear-only interest.
You in the gold community who own the producers
must put pressure on them NOW!
Now take my hand and stop fretting over gold just
because the COMEX crowd, seeing stops with little
demand below, ran them and took advantage of you
one more time. Ignore the gold geezers and other
Trojan horse gold advisors who are in fact more of an
enemy of gold than COT.
Gold is going to $440 and $480-plus, having reached
$405 but not yet $410 in June.
Come on, that was reasonably close, coming up from
$371 as a low, regardless of how hard COT wants to
hold my feet to the fire of their devious ways.
Rising interest rates are part and parcel of a rising
gold price. Should the increase in interest rates trail
the increasing expectation of inflation six months
forward at a time, then gold will accelerate to the
upside.
Please put a quarter-point increase in the U.S.
discount rate into perspective with other countries'
short-term interest rates.
United States: 1%
Australia: 5.25%
UK: 4.5%
Euroland: 2%
Canada: 2%
Switzerland: 1%
Japan: 0.15%
So what's the big deal about 1.25 or 1.5 or 1.75 or 2
percent? Inflation is going to 4 percent in 2005. So don't
fall for the COT analysts.
Let's not forget that once the U.S. raises rates, the world
will not be far behind, which is checkmate.
2) The U.S. federal budget deficit cannot be financed
without the destabilizing effect of massive liquidity
injections from Japanese buying of U.S. Treasuries. Last
month foreign purchases of U.S. Treasuries dropped 43
percent from the previous month. Even then most buyers
were central banks in support of the U.S. dollar.
Purchases of corporate bonds dropped 45 percent as
the purchase of agencies, which had been almost
non-existent before (Freddie and Fanny types),
improved for a resulting drop in foreign inflows from
$80.6 billion to $76.2 billion.
It is never the absolute number but the momentum
that results in price. The U.S. dollar is going lower
and soon, for fundamental reasons.
3) By early summer the U.S. monthly deficit will be
running at $50 billion, which, I assure you, is the
breaking point of any dollar bull. I am not speaking
about the U.S. financial community that does bullish
lip service concerning the U.S. dollar but is only a
minor presence in the dollar market. I am speaking
about the big makers and shakers in the U.S. dollar
market. Early summer is on us so any idea that a
rally in the U.S. dollar might survive even mid-July is
total hogwash on account of fundamentals. If
fundamentals run any market, that market is certainly
the U.S. dollar market.
4) How many of you read yesterday's New York Times
article, "Families, Deep in Debt, Bracing for the Pain of
Interest Rate Hikes"? The increase in rates may well
trail inflation but they are going to put a hurt on the
heavily indebted consumer and those with
adjustable-rate mortgages and high-priced (and going
higher) consumer loans. The U.S. personal savings rate
is 2.2 percent, which is disgraceful. No boom goes on
forever and the second that financing runs short, the
bottom drops out, so guess what. Rates will rise but
the Fed will make money quite available at least
through election time. Therefore STAGFLATION is the
future.
5) Since stagflation is the future, it is proper to
compare the action of the U.S. dollar to the last time
the United States experienced a major stagflation
business environment along with increasing costs of
money. That was 1976 to the first quarter of 1980,
during which the U.S. dollar declined 8.2 percent
from the inception of the event. That puts the U.S.
dollar at 82 and that is optimistic.
Conclusion: Ignore the bigshots on the COMEX and
the over-the-hill gang of gold experts. The dollar is
going lower, not higher, based on fundamentals.
So gold is going higher, not lower, based on
fundamentals.
My feeling is, as you know, $440 and then $480 in
July and August.
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RECOMMENDED INTERNET SITES
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NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
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Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
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