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Julian Phillips: Maybe the central banks won''t be selling more gold after all
By Peter Brimelow
CBSMarketWatch.com
Monday, October 4, 2004
http://cbs.marketwatch.com/news/story.asp?guid=%7B51AB148C%2DBB3C%
2D4360%2DA7D3%2D6B1A30B18603%7D&siteid=mktw
NEW YORK -- Gold's powerful move to $420 last week
tormented the technicians but left the gold geezers patient
as ever.
One gold-skeptical chartist, Martin Pring, wrote in his
Weekly Intermarket Update, "The gold price is now at
important resistance in the form of the [$420.30] trendline. ...
It stands a good chance of going through since the Gold
Bugs Gold Share index has already broken out."
And an indubitable gold geezer, a veteran of the gold
wars of the 1970s, Richard Russell of Dow Theory Letters,
said last week that gold had "a bullish chart showing rising
bottoms and rising tops" and that getting above $420 was
"an important technical achievement."
On Friday, Russell added tersely: "Gold is giving up very
little on the overbought corrections. Gold is not going out
of style -- sit tight."
But Russell is still not getting excited. This has been a
pattern with the gold geezers recently.
They've seen too much bloodshed since the great gold
blowoff more than 20 years ago.
Russell still believes in gold in a very fundamental way.
He wrote last week: "Gold is pure wealth -- it was wealth
in 2000 BC, it was wealth in the 1400s and the 1600s, and
it's wealth today. The people at the Fed may tell you that
gold is just an ancient 'relic,' but gold will be accepted as
wealth when these yo-yos at the central banks are gone
and forgotten along with the whole unconstitutional
Federal Reserve system and it's currency-printing
operations."
That's fundamental, eh? But reviewing a number of gold
stock charts, making the general case that their action
suggests a gold rally, he was careful to note that some
were overbought short-term. Thus he cited "Placer
Dome, one of my favorites. I've long felt the PDG was
a takeover candidate (think Newmont?) but for
whatever reason the stock is taking off -- to the north.
PDG has also entered the overbought zone, and for
that reason the stock could be in for a 'rest.'"
Similarly, Harry Schultz of the International Harry
Schultz letter told subscribers over the weekend:
"Gold's main market story is: Bullion seems to have
finished its correction and is preparing its assault on
the April double-top 435 high. The 2-day close over
415 (basis December futures) is a technical victory
for gold and will bring in a lot of chart buyers."
But Schultz doesn't seem to have changed his view
that gold is in a $380-$430 trading range. He still
says "take half profits at 427" and use squeaky tight
[stops] on rest."
Schultz's latest letter contains an unusually direct
assertion that the U.S. government is grooming the
stock market, through purchases of futures contracts.
But it says nothing (this time) about long-rumored
official intervention in the gold market.
The leading advocate of this theory is Bill Murphy's
LeMetropoleCafe.com Web site. This service seems
to be alone in drawing attention to the current
extraordinary increase in gold trading activity, which
it reads as an effort to contain demand for gold with
supply.
For example, one long-time contributor, Dan Norcini,
wrote on Friday: "I suppose you have seen today's
release of the open interest totals [contracts outstanding]
detailing what took place in yesterday's breach of
upside resistance near the $417 level basis December.
'Stunning' is too mild of a word to describe my reaction
-- more like 'someone call the exchange and tell me that
the typist hit the wrong keys on the computer!
The LeMetropole school expects a tough fight at $420
-- albeit an ultimately victorious one.
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
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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.freemarketnews.com/
http://www.investmentrarities.com/
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
Subscription site:
http://www.lemetropolecafe.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
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