Jim Sinclair: Don''t be fooled by chart painting as traders go long in gold

Same Old Story

By Jim Sinclair
Thursday, May 6, 2004

a href=http://www.jsmineset.comhttp://www.jsmineset.com/a

News flash! It's the same old game being played.

Gold was firm in the U.S. overnight and as the COMEX
opening approached and the cash market shifted to COT,
market makers in the U.S. weakened gold into the open
and then by the grace of COT, COMEX traders moved it
lower.

This routine is almost a repeat of what we saw in the
'70s. The actors may be different but the game is the
same: Cover your short positions before going long.

Rest assured, there will be no Academy Award for this
performance. These guys are about as smooth as No. 10
sandpaper on a baby's behind. All you need to do is
properly interpret the reports. Of course, not all of you
have the facilities to do this. On top of that, it requires
the floor knowledge of who is doing what in what size and
the actual timing.

The sells are small but loud. The buys are big but quiet.
The operation is painted on the COMEX and the covers
are in the cash market and the COMEX.

So here is another variety of quot;rumor control.quot; There has
been an attempt to manipulate gold in the past few
weeks by chart painting. Is it not natural that major COT
traders would try to manufacture a chart that helps them
shift from the short to the long side? Would it not be a
temptation for those influential enough to get articles
into major financial publications to start the story that
China is going to collapse along with demand for key
industrial commodities such as base metals? How
many commentators seeing that story simply accept it
and repeat it to their viewers? What a great way to move
a market into your ball court.

So my conclusion is that COT has only a few days left
because their action is so transparent that the
professional community will mimic COT in going to the
long side. Major cyclical changes have taken place and
the fundamentals more than ever support the long side.

Today's German manufacturing report is not what the
euro is made of.

This week or early next should limit COT's attempt to
paint the charts and gold will take off to and through
$419.70 and $430.31.

In 101 days or less it will trade at $480.

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