8 November 2007

Gold dealers don't know what they are selling

Movements in the price of gold are sometimes "so enigmatic" and central banks and bullion banks are so involved with it that the gold market may be less than free, the deputy chairman of the Bank of Russia says.

The deputy chairman, Oleg V. Mozhaiskov, made the remarks in a speech at a meeting of the London Bullion Market Association in Moscow in June, but the LBMA and other participants in the meeting suppressed it, refusing repeated requests to release a copy. After months of negotiation, the Bank of Russia last week supplied the Gold Anti-Trust Action Committee with an English translation, which is appended.

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On the growing gold demand and why The Gold Cartel is gagging … only two weeks ago MIDAS reported the following:

October 25 - Gold $767 up $5.40 - Silver $13.82 up 35 cents

My contact within the Istanbul Gold Exchange has told me that the exchange itself is "running" out of physical at breakneck speeds. So much so that they have started to solicit major and mid tier gold mining companies world wide with the hope of securing some more physical before the markets get wind of it. Says quite a bit, doesn’t it, when the world’s 3rd largest importer of gold is scrambling to find physical to meet the massive demand coming out of that area. I smell a commercial signal failure around the corner.....

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Now this:

Dear Mr. Murphy!

The following might be of interest for your next Midas and explain some things going on in the world of gold. This is based on a mail I received from a reader of my German language gold website

My translation:

"Today I had a conversation with a friend who works for a broker-house in Dubai: Because stock and bond markets moved sideways in recent weeks, but the USD sinks quite rapidly and precious metals rise, I asked him about his opinion as a professional:

He told me, the sheiks currently don't throw dollars on the market. BUT HE HAS THE ORDER TO BUY ALL GOLD WHICH APPEARS ON THE MARKET, BY USINGUS-DOLLARS FOR THE PURCHASES. The same order is valid for stocks of selected companies (even if they are in the US), but they buy no government bonds."

My commentary:

This might explain the current unsatiable demand for gold and a rising price despite all gold cartel efforts. But who buys the Treasuries sold off/not bought? Helicopter Ben?

Gold and silver market situation in Europe: Especially in Germany the market is on fire. Silver in larger quantities is almost impossible to get in Germany and Austria. Gold becomes more difficult to get, but is still available. Also the financial media became quite gold-friendly in recent weeks.

In other countries of Europe, like Switzerland, France, Italy the interest in PMs is markedly lower. There is a certain irony, that it is very difficult to get information about the situation in other EU countries. The reason is the language barrier. PM investors can only tap information in their own language area and from the US/UK (because most people understand English).

PS:

Last weekend I visited the annual precious metals fair in Munich, Germany (I have heard your speech there last year) and talked to several PM vendors and mining companies:

No one knows what the really sell: lifeboats for the collapse of the fiat-money-system. They all think they sell metals or coins. So they are totally unaware of the real potential in PMs.

This verifies repeated observations in Midas, that almost no one in the "professional gold world" really knows what their product is for.

Best Regards from Vienna, Austria

Walter K. Eichelburg

The PM Fix soared to $822.50. Demand for physical gold is on fire.

The big picture news could not be better. In the meantime The Gold Cartel gave us the usual drill … same ole crap. Gold spent most of the day up $15 to $16, meaning it was capped after the initial dramatic surge, as gold breaks away from $800 after yesterday’s test. Then it dipped a couple of bucks on the close.

The gold open interest shot up another 11,543 to 551,022, which gives you some idea of how much The Gold Cartel was on gold’s case yesterday with all US financial market turmoil. Who knows how much it went up today.

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