26 April 2009

China stalker leaves his footprints in the Gold Market ~ GATA

Many men fail because they quit too soon. They lose faith when the signs are against them. They do not have the courage to hold on, to keep fighting in spite of that which seems insurmountable. If more of us would strike out and attempt the 'impossible,' we very soon would find the truth of that old saying that nothing is impossible... abolish fear and you can accomplish anything you wish. ...Dr. C. E. Welch


GATA’s credibility took another leap forward this morning when China announced it has increased its gold reserves to 1,054 tonnes from 600 tonnes. For years and years and years GATA has claimed that the gold world establishment has failed to account for surreptitious gold lending operations by The Gold Cartel to suppress the price. For there to be greater gold supply hitting the market, there had to be greater demand to satisfy this undisclosed supply. As a result of Frank Veneroso’s brilliant supply/demand work in years past, we mentioned that one of the demand areas, that the likes of a GFMS was not accounting for, was China, and that someday their stealth buying would be reported. Voila…
China gold reserves apparently doubled

HONG KONG (MarketWatch) -- China has added to its gold reserves and now holds 1,054 metric tons of the yellow metal, according to a Friday report by the Xinhua News Agency, which cited comment by Hu Xiaolian, head of the State Administration of Foreign Exchange.

Hu said that China's gold reserves had risen by 454 metric tons since 2003 and that the total was being reported to the International Monetary Fund as per the organization's rules.

A Dow Jones Newswire report said the figure cited was nearly double China's reported gold reserves as of the end of last month, but noted that it wasn't clear which gold reserves Hu was referring to.

She said China's gold reserves now rank fifth in the world among nations which publicly disclose their holdings.

Analysts said China bullion buying reflects efforts to diversify their nearly $2 trillion stockpile of foreign exchange reserves.

"Chinese officials have been increasingly vocal about their concern on the U.S. dollar and the U.S. bailout policies of late, and have actively been seeking to diversify into other assets, especially commodities," said Martin Hennecke, an associate director with Tyche Group in Hong Kong…


To say that this revelation is a big deal is an understatement … for a number of reasons…

*It is more evidence that various central banks are increasing their gold holdings, in contrast to a number of western banks which have been selling for more than a decade.

*China’s move debunks Planet Wall Street and other western central bankers that gold is a barren asset and not worth owning.

*And it enhances the notion that gold is a valuable reserve which will encourage other central banks to follow China’s lead.

*It surely will spook some of the sheeple central bankers who have foolishly dumped their country’s gold reserves at bargain basement prices … especially at a time when the West is looking at one financial crisis after another and the world’s major currency reserve, the dollar, is looking very suspect. A number of them are unlikely to press for further bullion sales from their countries’ reduced reserves.

*The likelihood of China continuing to build its reserves is extremely high. They were secretly building their gold reserves BEFORE the latest financial crises. If this was the Chinese mindset then, what must it be now? As is, their percentage of gold reserves is still on the very low side.

*Because of what the US is doing with our bailouts and fiscal deficits, the US dollar is surely on a precipice, thus China must be looking to accumulate more gold. Therefore, this is not a sell the news market announcement. It is just the opposite. It is a clarion call to buy physical gold.

*That clarion call will not go unheeded by the sophisticated big money in the world.

*This is a major new headache for The Gold Cartel.

Derrick sends us some retro on China/gold which was brought to your attention years ago…

China's forex watchdog faces dilemma on expanding gold reserves

From Xinhua News Agency
Monday, December 26, 2005


SHENZHEN, China -- To buy or not buy? That's a question for Chinese foreign exchange authorities. They have been urged to expand gold reserve since the Renminbi appreciation, but the decision is hard to make since the gold prices are rocketing.

Some economists have been appealing to the State Administration of Foreign Exchange to expand China's gold reserve after the Renminbi appreciation in a bid to reduce the country's reliance on the greenback....

GATA has been all over the Chinese gold buying case and we can account for it in our understanding of the true supply/demand picture. GFMS and the World Gold Council CANNOT!

And then to shed light on the MIDAS analysis and what lies ahead…

I reproduce the following from a Financial Times article this morning declaring that China's gold reserves have officially been revised to 1,054 tons from 600. You have long held the view that China was buying gold through intermediaries and would eventually disclose part or all of these activities. It is the end quote I append that caught my eye:

"Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tonnes.

"It’s not a matter of a few hundred, or 1,000 tonnes. China should hold more because of its new international status, and because of the financial crisis," he said. "The financial crisis means the US dollar’s value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage." (emphasis added)

Thought you might be interested.
All my best to you and your health, Brad

And here’s a big tip o’ the hat to our STALKER source who nailed this one, beginning back in 2003, which just happens to be the year the Chinese now admit they started buying.

Doing a Café search, I have yet to find the initial presentation to The Café ... but the bottom line is our source went to Phoenix for a meeting with six others in 2003. Our source was there to act as a gold buyer in the future. The person who held the meeting spoke FROM BEHIND A SCREEN, as he did not want to disclose his identity. While speaking perfect English, our source thought at the time he might be Chinese and did not wish that to be known.

Our STALKER source called today and I could almost see the smile on his face through the phone. He reminded me of another tip, i.e. it was Chinese doing the buying, and he reported it was going through Australian banks, which have a longstanding relationship with the Chinese.

It is with great pleasure to bring MIDAS commentary to you re the Chinese/STALKER from more than half a decade ago…

September 10, 2003 - Gold $379.70 down $1.80 - Silver $5.22 unchanged

The Stalker

…Could any market trade more predictably than gold has the past month? Every time gold rallies sharply and early in a given day, it is capped by The Gold Cartel, sold off later in the trading session, brought down early that evening in overseas trading, and then is pressured all the next day by the same cabal. Over and over we see the same trading pattern.

You see it, I see it, and SO MUST the $4.6 billion buyer, which MIDAS characterized in general as being around some $40 ago. It seems to me this "gold buying group" is playing with The Gold Cartel. They know the cabal’s drill as well as we do and probably devised a trading plan to take them on, not fight them too hard on given days, and then overpower them.

This "gold buying group" must know what GATA knows, in that the cabal has a serious vulnerability, or Achilles Heel, when it comes to the physical gold market:…


September 11, 2003 - Gold $379.30 down 40 cents - Silver $5.30 up cents

Dramatic Gold Day / Silver On The Move / Both Have Fireworks Potential

…Today's action was very supportive of MIDAS' notion there is a Stalker ("gold buying group") out there taking on the corrupt Gold Cartel. They waited for Goldman Sachs to strike, then attacked, sending gold $7 off its lows. Dramatic it was. This is a big deal. Other traders will see how easily gold came back after filling the gap and will encourage them to get long, especially since the gap was filled. The huge open interest also suggests a significant move is coming. Gold’s startling comeback suggests that move is going to be one which takes the price MUCH higher….


September 19, 2003 - Gold $381.10 up $4.80 - Silver $5.25 up 2 cents

The Stalker Strikes With Another Huge Gold Buy Order!

…Gold came in stronger than expected on the Comex opening, which is almost always a very constructive development. It left a $1 gap and quickly shot up all morning, topping $383 at one point. Then the requisite Gold Cartel $6 price-capping rule went into play. That was all she wrote. The cabal regrouped and held gold in check the rest of the trading session and then did their requisite slam, knocking gold down a buck ON THE BELL. These no-good low-lifes are pitiful. Ah for the day when we can get our stretchers out, pick them off the mat, and then dump them in the sewer!

The big news is for Café members only. I received a call from London about The Stalker and learned a bit more about this "gold buying group." Two goodies for you:

*In addition to the $4.6 billion order, The Stalker is buying well in excess of another billion dollars worth of bullion and gold coins. The MIDAS analysis over these past months of huge new buying interests entering the gold arena looks better by the day.

*The orders are emanating out of New Zealand and Australia. My source believes it is Asian money and most likely CHINESE!

This is wonderful news as it would mean the Asian (Chinese) gold buy program is competing with Indian, Turk and Arab buying. Put them all together and it is easy to comprehend why The Gold Cartel has not been able to flush out the massively long specs. The Eastern buyers are always there on dips competing against one another for a diminishing supply of gold.

It also explains why gold has been moving up in price with a corresponding, but lagging, move in the dollar. Gold is leading the way and doing so for the reason John Brimelow and I have articulated for so long. The key to the gold price is the surging physical gold market taking on the corrupt and devious Gold Cartel…


December 23, 2003 - Gold $410.65 up 55 cents - Silver $5.71 up 2 cents

A STALKER Of A Gold/Silver Tale For Christmas Time

…As Café members have been made aware, the Eastern gold buyers have additional competition due to the enormous physical market buying by THE STALKER ("gold buying group"). Without getting into many details, I want to stress THE STALKER is real. My source’s good friend has attended a meeting with this "gold buying group," or his agent. I say "or" because THE STALKER is very secretive and does not want to be known publicly, even to the sellers from whom he is buying.

Both my source and I strongly believe the gold buying is of Chinese origin…


January 5, 2004 - Gold $423.80 up $8.60 - Silver $6.19 up 27 cents

Gold ($423.80) And Silver ($6.19) SOAR!

…*THE STALKER input has been incredible. Every time I get word this "gold buying group" is in the market, gold moves higher. Just as I was writing this, I received a phone call from "Mike," my STALKER source. He tells me THE STALKER was in the market today and they are going after $1.4 to $1.6 billion worth of gold in the near term…


January 15, 2004 - Gold $408.30 down $13.10 - Silver $6.19 down 21 cents

Ouch! Gold Cartel Wins A Battle

…Good news! Just got off the phone with my STALKER source. There was an unscheduled phone conference this afternoon with THE STALKER’S US buyers. They have a NEW order for $800 million to $1.2 billion to be completed between now and March. 72 tonnes of new gold buying is nothing to sniff at! The orders are still coming out of Australia and my source continues to believe they are for mainland China…


January 28, 2004 - Gold $414.60 up $4.90 - Silver $6.60 up 7 cents

Silver Closes At Six-Year High/Gold Charges Up $5/Gold Share Massacre Orchestrated

..In my various presentations and public commentary at the Vancouver conference I stressed the importance of what was going on in the physical gold/silver market and laid out what has been presented to Café members, including John Brimelow’s unique and extremely valuable work. There was no one else at the conference doing so. While most conference presenters stressed the weak dollar as the most important gold factor, I stressed it was the surging physical market.

In that regard, I learned this morning THE STALKER (probably China) just completed the last bit of its $6.8 billion order. NOW, THE STALKER is working on its additional 800 million to $1.2 billion dollar gold order (brought to your attention recently). I might know more on this on Friday.

To give you some idea of how significant this is, Norway just reported they sold 16 tonnes of gold in January (see below) and plan to dump another 17 tonnes of bullion, which will clean them out. The Gold Cartel and friends jump up and down about more central banks selling their gold and make a big deal how negative it is. What The Gold Cartel fails to tell the press and their clients is who is BUYING gold and to what extent. Can they all be so uninformed?…


February 24, 2004 - Gold $403.90 up $5.70 - Silver $6.59 up 13 cents

Silver and Gold Pop Very Nicely / $6 Rule AGAIN

…Some input from a bullion/coin dealer who has been in the business for 40 years. He has not seen the physical gold market this tight in two decades. The physical market is in a bit of a disconnect with the price-rigged Comex. Silver is also extremely tight according to my source and only trades in size at a PREMIUM. You cannot buy a decent amount of physical silver without paying up. Wait until next month!

Some STALKER feedback. We have confirmed the buyer is from the Far East, in all probability Chinese, and they still have $1.5 billion of gold to buy. We also know why they are buying. This is a big picture trade, not a short-term speculation. The gold they are accumulating is going into deep storage and not coming back into the market on rallies. The reason is these "Chinese" fear a complete debacle in fiat currencies in the next couple of years…


That’s enough for now. You get the picture. The GATA camp was right on the money about Chinese gold buying while there was nary a peep about it from the mainstream gold world, or from the big shot bullion dealers on Planet Wall Street.

Meanwhile, back at the gold ranch, it was Gold Cartel business as usual. The Chinese gold news threw a monkey wrench into their plans to keep gold suppressed today and the DOW propped up going into the stress test (criteria) that was released this afternoon … which is why gold was hit in the Access Market yesterday afternoon and the DOW was goosed on the close by the PPT.

Gold popped to $913 during Asian trading hours last night. Then it was Plan A for the cabal. The price rise was stopped cold when they reported to work at the usual 3 Am EDT…

These guys make me sick to my stomach, as do the lightweight people in the gold industry who refuse to deal with the manipulation truth. The Chinese gold news was enough on its own to send the gold price sharply higher. Yet, there were even more bullish market factors for the gold price, which should have sent it much higher on their own…

*The dollar began to break down. It closed off .74 to 84.74 and broke below the neckline of a head and shoulders formation...

June dollar
http://futures.tradingcharts.com/chart/US/69The euro rose .0119 to 1.3245. The pound was flat at 1.4675, but the yen rose .73 to 97.13.

*With short term US Treasury rates near zero at .06%, the yield of the 10 year T note rose to 3%, negating the entire move after the "quantitative easing" announcement and threatened to make multi-month highs. Clearly the inflationary effects of US policy, and what those implications are for the dollar, are having their effect in the marketplace.

June T note
Should the yield on the 10 yr T note take out 3.05%, we are likely to get an avalanche of Treasury note/bond selling.

*Crude oil blew through $50 again on the upside, ending the day up $1.93 to $51.55 per barrel.

Put all of that together, the price of gold should be screaming higher. Guy notes…

Can there be a more bullish story than the China gold story last night? And, yet again, gold can’t go up much on this news? You have to be kidding me! If China announced they were buying a big bunch of soybeans you can bet your last dollar that the bean market would be limit up today!! All this and the dollar getting hammered again???? When will it end!!!!


Don’t get bummed out here cause this is what THE BUMS do. Remember the past couple of days I reviewed the fact that gold almost never goes way up on very bullish news. The modus operandi of the cretin Gold Cartel is to SHOOT THE MESSENGER when there is positive news for gold. This is just par for the course ... with the dopey gold pundits making mention of how poorly gold reacted to such bullish news. Meanwhile, misguided sad sack souls, Geithner and Summers, continue to lead the country to disasterville.

Clearly The Gold Cartel wanted the price of gold down today. However, the news from all fronts was SO BULLISH, and the direction of the future price of gold so clear, they had all they could handle to keep gold from exploding, as it should have.

In the end, today was TERRIFIC for us, as the die is cast for the price of gold in the months ahead. The Chinese news will reverberate all over the word and attract more and buy SUBSTANTIAL buyers.

As The Gold Cartel had their hands full with gold, they sat on silver, which should have rocketed also. One day in the near future it will. In the meantime, oh well, that’s what JP Morgan & GANG does.

Ironically, our STALKER source called yesterday and re-affirmed that this brilliant London trader is still calling for $940 gold and hung in there on the brief dip. In addition he had some insight to some of the silver weakness besides the manipulation by JP Morgan & Co. You might recall that he told us some time ago that a large amount of silver was shipped from London to Dubai. The price at the time was about $17. Not good because after the oil price debacle, Dubai went into the tank and investors over there shied away from precious metals, including silver. Thus, these dealers were stuck with a huge amount of inventory which was doing them no good, so some of them have been dumping their silver and want some of sent back to London.

Will let you know if I receive any further updates on that silver score.

The gold and silver charts look better and better…

June gold
http://futures.tradingcharts.com/chart/GD/49May silver
http://futures.tradingcharts.com/chart/SV/59The gold open interest rose 8224 contracts to 344,626. The specs are on their way back in on the long side as they like gold’s performance following its test of its 200-day moving average.

The silver open interest went up 1334 contracts to 97,077, which is a recent high. The silver spec longs are emboldened.
The Cafe Sentiment Indicator remains BLAH. As is so often the case, just when gold/silver investors ought to be paying the most attention, they go to sleep as a whole. Some things never change.

The CRB went up 3.73 to 223.27.

More gold goodies:

Is the China game over?

Indian ex-duty premiums: AM $5.50, PM (12c) with world gold at $908.10 and $911. This is basis Ahmedabad, and the AM reading is probably anomalous. Most of the conduit cities seem to have finished the day slightly below import point, which fits with a Reuters story today. See:


However, the rupee was firm, closing at $1=R49.81 (Thursday R49.92) and the stock market closed up 1.74%. This is the 7th up week in a row; the market has risen 41% since its early March low and is attracting substantial foreign investment. If the Reserve Bank permits the rupee to rise, this will improve the Indian bid for world gold.

On Reuters data, the Vietnam physical market stood at a $5 discount to world gold (which at the time was at $912.50, virtually its high of the day.) Noting the story at


UBS guesstimates that Vietnam exported 80-100 tonnes of gold in the first quarter, but that the flow has subsequently stopped. A wider discount than $5 would be needed to make the trade worthwhile; but obviously the situation merits attention

TOCOM’s active contract gained 15 yen last night; aggregate volume was the equivalent of 10,530 Comex lots; open interest unfortunately is not available. World gold added $6 from the Comex floor close: thanks to China, not Japan.

As noted yesterday, Wednesday’s $9.80 Comex gain saw a 2,824 contract 8.78 tonne decline in open interest. MarketVane’s Bullish Consensus added 2 points to 74% yesterday; the HGNSI jumped 13.3 points to 16.8% Bulls. The GLD ETF marked the June Comex $14.10 gain by shedding 0.53 tonnes (260 Comex lots).

China’s announcement overnight that it has raised its gold reserves by 75% since 2003 raises a number of points. Firstly of course, it further demonstrates the CB gold holding statistics are close to worthless. Secondly, from a broad economic perspective, it calls into question Chinese FX policy. This puts them directly at odds with the Americans, who have clearly been hostile to CB gold accumulation for more than a generation. Optimists might think the Chinese are planning to forgo the undervaluation privilege which has been central to their US relationship the rule of Robert Rubin. This could help reflate their economy. More likely, in my view, the risibly cosmetic revaluation charade will be abandoned, triggering competitive devaluations across the Far East.

Not directly helpful to gold – except in as far as stress and antagonism are.



Dave from Denver…

Hmmm....market being forced higher

in anticipation that Geithner's Private Public Investment Partnership will do a belly flop? Today is the deadline for applications and apparently interest in the scam is lukewarm at best:

9F%2D81F9%2D62025CFEB7FB%7D&dist=msr_5Investors also are unlikely to be interested in buying packaged subprime mortgages that were based on misrepresentation and fraud, Lashley noted.

Investors believe bank toxic assets can be divided into three categories:
Attractive securities that can and are being sold without any government help.
Assets that may be attractive but banks want more than they investors will pay.
Bank-owned assets that, no matter what their price, investors won't buy.

Talk about a no surprise. The DOW ended the day up 119 to 8076 and the DOG leaped 42 to 1694. "Everything is fine," The Stepford Wives.


April 24 (Bloomberg) -- Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

U.S. economic news:

The stress test methodology release was mundane and as expected…

14:00 Fed says large banks should hold additional capital to serve as a buffer against higher losses than normally expected through 2011
The comments come in context of the release of the parameters of the stress test.
* * * * *

14:05 Fed releases white paper regarding stress tests
The following is the opening paragraph from the white paper, which is available via the Fed link attached:
"Most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized. However, losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks. Lower overall levels of capital—especially common equity—along with the uncertain economic environment have eroded public confidence in the amount and quality of capital held by some firms, which is impairing the ability of the banking system overall to perform its critical role of credit intermediation. Given the heightened uncertainty around the future course of the U.S. economy and potential losses in the banking system, supervisors believe it prudent for large bank holding companies (BHCs) to hold additional capital to provide a buffer against higher losses than generally expected, and still remain sufficiently capitalized at over the next two years and able to lend to creditworthy borrowers should such losses materialize."
Reference Link
* * * * *

Top U.S. banks must hold sizable capital buffer: Fed

WASHINGTON (Reuters) - The top 19 U.S. banks need to hold a "substantial" amount of capital above regulatory requirements to weather a potential worsening of the economic recession, the U.S. Federal Reserve said on Friday.

Supervisors said "stress tests" regulators conducted at major banks were aimed at ensuring the institutions have enough capital in reserve to continue to lend in potentially bleaker conditions, and are not to be considered a measure of banks' current solvency.

"It is important to recognize that the assessment is a 'what if?' exercise intended to help supervisors gauge the extent of capital needs across a range of potential economic outcomes," the Fed said in a white paper outlining the methodologies regulators employed.


08:30 Mar Durable Goods Orders (0.8%) vs. consensus (1.5%); ex-Transportation (0.6%) vs. consensus (1.2%)
Feb Durables revised to 2.1% from 3.4%; ex-Transportation revised to 2.0% from 3.9%.
* * * * *

U.S. durable goods orders fall 0.8 percent in March

WASHINGTON (Reuters) - New U.S. orders for durable goods slipped 0.8 percent in March, far less than Wall Street expected, Commerce Department data showed on Friday.

Analysts polled by Reuters had forecast orders for long-lasting manufactured goods to drop 1.5 percent.

Durable goods orders have now fallen for seven months out of the last eight, the Commerce Department said. The sole rise in that period, in February, has been revised to 2.1 percent from the 3.5 percent previously reported.

New orders excluding transportation slid 0.6 percent last month, compared to February when they rose 2.0 percent. Orders excluding defense also fell 0.6 percent, after rising 0.2 percent in February.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, gained 1.5 percent in March after rising 4.3 percent in February.


10:00 Mar New Home Sales 356K vs. consensus 337K
Feb figure revised to 358K from 337K.
* * * * *

U.S. home sales drop in March

WASHINGTON (Reuters) - Sales of newly built U.S. single-family homes dropped 0.6 percent in March, but the stock of homes for sale at the end of the month still plummeted at a record pace, Commerce Department data showed on Friday.
The inventory of new homes shrank in March, to 311,000 from 328,000 in February. That left the supply of homes available for sale at 10.7 months' worth, compared to February's 11.2 months.

The Commerce Department said that the monthly change in inventories, of 5.2 percent, was the largest drop in more than 45 years and the year-on-year plunge of 33.7 percent was the largest on record.

February sales were much stronger than originally thought, with the report showing they rose 8.2 percent, compared to the 4.7 percent gain previously reported.

The March drop brought home sales to a 356,000 annual pace. Analysts polled by Reuters had forecast sales at 340,000.

The median sales price for a new home fell to $201,400 from $208,700 in February. The average price, however, rose slightly to $258,000 from $255,100.

The worst may be yet to come

Is the worst over? Investors seem to think it is. Confidence that the crisis is winding down has been mounting.But the right answer to the question depends on what "worst" is meant. Appropriate replies include: probably, yes but so what, not yet, probably not, and let's hope so.

By Edward Hadas, breakingviews.com
Last Updated: 3:28PM BST 22 Apr 2009

The worst of the credit squeeze is probably over. True, loan losses are still increasing. But the official aid is massive: minimal policy interest rates, ample liquidity supplies, capital injections and implicit loan guarantees.

The aid from above has helped push dollar interbank borrowing rates down in the last six weeks. The cost of insuring against corporate failure in the credit default swap market has also fallen by 0.5-0.7 percentage points to about 1.9 and 1.6 percent annually for the main US and European investment grade CDS indexes. Improving bank credit has contributed to this trend. Better credit all round means more loans will be refinanced, so fewer companies will go under than would otherwise be the case.

The big official liquidity push also gives investors more cash to put into the markets. The additional buying power may account for some of the sharp increase in oil and equity prices. There have also been tentative signs of revival in the junk bond and IPO markets. To some extent, the mood is following the money.

It may be due to government help or it may just be the passage of time, but another worst that has probably passed is in the pace of economic decline. The huge sudden drop in activity after the collapse of Lehman Brothers last September has already become something of a business legend. If the decline had continued at that pace, economies would be back to the Stone Age in a few decades.

It's not going to be that bad. Globally, exports are down 30pc since last July, according to Lombard Street Research. But the pace of decline is moderating. Similarly, US housing starts, which have declined by 75pc since the 2006 peak, may have reached their low.

The balance of indicators still suggests GDP is falling in most developed economies, but at a much less dramatic rate than a few months ago. When the economy is only declining at a moderate pace, some measures typically suggest that growth is returning - the much talked-about "green shoots" - but more show further decline. That seems to the case now.

Inventories complicate the picture. A sharp decline in global demand led to an even sharper reduction of inventories as retailers and manufacturers cut back. As the inventories are rebuilt, production will most likely pick up faster than consumption.

So yes, all in all the economy isn't shrinking as rapidly as it was. But so what? It's still shrinking. On that yardstick, therefore, the worst isn't yet over.

Now look at another measure of "worst": unemployment. Even when growth does return, recovery is likely to be anaemic. It will take time to absorb the excesses built up during the credit boom, from houses in the US to too many Chinese factories making cheap goods.

What's more, it's not as if all that private-sector debt has gone away.

The rise in savings rates in the US and elsewhere isn't going to be a one-quarter wonder. This means that the peak in unemployment could easily be two years away.

And will that then be the end of the pain? Probably not. The crisis will leave government balance sheets shot to pieces. The best case scenario is that the authorities manage to suck all their fiscal and monetary stimulus out of the economy safely once economic growth has bottomed out. Then all that the world will suffer is high taxes and slow growth.

But there is a risk that this outcome proves too unpopular and that the authorities instead take the current fad for "quantitative easing" to the extreme - and just print money to finance their deficits. The outcome would then be inflation.

An inflationary outburst might even lead to another sort of financial crisis - a loss of confidence in key currencies. That could be worse than anything seen up to now.

Can such a dire outcome be avoided? Let's hope so.



Dear Bill,
You've been saying for a while that you smelled something big and awful coming around the corner, and that's why the PMs were getting smashed. Clearly the rapidly unfolding Bank of America scandal was it. I can't say I'm surprised by the revelation that Ken Lewis cared more about his job than the interests of shareholders. There have been so many instances of lying and cheating that it's hard to be shocked anymore.

The fact that the U.S. is not considered as corrupt as a banana republic is simply a result of human conservatism. Human nature won't let us change our minds about deeply held beliefs so quickly.

Despite Andrew Cuomo's investigation, I don't have any illusions that he will be the American people's white knight. As Catherine Austin Fitts points out, Cuomo was largely responsible for the subprime mess at Fannie and Freddie when he was in charge of HUD under President Clinton. (http://www.dunwalke.com/sidebars/andrew_cuomo.htm) Sadly, too many actors in this drama are recycled from the Clinton Administration - Schapiro, Gensler, Summers, Emanuel, and now Cuomo - and all of them are deeply compromised.

The spark of hope I see is the fact that Americans are starting to wake up to the severity of the crisis. Sure, it's still a small number but events like the recent Tea Parties show that a vocal minority is angry about the irresponsible policies of the government. Mainstream intellectuals like Simon Johnson of MIT and William K. Black of the University of Missouri are openly talking about fraud and the takeover of government by financial oligarchs. In effect, the media is moving over to covering GATA's point of view without acknowledging that GATA said it first!

All the best,

Jennifer Barry
Incredibly, there was barely a mention today about the Bernanke, Paulson, Lewis mess. Unreal! ... Planet Wall Street at its worst.


Good Evening All:
During the April 23rd TOCOM sessions the seven past largest paper gold shorts increased their net short position by 467 contracts to 20,497 contracts. STDJ also increased theirs by 90 contracts to 10,515 contracts.

http://www.tocom.or.jp/souba/gold/torikumi.htmlThe same seven members added 27.50 contracts to their silver net short position leaving them net short 294.50 contracts (60kg deliverable equivalent).

http://www.tocom.or.jp/souba/silver/torikumi.htmlTOCOM posted their "Margin for May 2009" and compared with their "Price Limit and Margin for April 2009" there are clearly differences:

http://www.tocom.or.jp/news/2008/20090421_1.htmlOne of the first differences that stand out when comparing the two is that no price limits will be imposed on and after April 27th for many items including gold and silver. Furthermore, spot month additional clearing margins will be increased for certain items including gold and silver (based on type of position) on and after April 27th. For more details please see the bottom of the "Price Limit and Margin for April 2009" release below:

http://www.tocom.or.jp/news/2008/20090325.htmlBest wishes,

Large Scale Conspiracies - The Evidence

There is a longtime argument that sophisticated investors like Jim Rogers use to dismiss the idea that a gold cartel, or conspiracy, exists. They claim that nothing that involves so many people can be kept quiet. The fact that no banker has come forward to publicly acknowledge a coordinated effort to suppress the price of gold is proof that no such effort exists. Without a smoking gun, or at least a smoking banker, the notion of a large-scale conspiracy is dismissed as impossible.

Well, if you base your position on a false premise, it’s pretty likely you will get a false answer. Garbage in, garbage out, as they say. There is now published evidence that proves that large-scale governmental conspiracies to defraud the public can be quietly maintained over decades. Who has printed this ground-breaking work? The Federal Reserve, thank you!

A study1 by researchers found, "that when government revenues dry up, police write more speeding tickets. After analyzing 14 years of data in North Carolina, the pair found that for every 1 percent drop in government revenue, the number of traffic tickets issued per capita increases by 30 percent the following year.

"It's significant," said University of Arkansas-Little Rock economics professor Gary Wagner, who co-authored Red Ink in the Rearview Mirror: Local Fiscal Conditions and the Issuance of Traffic Tickets. "If there was no revenue for issuing tickets, I wouldn't expect the unemployment rate and revenue to be related."

The study, which analyzed data from 1989 to 2003, found the lowest number of tickets issued in North Carolina was in 2000, after nearly a decade of economic growth. There were roughly 645,000 tickets written that year. The highest number of tickets came two years later, when governments were trying to recover from the post 9-11 recession, and issued roughly 768,000.

Wagner said the study reinforced a theory held universally by economists: Incentives matter.

"If local governments are somehow involved in the revenue that gets generated, there's an incentive to get more revenue," Wagner said.

Wagner said there are numerous anecdotes nationwide of such practices, such as the mayor of Nashville, Tenn., proposing two years ago a 33 percent increase in ticket revenue in his budget.

Wagner's co-author, Thomas Garrett, is an assistant vice president at the St. Louis Federal Reserve. North Carolina was chosen as a case study because the state had good data."

So here we have an effort to covertly defraud and damage the public. The "conspiracy" is widespread and crosses state lines. There is plentiful circumstantial evidence to confirm its existence…AND NOT ONE OFFICER, SWORN TO UPHOLD THE LAW, OR ADMINISTRATOR HAS COME FORWARD TO COMPLAIN! How can that be? Well, it’s obvious. Police officers, and administrators, understand that any whistleblower who speaks out will shortly be looking for a new line of employment.

The same principle works in finance. Why would a banker give up a life of privilege, to protect a public that mostly isn’t even interested enough to listen? Employees intuitively understand who pays their salaries and bonuses. They’ve also been brought up through a system that teaches them that gold is a barbarous relic, that it cused the Depression and that its proponents wear tinfoil hats and are mentally unstable. Who would make a public stand to fight for this? Thousands of people can know the truth, and yet not one person will speak it. Anyone who scoffs at this reality should just ask the Federal Reserve. As long as the "system" approves, a conspiracy can exist practically in public view, and no one on the inside will lift a finger to counter it.
Best wishes,
Peter R.

Gold availability

From: Michael Wright
Friday, 24 April 2009 7:23 AM

Subject: There is no gold (well very little anyway)

You might want to pass on to your GATA mates that it took me over a month following payment to get my 50 oz gold bar.

I purchased it on the 20 March and as you know they still didn't have it whenI tried to collect it on 3 April. When I went in (again) yesterday, they finally had it ready;
I said why didn't you ring me like you promised? They said sorry, but they only got it last night.

Michael Wright
West Perth WA 6872

Another bright light for the day was the way the gold/silver shares acted when The Gold Cartel pressured the price of gold back to the unchanged mark. They were firm as could be and failed to react on the downside to the pressure on bullion. As the day wore on they gained traction and closed superbly.

The XAU and the HUI rose 20.15 to 310.81.

It appears the HUI is in the process of completing a massive base … one which can support a move to new highs and beyond…

From Kiwi Land...

Gold stocks

Hi Bill:
From Midas one year ago

"April 24 (2008) – Gold $886.80 down $19.40 – Silver $16.66 down 50 cents

The XAU dropped 6.77 to 172.61 and the HUI gave up 17.93 to 407.28.

The HUI is one of the worst looking charts I have ever seen, as it has broken through massive support at 425 and broken down after completing a huge top. If I didn’t know the extent to which gold, silver and the shares have been managed, this would petrify me:"

You certainly got the call on the HUI right!

I've been watching for year on year Gold price. Yesterday we moved above the Gold Price of last year and with today's move higher combined with the $19.40 loss of April 24, 2008 we are solidly above it. However look at the silver price, still a good $3.75 below last year.

Today the HUI is up 20 to 310.81. Last year it was down 17.93 to 407.28 but still 30% higher than where we are today. The Gold stocks can move a lot higher from here and still be underpriced.

Cheers from Auckland, Ed Wener
The dollar is breaking down technically, yields on US Treasury notes and bonds are close to busting out, and US short term rates remain right above zero. That alone is one heckuva bullish stew recipe.

Meanwhile, the China gold buying news puts this MIDAS in our Hall of Fame collection. This revelation will act as anchor for gold for many months to come and send the price well beyond $1,000 per ounce.

Spread the word, Thunderbird!




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