April 16 - Gold $945.10 up $17.80 - Silver $18.31 up 54 cents
Gold And Silver Roar/PPT Guns Market
For purposes of action, nothing is more useful than narrowness of thought combined with energy of will… Henri Frederic Ameil
Another remarkable day and more astounding than ever. I left this morning for Washington before the U.S. economic news hit the tape. For the second day in a row gold was up nearly 10 in the pre-market going. Oil was firmer with gold in the tank.
After the news surfaced (by the end of the day), oil rose further and the dollar tanked even more. Crude oil closed up $1.14 per barrel to $114.94. The dollar sank .60 to 71.43. The euro rose 1.5 to 159.43.
Yes, both gold and silver had very good days, but when you compare their prices to oil, the dollar, and the CRB, it was woeful … and by design, courtesy of The Gold Cartel. There is no other explanation why gold is nearly $90 off its highs, compared to what the price of oil and the dollar are doing, and to their respective highs and lows.
May crude oil (headed towards the moon)
June dollar (broke down after an extensive sideways action)
June euro (broke through considerable resistance to make an all-time high close)
June gold (took out good resistance at $940, but noticeably lags oil and the euro, which is just why The Gold Cartel did what they did with their takedown)
The Gold Cartel has gone out of its way to make our "GATA Goes To Washington" conference even more essential and timely than ever.
Points of note:
*The financial market/economic situation in the US remains DIRE. Inflation is rampant, yet the deflationary forces of a disappearing housing market have the Fed in a box (see U.S. economic news below). The Fed needs to raise rates, like the ECB, to combat inflation, but if it does, our economy could go into a further tailspin … and the stock market could disintegrate.
*The dollar has completely broken down again, as US market fundamentals deteriorate, making General Paulson look sillier by the day with his talk of US commitment to a strong dollar. The man spews forth pabulum and it is embarrassing.
JUST IN … as I was saying…
O'Neill Says U.S. `Strong Dollar' Policy Is `Vacuous Notion'
April 16 (Bloomberg) -- Former Treasury Secretary Paul O'Neill said the ``strong dollar' policy that he and every other Treasury chief since 1995 endorsed is ``a vacuous notion.'
``It implies in it that somehow we have the ability to manage the relationship between the value of the U.S. dollar and other currencies around the world,' O'Neill, now a special adviser to Blackstone Group LP, today said in an interview with Bloomberg Television.
O'Neill roiled currency markets when he was in office from 2001 to 2002, at one point with comments in an interview with a German newspaper that the U.S. pursued a policy of a strong economy, rather than currency. The current Treasury Secretary, Henry Paulson, has repeatedly stated that he is a ``very strong' supporter of the ``strong dollar' policy.
``When I was Secretary of the Treasury I was not supposed to say anything but `strong dollar, strong dollar,' O'Neill said today. ``I argued then and would argue now that the idea of a strong dollar policy is a vacuous notion.'
The U.S. currency today fell to a record low against the euro, and has declined 15 percent against its European counterpart in the past year.
``The markets actually have control over those relationships. When people say strong dollar, if they don't mean that `we believe intervention can work and we're prepared to intervene,' then `strong dollar' is ridiculous.'
O'Neill, President George W. Bush's first Treasury secretary, said during his tenure he repeated the mantra originated by Clinton Treasury chief Robert Rubin that a ``strong' dollar is in the best interests of the U.S.
Every secretary since Rubin has repeated the phrase, regardless of whether the dollar was rising or falling.
*The housing news today is a disaster, yet US interest rates are on the move up. The yield on the 2 yr T note is 70 basis points up from its low. The yield of the 10 yr T note is back up to 3.7%. These moves put the Fed in even more of a predicament.
PIMCO's Gross-commodity price rise becoming fixed
NEW YORK, April 16 (Reuters) - Record oil and other surging commodity prices are affixing to the U.S. economy and pushing up long-term inflation, the manager of the world's biggest bond fund said on Wednesday.
Bill Gross, chief investment officer of the Pacific Investment Management Co, or PIMCO, said on CNBC television, "Commodity prices are...becoming structuralized in terms of increases."
*Contrary to what the Planet Wall Street crowd pontificates, the credit situation is far from being behind us. In addition to the Libor rate being on the move up in England, credit spreads are rising rapidly, in nervous market conditions…
US SWAPS-2Y spread widest in 5 weeks on Libor concerns
NEW YORK, April 16 (Reuters) - The spread on two-year U.S. interest rate swaps ballooned on Wednesday to their widest level in about five weeks on concerns about the daily settings on interbank lending rates in London.
Two-year swap spread, which grows with risk aversion, widened to 100.25 basis points, the widest since March 10, from 91.50 basis points late Tuesday…
Both gold and silver look very good technically and are gearing up for dynamic moves higher in the months ahead … as the reasons to own both are becoming abundantly clearer to the average investor.
The gold open interest went up 3190 contracts to 422,699. The silver open interest rose 1175 contracts to 149,199.
Comments about excessive gold market exuberance from the likes of dingbat gold industry organization GFMS are absurd … and that is being kind. The gold open interest is some 170,000 contracts off its high. The silver OI is about 25% off its high. This tells us that the real exuberance levels for both precious metals are VERY LOW, not high … which is confirmed by the lack of interest in the smaller gold/silver companies. GFMS and the World Gold Council are both pitifully retarded and disingenuous (I am being kind again).
There is room for enormous gold/silver exuberance to take those markets way past their old highs … as rejuvenated specs pile back into both markets.
The CRB is back at its all-time high, closing up 3.40 to 418.76.
More gold goodies:
Indian ex-duty premiums: AM $4.44, PM $5.53, with world gold at $925.75 and $934.80. Ample for legal imports. The stock market added 0.56%, but the rupee was static (despite the dollar decline), closing at $1 = R39.96 (versus R39.9625). In an extensive discussion of Indian demand this morning, UBS confirms the impression that there has been some improvement lately: "Using indexed information, if India buys 100 units of gold on a very busy day we saw only 5-20 units/day of buying between September 2007 and early March 2008. Since the sell-off, this has picked up to 20-70 units/day with an average of about 35/day. This is not 'strong' and certainly not 'very strong' but a lot better than we have seen for the previous six months. We have seen better demand out of Europe too… It appears the world’s largest bullion importer is adapting to $900+ gold. Gold started rising today on the European opening, broke the well-advertised low $930s barrier well before the NY open, and after the open surged to the mid $940s, where it has found another layer of dogged resistance. Credit is due to The Gartman Letter for its intuition (or information) that an upwards effort was coming.
CARTEL CAPITULATION WATCH
Perhaps the scariest market of all is the DOW. This afternoon a female CNBC reporter was muttering, "Why is the market up so much?" And Rick Santelli was muttering about the "counterintuitive" market action again.
As mentioned yesterday, the Bush Administration and the PPT (along with the Counterparty Risk Management Group) are gunning the DOW in a desperate attempt to shore up confidence in the US.
But good grief ... and because:
*Joe and Jane American know their net worth is declining, and in some cases, substantially so because the value of their home is going south, with the likelihood of further drops almost assured.
*Meanwhile, food and energy prices keep going up and up … also with no end in sight. Planet Wall Street can pooh pooh the importance of this consumer nightmare, but you can’t fool Main Street.
*The dollar is disappearing and Wall Street bulls continue to act (even cheer) as if this is meaningless. It is leading to a coming DISASTER.
Yet, the DOW goes bonkers today on some mediocre earnings reports (Intel), which were not even close to the bad ones (like a GE). The DOW soared 257 to 12,619 and is back near the top of its trading range again. The DOG rocketed 64 points to 2350.
Clearly, the PPT is going all out to negate the effect of the growing horror show out there. "Everything is fine."
Maybe today the PPT con works, but rising interest rates and a sinking dollar are a double whammy for the market. Seems to me what we have is another 1987 coming ... a similar scenario anyway.
There are some on Planet Wall Street, and some even in our camp, who see the market going much higher as the world realizes just how extensive the US is monetizing everything. Could be, but can't imagine it lasting very long.