I heard Gerald Celente the other night and also the lady, but could not stay up for the oil man.
What Gerald said was so true of what is happening, what is coming, and we are only at the beginning stages of nothing we have ever seen for America. Some know what’s going on, some do not know nor do not care. I watch the boring national news and they show all these clips of people spending hours in line to see a presidential candidate, it truly amazes me how stupid the people are in this country. You think two candidates are truly gonna CHANGE what is going on up in Washington? They both scare me to death….If we took all the total monies that they the candidates have spent, since the beginning last winter up to the day of elections, pooled the money, what do you think we could of built? How many new hospitals, schools, money for vet’s? I wonder what the “true” total would be? Interesting thought and I bet the figure would be staggering! Gerald made the claim that until citizens start standing up to local, state and national governments and say we have had enough, things will continue the same in course….and that is not on a putting green…! I wish I could take back my last two presidential votes…if I had only known! Where is true leadership…oh, if only we had Thomas Jefferson, George Washington, Abraham Lincoln, and they probably would not recognize our government today. I smiled when he said…tear up those nice green lawns and start planting a gardens, don’t spend one cent you don’t have to (those who have not much dollars) shut off those lights in your schools to cut expenditures, stop all the crazy sports, as #1 rated Finland, we are 15/18th or something in education, RAh! RAh! RAh!…..he also talked about jobs, the base lost in this country in manufacturing but the jobs created in GOVERNMENT was UP!…..IMAGINE THAT!!!, the loss of our dollar since GW took office, those that are making huge profits out of Iraq, and now Afghanistan upsurge in fighting.

I listened with regret, sighed at all I could comprehrend in my little brain, asked myself if I was listening to the radio in my dreams…is this really happening in America and in the world? Is it just too late? TPTB want it all~!

As always, I prayed prayers for strength and fell asleep.
Sunny B

Buttonwood | A gap in the hedge | Economist.com
July 3

There is a rebroadcast of last night’s show ongoing. Not all stations that broadcast C2CAM will broadcast the repeat. Gerald Celente is the featured guest tonight. I’m in Detroit listening to 840 am WHAS in Louisville Ky.

continued-
subsidize the failing airlines…subsidize the failing trucking industry…subsidize the failing auto industry…

Steve

“I’m to the point that it doesn’t matter what gold is worth in dollars,Yen or Pesos.” …is precisely where you need to be mentally mate …
…but the REAL hurdle and perhaps insurmountable for most will be to hold that notion when the inevitable blow-torch is applied to the belly.
If you’re able to weather the Dollar-Cash onslaught for the duration of (let’s call it) the re-set, I’m sure you’ll do just fine.

the Governor’s speech shows that he is just one of the Central Banker “boys”
a long speech in which he omits to say that Argentina had 50% inflation in 2007, and current inflation is 125%
it’s true that all in the audience understand this already
his purpose is to support “the boys”

“risk management underlies the Fed Reserve’s current behavior”…”acquiring illiquid assets from banks”
————————

he also said that “the trigger to current turmoil (in the US) is the real estate market”

this is a crucial observation/fact

and that Congress’ bill-soon-to-become law will implement “acquiring illiquid assets from banks”

the pattern to how the Authorities are reacting is:

take over the bad home mortgages…and as they continue to fall…to take over more bad mortgages…
…more and more and more…3-4-5-6+ million mortgages

and take over the commercial loans as theygo bad…to take over more and more and more…
and take ove the car and credit card loans as they go bad…to take over more and more…

+ stimulus…another stimulus…stimulus…stimulus to keep the economy going
Whew!

Steve

Keynote speech by Mr Martín Redrado, Governor of the Central Bank of Argentina, at the Bank of Russia, Moscow, 26 June 2008.

Libor and Euribor rates are recording wide spreads compared to yields on low counterpart risk such as U.S. treasuries. This is largely due to credit risk perceptions among banks, with some degree of overshooting in financial institution spreads. Current prices of banks’ CDS show that it will take time to correct this situation. As uncertainty regarding each institution’s exposure to “toxic waste” persists, banks continue to avoid lending among themselves. Then, demand for liquidity as a precautionary measure to confront potential materialization of contingent liabilities is what predominates in the financial markets.
Even though exceptional central bank steps helped mitigating pressures at the most critical times, they are still insufficient to recover investor – or, even worse, consumer – confidence.

We are witnessing a growing use of unconventional instruments to deal with the crisis in the developed world. We have experienced an unprecedented increase in U.S. liquidity windows to avoid disruptions in the financial system and to recapitalize it. When examining academic contributions by board members such as Bernanke or Mishkin, it is clear that the risk management approach underlies the Federal Reserve’s current behavior. In Europe, pragmatism is also a commodity. We see that the major central banks are prepared to adopt, without hesitation, a systemic liquidity approach, which includes, among other mechanisms, acquiring illiquid assets from banks to improve their financial position.

We have seen all across the developed countries the kind of “unconventional policymaking” that was very much condemned in the emerging world.

For the first time, we are not at the epicenter of the crisis.

A relevant example is the marked growth of Indian and Chinese demand for gold for jewelry, a factor that accounted for approximately 75 percent of the rise in world purchases for that purpose in 2007.

Finally, another phenomenon adding uncertainty is the fact that these commodities are now considered a financial asset class.

The U.S. dollar has historically represented a safe haven for Argentinians in times of uncertainty. Therefore, to curb depreciation expectations by acting in the foreign exchange market has positive implications, not only for money market expectations but also for financial system stability. Thus, we have demonstrated that the current managed floating exchange rate regime is the most appropriate at this time of our economic history.
Regarding the FX market evolution, the right question to ask is: what would have happened under the same circumstances but with a pure floating exchange rate regime in place? The timely intervention curbed depreciation expectations and, thus, the potential pressure on prices with minimal use of reserves.
I mean, it is a regime that, without providing any sort of “foreign exchange insurance,” prevents excessive volatility from affecting economic decisions.

See link for full text.

your post is a subtle and sophisticated explanation of the physical to paper gold markets
————–

if Hurricane Katrina II were to blow out 40% of our refinery capacity again and lots of oil rigs, oil would shoot up to $250+++

the Authorities would close the paper oil market to prevent speculation

…and if the dollar weakened? and (paper) gold shot up? — close the paper markets immediately

HAPPY JULY 4

Steve

Thanks Topaz. Only in shadowy light can Ender’s insane world of economics seem plausible.

Houston_Bug, no need to save that dribble. It is but a drop in an ocean of content found here at USAGold.

Jesse, All those that are looking to see the economic world from a different perspective, follow the links into thoughts, the Gold Trail and the Hall of Fame. In the Hall of Frame, there is a great conversation from the forum that is located under the Special Discussion Thread. If you read but the first post, you’ll get a great summary.

Ah, today the sky is blue. It is ripe for a calibration!

Short pithy overview, builds irrefutable facts around and upon near a dozen hyperlinked references, familiar names and places and new research.

“Keeping America Safe”–from the Constitution
Total Information Awareness Finds its “Second Life” at IARPA
by Tom Burghardt
Global Research, July 3, 2008
Excerpts:

“Like countless resurrections of Freddy Krueger, it appears that John Poindexter’s Total Information Awareness (TIA) program has found a new, more accommodating home for its “mission” of “keeping America safe”–from the Constitution–at the Intelligence Advanced Research Projects Agency (IARPA).
According to McClatchy investigative journalist Warren Strobel,
IARPA … is the U.S. intelligence community’s counterpart to DARPA, the Defense Advanced Research Projects Agency, which has been in business for more than 35 years and is meant to be a small, flexible R&D agency that funds high-risk, but potentially high-payoff technologies. (”What’s IARPA?”, McClatchy Washington Bureau, June 30, 2008)
IARPA has been organized under the auspices of Office of Director of National Intelligence (ODNI) Mike McConnell, a former executive vice-president with spooky mega-contractor Booz Allen Hamilton. As Tim Shorrock reported in March,
As Booz Allen’s chief intelligence liaison to the Pentagon, McConnell was at the center of action, both before and after the September 11 attacks. During the first six years of the Bush administration, Booz Allen’s contracts with the U.S. government rose dramatically, from $626,000 in 2000 to $1.6 billion in 2006. McConnell and his staff at Booz Allen were deeply involved in some of the Bush administration’s most controversial counterterrorism programs. They included the Pentagon’s infamous Total Information Awareness data-mining scheme run by former Navy Admiral John Poindexter, which was an attempt to collect information on potential terrorists in America from phone records, credit card receipts and other databases. (Congress cancelled the program over civil liberties concerns, but much of the work was transferred to the NSA, where Booz Allen continued to receive the contracts.) (”Carlyle Group May Buy Major CIA Contractor: Booz Allen Hamilton, CorpWatch, March 8, 2008)…

In the beginning, there was Total Information Awareness, a DARPA information-gathering program run by noneother than former Iran-Contra figure and Reagan national security adviser John Poindexter. Critics saw the program as a major, post-9/11 intrusion on American’s privacy and civil liberties, and Congress killed funding for it in 2003. But there were persistent reports–confirmed by yours truly in conversations with former U.S. intelligence officials–that portions of the Total Information Awareness research had simply been shunted off to other agencies.
As readers undoubtedly recall, Total Information Awareness (TIA) was “terminated” by Congress when it learned that Poindexter was setting up a program that would sift through “public databases storing credit card purchases…

And to whom did DARPA turn to manage TIA? Why none other than Booz Allen Hamilton, of course! Joining SAIC (Science Applications International Corporation), Booz Allen “won” some $63 million in contracts to run Poindexter’s pet project. While the program–and contracts–were allegedly cancelled, portions of TIA had simply been spun-off to other agencies including the FBI and NSA.
Where else did TIA migrate? It turns out, many of its data-mining projects, including the Scalable Social Network Analysis (SSNA) operation, which seeks to model networks of connections like social interactions, financial transactions, telephone calls, and organizational memberships into a coherent analytical tool,�were “assimilated” by the Advanced Research and Development Activity (ARDA), managed by NSA.”

July 3, 2008

Happy Birthday America: Americans need to stop listening to the myths they’ve been fed
By John Stanton - Global Research.ca
JUL 2, 08

That was a very competent tying up of a lot of loose threads. Thank you! (and to all the others who made him sweat!)

The only thing which struck me as missing in the description is that, in dollar terms, the size of the paper market is probably many times the size of the physical one (and by this I mean the net physical, not the backwards and forwards of the supposedly all-physical LME). Further, the size of the paper gold market is minuscule compared to others such as the bond and currency markets. A tiny hiccup in those can have a disproportional effect in gold. An example of this would be if margin calls in other markets, eg oil, cause the traders to sell all their long contracts in other commodities. This would explain at least some of the near-vertical swings of $20+ that we have seen in recent months.

Now that there is no separation of banking and brokerage, the mortgage debacle is being felt far further in everything financial than it might otherwise have been. I read or heard something in the last few days (I think it was in James Scurlock’s “Maxed Out”) which stated that the main impetus for all the restrictions on banks came from the banking industry itself. Presumably the result of the battered survivors of the 1930’s not wanting their comfortable businesses disrupted by upstarts who spoil things for everyone! I wonder when we will be hearing that song again in the near future.

An enjoyable 4th of July to everyone. Remember to do some reading. Ah! those were the days. When people put down exactly what they thought in a text not much longer than this post!

C!

Yesterday afternoon I posed a simple-minded question concerning gold price manipulation, and by this morning I am reading several thoughtful posts which have, directly or indirectly, answered mine. I have been provided with some new tools for thinking. I am grateful to this forum.

If there is a world wide systemic failure of the financial institutions will people reject paper completely. Even with the substitution of digital money for paper will the lesson be learned that it is just paper and electronic blips that can be wiped out by other peoples mistakes or whims to control. The trader in France, Argentina, LTCM and Zimbabwe for a few. I’m to the point that it doesn’t matter what gold is worth in dollars,Yen or Pesos. Just that I have some ounces for that is the only control I have in this Fiat World.
Slingshot————–$

” I give you a Republic sir. If you can keep it”. I believe those are the words of Ben Franklin and how true they ring. Have to run up, “The Stars and Stripes”. Play some J.P.Sousa to get things going.
Slingshot—————–flash—–Boom!

Ender,

My sincere thanks for your thorough commentary. I have actually saved it in a Word document to refer to later. Well done sir!

HB

@Everyone
Thank you all for the clear summary of possibilities!
This forum is so valuable for me. And THAT for free.
Compliments to USAGold.
I’m more of a lurker than a poster, BUT if I really want to clear up some issue more, I won’t hesitate to ask here.

Jesse

Please read and absorb Sir Enders offering …and be sure to “difference” in your mind what is the real Gold …and what is the promised Gold eh?
Your English is good, post more often.

Thank you ..and that is the gist of it in a nutshell. Well done!

We older folk are so used to identifying Gold as an ultimate “present” …when in fact due to forward sales, miner hedging, contrived market arrangements and the like, the World of today trades and tacitly accepts Gold as a “future”.

That is why I’ve taken to comparing the PoG with L-Bond price as they’re actually twins in the market-place imo. This will change when PoG AND Cash re-attach, …where-o-when that will happen is anyone’s guess.

What sense would it make to sell to suppress price in order to buy back? You’d at best come out even. Am I missing something?

Hypothetically, during an established up trend, if you’ve stake is big enough, sacrificing a small portion at say $32 lower then reigning market, as demonstrated last week, you can possibly double or more your original stake at an average of 15$ below contemporary market, by the time it, the market, has caught up with this little bit of fancy footwork again. That’s a little better than even. Unprofessional? Not since the broker profession has been de-regulated into bank in-house trading, hypothetically of course. Enron after all was only a sign of the times, hardly an isolated occurrence. Belief that this negative trend could be reversed again? Not of you’ve witnessed the level of questioning during a congressional hearing on TV. Unless of course I’ve missed something myself.

Topaz: “In fact, I’d fully expect that soon after we top out at $1k+/Oz this go-round, the “price” will plummet to 7,6,$500, maybe even back down to $300 in short order. You’ll be hard pressed to obtain any though.”

Jesse: “I really hope not that this kind of rigging is possible….”

Devils advocate: “the more gold drops the more anyone with any sense will buy”

Tahoma: “As I understand it, the only means by which the price of gold can be suppressed is to sell enough to increase supply, thus lowering the price as more and more is sold. Conversely, if gold is bought in sufficient quantities to lower supply, then the price would rise as more and more is bought. [What sense would it make to sell to suppress price in order to buy back? You’d at best come out even.]”

Houston_Bug: sights Sinclair’s 24 points – with no commentary.

Slingshot: “I don’t think it will be dollars.”

-=-

A Topaz, to an untrained eye, may pass as either a diamond, or mere quarts, but then cut, polished and set in the proper light, it shines like nothing you have every seen. My fellow Topaz, the Ender has found words for the ongoing conversation that I hope will not dull the perfect simplicity of your statement. Please correct me if I change your intended meaning. I would not want to do that.

From Ender’s point of view, to better understand this seemingly inconceivable price fluctuation, you must understand the markets.

Assumption 1: There are two gold markets.

The basic idea here is that you can either pay for gold today, or buy the promise of getting gold tomorrow. An example of getting gold today, is to call our host and exchange dollars for gold. I’m quite confident you’ll see your physical gold in just a few days. This is the Physical Market. This market also extends to jewelry stores, but they usually settle for a higher price. Or, you can put your money in a brokerage account and purchase a contract that promises future settlement in dollars based on the gold price. The typical gold futures trader plays in this market. This is affectionately known as the Paper Gold Market. What is most interesting here is that these different markets have different characteristics.

Assumption 2: Settlement in each market is different.

This is a key point. When you settle your transaction in the Physical Market, the buyer gets gold. When you settle your transaction in the Paper Gold Market, there is a 99.9% chance that it will be for dollars – or, that you will have someone else store your claim until you’re willing to settle for dollars.

Assumption 2a: Paper Gold Settlement rules are subject to political will

Here, it turns out that for promises to be kept, rules must be followed in order to keep everyone confident in the paper gold trading game. Margin limits are not constant, default rules may change and delivery is highly discouraged.

Assumption 3: Physical price follows Paper Gold price.

The confidence that there will be gold available in the future at a given price helps shape the actual physical price at which those that hold gold today are willing to sell. It might seem a little weird, but if the dealer can secure his replacement at a better price then he can sell today, he’ll be more willing to sell today which drives the price towards that future delivery price. Even if this logic doesn’t hold the spot market prices (Physical) are shaped by the future market prices (Paper Gold). Or, more importantly, the two market prices are strongly correlated.

Assumption 4: Standard rules of supply and demand apply to both markets.

This one is simple, if lots of buying occurs on something and the supply is tight, the price logically rises. Similarly, if there is lots of selling of something and the supply is abundant, the price drops.

Now let’s put this together and see if we can drive the ship.

1) If the Physical supply of gold drops and the demand rises, the undisputed result is higher prices.

2) If the Paper Gold supply drops and the demand rises, it also stands that the undisputed result is higher prices.

Likewise, in our physical market, if the supply of gold rises and the demand drops, the undisputed result is lower prices. It only logical that the same applies to the Paper Gold market if there is an over liquidation.

The kicker is that these to different markets are highly correlated. When the supply of gold in one market grows it tends to affect the price of gold in the other market. So, for instance, if the supply of Paper Gold where to increase by a 100 tones but the demand for Paper Gold does not pick up, the price of Paper Gold will drop do to the over supply. The correlation assumption between these two markets drags along the physical gold price.

But, to the Physical gold holder, when the price of gold drops below the cost, the holder is less likely to sell. They simply withdraw supply and wait for a correction up. This in turn contracts the Physical supply in reaction to the abundant supply of Paper Gold. Conversely, if there is little Paper Gold supply, the paper demand will drive the price up and make the Physical gold holder withdraw their sale waiting for an even better price. Contrary to what you might think, the physical gold holder holds through a down turn and holds out for a better price when the price is rising.

Assumption 5: Gold is the barometer of inflation
Assumption 6: Central banks stand willing to lease gold should the price rise.

The rising price of gold makes currencies look bad. So, if your charter is to maintain public confidence in your currency, not letting the price of gold get out of hand may be something that you have to manage. Now, if you were going to do this, would you sell Physical gold or Paper Gold? Either will work, but one market is much better with regards to settlement.

Now, with these assumptions in mind, could we ever see quotes in the $300 range for gold?

To the Ender it is highly possible and most probable. The Paper Gold market is but a promise to deliver. As we watch the markets today, we see how the world is sitting on the edge of not being able to pay. If those buying Paper Gold ever feel that the promise to deliver is in jeopardy, will they buy? Probably not. Thus, there is a chance that those that sell Paper Gold will find that the buyers of Paper Gold will not come to market. Thus, the Paper Gold price plummets. Due to the high correlation between the Physical market and the Paper Gold market, during this plummet, those selling physical gold just hold.

For Topaz’s situation to play out, those that buy Paper Gold must question the promise of delivery and those holding physical gold will opt to not play the trading game for a little while. At this point, we have cheap Paper Gold and physical gold that one cannot get a hold of at any price!

To sum up, Ender reads Topaz’s statement as, if those that buy Paper Gold lose confidence, they will not come to market thus we might expect contracts at rock bottom prices. But if you’re looking to pick up physical gold, you’ll be hard pressed to find any because no one will sell it to you at that price!

To Jesse, It’s possible, but many would believe that it’s not probable.

To devils advocate, to those that think physical yes! But, as Topaz says, they will be hard pressed to find any.

To Tahoma, those that sell Paper Gold have a purpose that is much greater than the gold market. It is not about breaking even or making a profit. Think about this as you watch the US treasury Secretary look for ways to maintain confidence in the system.

To slingshot, I had not expected this from you.

To all my fellow metal-heads, rejoice, for your gold coin will be your ballast in the developing storm.

Fed’s Bullard Says Bank’s Credibility on the Line

By Ros Krasny
Reuters
Thursday, July 3, 2008

CHICAGO — The Federal Reserve’s use of core inflation measures is harming its credibility, the new president of the St. Louis Fed wrote in an editorial released on Thursday.

James Bullard, who took over from William Poole in April, said focusing on inflation indices that exclude food and energy work well when those prices are rising at rates similar to those of other prices, “but that is not what is happening today.

“It is hurting Fed credibility to say that we are trying to keep inflation low and stable, but at the same time we are not counting some of the prices that are going up at the most rapid pace,” Bullard wrote in the bank’s magazine, “The Regional Economist.” …

* * *

For the full story:

http://www.reuters.com/article/bondsNews/idUSN0332437420080703

excerpts
4 July 2008; TEHRAN: Iran’s annual inflation rose to 26.4 per cent last month, an Iranian news agency cited central bank figures as showing yesterday, as consumer prices continued to climb steadily in the world’s fourth-largest oil exporter.

Rising inflation is expected to be a key issue for voters in next year’s presidential election, with President Mahmoud Ahmadinejad facing growing criticism from MPs, the public and the media over his government’s failure to rein in price hikes.
…
Ahmadinejad came to power in 2005 on a pledge to share out Iran’s oil wealth more fairly but the conservative president has come under fire over his economic policies.

Analysts say the profligate spending of an influx of petrodollars combined with interest rates well below inflation are factors fuelling inflation.

A London-based economist said the latest inflation figure was no surprise. He blamed loose fiscal and monetary polices while saying rising global food and other prices added to the problem.

^_(from hyperlink)_^

The interesting thing you can discover when you read a dispassionate economic assessment of a country is that, given a rare absence of the ever-present socio-political rhetoric that accompanies most news reports, it turns out that most of those “evil guys” in the black hats seem to share a whole lot of the daily grind that “all of us other guys” in the white hats frequently gripe about in the course of our own lives.

Who woulda thunk it? (Those fellas complaining about inflation over there are probably buying gold, too, to preserve some of their purchasing power — ya think maybe so???)

R.

You never know what the heck the PTB have up their sleeve. I don’t think it will be dollars. More like Amero’s. Gold passes $1000. Shoots to $3000 and the Great Reset of golds value is adjusted. You may be right gold would be hard to acquire because it will be in the hands of somebody and none on the market. So if 3000 dollars are now 300 amero’s, will the change be as easy as Europe was changing Lira to Marks to Pesetas to Euro’s. Americans are not going to handle any kind of change. It makes their brain hurt.

Slingshot—————-$

Despite day’s dip, NY gold ends holiday-shortened week up $2

The COMEX August gold futures contract closed down $12.90 Thursday at $933.60, trading between $928.00 and $950.00

July 3, p.m. excerpts:
(from MarketWatch, DowJones & Bloomberg) — Gold futures closed with a loss of more than 1% Thursday, pressured as the U.S. dollar rose against other currencies, but the precious metal still posted a gain of more than $2 an ounce for the holiday-shortened week. Regular futures trading on Nymex will be closed Friday for the Independence Day holiday. Electronic trading on Globex will proceed as usual Friday and throughout the weekend, though Nymex said it will convert the trade date for any trade execution reports sent from Globex on July 4 to July 7.

But weighing on gold prices Thursday was a surge in the U.S. dollar following the jobs data. “The jobs number for the month of June was bad but not bad enough to stifle the gains in the U.S. dollar,” said Kathy Lien, chief strategist of DailyFX.com. “Anything short of 100,000 would have been dollar positive and that is exactly how the market reacted today.” (Job losses in June were worse than the 40,000 expected by economists surveyed by MarketWatch.) The Labor Department reported Thursday that the U.S. economy shed 62,000 jobs in June while the unemployment rate unexpectedly remained at a four-year high of 5.5%. (The unemployment rate was expected to fall to 5.4%.) Payrolls have now fallen in all six months this year for a total job loss of 438,000, the strongest evidence that the economy fell into a recession in the first half of the year.

“We’re following the euro,” said a Comex floor trader. “It looks like a little profit-taking ahead of the weekend.” Gold futures fell sharply Thursday in reaction to euro weakness that was largely tied to remarks from European Central Bank President Jean-Claude Trichet construed to mean that a rate hike was not necessarily the start of a long string of rises, analysts said.

“Trichet helped the dollar and in that way inadvertently put the gold down, crude came off the highs and the stock market held its gains,” said George Gero, vice president with RBC Capital Markets Global Futures.

The dollar initially held against the euro - and gold was somewhat steady - ahead of the pit open after the European Central Bank increased its key interest rate by 25 basis points. Not long after the open-outcry session opened, the metal edged modestly lower after a U.S. jobs report that not far from expectations. Then the sell-off began in earnest a few minutes later when post-meeting comments from Trichet hit newswires.

During a news conference, Trichet was less hawkish than expected, observers said. The ECB chief again expressed concerns about inflation, but also said there are downside risks to economic growth.

August gold at one point was down $18.50 for the day to low of $928 in thinly traded session ahead of a long Fourth of July weekend. “When gold swooped down $15 to $16, there was stop-loss selling and there weren’t enough buyers to offset it because of the limited participation,” Gero said. “Once the initial sell orders subsided, no new selling developed. It just stayed down for the day, fluctuating with an eye open toward the dollar and any new dollar moves.”

The dollar rose as much as 1.3 percent against the euro after the European Central Bank signaled that a 25 basis-point increase in its benchmark lending rate today may be enough to control inflation. Gold … has climbed 42 percent in the past year as the ECB held rates steady while the Federal Reserve slashed borrowing costs and the dollar sank.

The ECB boosted its main refinancing rate to 4.25 percent, the highest since 2001, to cool inflation. The Fed cut its benchmark lending rate to 2 percent on April 30, the last of seven straight cuts from 5.25 percent in September, to head off a recession.

Crude-oil futures reached a record $145.85 a barrel today on concern an attack on Iran’s nuclear facilities will disrupt Middle East petroleum supplies. Iran is OPEC’s second-biggest producer.

“Fundamentally, I remain very bullish,” said Adrian Day, president of Adrian Day’s Asset Management. “With geopolitical problems over Iran, oil prices high and inflation brewing, this is the perfect storm for gold. I would buy again closer to $900.”

see full news, 24-hr newswire…

Fellow Gold Bugs,

Found this tidbit on Jim Sinclair’s website…….
**************************************************

Metals dealers buy metals from producing companies at a discount to form, condition and location.

The metals dealer prices their buy according to their ability to sell the metal in the forward market.

That transaction is a true hedge.

The short side of the gold trade as in this example is risk free at that point.

In the old days a modest profit fulfilled the desire of the metals brokers.

The short was covered when the purchased bullion metal was sold to industry.

Today the world has no ceiling on desires.

The metals dealer of today wants to make $50 or more, not 50 cents.

The gold market becomes prone to declines from time to time by entities like crude oil or the euro.

The metals dealer has a risk-less short position on.

At this point risk is taken by selling to hammer prices lower, not to sell volume.

This can be identified by a floor trader in open outcry or later by computer entry offering thousands of gold contracts for sale when a few hundred or even ten is the only buyer showing.

The bravado has a purpose. That is to scare the gold market lower using the least sales required.

As gold moves into areas of major support the metals dealer buys back the short.

As the producers continue to sell, dealers then buy as in number one but play the market and back higher the gold price goes.

The short is then put on by the metals dealer at Angels or round numbers.

This along with mindless black boxes and follow the leader hedge funds results in the largest money on the planet playing the smallest market on the planet. This creates a large degree of unprecedented volatility.

The net result is that people assume a huge dedicated short, which is wrong.

What is correct is a turning short that keeps the number high but in fact is made up mostly of risk-less trades.

The trades are not registered as hedges rationalizing that; in today’s world a hedge is defined as a different transaction than outlined.

Since these trades are made generally either as broker or principle by the big six who can do no wrong, who cares how they report it.

The metals dealers do all possible to invite the assumption that they are dedicated shorts when they are NOT. This benefits their desires as up moves try and push a short that in fact turns over at a profit and has no dedication to anything other than the 21 points just made.

What people refuse to believe is that just those that are identified as the enemies of gold will be the ones that make the most long gold.

As I understand it, the only means by which the price of gold can be suppressed is to sell enough to increase supply, thus lowering the price as more and more is sold. Conversely, if gold is bought in sufficient quantities to lower supply, then the price would rise as more and more is bought. What sense would it make to sell to suppress price in order to buy back? You’d at best come out even. Am I missing something?

the more gold drops the more anyone with any sense will buy

people are waking up around the planet to “monetary gold” - the only real money
————————-
actions speak louder than words

:will a quarter point rate hike have any effect on rising inflation? words…words…words…

:will saying that inflation is a concern change chronic high inflation?

:will touting stocks - the best stock to profit from, the time to buy financials, the….-convince anyone as everything tanks?

:will words count when truckloads of money don’t help?

Steve

@Topaz:

It is possible that the banks “suppress” the POG for a very short time to $300 for example, so they can load quickly the cheap gold back so they can use this gold again to suppress again at a much higher price?

If this is possible, then they can for example drop the POG to even $36/ounce and then buy nearly all the gold and set the price back to $900 where the normal people can buy it at this price. Then they drop it again….

I really hope not that this kind of rigging is possible….

Sorry for my bad English.

excerpts

NEW YORK (Reuters) - Phillip Bennett, the former chief executive of Refco, was sentenced to 16 years in prison Thursday for fleecing investors of more than $2.4 billion in a fraud that destroyed the world’s largest independent commodities broker.

The sentence marks the latest chapter in the decline and fall of Phillip Bennett, 59, who built Refco into a global commodities trading empire only to see it unravel in 2005 after the company disclosed an accounting deception.
…
Bennett pleaded guilty in February to 20 counts of fraud, conspiracy, money laundering and lying to auditors and others.
…
“During these 33 months (since Refco went bankrupt), I’ve come to realize that, despite the best of intentions, I made an unacceptable and appalling error in judgment,” he said.
…
Prosecutors said Bennett conducted his fraud over eight years. In the late 1990s, a series of Refco loans to customers went bad. Bennett engineered fraudulent transactions to take the bad debt off the company’s balance sheet at the end of reporting periods, so investors and others would not know about them. He engaged in other maneuvers designed to hide Refco’s lack of cash flow as well, prosecutors said.
…
Former WorldCom CEO Bernard Ebbers is serving a 25-year prison term for orchestrating a massive accounting fraud…

In another case, Bayou hedge fund executives Samuel Israel and Daniel Marino were each sentenced to 20 years in prison this year after admitting to defrauding investors…

^_(from hyperlink)_^

Just another reason not to trust overmuch of your vital life’s savings to clowns who only give you only a dubious accounting statement of columns and numbers in return. Instead, convert a sensible portion into hard assets (such as gold) and accept nothing less than physical delivery for your very own safekeeping.

R.

In some ways we could expect this rampant global money creation to impact PoG in a positive manner however it’s the act of determining the “price” of Gold that IMO is bogus here.

If the Miss World Comp was the currency markets, the Ugliest, Fattest, most illiterate candidate would win hands down.

Buying Physical Gold is clearly the right strategy …however, don’t expect the “price” going forward to be any more reflective of it’s worth, just as it’s current “price” is NOT reflective of it’s worth. …capiche?
In fact, I’d fully expect that soon after we top out at $1k+/Oz this go-round, the “price” will plummet to 7,6,$500, maybe even back down to $300 in short order. You’ll be hard pressed to obtain any though.

Meanwhile, your much maligned Buck will be on a one-way trip into the stratisphere.

Let’s watch!

Link here
From Alex Wallenwein’s camp, John Browne says dire happenings due this summer, joining numerous commenatators from the mainstream, banks and international finance. But this fine commentary underscores the case for gold more than anything else.

Das Monetary Policy
– Posted Wednesday, 2 July 2008 | Digg This Article | Source: GoldSeek.com
Excerpts:

“Commentary from John Browne – Senior market strategist, Euro Pacific Capital.

On June 25th, the Fed made no changes in its key interest rates and issued a statement that underscored how narrow their room for maneuver had become. Caught between the opposing forces of economic contraction and inflation, the Fed revealed that it was locked in neutral…

This inaction did not inspire confidence. The market sell-off in the days since the meeting has accelerated the swoon that has seen American stocks down by some 20 percent in the first six months of 2008. It is now official: the ‘bear’ market has begun.
Although leading policy makers do not dare to utter the name, the conditions currently confronting the Fed are known as “stagflation”. However, America is not the only major economy facing this grizzly beast. The European Union is also coming to grips with the problem. The difference in the manner that America and Europe deal with the issue could make a huge impact on the world economy for years to come.
Unlike the American Fed, the European Central Bank (ECB) has only a single mandate; to curb inflation…

Today however, things have changed, dramatically. Many oil producers now demand Euros in payment for oil. Important nations have abandoned the dollar as a peg for their currencies. Worst of all, the debasement of the U.S. dollar is fast eroding faith in paper money. There is now rising, but so far hidden, pressure for a more reliable international ‘reserve’ currency.
The most obvious choice would be the Euro, especially after the expected European unification treaty of Lisbon is finally ratified in 2009….

If the U.S. dollar loses or even has to share its ‘reserve’ status, it will become increasingly vulnerable to a panic run. The July 3rd meeting of the ECB is likely to prove crucial. If the Germanic view wins out and the ECB raises its rates, it risks both a run on the dollar and the possible loss of the dollar’s ‘reserve’ status.
If such a move were adopted, it would involve a further international risk; the pushing of a looming recession into a depression, just as it did in 1930, when the same anti-inflation sentiment prevailed.”

Want to learn more about gold ownership?

Click here…

Gold Retreats Following ECB Rate Hike
Jul 03 a.m. (USAGOLD) — Gold has retreated into the range after ECB president, Jean-Claude Trichet, took a slightly less hawkish stand following a 25bp rate hike.

The bump in the ECB’s refi rate to 4.25% was widely anticipated and Trichet was expected to maintain a firm inflation-fighting stance at the follow-on press conference. The euro rose to a new 2-month high above 1.5900 in anticipation.

However, Mr. Trichet’s comments at the press conference had a more neutral tone than many were expecting. He implied that after today’s 25bp rate hike; monetary policy contributes to achieving the goals of preserving purchasing power and anchoring expectations.

The ECB chief did not go so far as to say that rates are now appropriate, adding that the bank would continue to monitor developments very closely. This leaves the door open for further rate hikes down the road, but the less than convincing tone prompted a round of profit taking in the euro.

The EUR-USD rate tumbled back below 1.5800 as traders who had been betting on a more hawkish ECB tone squared positions ahead of the long holiday weekend in the US. The resulting firmer tone in the dollar had a negative impact on gold.

We’ll see if the hawkish Mr. Trichet returns in the weeks ahead if upside price risks persist, as they are likely to do. It won’t take much to get the euro back on track for a short-term retest of the 1.6020 all-time high from Apr, which would have gold moving higher again as well.

Gold’s retreat into the range leaves important chart/Fibonacci resistance at 954.70/960.88 intact for the time being. However, good buying interest is likely to be seen on dips ahead of the pivotal 900.00 level.

As the long-term uptrend in the yellow metal continues to re-exert itself, an eventual push above 960.88 would lend considerable credence to the scenario that calls for renewed probes above $1,000.

Oil prices set another new record high today, which is going to continue to be supportive to the gold market as well. As energy prices continue to rise so do the price risks for a wide array of goods and services. This is just the scenario that may prompt the ECB to hike rates again down the road.

Since gold is the classic hedge against inflation, we look for the yellow metal to remain underpinned by ‘unanchored’ expectations with respect to inflation.

US nonfarm payrolls fell 62k in June, versus a revised -62k in May. The unemployment rate held steady at 5.5%. The number of jobs lost exceeded market expectations and marks the sixth consecutive monthly decline.

The weak employment outlook, combined with the latest drop in the US ISM nonmanufacturing index, clearly shows that the US economy remains on the ropes.

Not a real ‘feel good’ as we look forward to the long Independence Day weekend. However, the prudent investor can turn to gold as means to preserve wealth in these turbulent economic times.

Physical gold offers a convenient and liquid hedge against inflation, a declining dollar, as well as general economic and geopolitical uncertainty.

Physical gold also offers non-correlated diversification against the more traditional asset classes.

On Monday we will release our annual Survey of Investments. One look at the chart that will accompany this report will clearly illustrate which asset classes continues to shine above all others.

If you are not already a member of our NewGroup and would like to receive this report, please click here to register.

Gold Market Movers:

US nonfarm payrolls for Jun -62k, versus downwardly revised -62k in May. Unemployment rate steady at 5.5%.

US jobless claims for the week ended 28-Jun +16k to 404k, well above market expectations.

ECB hikes refi rate by 25bp to 4.25%.

Eurozone retail sales for May +1.2%.

UK services PMI for Jun fell to 47.1, below market expectations.

Riksbank raises rates by 25bp.

Dow in secular bear market when priced in ounces of gold

Payrolls fall by 62,000 in June

Oil touches new high above $146

(Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. Centennial Precious Metals, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD - Centennial Precious Metals does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.)

The ECRI reports that inflation pressures in the US are now at their lowest since Jan 2004. They deserve another letter- R- for The ROYAL Economic Cycle Research Institute.

And Marketwatch.com notes:
Initial jobless claims top 400,000 last week
By Rex Nutting
Last update: 9:49 a.m. EDT July 3, 2008
EXCERPTS:

“WASHINGTON (MarketWatch) — The number of people filing for unemployment benefits rose by 16,000 last week to 404,000, only the second time in this cycle that initial claims have been above 400,000, the Labor Department reported Thursday.
The four-week average of new claims rose to 10,250 to 390,500, the highest level since October 2005. Layoffs have breached levels typically associated with recessions.
Meanwhile, the smoothed average of continuing claims rose to a fresh four-year high of 3.11 million, further evidence that jobs are increasingly hard to find.
In the latest week, continuing claims fell by 19,000 to 3.12 million…

Compared with the same time last year, initial claims are up about 23%, while continuing claims are up about 24%. Continuing claims have never risen by 20% or more without the economy falling into recession.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs…”

More sighted by Marketwatch:

Toyota to overhaul U.S. strategy after June slump [Prong in tactics to prolong invasion]

Shares bounce as rate-hike worries fade after Trichet talk [”Plunge Protection Team gathers at Four Seasons Hotel French Riviera for Holiday celebrations…”]

Gold’s rally probably won’t get a summer break [That’s terrible! Are you sure we can’t arrange one for him?]

ECB’s Trichet claims ‘no bias’ after first hike in 13 months [”Pinocchio’s nose dwarfed by latest honker”]

The other addiction: What Obama, McCain don’t say about deficits [”Deficits are still modest”]

Bulls pulling in their horns [”We have exclusive patents to bull, and horns”]

Fed’s overlooked message: Dump your ARM now, if you can [”Ready? Dump ugly stepsisters on cue…”]

Gold Bug Opinion:
govt should stop printing money to reduce inflation = cut govt spending and borrowing, pay off the Govt deficit

vs.

Bill Gross (in his July opinion letter to his choice for President):
Dear Pres. Obama: “Your administration will (should) produce this nation’s first trillion dollar deficit!”…(by 2011)
“…this is the fiscal stimulus popularized by Keynes following the Depression.”

—————————————–

I’m out the door to buy gold

Steve

“Of concern,” says today’s Gold Market note from Mitsui in London, “the Comex announced it is increasing the margin requirement on gold futures by 15%.”

Yeah,you guessed it right.Buy physical instead

Source: Prudentbear.com
Windbag inflation by mikal

Threat of disruption hangs over US west coast ports - FT [Imbalances and inequities can’t be “contained”?]
�
Industry Group Says Loan Delinquencies Are Rising - WSJ ($) [Delinquints. Mutineers. Traitors. Suppose they can work in government and finance now.]

Few workers are saving enough money for retirement, study says - Boston Globe [What is Big Brother for?]

Average Joe figured out problem awhile ago - Boston Globe [Really? Better late than never. Now how’s about a fix?]

AirTran plans 5% to 15% pay cuts; furloughs also expected - Atlanta J-C [Frog says “ahh, this water seems so warm and snugly…”]

Food companies’ hedges remain hard to pin down - Reuters [It’s ALIVE!]

Trichet Says Rate Increase Will Bring Down Inflation - Bloomberg [Yes, and I have a bridge for sale near Ground Zero.]

U.K. Services Contracted Most Since 2001, Banks to Curb Loans - Bloomberg [Consumers becoming maxed out, spending more on pain killers.]

Sweden hikes interest rate to 4.5 pct - AP {It’s expected to hike two or three more times this year. Like the ECB and other banks especially the Federal Reserve Bank of NY, they know they’re behind the curve so far that they they’re still working on the first one.]

Bush’s Dollar Drop Maps Loss of U.S. Clout at Final G-8 Summit - Bloomberg [Dollar was dropping before Bush, just as it will after Bush. Count on gold for “clout”.]

This past week has been very quiet when it comes to fireworks. The sounds of the approaching Independence Day is scarce. The aerial bombardments that should have started three days ago have fell silent. In days passed the neighborhood would be filled with smoke and the smell of flash powder. Sign of the times.
Slingshot————$

Another set of US data released today, showing more than expected job losses. But statistical adjustments greatly temper the outcome. Unemployment rate was 5.5%, also “higher than expected”. And payrolls “in April and May were revised down by 52,000 to show increased losses…”

U.S. June nonfarm payrolls fall 62,000 - MarketWatch
08 July 03

as the ECB readies to hike

-is the oil market pricing in the effect of an ECB rate ahead of time? I don’t think so-
maybe it is really saying all along that they want more dollars for oil because of more inflation

currency intervention is about to start to prevent a dollar free fall

Citi’s prediction of the dollar falling to $1.69 by Sept rests on:
1. rising oil price
2. falling bond yields
I disagree. I believe it’s the other way around. Oil is rising because the dollar is weakening because of too many dollars (= inflation)
to pay a YIELD on bonds, more and more bonds, and to create debt all around in all forms…car loans, home loans, credit card loans, business loans etc.

Nobody wants the dollar. Foreign money (US dollars) buys the shorter duration bonds (e.g. 10 Year Notes)
:it’s like throwing “bad” money (US Dollars) after “bad” money (short US Bonds) - get rid of the dollar as fast as you can
:and they are trying to “help” USA by buying more which lowers the yields for short durations -home mortgage rates are pegged to 10 Year Notes

Nobody in their right mind is buying the Long Bond (30 Years) - only the Social Security Trust Fund.
Nobody wants the dollar -the dollar/L-Bond is going bye-bye…

Prof. Lawrence Kotlikoff says that the SS Trust Fund will pay out more than it takes in in 2012 (4 years from now)
the next President will either raise taxes, issue more bonds, or print money

Nobody wants the dollar.

The Price of Gold will rise regardless of the L-Bond price.

Topaz: you are right. Only time will tell whether these current tremors will pass without a quake.
When the quake does come, ‘flations won’t matter.
It will be called the Time for Survival.

Steve

“Damned if you do, damned if you don’t.”
That’s an inflationist CB’ers epithet here and abroad. They spin monetary policy any way, every day while their specie, currency frays. Gold pays in full. Trichet’s comments due shortly, likely to echo the preview given here.

ECB lifts key rate to 4.25%, first hike in 13 months - MarketWatch
03 July

Dow in Secular Bear Market When Priced in Ounces of Gold - Kirk Lindstrom - Seeking Alpha
07/03/08

Of COURSE they’re going to discuss the dollar(CTV.ca) But they won’t pass up other rhetorical, political, PR and financial ops. And breads and circuses.

Brown, Medvedev to Meet at G8 Amid Signs of Compromise - Agence France Press - Dow Jones Newswires
July 3

Pathetically conservative estimates all the way around. But at least they’ve pinned down some of the drivers for you. There’s nmention that the US dollar has broken down for example, or that funds continue to flee bonds and treasuries. No where is mention made of the credit card crisis. Nothing is said about the growing cost of basic government day to day operations, pensions and health care maintenance, war, bailouts, ‘loan extensions’ and other nefarious and illicit subsidies, asset deflation, spirals such as job losses and tax base depreciation, eroding consumer and foreign confidence, corporate and bank downgrade recriminations and implications, dislocated workers, manufacturing and agriculture, unbalanced and untenable household savings, systemically deteriorating government, corporate and municipal balance sheets, inflation compounded to hyperinflation, unemployment, stagflation, weather extremes, stock market illusions fading, hard work and hard assets rising…

Analysts prepare for summer gold rush
Budapest Business Journal - Marketwatch
July 3

I’d have thought Bonds would’ve firmed a bit more than they did yesterday, makes the going tough indeed for PoG.

The Hyperinflation of which you speak, and to a large degree the few examples we witness today, (Zim?) are a direct result of having a “measure” to compare with or against. In the case of Zim, we compare it to the USDollar and determine The ZimD is worth less with each passing minute.
In the above example, what is the USDollar equivalent if the ZimD is represented by (in this case) the Dollar? Are we expected to regard the Dollar vis-a-vee the equally papery Euro?
Do we define a droopy Dollar as indicative of inflation where every tick down in DX is equalled by an uptick in the “value” of the Dollar denominated Bond?
Oh there’s lots of Money around DA …and more with each passing day, but rest assured, if they stopped creating it, even to take a breath, their little Fiat con-game would collapse in a deflationary heap.
So in some ways we are as you say Hyper-inflating but whats really happening is the System is providing copious amounts of nourishment for the ever-increasing sess-piles of idle Capital.

The “demand” for unearned -Yield- is simply that great and unabating in this here here and now.

i was reminded of ‘another’ today as in many sectors the stocks were down hard whilst the underlying hard asset was up–gold, coal, steel

“Our position has been to be in cash and gold.” Richard Russell, 7/01/08

Hello friends of Gold,

Stunning to see how the events are being played out in our stock market.
It’s interesting to read the market has lost more value or something equated to that since 1930.

I was fortunate to learn of the hardship of that era from both of my Grandparents. The idea of penny pinching struck a cord with me many years ago.

Savings has a real meaning to me. Over priced coffee was never something
I felt inclined to partake just to appear popular. Maybe the new consumerism will realize that saving today will get you a lot further tomorrow? I can give up
a lot to buy more gold. Now that’s a good thing!!

:-)