More gold goodies Happy New Years special from John Brimelow…

Thursday, December 29, 2011

An Ancestral voice prophesying: Veneroso bullish! Gold shares too?

On Thursday the circa 6-55 AM down $40.20 level in Feb gold proved to the low of the day, although a decisive recovery did not set in until just before Noon. Gold then rose quite smoothly to settle down $20.30 in Feb at $1,540.90. After 2PM it moved sideways as if capped, standing $6.60 higher at 4PM, 0.48% below Wednesday’s stock market closing level. Silver, however, which started up at the same time continued rising to a peak at the stock market close, 2.9% above Wednesday’s 4PM level.

Estimated volume for gold was 126,267 lots, of which 94,904 lots were booked by 9AM and only some 20,000 lots after 12 Noon.

Gold shares had a very promising day. The HUI and XAU both went positive in the mid morning – before the gold rise got underway – and closed on their highs, up 2.04% and 1.75%. A strong rise like this on what was still a down day is unusual and bullish. The GDX/GDXJ ratio was also constructive, at 2.28%/3.82%.

PHYS gained to a 5.29% premium to NAV and CEF snapped back to a premium of 5.3% (Wednesday 4.81% and (3.2%). The GLD ETF reported no change in gold holdings for a 5th day, remarkable considering gold market events.

MarketVane’s Bullish Consensus for gold lost another point to 55%, last seen on December 5th, 2008. Silver’s and the HGNSI were both unchanged at 47% and 0.3%.

Early on Friday morning local Vietnam gold stood at a premium of $62.34 to world gold of $1,558.15 (Wednesday $79.35/$1,555.62).

This evening gold started moving up ahead of the TOCOM open, and so far has seen a high of up $20.10 in the Feb contract ($1,561). Volume is moderate: just over 11,000 lots on the CME website at 11-55PM and the equivalent of 9,600 NY on TOCOM. Both the Yuan and the rupee are so far supportive.

Today, for the first time in quite a number of years, Frank Veneroso circulated a comment on gold. In the 1990s Veneroso was the intellectual leader of the gold-friendly community, pioneering the Eastern physical demand concepts on which JBGJ’s work is based. He has subsequently been uninterested in the topic.

With caveats, his piece read:

"I think what we may be seeing right now is a bunch of traders trying to break a multi-year trend line in gold during the thinnest trading of the year in order to hit stops.

***

MIDAS… As veteran Café members know, I have known Frank Veneroso since 1980 when I was his broker at Drexel Burnham. Frank had quite the reputation back then. Never forget him selling the high tick in US Treasury bonds following their first big rally from 20% interest rates.

Frank was my mentor regarding gold when he wrote his highly regarded Gold Book in early 1998, one which I still use often in my presentations. Frank was the one who alerted me to the extent of the gold loans back then, which he said could have been as high as 8,000 tonnes. This basic input is what clued me in to the gold price suppression scheme. When Long Term Capital Management blew up, it was clear to me the bullion banks were protected their gold loan positions from blowing up … and doing so by taking over LTCM’s 400 tonne short position, which should have been covered. Frank’s input, which we corroborated further over the years, initally led to the formation of GATA by CP and me.

Frank V has shown little interest in gold as of late. What he is saying out of the blue should be taken very seriously.

Friday, December 30, 2011

Mother of Short Squeezes? Gartman considering buying

The CME Final for Thursday indicates that on volume of 143,464 lots, 13.5% above estimate, open interest ROSE 3,084 lots, 9.59 tonnes or 0.74%, to 422.079 lots.

Since Feb gold at the low was down 2.57%, and at the stock market close was still down 0.48%, this is astonishing. Particularly since the rally in the NY afternoon was on light volume, whereas the down spike involved the bulk of the day’s trade. Was this really a short seller of kamikaze character?

Indian ex-duty premiums: AM $11.50, PM N/A, with world gold at $1,555.65 and 1,567.14. Morning - lavish for legal imports. Reuters did not supply the afternoon gold data. Maybe the dealers were hiding: world gold jumped $13 in the last half hour of trade and the Reserve Bank once again goosed the rupee, which closed at $1= R53.08 (Thursday R53.07). Around the formal gold market close the rupee was R53.3 compared to R 53.43 on Thursday. The stock market closed down 0.57%. At a 24.6% loss for the year, according to Reuters India had the worst performing of the world’s major stock markets. Not much competition for gold.

Unless the rupee continues making major further losses, January is likely to open with huge Indian gold off take. The currency fell 0.9% against the $US this month and is down 15.8% for the year, all of it since August. See

http://in.reuters.com/article/2011/12/30/markets-in
dia-rupee-idINL3E7NU2HE20111230

In JBGJ’s view, this slide in the rupee is the single most important factor in the world gold market in the past few months. Without the crippling effect this has had on India gold demand, the Bears would not have had as free a paw in the latter part of 2011.

Soros Sees Gold Prices on Brink of Bear Market . This contains no such quote from Soros, and merely a dated reference to his reduction in GLD holdings. Bloomberg is very top-down edited. In JBGJ’s view orders were to produce negative stories on gold to please Hedge fund cronies. Otherwise such sloppy journalism is inexplicable.

The Gartman Letter,