The Running of the Bulls
by Rob Kirby, Kirby Analytics. July 11, 2005
This past week, the world was treated to one of the familiar “rites of summer.” Every year at this time, one of the true spectacles in the world plays out in the narrow streets of Pamplona, Spain. Even if you have never been lucky enough to witness it first hand, who hasn't seen this exhilarating event replayed on televised news accounts in the comfort of their living rooms around the world?
Photo: Javier Sesma
This famous run is the defining event of the Fiesta of San Fermín, covering a distance of about one half mile and occurs in the early morning hours daily between July 7th and 14th each year. This short run [usually lasting 2-3 minutes] begins in the bulls' pen and ends at the bull-ring. For those of you who might not be aware of what happens to bulls in the bull-ring, I would like to direct your attention to this picture to give you a little hint [it usually doesn't end well for the bull].
Photo: Javier Sesma
This past week, the world witnessed another gruesome example of what has become an all too familiar sight that being the terrorist bombings this past Thursday in London, England. In the minutes following the bombings becoming news, European stock markets and bourses immediately plummeted and the price of gold spiked about 4 bucks. By the time news spread to North America, who were just beginning to arrive at their offices and trading desks, pre-market futures trade indicated the DOW was poised to open roughly 200 points lower prior to the Thursday morning stock market opening. But then something happened - something that has become an increasingly familiar occurrence when North American equity markets encounter, for lack of a better word, "turbulence." What happened is best described by Jim Puplava in this past weekend's, July 9th FSO radio broadcast [1st hour] as, "the stock market fairies showed up just prior to the DOW opening," the futures rallied, the stock market opened weak – but did better throughout the day and DOW closed bullish - up on the day!
As the stock market fairies were doing what they do best, the gold market elves for some reason decided to pummel gold [which had been up 4 bucks at 7:30 a.m. ET as mentioned earlier] to the point where it was barely registering gains at the 8:20 a.m. ET COMEX opening. The price of gold closed unchanged on the day, Thursday.
The actions of the gold market elves this past Thursday coupled with their handiwork the previous Friday, July 1st gave reason for Mr. Peter Grandich, publisher of the widely read and respected Grandich Letter and a [now former] well known member of the anti-gold price rigging conspiracy camp to issue this special alert to his readership:
The Grandich Letter
London Bombings Should Sadly Change the Investing Landscape
....Gold – I have not been a card-carrying member of the "gold is manipulated" fringe group within the metals and mining industry. This is not to say I do not respect what they have to say. But after Friday's trading pattern on the Comex and the opening today, I think I will be contacting them for an application.
Now in my third decade of following the gold market, I believe Friday's trading on the Comex was a "planned" bear raid and not a random coincidence of factors that led to an $8+ decline. With a major holiday weekend upon us, and extremely ill-liquid trading environment, gold suddenly tanked. You can search until the cows come home and not find any legitimate fundamental factor that could have even remotely led longs to suddenly want to liquidate their positions. The fact that this occurred as gold was approaching levels that could have led to a break out on the upside, well?
Any doubt that there is someone (or a group) currently attempting to get Comex gold prices lower for reasons that the gold manipulation crowd have repeatedly stated for a long time now, left my body this morning. Minutes before gold is set to open on the Comex this morning, it begins to fall and is heavily sold as soon as the bell rings. Did any of the news change that led to the rise just minutes and hours before? Why at 7:20AM EST does the gold community believe gold deserves to be up $5 but in just one hour (and no new news) do players on the Comex hit the ground selling hard and lead gold to be up less than a buck?
The planned "bear raid" Mr. Grandich speaks of in his alert, which occurred on July 1st, is graphically illustrated below. For those interested, they can read a subsequent interview with Mr. Grandich on his "change of heart" as well as his current view of the gold market. Take special note of the manner in which the gold price was annihilated at the hands of the N.Y. COMEX paper market at exactly 11:00 a.m. ET – in a market devoid of corroborating "news" at the very moment when the [physical] London market goes home for the day:
While most main stream news outlets seemed preoccupied and/or confused this past weekend, whether to cover the Menacing Dennis or the London bombing aftermath – rest assured, the event outlined above is important "news." I cannot help but construe this as indicative of - or quite possibly the "thin edge to the wedge" of a major sea change in investor sentiment. I have written about this recently in an article titled Smoking Gun? and have written a follow up piece to it, Smoking Gun Reprise which is available to paid subscribers at my web site.
On Friday, the stock market fairies were at it again - busy herding the equity bulls again to the tune of another breathtaking 147 point DOW gain. I sure hope this bull-run doesn't turn out to be as short lived as its half mile cousin in Pamplona, Spain.
Oh, and I sure hope there isn't one of these waiting for it when finally arrives at the ring [because – as mentioned before – it usually doesn't end well for the bull].
Overseas markets began the week on a strong note with Japan's Nikkei Index up 108.8 points to 11,674. North American equities began the week much the same with the DOW up 70.58 to 10,519, the NASDAQ up 22 to 2,135 and the S & P up 7.58 points to 1,219.
In the interest rate complex, yields were little changed with the 10 yr. bond finishing the day yielding 4.10% and the 5 yr bond ending the day at 3.89%. NYMEX crude oil futures finished the day at 58.92 per barrel, off .71.
The U.S. dollar index sold off, closing down .82 at 89.33. The YEN finished at 111.82, the Euro at .8286, the GBP at .5691, the CAD at 1.2165 and the RUBLE at 28.71.
Precious metals finished the day higher with COMEX gold futures up 2.50 to 425.70 per ounce while COMEX silver finished the day up .08 at 7.10. The XAU gold index finished the day up 1.92 at 94.09 and the HUI index ended up 5.15 at 205.03.
That’s all for today. Have a great evening and a pleasant tomorrow.
© 2005 Rob Kirby