Friday, January 13, 2006

Interview With GATA's Bill Murphy.


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Todays broadcast is dedicated entirely to our very special guest, Bill Murphy. From Cornell University and the School of Hotel Administration, Bill Murphy has an extensive commodities and futures background having spent time over the years with some of the most well-known Wall Street firms. Today, he is your host at The Cafe and is Chairman of the Gold Anti-Trust Action Committee [GATA].


Third Edition

Friday, January 13th, 2006

Chris G. Waltzek



This week, Gold closed at a new high point, a 25 year record. Gold stopped trading on Friday at $556, up more than $10. Silver finished near the break-even level at: $9.09, not far from a record close.

This week, I had the honor of interviewing, Dr. Marc Faber and Bill Murphy from GATA and, on my Daily Gold and Silver Review broadcast. Dr. Faber is a brilliant economist who believes that there are far too many dollars in circulation. Dr. Faber points out, on the show, that he expects gold to remain a powerful alternative to paper based assets. Dr. Faber is a self proclaimed Inflationist, who worries about the dangers that fiat money poses to the global economy.

My next guest, Bill Murphy, indicated that he believes gold will skyrocket to the $3,000-$5,000 level in the years ahead. His case for such a move is very sound. Mr. Murphy is convinced that central banks are holding far less gold reserves than stated and that the gold cartel holding down precious metals is in the process of collapse. You can listen to Dr. Faber's and Bill Murphy's free interviews online or download to your Mp3 player at my blog:

This Weeks Guru Predictions:

With gold climbing to record highs, there was once again no shortage of predictions of higher prices to come. Jim Sinclair, the unrivaled Internet Gold King, stated boldly this week that no one will wrestle an ounce of gold or even a gold share certificate from his mighty hands! He believes that we have experienced a significant break-out in gold and that a dash to $682 gold is possible:

"There is no reason to preclude the run to $682 right now. COT is falling back hard. It is looking like $529 plus 3% is holding well. That is the classic definition of a breakout. This breakout as I have been telling you for years would signal a runaway in the gold price, something you may well have never experienced but I have. It is marvelous to behold. I also reiterate that as long as gold remains above $529 plus 3%, stop trading and hold on for the ride.

"The final word for tonight is that there is every possibility that $682 is in the cross-hairs of the gold market. If it is not right now, then rest assured it is coming soon. Hold tight and watch closely. The line of demarcation is gold at $544.87 in CASH bullion. We are above that now for the second time so hold tight and watch closely. You will not get a share or an ounce out of me now."

Our next gold proponent, Derrick M. Reid, bases his predictions on what he sees as impending unrest in the Middle East, in the recent article, When Smart Bombs Pop Over Tehran, Gold Will Pop to Over $1000/oz:

A melt down is on the near horizon, far exceeding that of Chernobyl Ukraine, but this time, will be intentionally done, probably by summer, and Gold will pop to over $1000/oz, virtually over night, and maybe to $1500/oz.

Next, a Reuters article cites several gold targets from various sources. Listed among the reasons for higher gold prices are strong oil prices, global conflict and a weaker dollar:

"Gold consolidated on Wednesday after touching a 25-year high earlier in the week, but analysts and traders said it was building steam for another charge higher.

"It's just a kind of consolidation phase but on a very, very high level. We always have to be prepared to see some sell offs but the overall direction is up," Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus, said.was set for further gains in 2006 and had the potential to breach $600 an ounce.

Australian investment bank Macquarie said it had raised its gold price forecast by an average of 19 percent in 2006 to $565, while Barclays Capital hiked its average price forecast for 2006 by 13 percent to $525 an ounce from $465 previously.

Dealers remained positive on gold, with investors diversifying into precious metals due to worries about the outlook for the dollar, global tensions and firm oil prices.

"I think they are going to try and push it higher towards this $550 level again, although I remain a bit wary of people taking profits," one dealer said."

Bottom Line:

The upward trend in the gold and silver markets will remain intact as long as higher highs are followed by higher lows. Gold once again recovered from a powerful sell-off this week followed by a surge to higher levels. Gold continued its near parabolic climb on Friday after breaking above the brief market consolidation:

Silver on the other hand closed near the break-even level and is not confirming the record close in the gold market. Silver is within a tight trading range. In order for the current break-out in gold to remain valid, silver should close above the pattern in the chart below this text:

Our Big Shot of The Week Award, goes to Bill Murphy from GATA. His target of $3,000+ for gold tops all of the analyst reviewed for this column.

The remaining precious metals advocates insist on more conservative targets for gold. Their predictions fell within the following range: $525, $550, $565, $600, $682, $1,000, $1,500. We'll be watching for a break either up or down in the silver market consolidation. A close above the range should lead to higher gold prices, a close below the consolidation may indicate momentum exhaustion in the precious metals market.

Thanks for reading.

Chris Waltzek

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