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xzorro | 04-23-2004 12:57 AM
Gold's Indian rope trick to the rescue? Interesting article explaining that if PoG < $400, there will be strong buying pressure from India probably leading to a rally. CBS: URL http://tinyurl.com/2zwfm <i>My view: It will. The bears have inserted their paws (at least) into what is likely to be a very vicious trap. The critical factor: the news from India, the world's largest buyer. As I explained when gold got below $400 in early February, it is possible to figure out if India is actively importing gold by comparing the domestic price of gold with the appropriately timed world price. Bill Murphy's LeMetropoleCafe site carries my calculations every evening. The principle is demonstrated on the Web site of India's National Multi-Commodity Exchange ("Commodity Study" section, gold segment). Since gold slipped to $400 last week, India has been showing enormous premiums. Basically, the domestic price now exceeds the world price by more than $10. This means <b>there will be massive imports</b>. This Indian premium is far higher than when gold went below $400 earlier this year. In fact, and significantly, the last time premiums of more than $10 were seen, briefly, was at the bottom of the major gold slide in March 2003. I conclude the Indians will be dining on bear curry. There are other reasons to expect a rally. The gold market shows all the hallmarks of an actively promoted short position. In the final hour of stock trading on Tuesday, gold shares staged one of their biggest and quickest drops of recent times.</i> Etc., etc.

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