Yikes! Who to believe? What to believe? There are so many cross-current opinions flying around, that the only thing that seems evident is that no one knows for sure what's going to happen. What a circus. Now this.

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12/8/2008 11:24:52 AM | Thom Calandra (From Stockhouse)

‘Interventional’ analyst expects price plunge this week

Michael Bolser, a trained physicist who developed dollar value commodity indexes and 10 months ago correctly forecast the scope of the current recession, expects more than 3,000 tonnes of gold to flood the market this week.

Bolser, based in Florida, says the International Monetary Fund will release the gold for sale on Wednesday, Dec. 10. The 64-year-old Bolser says the price of gold subsequently will slide as much as 40 percent – to $455 an ounce in coming weeks from its current $760 an ounce.

Bolser, whom I met five years ago at a New Orleans commodities conference, writes Interventional Analysis, a subscription newsletter based on his real-time dollar index charts of gold, silver and oil and other metrics he devised. Bolser tells me he is plotting timelines with a 50-day calendar of events that central bankers around the world also use to intervene in financial markets.

“Demand will crushed by a bullion dump and $650 prices,” Bolser told me from California, where he is visiting family.

Bolser is a former director of the Gold Anti Trust Action Committee (GATA). The organization, as well as Bolser, believes governments, multi-national organizations and quasi-governmental agencies such as the Bank for International Settlements and the IMF often intervene in commodity markets to “manage the market.”

That is as much as they share in dogma.

“Since Mike is convinced that the Federal Reserve rigidly controls all markets every day and will have the wherewithal to control them forever, and since, in that belief, he has been advocating shorting gold since it was at $413, he's no longer a member of GATA's board,” GATA secretary Chris Powell says. “But we're still in agreement in principle on … surreptitious intervention by the government in the markets.”

Spot on

In February, Bolser told Jerome R. Corsi, who was writing for WorldNetDaily, that the Federal Reserve this year would drive down stock prices as measured by the Dow Jones Industrial Average this year to the 8,000 level from the 12,635 it was selling for then. Bolser also forecast a deep recession, which we now know already had begun.

The Dow average is now about 8,600.

Bolser used another metric he devised, one tracking Federal Reserve repurchase agreements that the central bank uses to lend funds to large banks, to predict the Dow Jones average’s daily movements. He has been close more often than not in 2008.

Bolser is a prolific author of papers ranging from monetary policy and money flows to “optics materials theory.” He says he called the reversal in the price of crude oil three weeks before its mid-July high of approximately $150 a barrel. A barrel now sells for $40 or so.

Bolser’s theory of interventional maneuvering covers a wide range of what he calls “covert” activity. The large receivers of Fed repurchase agreements each day, Bolser says, use the liquidity they provide to buy and sell commodities such as gold and oil, and to transact derivatives, swaps, futures, forward sales and so on.

On the IMF “dump” of gold he is forecasting for this week, Bolser says, “The IMF will say we need to take outperforming assets and put them in places where we can get the economy of the world going again. This is a replay of 1934, an artificial depression. The central banks will end up with the IMF’s gold.”

If your head is spinning, please do not call the doctor just yet. My head is spinning, too. I have been writing about gold and other commodity markets in one way or another since 1990.

The IMF, for example, already pledged this year to sell about 2,000 tonnes of gold in the marketplace. The IMF essentially receives gold from its member central banks as a pledge. That much I know.

Still, I feel like the reporter in the fictional movie coming out of Hollywood later this month, the woman who essentially wrote terrific stories about Venezuela and an assassination attempt on the U.S. president, but her sources were dead wrong. If your sources are wrong, one character in the film says, then you’re wrong. The film is called “Nothing But The Truth”

Bolser has a small and dedicated audience, and his metrics are original and purely formed. His research is deep. I could not find anyone outright laughing at his predictions.

“We don’t think the bottom (for gold) is in, so any decline fits fine,” says Robert Prechter, strategist, author and chief of market forecasting firm Elliott Wave.

Shoot the …

Bolser’s convictions, alas, are intense – thus making him a marked messenger if his forecasts turn out to be wrong.

“I am calling Dec. 10 as the center of probability for the IMFD selling 2,100 tonnes of Italian gold and another 1,100 tonnes from other countries. They will declare an emergency because the elites in charge want the gold,” Bolser says.

The motive behind all of Bolser’s bold predictions is as plain as he can make it, he says. The Fed and developed nations’ central banks and cooperating banks are victimizing investors, be they oil, gold or currency speculators.

As for economics, Bolser says central bankers have engineered a recession at the same time they are hyper-inflating their economies with trillions of dollars, pounds, euros and yen worth of paper currency. The effect, he says is one to counterbalance deflation and inflation.

U.S. Federal Reserve Chief Ben Bernanke in a 2002 speech about avoiding deflation said, “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

Bolser also follows the platinum market and says casual observers might keep an eye on the platinum price compared to gold. He expects platinum to hold the $800 level as gold slides.

At GATA, Chris Powell is no research slouch either. He likes Bolser, as many do. But he poses these counters to Bolser’s gold timeline:

“There is such a retail shortage and such a premium on real metal above futures contracts.

See Antal Fekete's analysis published on the backwardation creeping into the gold market,” Powell tells me. (Please see: http://news.goldseek.com/GoldSeek/12...

“Central banks all over the world are rushing to reflate and devalue. Indeed, a British economist, Peter Millar, speculates that central banks will use an upward revaluation of gold to avert debt deflation, just as FDR did in 1934,” Powell says. (You can find Millar's treatise on this topic here: http://www.gata.org/node/4843.)

Bolser sticks to his calendar. “As gold bugs enter a rising hysteria about shorts … and COMEX contract delivery requests, the Fed will slash then mercilessly,” he says. “It is a replay of the last financial hours of (silver speculator) Nelson Bunker Hunt.”