Paul writing tonight in MIDAS. He doesn't state who the manipulators are but we are led to believe it is the Cartel banks and the government administration.

Manipulation of the mining stocks

Bill,

I would like to provide some facts concerning the manipulation of the mining stocks. On June 30, 2008; the DJIA = 11,350, XAU = 195.25, and gold = $950/oz. On May 13, 2011; the DJIA = 12,596, XAU = 195.25, and gold = $1,495/oz. So, we have the stock market up a little over 10%, gold up over 50%, and the XAU going absolutely nowhere due to the manipulation over a 3 year period.

So far in 2011 as of May 13; the stock market is up 9%, gold is up 5% or so, silver is up over 10%, the XAU is down 13.82%, and one of the best of the best - Tocqueville Gold Fund - is down 6% year to date. This is insane. The manipulators are engaging in psychological warfare to try and screw with our minds.

I have heard the argument that hedge funds are hedging their physical gold holdings by shorting the stocks. In my opinion, that makes absolutely no sense. Until 5 years ago or so, the gold and silver mining stocks would outperform to the upside. Unless you knew for an absolute fact that the mining stocks were going to underperform, why would you go long GLD and short GDX? Historically, that would be a loser.

The XAU/gold ratio currently = 0.13. Over the last 25 years, the XAU/gold ratio averaged 0.24. In the 1990s, the XAU/gold ratio got as high as 0.38. Unless you had a deathwish or you knew for an absolute fact that the mining stocks were going lower, why would anyone go long GLD and then short the mining stocks when we are way below the 25 year average in the XAU/gold ratio? The people shorting the miners are the manipulators who know they can throw whatever amount of firepower at the miners to break them on a short term basis.

There may be hedge funds short some of the miners. If there are hedge funds short some of the miners, I would like to subpoena their trading records when events like I describe below occur which have occurred numerous times over the last few years.

I am long gold futures and the miners. It is about 10 AM one morning and I have CNBC on mute and I am watching the ticker at the bottom of the screen. Gold, silver, and the miners are all up. All of a sudden on no news, I see ALL the miners start to trade lower on no news. GFI, ABX, NEM, GSS, IAG, HL, CDE, SSRI, PAAS, AU and others all start to trade lower and continue to trade lower. At that point, gold and silver have not really budged. The miners continue lower. I say to myself, Uh Oh, here it comes. And sure enough, the onslaught in gold and silver starts. Someone cannot tell me that this is spontaneous hedging going on here. All these hedge funds start to hedge all at the same time on no news? I have seen this happen too many times to count.

It is even worse than I am describing above. If any precious metal stock starts to outperform, some manipulator starts piling on shorts. Take AZK as an example. At one point in time, AZK had one of the smallest short positions of any precious metal stock with a short position between 100,000 to 200,000 shares with a float of 159,000,000 shares. AZK starts to outperform. The manipulators start to pile shorts on AZK. The short position increases to around 2,500,000 shares from 100,000 shares over a relatively short period of time and the manipulators break the stock while the fundamentals are still pretty good and in the middle of a gold bull market. Now that the manipulators have nailed the stock price, the short position is down to 150,000 shares. Someone cannot tell me that hedge funds were just hedging as the short position goes from approx. 150,000 shares to 2,500,000 shares and back to 150,000 shares all over the course of a few months.

One of the top performing mutual funds of any type over the last few years is the Tocqueville Gold Fund. As good as Tocqueville is, over the last 5 years according to Barron's, the GLD has actually slightly outperformed Tocqueville. If we just bought physical gold bullion and stashed it away, we would outperform 95%+ of all the funds out there over the last 5 years.

As bad as the manipulators are in carrying out their illegal activities in broad daylight, the manipulators appear to have a media that will say anything the manipulators want them to say. The mainstream media almost never ever has anything good to say about a gold and silver mining stock. On the rare occasions they do recommend gold or silver, 95 to 99% of the time it is to buy the GLD or SLV. For whatever reason, the manipulators seem hell bent on directing all potential gold and silver investors to GLD or SLV.

As bad as all the above seems, I just made a recommendation to subscribers to buy the gold and silver mining stocks. There is currently strong buying of physical gold and silver. The commercial net short silver position is at it's lowest level in months. The gold stock timers are almost net short. Silver is in unprecedented backwardation now going on 4 months. The gold and silver mining stocks are oversold and their fundamentals are superb. NEM has a P/E of 12. FCX has a P/E of 9. SSRI has a P/E of 6. NEM, FCX, and SSRI are all components of the XAU index.

Paul