What did I miss? Bernake says things are A-OK and Gold Price stays low yet mints are N/A

So last week I took the much needed time away from the craze of investments and stock market. Checking up on what I missed during the week, I noticed Bernake's optimistic statement that spiked a short rally on Friday...

New York, NY (AHN) - U.S. markets were bought up on Friday. Positive inflation comments from Fed Chairman Bernanke and a big drop in oil prices sparked a broad-based rally in stocks.

Fed Chairman Ben Bernanke, speaking at an annual retreat in Jackson Hole, WY, said with the dollar stabilizing, coupled with recent declines in commodity prices, that inflation is likely to slow. His word sparked a rally in the markets as investors view that as a sign the Federal Reserve will likely leave interest rates unchanged the next time they meet.

Interestingly enough, gold and silver prices have indeed fallen - as summarized by the wise chairman's "falling commodity prices". Gold today is at $822, down $100 from less than 2 weeks ago, yet if you walked down to your local bullion you would be told there's a line-up and wait-list to buy minted gold ounces. In fact, US government has gone as far as suspending sale of all non-collector gold mints just mid August 2008!!

The Gold Anti-Trust Action Committee (GATA) reported Friday that the United States Mint has suspended sales of American Eagle gold coins to their network of Authorized Purchasers.

The suspended coins are bullion coins (non collector versions) the Mint will not sell directly to the public, but instead to Authorized Purchasers who can then sell to the public.

At the time of this writing, fractional collector proof and uncirculated American Eagle gold coins are still available through the Mint’s website, although the sharp drop in gold prices without a similar reduction in coin prices has resulted in much higher premiums for collectors to assume.

An ounce of gold peaked above $1,000 an ounce as recently as March. Friday, the yellow metal plunged below $800 an ounce — falling more than 8 percent during last week’s trading sessions.

What’s the reason for faltering gold prices? According to a statement on GATA’s website by Chris Powell, Secretary/Treasurer of GATA, the Mint’s suspension is supporting evidence of a scheme to lower precious metal prices.

Last I checked, the supply-and-demand curves works this way - when supplies are down, first come first serve - people pay what they think the items' worth. A simple analogy - when inflation was in the 100%+ in Germany and USSR, a loaf of bread was $1000+. What would you rather have, worthless devalued dollars, or something that can fill your stomach and fend off hunger? The chart below shows the US Banks' involvements in short selling of Gold Futures Contracts. http://news.silverseek.com/TedButler/1219417468.php

For years, the data contained in the weekly Commitment of Traders Report (COT), issued by the CFTC, have indicated that several large COMEX traders have manipulated the price of silver and gold. For an equal number of years, the CFTC has reluctantly responded to public pressure over this issue with blanket denials of any wrongdoing. Many analysts have agreed with the CFTC’s position, conjuring up various ways to explain why a massive short position held by a handful of traders is not manipulative.

The recent widespread shortage of silver for retail purchase coupled with a price collapse appears to have shaken these analysts’ confidence that the COMEX silver market is operating ‘fair and square.’ Well it should, since there is no rational explanation for a significant price decline going hand in hand with product shortages other than collusive manipulation.

For any remaining doubters that COMEX silver and gold pricing is manipulated, the following CFTC data should be considered. This data is taken from a monthly report issued by the CFTC, called the Bank Participation Report. Here’s the link for the report - http://www.cftc.gov/marketreports/bankparticipation/index.htm

An interesting dilemma, what business does the bank have in manipulating gold prices? Unlike actual gold producers hedging against gold prices to manage their risk in production costs, banks hedge against commodities merely to add to their bottomline. So what happens when they have to cover their short position and cut their losses?

That's when the long term investors reap what they sow.

Good luck to all longs in the juniors, keep in mind even the legendary long term value investor like Warren Buffet is down 33%+ so far in 2008.

Though he would be the first to caution against focusing on short-term performance, 2008 hasn't exactly been a banner year for Warren Buffett and his legendary firm Berkshire Hathaway (NYSE: BRK-A - News, BRK-B - News). The stock is down over -16% year to date, and the company recently reported underwhelming Q2 earnings, as price competition in most insurance markets is expected to reduce underwriting profits throughout the year.

If you don't know of him - this is the man who averaged 27%+ and beat the S&P Index consistently for the last oh say... 40 years?

US billionaire investor Warren Buffett issued the latest of his renowned annual letters to shareholders on Friday to coincide with Berkshire Hathaway's 2007 earnings report.

"For the entire 42 years, our compounded annual gain in per-share investments was 27.1%. But the trend has been downward as we increasingly used our available funds to buy operating businesses," Buffett wrote. "Berkshire's past record can't be duplicated or even approached. Our base of assets and earnings is now far too large for us to make outsized gains in the future."

Companies like TNR Gold Corp and Minera Andes isn't so bad after all, eh?