To cut lease rate, BIS dumps gold, but ex-Fed governor pumps it


9:17p ET Tuesday, February

Dear Friend of GATA and Gold:

Below is GATA Chairman Bill Murphy's special "Midas"
commentary tonight for his subscribers at

Note particularly its quotation of commentary that was
distributed today by Prudential Securities. The Prudential
commentary focuses on ... GATA.

While it seems not to want to believe it, Prudential
indicates that GATA is influencing both the conduct of
the suppressors of the gold price and the gold market

This is huge recognition for the work GATA and its
supporters are doing for the gold cause, and an
indication that we're getting close to success.

Like us or not, we're a factor in the gold business
now, doing the work that the World Gold Council should
have been doing and might have done if it had not been
terrified of standing up for gold's traditional
monetary functions; terrified of standing up for gold's
use as money, which is infinitely more important than
its use as mere jewelery, with which the council has
contented itself; terrified of standing up for the
council's own industry; terrified of confronting the
powers aligned against gold; and terrified of
acknowledging that gold is and must always be the direct
competitor of those powers.

Imagine what could have been accomplished by now if the
gold council, amply funded despite the gold industry's
horrifying decline, had not left this work to little GATA
over the last two years.

Well, as bemused as Prudential Securities may be that
we're moving the gold market, we're going to keep
working at it. People all over the world are coming
forward to help us. The industry itself is waking up.

Don't despair; we're getting close. If one avenue is
closed to us, we'll find another. We can win because
we're right, no matter the power against us. Lincoln
knew it: "Let us have faith that RIGHT makes might, and,
in that faith, let us, to the end, dare to do our duty
as we understand it."

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *


By Bill Murphy
February 27, 2001

The one-month lease rate soared today, flirting
momentarily with 5 percent and settling around 4.68
percent. The stress on the gold cartel and in the
physical market is building noticeably.

Gold closed up $1.50 to finish at $266.70. Volume was
VERY heavy at 58,000 contracts, which means the big
shorts are using up a lot of ammo trying to keep the
gold price from exploding. They threw the kitchen sink
at the gold longs today. The Comex open interest
declined only 1,795 contracts on yesterday's big move
up -- another disappointment for the bears.

The gold price in Aussie dollar is 512 and not far off
its 522 highs. Remember the last time the Aussie gold
price went that high -- the heightened concern in the
financial community about the possibility that hedge
books of some of the overly hedged Aussie gold
producers would go so far under water that they would
sink for good.

Why should those fears be less today when the physical
gold market is so much tighter?

The following comes from Cafe member Sean, who prefaces
his remark with an excerpt from an article in the South
African newspaper, Business Day, the country's
equivalent of The Wall Street Journal:

* * *

"Perhaps central banks that traditionally have lent
gold have become more reluctant to lend out their
bullion, making speculators' lives more difficult. It
is not inconceivable that our own Reserve Bank has
played a quiet role, as the Bank has been a gold
leasing player.",3523,800329-6094-

Not "inconceivable," maybe, but BREATHTAKING all the
same! The South African Reserve Bank's balance sheet
shows $14.5 billion forward sales against ALL foreign
exchange and gold reserves. Were they selling their own
country short until GATA visited?

* * *

From South Africa's Business Day on Friday, February

"Standard Bank group economist Iraj Abedian has
suggested that the government refuse to do business
with fanancial institutions that attack the rand.

He said rumours that have damaged the rand have
consistantly emanated from three or four houses...."

A South African Cafe member called up Abedian and
complimented him on his statement. Our guy asked
Abedian who the banks were, but he was reluctant to
answer. Your fellow Cafe member said, "OK, how about if
I name 4 banks and you just say warm or cold."

Abedian agreed.

Your Cafe member then rattled off four of the five
bullion banks in the Gold Cartel as cited in Reg Howe's

The response from Abedian: "Very warm!"

* * *

February 27, 2001

Certainly there their is no "shortage" of short sellers
in the gold market. Indeed, gold-investment industry
elements have gone so far as to file legal action in
U.S. federal Court against the U.S. Treasury and
several prominent investment banks, claiming a
conspiracy exists among G-7 central bankers to keep the
price of gold depressed so as to hide the current
account vulnerability of the U.S. dollar.

We reserve comment on GATA, the industry group staking
the conspiracy claim, as we have philosophical
opposition to GATA's thesis, since gold remains the
SINGLE BEST deflationary indicator, bar none, and since
it -- and inflation -- peaked in 1981.

However, let us digress and imagine ... create and
conspire ... SUPPOSE ... that GATA is right, and an
elaborate network of gold-bug-squashing banks conspire
and covert daily to manipulate the price of gold via an
extensive lending program.

Then SUPPOSE the influence of GATA's lawsuit has put
these entities under such scrutiny that they fear a
misstep, and are thus paralyzed by the glaring

IF under such circumstances, as farfetched as they may
be, a bank has a problem acquiring material to honor
one of the thousands of forward sales most assuredly
needed via such a scheme. Whereas BEFORE the spotlights
were glaring, this bank presumably could have "conspired"
to acquire short-term physical from, say, a central bank,
perhaps NOW that is not so easily done without risking
detection and exposure for the conspirators.

In such a case, gold lease rates WOULD begin a STEEP
and BROAD rise. Hey, maybe just like in the last week.

* * *

Couldn't have said it better myself!