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Gold rises on Bank of England auction results
'MIDAS' COMMENTARY FOR JULY 9, 2001
By BILL MURPHY
July 9, 2001
Gold $266.50, up 80 cents
Silver $4.22, down 3 cents
The gold market is comatose as the Gold Cartel has gold
right back at its official price of $266. Meanwhile,
they have to be frantically trying to figure out how
they are going to get out of their massive short
positions. Time is NOT on their side (see below).
The big story of the day is one you will not hear
spoken about in mainstream gold commentary. For weeks
now Mike Bolser and I have been clamoring that U.S.
Treasury Secretary Paul O'Neill should explain why
1,700 tonnes of the Treasury's gold bullion reserve
were reclassified as quot;custodial gold' in August last
The reason could not be more obvious. The word
quot;custodialquot; implies taking care of something for
someone else (as for the Bundesbank) as opposed to
owning it yourself. That can be the only explanation
for the reclassification. Some clerk was only doing his
job correctly and told it as it was; that is, told the
truth. U.S. Reps. Ron Paul (Texas) and John Larson
(Connecticut), as well as Sens. Joseph Lieberman
(Connecticut) and Wayne Allard (Colorado) have posed
the same question to the treasury secretary, and so far
he has failed to answer them, as well as many others.
Lo and behold, look what we have here today -- a
posting at www.USAGold.com by Elwood:
* * *
Looks like all the gold at the mint locations is now
called either quot;deep storagequot; or quot;working stock.quot; It's
labeled quot;Treasury-owned goldquot; at the bottom of the
From the notes at the bottom of May's report:
quot;Deep Storage Gold -- formerly called Gold Bullion
Reserve or Custodial Gold Bullion Reserve. This gold is
owned by the U.S. Government and held for safekeeping
by the U.S. Mint at the locations listed.
quot;Working Stock -- formerly listed as specific coins and
blanks or called PEF Gold. This is the portion of
U.S. Government-owned gold that is used as the
operating inventory for minting gold coins. Working
stock includes bars, blanks, and finished coins.quot;
The May report (updated July 2) is the first month of
the new classification.
* * *
Is this the Treasury's response to a most serious
question posed by very serious people -- that U.S.
Government gold is now classified quot;Deep Storage Goldquot;
so that they have an answer to any sort of inquiries?
Does this mean that there are no new questions to be
asked in the future because of the pathetic Treasury's
quot;definition of 'is'quot; obfuscation?
This is one sick government we have. God help us all.
What the heck is REALLY going on in Washington? What
kind of systemic risk is close at hand? What has
happened and is happening to America's gold? To what
extent will the U.S. Government go to hide the truth
from its citizens and members of Congress? What kind of
depravity is ruling the roost in our nation's capital?
quot;I never had sex with that woman, Miss Lewinsky.quot;
quot;The Levy girl was just a friend.quot;
quot;A gold swap with the Bundesbank? How silly!quot;
quot;Deep Storagequot;? That is comical. Who thought that one
up? I guess we are going to need a quot;Deep Throatquot; to
find out about the U.S. gold in quot;Deep Storage.quot;
One thing for sure. WE GOT THEM. GATA has stirred up a
hornet's nest on this one. There can be no other
explanation for such a ridiculous classification of the
gold of American citizens. Clearly they have made the
change in classification because they can't answer the
questions posed to them. So they changed the
What more does anyone need to understand that the gold
market is under siege with the United States acting
like the world's gold czar? Yes, the gold price is
manipulated and something is very wrong in the gold
market -- but, worse, something is even wronger with
our government. A certain faction of Washington has
LOST IT -- and lost the ideals our country was founded
I am still waiting on confirmation that Newmont has
closed its giant Gold Quarry mine in Nevada. If that is
the case, it means that the two premier U.S. gold
producers have closed their flagship mines within seven
months. First, the Homestake mine in South Dakota and
While this would be a blow to Newmont shareholders, it
will be a very positive development for the gold price
-- mostly because it signifies the sharp drop in gold
production that is upon us. Gold producers are hitting
the wall all over the world.
The Gold Cartel has created the most untenable of
situations. The gold loans are 10,000 to 16,000 tonnes,
the gold derivatives are massive and hover above the
market like a neutron bomb, the U.S. Government is
trying to cover up what it has done (always a no-no),
and now gold supply is starting to drop off a cliff
while gold demand remains strong.
Murphy's Law is setting upon the Gold Cartel. The
Manufacturers Association is moaning to the media that
the strong dollar is hurting them and the U.S. economy.
The pressure to bring the dollar down is going to
intensify. A lower dollar can only stimulate gold
Meanwhile, if something is not done quickly in South
Africa, that country's gold supply might dry up all
together. The National Union of Mineworkers remained
adamant yesterday that the mining industry was sitting
on a time bomb, should the dispute with the Chamber of
Mines continue to go unresolved. Should the threatened
gold miners strike go ahead, more than 200,000 of the
union's members could put down their tools.
I do not know whose central bank gold they are using to
hold down the price of gold at the moment, but I do
believe strongly that this just can't last.
Meanwhile, the political pressure to reduce interest
rates is going to accelerate in a resounding crescendo
soon. That will also be very gold-friendly. The concern
of American citizens is that their 401-k's might become
1 k's. The latest on that development:
* * *
401(k) Accounts Are Losing Money for the First Time
By Danny Hakim
The New York Times
July 9, 2001
For the first time in the 20-year history of the
popular 401(k) retirement savings plan, the average
account lost money last year, even after thousands of
dollars of new contributions. And despite some
strengthening of stock prices in the last couple of
months, recent estimates show, the declines persisted
in the first half of this year.
The trend is exposing years of mistakes by employees,
raising some questions about proposals to permit
Americans to manage part of their Social Security
accounts, and clouding the future of many employees'
nest eggs for retirement.
The losses have led many individual workers to second-
guess themselves, since they are the ones who decide
how much to contribute to 401(k) plans and how to
invest their money. There are some risks that people
cannot control, such as stock market declines and
company contributions that shrink with profits.
But a look at shifting account balances over the last
decade shows that many people have grown overly
dependent on stocks, do not contribute enough to retire
when they expect to and put too much into a single
aggressive mutual fund or their own company's stock,
financial planners and plan administrators say. And
relatively few employers offer much useful help to
workers in making these crucial decisions....
* * *
The 401(k) story has just begun. The ending will not be
a pretty one. It is not so pretty for Martin Armstrong
Another scary development. Many Cafe members have asked
about Marty A. over the past months. The latest:
* * *
Judge Richard Owen ordered Armstrong to remain in jail
under contempt of court ... INDEFINITELY! How can a
judge do such a thing? The judge refused to postpone
the hearing until July 12 (one day before Armstrong's
scheduled release). He then permitted the receiver to
submit a brief in support of Armstrong's continued
incarceration on the day of the hearing. (Any
supporting briefs were supposed to be submitted by July
3.) Armstrong's court-appointed counsel was granted
seven minutes to review the brief in court.
This has obviously crossed the line to punishment, and
there is nothing more Armstrong can do about it except
appeal to the 2nd Circuit again. The receiver has never
proved that Armstrong is in possession or control of
any of the assets demanded from him.
Armstrong turned over what he had, testified as to
missing assets, and has served 18 months in jail. His
house was searched by the FBI, and his office and shore
house were searched by the receiver. What else is there
Armstrong has already served more time in jail than
many convicted felons! This quot;justicequot; system is in dire
need of reform!
* * *
How can this be again? I don't know whether Armstrong
is guilty or not, but he was supposed to get out of
jail so he could defend himself. He has been in jail 18
months and yet has not been proven guilty of anything.
It's too much for me to get into this tonight, but who
were Martin Armstrong's main business dealings with?
Republic Bank, a prominent New York bullion dealer. Who
was the founder of Republic? Edmond Safra, the
billionaire found mysteriously murdered in Monaco.
This gold game is not for Little Leaguers!