The BIS shoots back but leaves lots of stuff out


September 1, 2001

Tim Wood

Dear Tim:

This may be of some interest as a response to your
latest essay at, "Gold bulls
surrender Labor Day opportunity," which shows much

Around 1994 Jimmy DePiazza, Phibro's trader in
Connecticut, figured out a way to corner the silver
market. Phibro had been taken over by Salomon Brothers,
whose chairman was Warren Buffet.

Old-timers like myself will remember one of the great
coyish plays of all time. It was going into option
expiry day with silver trading around $5. Phibro was
loaded with $5.20 calls, which had concerned the silver

But with silver at $5, the shorts were relaxed and
laughing at what seemed like Phibro's bad trade. The
market closed. The shorts were all smiling. Then Phibro
announced that it was excercising its $5.20 calls --
calls that were 20 cents above the market.

Phibro wanted the silver.

The shorts panicked. The price of silver soared the
following day and week. Phibro had found a way to
corner the silver market.

The following week Warren Buffet received a call from
the U.S. Treasury Department and was told that
squeezing the silver market was not a good idea. The
Treasury people did not tell Buffet what to do. They
just said that he could very well win the silver battle
but that Salomon Brothers would lose the war. For
Salomon was under great pressure due to financial
market concerns and some bond market scandals, if my
memory serves me correctly.

Warren Buffet knew just what the government meant:
Squeeze silver and you will have every government
agency on top of you.

Buffet was assured that if Phibro stopped the squeeze,
the government would make sure that it lost no money on
its trade.

So Phibro sold its silver longs. Buffet wanted no part
of taking on the U.S. government if it meant dealing
with one investigation after another. What would that
have cost Salomon in lawyers, accountants, etc.

A nightmare for Salomon was thus averted.

Tim, that is why no gold Patton has shown up yet. I
could go on and on, but I hope I have made my point.

If there is a Patton for gold, it is GATA. We have been
at this for three years. We knew the scoop that long
ago. Where is the rest of the gold world? Why have they
not been willing at least to acknowledge the
overwhelming evidence GATA has developed? Why won't
they even talk about it or suggest that the press do

Even so, the tide has changed. Make no mistake about
it. First you, then John Hathaway, now the Financial
Times story about the attempt of the Bank for
International Settlements trying to exlain the gold
loan situatin. Oh, excuse me, Giacomo Panizutti, head
of foreign exchange and gold for the BIS, was speaking
only as a private citizen.

Can you imagine an IBM senior executive making a
statment like that?

GATA's two-man army has grown into the thousands. Not a
day goes by that one of us does not find more evidence
regarding the manipulation of the gold market,
disinformation supplied to the gold world, or specific
cover-ups in Federal Open Market Committe minutes.

Not a day goes by when one of GATA's army is not
contacting his members of Congress to go directly to
the U.S. treasury secretary to seek answers to
reasonable questions about U.S. policy toward gold.

There is a Patton out there. It is those inspired
citizens all over the world who care about free
markets, the truth, and what used to be the
American Way. Like the bulldog Patton, the GATA army is
winning the day with our own "enveloping horn"
strategy, fashioned after Africa's greatest general,

Based on developments over the last few weeks, it could
not be more clear that GATA is now on the offensive.
The gold cartel is backpeddling -- most likely
terrified of what is happening, knowing that the
hearing in Reg Howe's lawsuit in U.S. District Court in
Boston faces them on October 9.

It is only a matter of time before the big money gets
behind us. for the U.S. Treasury is going to be
spending too much time defending itself to take
on the investment world, which will realize that the
Treasury is stuck in the most despicable financial
scandal in U.S. history.

All the best,

Gold Anti-Trust Action Committee Inc.


If you benefit from GATA's dispatches, please consider
making a financial contribution. GATA welcomes
contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541

By credit card (MasterCard, Visa, and
Discover) over the Internet:

By bank wire:

Gold Anti-Trust Action Committee Inc.
c/o Savings Bank of Manchester
923 Main St.
Manchester, CT 06040
Bank routing number 211-170-185
For account number 9500-574-053

By Gold Money:
Gold Anti-Trust Action Committee Inc.
Account number 50-08-58-L

By E-Gold:
Gold Anti-Trust Action Committee Inc.
Account number 110915

GATA is a civil rights and educational organization
under the U.S. Internal Revenue Code and contributions
to it are tax-deductible in the United States.