Newmont wins Normandy as Anglo bows out



By Bill Murphy

Gold $287.50, up $3.10
Silver $4.56, up 1 cent

A while back I mentioned that we needed a
couple of events to take place to signal that
The Gold Cartel was in big trouble. The first
was the breaking of the $2/two day rules they
have had in place for at least 3 1/2 years.
They have been broken, barely. The second was
to see volatility emerge in the gold pits.

The reason that is so important is it means
that someone is taking on The Gold Cartel on
the buy side. To rig the market the cabal
must call on massive selling when they need
it. On a daily basis, they only use as much
selling as needed to control the price. A
volatile market demonstrates that someone is
challenging that selling on the buy side, so
the trading action becomes choppy, or changes
direction during the day. Without that big
buying, The Gold Cartel just sits on the
price, keeping the action as dull as

Today was exceptional, and probably pivotal.
Gold was very strong early in the morning
before the Bank of England joke of an
auction, then was trashed when the rigged
results were announced, and then charged
right back up into Gold Cartel selling,
finishing close to the highs of the day for
the New York trading session.

It was good buying too as the trade took on
GOLDMAN SACHS, which probably was selling for
the ESF. After only a few hours of trading,
GS had sold 5,000 contracts to other bullion
houses. Goldman was taking on all comers as
they have done many times over the past 40
months. Perhaps other bullion dealers know
the rig is about to end and are willing to
take them on now. That is my guess.

Why now, you ask?

Remember my Warren Buffet silver story? It
was the one when he was chairman of Salomon
Brothers in 1994. Phibro, a Salomon
subsidiary, was going to squeeze the silver
market in 1994 under the direction of the
savvy Jimmy DiPiazza. It was all over but the
shouting match. DiPiazza had done his
homework and had the silver squeeze all set

Then Buffet got a call from the U.S.
Treasury. I think it was from Rubin, but not
positive of that part of it. Rubin said that
he had heard of Phibro's intentions and
calmly told Buffet that he would win the
silver battle, but lose the financial war --
meaning Rubin would sic the government all
over Salomon, who was just emerging from a
bond scandal and had all sorts of other
problems at the time. End of silver squeeze,
end of story.

The point is that story got around to the big
players in the financial markets. Word spread
that you did not want to mess with the U.S.
Government, or they would find a way to go
after you. Times are changing as a result of
the Enron mess. The U.S. Government has so
many problems that will emerge from Enron,
they cannot afford to be seen bullying
players in the financial arena. Big hedge
fund players know that and thus are willing
to go after the Gold Cartel.

If the gold rig/fraud is ending, batten down
the hatches. We are within days, or weeks, of
the biggest gold price explosion in history.
And, few in the investment world will have a
clue as to what is going on and why.

As I said yesterday, the BOE auction was no
big deal. However, The Gold Cartel tried to
make it one by lowballing the auction result
price. Here is what happened:

The London AM Fix was $287.95, then the
auction result was announced at $283.50 (1.4
bid/cover), then the PM Fix came in at
$284.60 (+$1.10). Meanwhile, gold was trashed
for a buck and change in New York when the
auction results came in and then rallied the
rest of the day in most impressive fashion.
The goldshares were also firm all day long
with the XAU taking out key resistance at 60,
closing at 60.29 up .73.

One thing for sure, the British citizens were
shafted by their own central bank who
obviously was trying to set a negative tone
for a resurgent gold market - one that is
threatening to send the Gold Cartel right
back into the abyss.

John Brimelow sees it this way:

* * *

Indian ex duty premiums: AM $1.27, PM
$4.06, with world gold at $287.40 and
$286.40. Even the latter is somewhat below
legal import level: a normal response to a
sudden jump in price.

Very strange market action today, which at
various time has been distressing to both
bulls and bears. A large buyer in the Asian
day started a short covering panic ("...there
is some sizable buying around...Our traders
believe that the buying is not done yet and
there is a chance that this will continue
into the auction.." - UBS Warburg). At one
time gold was up $6.

In fact, of course, the auction was $4.45
below the fix on a weak cover ratio, the
deepest discount to the AM fix since the
sales began. It appeared that, once again,
the auction had served as a spoke in the
wheel of a bullish move. Notable bears were
celebrating: "The downside risks have
increased enormously" - Howard Patten,
Barclays Capital.

But then the yen started weakening, and gold
has rallied in New York on (of course)
extremely heavy volume (31,000 by Noon) . By
now the story is that, given an excellent
reason to stage one of its' all too familiar
routs, gold declined. Significantly, the
shares, which edged up during yesterdays gold
price decline, are continuing to rise again
and are on the brink of significant technical

Japan is continuing to offer encouragement:
"very firm throughout the day" (Mitsui-
Tokyo). Volume was down at 2.4Mm ozs (Comex
yesterday was 2.5Mm), but open interest rose
a further 80,000 ozs. One continues to feel
further weakness in the yen could have
interesting consequences.

-- JB

* * *

Kudos to John. who has been all over the
Japanese and Asian buying, vis--vis the
weakening yen, etc.

As also mentioned yesterday, $290 is CLEARLY
the key. If gold breaks above that important
cabal selling point, gold should be off to
the races.

Silver must clear $4.60, which was today's
high. As soon as silver started to rally this
morning, word spread that a player was out
borrowing silver. The silver was needed by
some cabal member to feed into the physical
market in order to keep silver from going to
where it wants to.

The dollar remains very firm around the 118
level. Same comment from me again. After
September 11, there were comments from
"officialdom" that financial markets would be
stabilized or managed when appropriate, as a
result of the Terrorist attacks. Four months
later and the same program remains in play.
No matter how bad the news gets in the U.S.,
the dollar refuses to go down.

The Working Group on Financial Markets must
be petrified that if the dollar weakens, the
U.S. stock market will be bombed as might
U.S. Treasuries.

The good news is that they know what could
happen if gold moves above $300. The price
action in gold indicates they might be losing
control of their fraud and price-rigging
operation, regardless of their frantic
efforts to prevent that from happening. If
the dollar goes south in a big way, they will
have no hope of holding gold down, which is
another reason they are doing what they can
to keep the dollar firm.

As oft reported by me, however, please keep
in mind that gold can explode to $600 per
ounce and the dollar never budges. Many
investors may miss the big money to be made
in gold/silver related investments if they
are waiting to take their cue from a
weakening dollar.

Cafe members all know the danger that J.P.
Morgan's 23 trillion interest rate derivative
position poses to the world financial
markets. Today's gold action and this
announcement moved that derivative bomb one
step closer to detonation.

* * *

J.P. Morgan Posts Net Loss on Restructuring
Charge, Exposure to Enron and Argentina

NEW YORK -- J.P. Morgan Chase & Co.
swung to a fourth-quarter loss, hurt by a
huge restructuring charge and its exposure to
Enron Corp. and Argentina. The financial-
services company Wednesday posted a net loss
of $332 million, or 18 cents a share,
compared with a year-earlier profit of
$708million, or 34 cents a share. J.P. Morgan
(JPM) said the latest results were dragged
down by charges totaling $579 million for
merger and restructuring costs. Excluding
those items, the firm said operating earnings
came to $247 million, or 12 cents a share,
compared with $763 million, or 37 cents a
share, a year earlier. J.P. Morgan said
developments at Enron (ENE), which filed for
Chapter 11 bankruptcy protection in December,
and in Argentina, which devalued its
currency, increased credit costs and reduced
trading and other revenue by $807 million.

* * *

On J.P. Morgan Chase's earnings:

"Hi Bill...

"I was thinking that it would be a good idea
to start a CNBC and SEC letter writing
campaign. It's time that they stop reporting
proforma earnings as just earnings. I have
been watching CNBC for some time's
never been worse...likely because actual
earnings have never been worse. 99% of the
time they report that JPM reported earnings
of 12 cents or whatever, when JPM had pro-
forma earnings of 12 cents and reported an
actual loss. The same goes for INTC. I have
heard the 15 cents number all day but never
the 7 cent actual earnings.

"I think that when they report it should be
mandatory to state the GAAP earnings at the
same time...likely first ... just as it must
be done in news releases. It is clearly
misleading the public. In the past when I
have been away from home and a computer, I
have watched CNBC to hear the earnings. It's
amazing how much they distort the picture.
If you don't have access to the internet or
the time to look at earnings
would be completely fooled.

"Kevin B."

* * *

Kevin is right. I had to do a double
take. Morgan lost money, but you would never
know it by the reports on CNBC today.


President Bill Clinton

Robert Rubin

Lawrence Summers

Alan Greenspan

William McDonough

Barrick Gold

Now, look at this beauty from

"Robert Rubin listed Enron as one of the
firms with which he had had 'significant
contact' while at Goldman Sachs. Enron was
represented by the law firm of Akin, Gump,
Strauss, Hauer & Feld, the firm where
Clinton advisers Robert Strauss and Vernon
Jordan worked."

Vernon Jordan was on the Board of Directors
of Barrick for a period of time.

Midas has been on a roll as of late. I
believe the coming Enron fiasco was touted at
the Cafe way before just about anywhere else.
Another one for you. Last week I suggested
that the cancellation of the 30-year Treasury
bond was related to the Enron mess. I went so
far as to say that it probably was done to
help Enron in some way. Remember the botched
announcement? Howdy Doody could have done it
more professionally. Even so, a few of my
GATA buddies wondered if that might be a

I learned today that word is spreading on
Wall Street that my hunch was correct. Like
the players at LTCM, Enron was known as the
derivative king of the financial world. But,
again like LTCM, we know they got themselves
in a staggering bind. It seems that Robert
Rubin's calls to Peter Fisher at the Treasury
were to influence Fisher to cancel the long
bond because it would greatly benefit Enron's
structured interest rate book. It is already
on the record that Rubin tried to keep the
credit rating of Enron from being downgraded,
which Enron desperately needed to avoid at
the time.

It also must have also helped the $23
trillion interest rate derivative structure
at Morgan, which could implode the financial
world. Who were the big lenders to Enron?
Morgan and Citibank. Who is the CEO at Citi?
Rubin the crook, Rubin the master market

He is the one who ought to be going to jail.

As any futures trader will tell you, one
would only need to know of that Treasury
decision five minutes in advance to make
enough money to retire for five lifetimes. It
is public knowledge that some people were
alerted in advance of most market traders.

Enron didn't know in advance with all the
trouble they were in? Sure. Wait for this to
come out. This is how the Bush administration
tried to bail Enron out! They could not take
overt action because of potential political
fallout, so they cancelled the long bond in
attempt to take care of Enron and its two
biggest creditors, which just happen to be
two New York bullion banks that have been
rigging the gold market and named as
defendants in Reg Howe's lawsuit.

That brings us to the shredding of documents,
etc. Will they lead to suspicious gold and
silver trading? Will they lead to the
Treasury decision that was made in such

One that HURT so many bond traders not in the
know. Wall Street has become a sewer just
like the rotten decision making processes of
the U.S. Government regarding the financial

A reminder:

The coming gold/financial market scandal is
going to dwarf Watergate because of its
international implications.

My take on the President Bush pretzel
story is a non-conventional one. Phooey on
the pretzel choking. He got word the gold
scandal is going to break some time soon and
fainted from the pressure.

The abrupt resignation of Fed Governor Meyer
(end of January) is getting little play in
the press. I wonder why? The man was the heir
apparent to Greenspan.

Could that have anything to do with the way
business is done at the Fed and U.S.


The Dow broke hard today down over 200 points
and the Nasdaq swooned on the close to finish
below critically important 1960 technical
support. For a long time I have suggested
that Murphy's Law would come into play and
terrorize The Gold Cartel. It appears that is
happening RIGHT NOW. One thing after another
is going wrong for them, much of which they
never could have imagined or prepared for.

Couldn't happen to a nicer bunch of guys!

Just in:

* * *

Report To Shareholders: Gold Hedging Reduced,
Normandy Value Enhanced

ADELAIDE, South Australia, Jan 16, 2002
(BUSINESS WIRE) -- Normandy has reduced its
minimum hedge requirement and has completed
further restructuring of its hedge book to
increase upside participation and reduce gold
interest rate risk.

"Gold hedging has been revised, reducing the
minimum hedge ratio from 60% to 45% of
reserves of operating mines, except for
Ovacik and Midas which remain unhedged, and
the hedge book has been reduced," Normandy
said in a statement.

* * *

This makes Normandy more prized that
previously thought. And, AS I HAVE BEEN
SAYING FOR A LONG TIME, it begs the question,
"who is selling gold if many producers are
covering hedge shorts?"

GATA knows who. The price of gold should have
been flying last year and would have if it
were not for the wretched cabal.

Word to me is that Barrick is lobbying the
South African government that it be allowed
to be able to take over Gold Fields. If that
is ever allowed, after all the damage Barrick
has done to South Africa, the ANC government
should be overthrown in disgrace by the
Zulus, once led by the great South African
general, Shaka.

GATA would like to thank so many of you for
taking the time to write members of Congress
regarding our recent findings.