Different gold share indexes track unhedged producers'' lead over hedgers


From "Midas" commentary for Tuesday, May 7, 2002
Copyright 2002, www.LeMetropoleCafe.com
Used by permission

By Bill Murphy
May 7, 2002

This morning I received a phone call from the best of
sources in South Africa. The source has a friend who
spent some time recently with two J.P. Morgan Chase
senior bankers. The friend was told by the Morgan
people that they have "lost control of the gold market
and that the gold derivative department was a mess."
The two Morgan people felt it was so bad that J.P.
Morgan Chase -- the bank itself -- might not make it
through the year. They suggested that my source buy
$330 February gold calls.

Separate from these two Morgan bankers, my source
received the following from a futures and options broker
in London who works for one of the Gold Cartel bullion

* The gold derivative department of J.P. Morgan Chase
is being investigated.

* The man who ran the department has been fired.

* This was discussed on CNBC Europe, but was
called "still a rumor" by the program host.

* It appears the "conspiracy guys" were right all along.

A Canadian source of mine later confirmed that the
man who ran Morgan's gold derivative department had
indeed left the firm. Morgan is putting a different spin
on the reason for his departure. What you expect from
a bunch of lying crooks?

Subsequently, another outstanding source informs me
he hears that Dinsa Mehta, former long-time chief bullion
dealer at Chase Bank, was fired two weeks ago. Mehta
was the one who went nuts a couple of years ago when
Reg Howe revealed Chase's gold derivative position as
reported to the Office of the Comptroller of the Currency.
Mehta called in his accountants and others to find out
how that disclosure happened. It was that discovery that
led to GATA's Gold Derivative Banking Crisis report. Frank
Veneroso, Reg Howe, Chris Powell, and I presented that
document to the speaker of the House, Denny Hastert.
The following day I delivered it to every member of the
House and Senate banking committees.

Too bad they did not pay more attention to what we had
to say.

This is a bombshell and confirms what Midas and Jim
Sinclair have alerted Caf members to:

* The Gold Cartel is not in control of the gold market. The
longs, led by Hung Fat and Dr. No., are teasing the Gold
Cartel and eating their lunch, buying the dips.

* A gold derivative banking crisis is not far off.

* Panic gold producer buy-backs cannot be too far off either.

* The price of gold is going to explode.

* There is no telling what can happen to those bullion bankers
and gold producers that have too much gold derivative exposure.

The Gold Cartel, Working Group on Financial Markets, and the
Fed must all be in a state of sheer panic over gold. There is a
feeling by some in the GATA camp that they will orchestrate
a massive bailout -- like ask the International Monetary Fund to
sell its gold. Anything is possible, but to do anything now might
be folly and tip their hand that GATA was right all along. Why
should anyone care if gold goes to $400 or $500, much less
$350? All that a price rise would do is be a boon for the
economies of sub-Saharan Africa.

The Gold Anti-Trust Action Committee's credibility is very good
in Africa. If The Gold Cartel comes up with some trumped-up
reason to sell gold, I shall try and see some of the leaders of
the gold-producing countries and point out what has been
done to them and why.