Bundesbank threatens to sell gold reserves as often as necessary

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USED BY PERMISSION

EXCERPTS FROM 'MIDAS' COMMENTARY
FOR DECEMBER 16, 2002
www.LeMetropoleCafe.com

Gold is Exploding As Per GATA's Prediction;
The World Is Round, Not Flat

By Bill Murphy

Gold $337.10, up $4.10
Silver $4.68, down 1 cent

Gold's positive action has been classic and
in perfect textbook form. First, it moved up
to MAJOR key resistance at $330-$332. We then
witnessed an historic "teacup breakout." That
was accompanied by another textbook maneuver,
the stunning close LATE in Friday's session.
The big league buyers clearly have the upper
hand and are actively toying with The Gold
Cartel (not to mention the mentally
challenged gold establishment/groupie crew).
Today, we saw another furious late buying
pattern while the trapped shorts continued to
suck their thumbs in total disbelief. As
mentioned in recent MIDAS commentary, the
smart money is BUYING and brazenly toying
with the cabal crooks.

There are no near-term gaps to fill either.
That is a healthy positive from a technical
standpoint. We are still due for the major
breakaway gap opening, as the gold
derivatives neutron bomb continues to ignite.

The Comex open interest only grew by 1950
contracts on Friday and now stands at 200,039
contracts.

The news was gold friendly all over the
place;

* The CRB soared AGAIN today, closing at
237.16, up another 2.38 and another multi-
year new high. But, there is no inflation!

* The bonds were down almost a full point,
reacting to the big day in the stock market
and sharply rising commodity prices.

* Gold rose once again, while the dollar was
flat. All along I have said the gold move up
would lead the dollar down, not the other way
around, as commonly written. Facts! Facts!
Facts! That is the way it was the first half
of this year and that is the way it is now.

* Gold moving sharply higher with a flat
dollar and strong stock market is the BEST
KIND of gold action, again as oft-repeated
here. Almost the entire investment world
remains completely oblivious as to why gold
can rise without a weak dollar and weak stock
market.

Gold is soaring and the Wall Street bullion
dealers continue to be neutral to bearish.
Are they that stupid? Are they that corrupt?
Are they that inept? In toto, they have
earned their new nickname: Bullion-Banking
Bozos!

Find out what Frank Veneroso and Declan
Costelloe presented at The Fifth
International Gold Symposium in Lima, Peru:

http://www.gata.org/Veneroso1202.html

This could not come at a better time.

The critical point is that Frank's gold
loan/swap work confirms the analysis of the
recently published Howe/Bolser report. I
worked with Frank and know he really believes
his gold loan/swap numbers to be around
15,000 tonnes, or on the higher sides of his
estimates. That is around the number that Reg
comes up with. Both did their calculations
differently.

This is staggering news for the gold and
investment world. They are going under the
assumption that the gold loan/swaps are less
than 5,000 tonnes, as per the numbers of
Goldfield Mineral Services and the World Gold
Council. The Venroso/Howe gold loan/swaps
numbers are three times that of the gold
establishment. The discrepancies of the two
are extraordinary. As such, the attendant
ramifications will play a significant role
and evolve as a major reason behind gold's
price going sharply higher in the weeks and
months to come.

Last week, a wire service gold reporter asked
a colleague of ours to give his opinion as to
why gold was moving up. He told this person
that one of the reasons for gold's move was
the dissemination of the Howe/Bolser report.
This person scoffed at him. The manner in
which the establishment, and those that cater
to them, refuse to "get it" is inordinately
pitiful.

Like Frank Veneroso, Christopher Columbus was
of Italian descent. His own "establishment"
people would not even listen to him about
whether the world was round, so he went to
the Spanish for financial assistance. When CC
discovered the world was indeed round, he
came back and wrote a report of his
discovery.

In essence, the Howe/Bolser-Veneroso
revelations have shown the size of the gold
loans/swaps to be exponentially higher than
the establishment's. This means demand for
gold has been much higher than reported for a
decade, or more. It means the central banks
do not have the gold in their vaults they say
they do. It means the monthly, gold
supply/demand deficit is much larger than
acknowledged by the gold establishment. It
means The Gold Cartel is running out of
physical metal to continue their scam. And,
it means the price of gold has to EXPLODE TO
CLEAR THE MARKET.

Yet, when confronted with the work of Howe
and Veneroso, the establishment/gold world
exclaims: "Sorry, the world is flat." They go
into complete denial. They refuse to deal
with facts, the truth and the real gold
story. When asked to debate the Christopher
Columbus-like GATA camp, they refuse.
Recently, I was told they refuse to do so
because we know too much, we focus on the
subject too much and our experts are too
smart! Huh?

Something else: Whether the central banks let
the bullion banks out of their short
positions to do what they can to keep the
gold derivatives neutron bomb from going off
is open to debate (this still won't help the
big hedgers like Ashanti). Regardless, that
will not negate the fact that the central
banks do not have the gold they say they have
and will no longer will be the threat they
have been for so long.

We cannot say what most of the central banks
have in their vaults as reserves a how much
has been lent out. What we can say is they
are running out of ways to continue on with
their fraud. The jig is up. My logic:

Amounts of gold that certain central banks
say they possess:

United States -- 8,400 tonnes. GATA has
extensive communication in which the United
States has denied any gold mobilization.

International Monetary Fund -- 3,000 tonnes.
They were forbidden to sell their gold by
Congress a few years ago and have stated they
have not lent their gold.

France -- 3,000 tonnes. It is in their vaults
and we know they have not lent their gold via
official statements.

Britain -- The sad-sack British say they
still have 300 tonnes.

Switzerland -- approximately 1,800 tonnes. We
have a pretty good idea what they have lent
and sold.

Because of recent sales, the new official
number of central bank gold holdings should
be around 32,000 tonnes. The above numbers
total 16,500 tonnes. Subtract that from the
CB holdings and it means the central banks
have only 15,500 tonnes to work with. The
analyses of Howe and Veneroso reveal that
around 15,000 tonnes is gone. That only
leaves 500 tonnes with a yearly supply/demand
deficit of at least 1400 tonnes.

The Gold Cartel's predicament worsens when
you realize the above little ditty means the
Italians and Germans must have sold all their
gold, as did every other central bank in the
world. Now, we know that cannot be.
Therefore, somebody is lying and those lies
will be exposed because they are running out
of gold.

That is why it is so important that Reg and
Frank's work is widely disseminated
throughout the "big money" world. They will
"get it" and will want to own as much gold as
possible when they have finished doing their
own homework. That is why gold is running at
this particular point in time. WORD IS OUT
AND SPREADING.

The Gold Cartel's blunder is they have been
working with the wrong numbers. In addition,
they did not count on the likes of the GATA
ARMY to show up via the internet to spoil
their scam.

Too bad. The world is round, not flat.