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Gold $350.80, down 90 cents
Silver $4.75, up 4 cents

Today was very interesting and perhaps very
revealing for an increasingly desperate Gold
Cartel, which could not get gold to close
below $350 for the third or fourth time. Once
again, it appears the path of least
resistance is up, not down.

Gold was firm in Asia last night and then
weakened into the U.S. open as the cabal
prepared to do what they could to turn the
big specs into sellers. Their mission was a

Comex open interest waned a bit further on
Tuesday and now stands at 214,634 contracts.
That is a small positive as some of the froth
in the gold market is being worked off as
gold trades in the low $350s.

Crude oil closed in new high ground at
$33.20, up 67 cents. That is a very gold
friendly development these days, as the Arabs
are buying physical in size. The higher oil
goes, the more aggressive they will be with
their gold purchases. That was the case in
the late 1970s. That has not been so during
the past two decades until very recently.

Gold remains in explosive mode. It could
erupt in the next few days, or the next few
weeks. This is the last hurrah for The Gold
Cartel. Once gold closes through the mid $350
area, it will set off a gold-buying panic.
That is when we will likely see the gold
derivatives neutron bomb go off.

* * *

The John Brimelow Report
Wednesday, January 15, 2003

Indian ex duty premiums: AM $1.46, PM N/A,
with world gold at $352.80. Only about 60
cents or so away from legal import point.

TOCOM finally came through for gold today. On
20,112 Comex equivalent volume, 28.6 percent
above yesterday, open interest jumped the
equivalent of 1,849 Comex contracts, the
largest this year. Buying from Japan pushed
$US gold up $1.10 from NY's $351.90 close.
Japanese appetite came despite the yen
firming, and deserves close monitoring. NY
yesterday traded 49,493 lots; open interest
slipped 1996 contracts.

As remarked before, the gold market is so
overbought by most standard technical
measures (although MarketVane's Bullish
Consensus did slip last night to 88 percent)
that a failure to sell off will raise serious
questions for the bears. Getting gold down
much, in view of the Middle and Far East
behavior, might not be so easy.

Longer term, the most important news of the
day comes from Mitsui. Their Sydney
commentary, speaking of yesterday's
announcement by the Portuguese of a 15-tonne
sale, observes

"We think they got exercised on some calls
granted as part of a collar back in the 97/98
area. There may be more and with different
central banks. Gold didn't flinch."

According to the Bank of Portugal's 2001
annual report, out of its 606 tonnes of gold
reserves (now 591) Portugal swaps 381 tonnes
and lends 52 tonnes; that is, over 70 percent
in the lease market! They may be the second
biggest gold lender in the world. Might
option sales "structures" conceivably lead to
some further withdrawals?

Are tighter lease rates coming?

The footnote that discloses the distribution
of the Bank of Portugal's gold is at:

(Scroll down to the nine page.)

The information that the Bank of Portugal has
been so specific in its annual report is, I
think, new to the market place. The news that
70 percent of Portugal's gold has, in effect,
already been sold, lends powerful support to
the view that much of the global central bank
30,000+-tonne hoard is gone. This insight
into a central bank's gold option activity --
with the insinuation others are also involved
-- further advances this case. And, once
again, the new spectacle of junior bullion
banks being willing to be so candid about
(possible) clients suggests that they think
that the era of central bank domination of
the gold market is drawing to a close.

-- JB

* * *

Word is the Portuguese central bank sale was
the result of an options structure arranged
in tranches over 1997 and 1998 -- what is
called a collar. This is exactly what Midas
reported over the past years and may be only
the tip of the iceberg. Central banks wrote
calls above the market and gold is being
called away from them.

I doubt this gold will ever see the physical
market because of the massive 15,000-tonne
gold short position. There is a scramble out
there to get hold of physical gold to honor
prior commitments. The Portuguese have found
that out.

The big news, as far as GATA is concerned, is
that 70 percent of the Portuguese gold is
gone. How many other central banks are in the
same predicament? The Portuguese gold
loans/swaps are not in the gold loan numbers
of the World Gold Council and Gold Fields
Mineral Service. Their gold loan numbers are
only 4.600/5,000 tonnes. The
GATA/Howe/Veneroso numbers are more than
three times the official gold industry

With this Portuguese central bank gold
loan/swap news, it may be easier for
investors to understand that GATA has been
right all along -- that the Howe/Veneroso
gold loan/swap numbers are the right ones.
Our numbers, 15,000 tonnes, are only a little
less than half of the reported gold in all
the central banks.

The central banks have been deceiving the
public for years about the gold market. They
have done so to perpetuate the gold price
rigging operations of the Gold Cartel.

Take the Bundesbank. Do they have any gold
left? As per the hideous instructions of the
International Monetary Fund, they report
their gold loans, swaps, and gold on hand as
gold reserves. They fail to break their
numbers down. James Turk has brilliantly
written on this subject and posits that the
Germans are, in essence, out of gold.

To get an idea how devious and conspiratorial
the gold scam is, it will be helpful to
review the following from GATA consultant
Andrew Hepburn's essay, "On the Record,"
about evidence of central bank intervention
against the gold price:

* * *

One other official institution, over which
the U.S. Treasury has considerable influence,
has distinguished itself with questionable
accounting practices. In October 1999, less
than one month after the post-Washington
Agreement gold price explosion, the
Statistics Department of the International
Monetary Fund published a document entitled,
"The Macroeconomic Statistical Treatment of
Securities Repurchase Agreements, Securities
Lending, Gold Swaps and Gold Loans." See:

This draft paper, discovered by GATA
consultant Michael Bolser, recommended that
central banks record as a reserve asset gold
that had left their vaults by way of a swap.
Simply put, member nations would be advised
not to differentiate between gold in the
vault and gold receivables.

With the above in mind, GATA supporters
around the world posed the following question
to the IMF in October 2001:

"Why does the IMF insist that members record
swapped gold as an asset when a legal change
in ownership has occurred?"


The IMF responded:

"This is not correct. The IMF in fact
recommends that swapped gold be excluded from
reserve assets. (See Data Template on
International Reserves and Foreign Currency
Liquidity, Operational Guidelines, para. 72,


But a footnote on the Internet site of the
central bank of the Philippines contradicts
the IMF's claim:

"Beginning January 2000, in compliance with
the requirements of the IMF's reserves and
foreign currency liquidity template under the
Special Data Dissemination Standard (SDDS),
gold swaps undertaken by the BSP with non-
central banks shall be treated as
collateralized loan. Thus, gold under the
swap arrangement remains to be part of
reserves and a liability is deemed incurred
corresponding to the proceeds of the swap."


Responding to an inquiry, the European
Central Bank also revealed that swapped gold
was to remain a reserve asset. The ECB wrote:

"You have asked us about the IMF
recommendation in cases where the ECB engages
in gold swaps.

"Following the recommendations set out in the
IMF operational guidelines of the 'Data
Template on International Reserve and Foreign
Currency Liquidity,' which were developed in
1999, all reversible gold transactions,
including gold swaps, are recorded as
collateralised loans in balance of payments
and international investment position
statistics. This treatment implies that the
gold account would remain unchanged on the
balance sheet."

The Bank of Finland and the Bank of Portugal
also confirmed in writing that swapped gold
remains a reserve asset under pertinent IMF

* * *

Did Andrew Hepburn's poking away at the Bank
of Portugal affect their gold reporting?
Something has Portugal coming clean.

It is very important that most of the
Portuguese gold that is gone is in the form
of swaps, not loans. GATA has focused on gold
swaps for a couple of years now. In Hepburn's
"On the Record" report, you will see quotes
from the Fed minutes talking about gold
swaps. I could go on and on. The point is
that we now have another piece of the gold
puzzle that supports what GATA has been
saying for a long time.

Australia has lent out almost all its gold.
So has Kuwait, at the urging of the United
States. Does Germany have any gold left,
really? Could a good chunk of the U.S. gold
be swapped out?

Please keep in mind that the swapped/lent
gold is GONE. It is worn as jewelry by the
women of the world. These arrogant dingbat
bankers can't get it back, not when there is
a 1,500-tonne yearly supply/demand deficit at
the moment -- not when mine supply is 2,500
tonnes per year and going down for the next
three years no matter what the gold price

This is why I keep saying gold is headed for
$800 to $1,000 per ounce. Gold has become
scarce and the massive shorts cannot get out.
The smart money is squeezing them. Get ready
for a golden fireworks display.

There will be more on this exciting
development from GATA in the near future.


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Dr. Fred I. Goldstein, Senior Broker



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