CNN/Money takes note of gold and gold stocks

Section:

9:23p ET Tuesday, October 5, 2004

Dear Friend of GATA and Gold:

The importance of the speech of Oleg V. Mozhaiskov,
deputy chairman of the Bank of Russia, to the June
meeting of the London Bullion Market Association,
which the LBMA suppressed and which GATA finally
was able to obtain, was recognized yesterday by
gold market analyst John Brimelow.

Brimelow's analysis is included in the daily
"Midas" commentary of GATA Chairman Bill Murphy
at LeMetropoleCafe.com, and his remarks on the
Mozhaiskov speech are appended.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

From the John Brimelow Report
Monday, October 4, 2004

The G-7 meetings appear to have been a defeat for
the enemies of gold. A good deal of nonsense is
talked about the proposals said to be under
consideration, notably by Dennis Gartman today.
There were two ideas:

1) To use a sale-and-repurchase transaction with
a repaying IMF debtor to create a reason to bolster
the IMF balance sheet by an accounting adjustment.
This would facilitate the IMF in writing off debt and
was done in the late 1990s. (A parallel would be a
company writing up assets to increase undistributed
surplus.) It has no effect on the gold market. This
idea does not seem to have been well received.

2) Actually sell some bullion. (The proposal
published last week was to include such sales in
the Washington Agreement numbers, which would
render the effect on the market null, those sales
having already been discounted.) It is not clear
that this idea was even discussed.

In the current political climate, neither helping
Third World debtors nor damaging gold or helping
the dollar appears popular.

Some insight as to why is contained in the
remarkable speech delivered to the London
Bullion Market Association forum in Moscow in early
June by the deputy chairman of the Russian central
bank and now at last made available in English
thanks to the unflagging determination of the Gold
Anti-Trust Action Committee. It is available at ...

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

... and is imperative reading for serious students
of gold.

A surprisingly sophisticated and elegant discussion
of the function of gold in central banking, this
speech is notable for the hostility it displays to the
hegemony of the dollar, complaining of "the blatant
lack of discipline demonstrated by the U.S. dollar.
I am leaving aside the main aspects of this problem,
such as the social and economic injustice of a world
order that allows the richest country in the world to
live in debt, undermining the vital interests of other
countries and peoples. The problem could be more
accurately termed the irresponsibility of the U.S.
government in relation to the market valuation of its
currency in international circulation. The world has
come to a paradoxical situation in which the creditor
countries are more concerned with the fate of the
dollar than the U.S. authorities themselves are."

Also, the speech gives a negative assessment of the
role of leasing and gold derivatives:

"A number of central banks have started to place a
part of their reserves into deposits with commercial
institutions -- leasing operations. Naturally, the
central banks' activity increased market liquidity
and thus also put downward pressure on the gold
price. The influence of these operations, however,
must not be exaggerated. It is even incomparable
with the pressure that was exerted on the market
of gold derivatives."

Astonishingly the speaker also summarized the
GATA/Bill Murphy/Reg Howe allegations and
delicately gave them credit:

"I dare assume that the specific facts included in
the lawsuits might have given ground to suspicion
that the real forces acting on the gold market are
far from those of classic textbooks that explain
to students how prices are born in a free market."

The LBMA flatly refused to make available the
transcript of this speech, which the World Gold
Council, needless to say, never mentioned either.
Yet it has to be the most gold-friendly speech given
by a central banker since the days of DeGaulle --
and from a central bank that is demonstrating
sincerity by accumulating the metal.

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----------------------------------------------------

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----------------------------------------------------

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