Bill Murphy responds to a rebut of the Farfel posting


Dear fellow-members of GATA,

Last week the Prime Minister of Canada, Jean Chretian, added his voice
to the chorus, "The I.M.F. should sell some of its gold to help the poor
countries." He did so probably well knowing that if the money-rich are
really so concerned about the money-poor countries, they would be seen
to be for holding gold, not for giving it away at today's price. As
Prime Minister of a gold-producing country, Jean Chretian must know that
what is needed is a rise in the price of gold, which will bring with it
a general rise in commodity prices, and so generate economic relief not
just for miners everywhere, but for the money-poor world as a whole.

So why has he joined the chorus against gold? Well, there was an
interesting question at the Gold-Eagle discussion group yesterday
(28 March from 16.00): "What is Goldman Sach's Role in $Canadian/$Aussie
Carry Trades?" Yes, this IS a very interesting question. Along with the
money Goldman Sachs and others may have made from knocking down the
Canadian and Australian dollars as has already been made from knocking
down the South African Rand, Russian Rouble and Brazilian Real . . .
anyway, along with the dollars Goldman Sachs and other investment houses
may have made for themselves and their clients from playing down the
gold-producing countries' currencies, there is the whiff (or a stink
perhaps) of economic blackmail here.

While twiting along with the chorus of big league politicos, "The I.M.F.
must sell some of its gold to help the poor!" was Jean Chretian perhaps
also muttering under breath, "And now lay off the Canadian dollar
please, boys."

And let us ask while we are about it, what has been the real reason
behind Canada and Australia off-loading some of their gold reserves? The
CB gold sales and all the hype around these sales has been so obviously
against the interests of the Australian and Canadian gold mining
industries, the pressure to sell must have come from elsewhere.

With Canada and Australia together now supplying the world market with
almost as much gold as South Africa, one is entitled to ask: What is the
difference between a whiff and a stink here? Answer: Hard evidence that
somebody has been spreading s**t talk through the corridors of political
and central bank power, right round the world, and particularly the gold
producing countries, to the effect that "The Masters of the Universe"
are able and ready to reduce the national currency of any country that
does not play down gold with them to toilet paper worth.

Is there anybody out there with hard evidence to back this suggestion?

- - - - -
Of course, we know that there is another, more obvious factor at work to
make the politicos anxious to please the Wall Street Masters of the
Universe. There is the fact that, by the nature of the gold carry trade
and where that trade is at now, they and their central bank governors
are going to end up with something worse than egg on their faces when
the price of gold rises, as it inevitably will some day.

The fact is, once one starts selling short on any carry trade, one is
inclined to borrow more and more to ensure that supply stays ahead of
demand. In other words, there is a compulsion to borrow and sell more at
the time of purchase for repayment of earlier borrowings, to ensure that
the purchase (of one's own sales, talking group-wise!) is going to be a)
at a good price, and b) camouflaged. Therefore, it is not just greed
that has led to there now being a very large overall short position. And
the game has now reached the stage where all involved must be fearing an
awesome bear squeeze, which will not just knock the wind out of Wall
Street, but also seriously embarrass central bankers.

Since the central banks have been the lenders for the carry on trade, it
follows that they are going to do whatever the borrowers tell them to do
to keep the gold price from rising INCLUDING LISTENING TO AND ACTING

- - - - -

Having established good cause why the politico bullshit merchants and
central bankers are finding it necessary to play down and write off
gold, lets go on to consider how effectively they appear, at this moment
in time, to be doing so. And how even more effective GATA will need to
be to counter them.

New GATA member, Dennis of Ottawa, shared the feeling of many members I
am sure, when he wrote:

"My wife just exclaimed to me 'gold is down $3.15'. I don't know.
Someone is hammering it. I hope it doesn't go all the way to the $100
basement as some 'gold technicians' are predicting. Sure as God made
little apples, the day we sell bullion is the day it will turn around!"

I responded: "Dennis take heart. Those people who are predicting that
gold will go all the way down to $100 haven't taken GATA into account.
That goes for Princeton Economics International, too. In answer to my GO
GATA e-mail to them of 23 March, Bruce Pugesek
replied for PEI that their forecast calls for gold to sink to the $200
range by mid-2000 -- after which they anticipate 'a gold bull into 2003
and perhaps 2007 with the price of gold moving to $1000'. Well, I refuse
to be discouraged. GATA will take this as a challenge."

There is no question that PEI has been remarkably accurate with many of
their forecasts. And if they are proved right about their more immediate
forecast of a Dow Jones crash on April 8 into 9, then we at GATA and
goldbugs generally are going to be so strongly challenged, we are either
going to come through from nowhere as winners, or be knocked right out.
And nobody is going to knock out a team of 200 GO GATA goldbugs so! We
are going to win by honing in on and exposing why Wall Street, the
Treasury Department, the Fed and most central banks have committed
themselves to writing off gold AGAINST OPEN MARKET TRENDS AND THE PUBLIC

Let us consider the market facts: There is a growing demand for gold in
India and elsewhere in Asia. There is a 60 percent up of oil off its
lows. There is a massive 1,600 tonne gold supply/demand deficit. . . all
this speaks for a gold price of from $350 to $400. But the computer
models show that Wall Street will not buy into this AND that the central
bankers will go on supporting the big investment houses as they work
against open market trends. In other words, the central bankers are
willing to see gold bought and sold at much lower than realistic market
prices, while pretending to be for a free market.

What GATA has to show is that it is not an open world market that is
determining the price of gold, but a closed market run by a cabal a
cabal now stuck with a ridiculously high level of gold shorts a cabal,
therefore, that is compelled to more gold carrying; therefore to putting
more pressure on politicos and central bankers a cabal, therefore,
that is determined to ensure an ever-greater flow of gold from the
vaults of central banks into private hands, at a closed market price
that is against the interests of the peoples that the banks are supposed
to be serving.

- - - - -
Now the curious thing is, after the first letter from Princeton
Economics International, advising me that the price of gold will bottom
at $200 around the middle of next year, there came a second letter, now
from Martin Armstrong, as if to reinforce the point.

"There is no conspiracy against gold," he wrote. "The conspiracy is
against paper money. The reason why the Euro is only an electronic form
of money for the next 4 years, is because this is an attempt to move to
purely an electronic currency using debt and credit cards. It is hoped
that by eliminating circulating currency is any form, that government
will be able to eliminate the underground economy and collect what they
believe to be there just tax quota.

"Gold has simply been demonitized by the central banks and its
liquidation will continue. They have no plan to ever return to a gold
standard and hence its demonitzation continues through its liquidation.
Gold has ceased to be a monetary base unit of value and it has simply
become an investment.

"Gold declined in value against stocks between 1924 and 1929. It rose in
value between 1929 and 1932, declined again between 1932 and 1934 before
it was officially revalued by FDR. During the Depression, gold was cash.
It acted in the same manner as cash acts today during any liquidity
crisis. The value of money rises whenever the value of tangible assets,
including stocks, decline."

I responded:

Dear Martin Armstrong,

"Thank you very much for your letter. It goes to the heart of the gold
price issue, and I assume that it reflects the Princeton Economics
International attitude to gold.

"I would ask you to consider this: If there is an ideological commitment
to demonitize gold, as you imply, then there is a commitment to see that
it happens, by collusive means if it comes to that, even against the
will of the majority of the people of the world and the market.

"GATA is commited to stopping the rot through the law courts. As we draw
public attention to the issue, we anticipate a groundswell movement
against demonetizing gold.

"Also, have you considered how the movement to demonitize gold in the
West is opening the way for Islam and the East -- India and China
particularly -- to start a counter-movement; and thereby gain economic
and cultural acendancy in the long-term."

- - - - -
Well, I don't expect PEI will make much of that -- yet.
No, not until we have retained Berger and Montague and filed a lawsuit
against the colluders. Then PEI will have a new factor to programme into
the computers: the possibility that central banks will stop conniving at
anti-market gold dealings.

With what results? One cannot say other than that in mid-2000
the gold price will be considerably up and not down from where it is

Your comments on this offering would be appreciated.

GO GATA, Go Gold.

Boudewijn Wegerif (Bodwin)
Moderator GATA E-mail Group
Bill Murphy has just received this E-mail from GATA member Jerry: "A few
moments ago I had a conversation with Mr. John Devlin. He is with the
Investor Relations at Bema Gold. Mr. Devlin is aware of GATA but to my
surprise stated that Bema has received no correspondence from
Shareholders urging Bema to support GATA. Mr. Devlin personally
recommends that shareholders contact Bema in this regard. Come on Bema
shareholders get those e-mails off. As a matter of fact, even if you are
not a shareholder, drop them a line anyway. Let Bema know what you think
about the obvious manipulation of Gold.