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NO SMOKING GUN BUT
THERE'S A SMELL OF CORDITE

By Jonathan Rosenthal
The Business Report
South Africa
Friday, May 28, 1999

When I last looked at the alt.conspiracy newsgroup on
the Internet a couple of years back it was filled with
small-town Americans swapping tales about black
helicopters. (You know, the ones that hover outside
your house and shine laser beams in your eyes.)

And the big question of the day was what happened if
you didn't come out at night: Did the helicopters just
keep waiting or move to another house?

These days, a new breed of conspiracy theorists is more
concerned with hiring lawyers and discovering the truth
about low gold prices. Like FBI agents Scully and
Mulder in "The X-Files," they trust no one (especially
not the Federal Reserve), and are piecing together
seemingly unconnected bits of evidence that point to a
grand conspiracy to hold down the price of gold.

That the victim is being murdered is plain to see
through a series of uncanny coincidences, like the UK
treasury's announcement of gold sales as the metal was
starting to rally. But my problem with conspiracy
theories always boils down to a simple question: where
is the smoking gun?

Bill Murphy, a former futures trader and now chairman
of the Gold Anti-Trust Action Committee, is probably
the one man who has done most to organize conspiracy
theorists into actually doing something. But he too has
a similar problem.

Although he is convinced he has found the smoking gun,
proving it is another matter entirely. He says his
organization has hired lawyers and is investigating
whether it can bring a lawsuit against those
responsible.

"Thus far our evidence is circumstantial, but
overwhelming. Our hard investigation has not started
yet, but will soon. It's only a matter of time before
someone sends us a stained dress," he says.

Now, as any "X-Files" addict knows, plausible evidence
is less important than a good plot, so let's give
Murphy time to find the stained dress while we look at
the plot.

Any good conspiracy plot has powerful people in cigar-
smoke-filled rooms:

"Ed gets the Bank of England to sell gold this month,
and I'll make sure the IMF sells in September. And have
Miss Moneypenny bring me some tea."

More to the point, does Allan Greenspan smoke cigars,
and what is Murphy's version of the plot?

In essence the world financial crisis that paralysed

Asia and destroyed the Long-Term Capital Management
fund last year is not over. While this would normally
be good for gold, as investors switch to investments
seen as safer in uncertain times, gold has in fact
weakened over the past year.

And the reason for this is that powerful vested
interests, including the Federal Reserve, are
attempting to forestall an economic meltdown in the
U.S. financial sector through providing low-interest
gold loans.

It's a bit like the U.S. version of the Absa lifeboat
saga. Murphy claims: "We believe the practically
interest-free gold loans are being used to try to
reduce the pain of some of the problem investments....

"Some big banks and big investment houses have some big
problems. That is being reflected in the swooning of
the banking shares, which are now going straight south.

"The leverage in the financial system that caused the
problems late last summer was never removed from the
system. It was just shifted from the hedge fund Long-
Term Capital Management types to the money-center
banks, the broker/dealers. These (the Credit Suisse,
Bank America types) are the new vulnerables.

"We suspect problems; the Fed knows the problems. That
is why the Fed would not afford to let the price of
gold rise above $290 and called on the English poodle
politicos to drop their bombshell about selling Bank of
England gold when they did.

"That is why Goldman Sachs continues to bomb the market
and demoralize any bulls left. It is a no-prisoners
philosophy."

So now we have the smoke-filled-room plot. But what of
the smoking gun?

Murphy claims he has reliable information that the
Federal Reserve has been active in the gold market, and
has been trading through Goldman Sachs. But like every
good episode of "The X-Files," this is a saga that is
to be continued.

"All we can tell you at this point is that the Gold
Anti-trust Action Committee is investigating this
matter, and it has, in part, to do with who is behind
the Federal Reserve banks," Murphy says.

-END-

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