Gold soars as central banks cap sales

Section:

11:55p EDT Sunday, September 26, 1999

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy told you last week in his
"Midas" commentaries that something like this was about
to happen. Here's a flash he dispatched tonight to
subscribers at www.lemetropolecafe.com. As I write gold
on the overseas markets is up $10.

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

* * *

WASHINGTON, Sept. 26 (Dow Jones) -- Fifteen European
central banks led by the European Central Bank Sunday
pledged to not enter the market as a seller of gold
with the exception of sales that have previously been
decided....

In a joint statement issued by the central banks, they
said "gold will remain an important element of global
monetary reserves."....

The gold sales already decided will be achieved through
a concerted program of sales over the next five years,
said the banks....

Annual sales won't exceed about 400 metric tons and
total sales over the period won't exceed 2,000 tonnes..

The signatories to the agreement have also agreed not
to expand gold leasing and the use of gold futures and
options over this period....

Switzerland and England are included....

European Central Bank President Wim Duisenberg also
said the central banks agreed to the 400 metric ton
annual ceiling because it was an amount that wouldn't
disturb the market and that he thought the market could
absorb such a sale....

"The current situation is characterized by uncertainty
and that uncertainty by itself led to a lot of
volatility and a downward trend in the gold price,"
Duisenberg said.

He said central banks want to see stability in the
market, but he also said they're "not trying to prop up
the gold market."

Nonetheless, Duisenberg indicated his expectations for
a bullish reaction to the announcement: "I think the
gold market will interpret the ceiling as being less
than they feared."

* * *

At the moment December Comex gold is trading at
$275.70, up $5.90, and has traded up to $277.

This explains what I told you in the last Midas de
Metropole about the scoop I received that some hedge
funds had swiftly left for Switzerland this week to
discuss the gold market. They MUST have known that this
move by the central banks was coming and, as I told
you, are very concerned about finding the gold they
need for their short positions -- either for buyback or
borrowing purposes.

More on all this tomorrow in Midas. Stay tuned and be
informed. A multi-year bull market in gold is ahead of
us. There is a lot of money on the table now.

All the best,

Bill Murphy
Le Patron
http://www.LeMetropoleCafe.com