Default risk in fractional gold banking


9:20p EDT Monday, October 4, 1999

Dear Friend of GATA and Gold:

Yesterday GATA broke into the Sunday San Francisco
Chronicle. Today John Crudele's column in the New York
Post gave us much favorable notice and even mused that
we well may have prompted last week's declaration in
favor of gold by the European Central Banks.

We're not the only ones working for the gold cause and
working to expose the shorts and manipulators. But we
have excellent connections around the world now, and I
don't think that anyone is working harder.

Crudele's column follows.

Despite our success of the last couple of weeks, we
must remember at every moment that gold's enemies
remain strong and we must be prepared for more of their
manipulations. GATA right now is especially vigilant for
intervention by the U.S. Federal Reserve and Treasury
to bail out the bullion banks and brokerages just as the
Fed arranged the bailout last summer for the gold-shorting
hedge fund, Long-Term Capital Management. They could
strike at any moment. Beware.

Please post this as seems useful.

Gold Anti-Trust Action Committee Inc.

* * *


By John Crudele
New York Post

October 4, 1999

The price of gold soared last week after a number of
Central Banks said they won't unload extra gold onto
the open market for the next five years. The precious
metal jumped to $329 an ounce, up almost 30 percent.

We outsiders will probably never know what prompted the
statement by the 15 governments. But it is very
interesting that an outfit called the Gold Anti-Trust
Action Committee, headed by former pro footballer Bill
Murphy, recently hired lawyers in Britain and enlisted
the help of Parliamentary members to find out if the
price of the precious metal was being purposely kept

Why England? Because the Bank of England announced last
May that it was going to sell tons of gold on the open
market. Whenever there's a big seller like that it
obviously keeps the price down - whether it's gold or
dog biscuits.

"It just raised the whole issue of what was going on.
It's real simple," said Murphy. "The powers that be
went to the English government and said we can't let
gold go above $290."

That, of course, isn't the way markets are supposed to
work. So Murphy's group -- headquartered down in
Dallas but reaching farther through a website -- pestered
members of Parliament to bring up the gold sale for
debate, which occurred this past June.

Senator Phil Gramm, chairman of the U.S. Senate Banking
Committee, got a copy of the Parliament debate in July.
Was Murphy the one who started the ball rolling that
eventally caused the 15 banks to announce that they
were laying off gold? We'll never know. But it's as
good a guess as any right now.

It looks as if someone manipulated gold prices again
last week. Despite being at $329 an ounce in the early
part of last week, gold closed at just under $300 an
ounce on Thursday. The strike price on gold futures
contracts just happens to be $300 an ounce. The very
next day gold went back up to around $311 an ounce.