World may send U.S. inflation back home

Section:

12:50a EDT Wednesday, October 6, 1999

Dear Friend of GATA and Gold:

It now has been edited, so I'm sending you here the
transcript of GATA Chairman Bill Murphy's interview
Tuesday with Alex Hogg on the South African radio
program "Moneyweb."

GATA continues to take its message around the world
every day, and we're being heard by millions now.

Please post this as seems useful.

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

* * *

"MONEYWEB" RADIO SHOW IN
SOUTH AFRICA INTERVIEWS
GATA CHAIRMAN BILL MURPHY

Tuesday, October 5, 1999

MONEYWEB: That special treat that we promised you
earlier. Bill Murphy, Dallas, Texas, is where he's
talking to us from. He's the chairman of the Gold Anti-
Trust Action Committee, well known as GATA. Is that the
way you've been pronouncing it, Bill?

BILL MURPHY: Yes, that's correct. That's how you
pronounce it.

MONEYWEB: Now how did it start? How did Gata start?

BILL MURPHY: Well, I've a financial website,
www.lemetropolecafe.com, and we're just making
commentary on the gold market and we noticed, after the
Long-Term Capital Management bailout, that gold was
acting very mysteriously. It just wasn't acting like
any market we saw, and certain bullion dealers were
always selling at the same time, and capping the
market. And then we heard from producers in South
Africa that these bullion dealers were going around
offering incredible terms if they would just sell. One
thing led to another, and there was more information,
and one of the people on the site said, "Bill, what
you're talking about is a violation of the Clayton and
Sherman Anti-Trust Acts in the United States. Let's
stop talking about this. The gold market's being
manipulated. Let's do something about it." So we formed
a committee.

MONEYWEB: All right, and some people say you played
quite an important part in this gold price rally that
we've seen -- an almost $80 rally in the last seven
days.

BILL MURPHY: Yes, well, all I can say is that now we
thank people for that. We've worked very hard at
investigating what was going on and proving the
manipulation, and one thing we did do is that one of
our operatives in England knows some very high people
in the British Parliament and, through him, we were
able to get this discussed in the House of Commons, and
it was a big brouhaha. Then it went on from there and,
after that, we heard there were serious government-to-
government negotiations going on about the Bank of
England gold sale, which was brought about in a
ridiculous way. And then the European central banks
came out and said that they were going to restrict gold
leasing and, because there are too many of these gold
shorts that were holding down the price, it's exploded.

MONEYWEB: What about Goldman Sachs' role in all of
this? You have been pretty critical of this group in
the past?

BILL MURPHY: Well, again, we started a search for the
truth. And, investigating the gold market, in that
search Goldman Sachs came up everywhere we looked. They
were always selling in the market at certain times, and
they were just every place and of course, one thing
that was very disturbing to us is that their people
were very close to the Bank of England people. Just as
the price of gold was going to explode early last May,
and shares in your country were surging, the Bank of
England made its gold sale announcement. They have very
close ties to Goldman Sachs, and it was just Goldman
everywhere we looked.

MONEYWEB: Bill, what do you make of the performance of
the gold price right now, and where do you expect it to
go in the near future?

BILL MURPHY: Great question. Well, I honestly think the
problem for the shorts is we have told our followers
that the gold loans are 10,000 tons -- that's what
hedge funds and producers are short. Annual mine supply
is 2,500 tons. We kept telling people we went to
Congress about this. There's no way they can get out of
shorts if they want to. We also believe that gold
demand at the lower prices was more than 160 tons
greater than supply. The only way that this market can
grow clear, come to equilibrium price, is for the price
to rally sharply. Now it'll go in stages, but we think
that equilibrium price is around $600.

MONEYWEB: $600? It hasn't been there for many, many
years. Are you saying that it'll get back there because
of the overhang that exists, or has been built up over
those years?

BILL MURPHY: Yes. Well, the gold price has been kept
unnaturally low, or orchestrated lower, by certain
officials and mostly the bullion dealers that have been
fostering the notion that they were borrowing gold at 1
percent and using the money to invest elsewhere, like
people did in the yen carry trade, where they borrowed
yen in cheap places. That blew up. The gold price is
blowing up, and what's happening is that the price will
rise because the demand is too great for the supply of
gold. In other words, if a certain percentage of these
10,000 tons short cover, which are so doing now,
there's not the gold to cover it. The price has to rise
to cover, just to sort the shorts out.

MONEYWEB: But Bill, the price has been rising in
stages. We'll have a sharp increase in a couple of days
going nowhere, and another sharp increase as it
happened today?

BILL MURPHY: Yes, well, everybody is trying to catch
their breath, and many people do not understand the
dynamics. They did not understand the market was
manipulated, kept at an artificially low price, so very
few people understand why this is happening. So the
market will spurt and stop and, if it was going to
correct. It doesn't correct, and it spurts again,
that's why you're getting action like this. We also
hear, by the way, that many of the bullion dealers are
in trouble because of this, which again is what we went
to Congress about. And the rumour mill was full of
bullion banks going to the United States Federal
Reserve, borrowing gold from them, trying just to get
gold back into the system. They're having that much
trouble.

MONEYWEB: But, having said that, and the $600 target
that you've set for yourselves, how long might it take
for the gold price to get there?

BILL MURPHY: Well, the price of gold could easily hit
$400 by the end of this year. And then, you know,
throughout the next year, year and a half, it could hit
$600. But, quite honestly, if you were to tell me that
it would be $600 by the end of the year, or somebody
would, I would not be surprised, but it's very hard to
predict that. It depends upon the market forces, and
how fast some of the shorts try to cover their
positions.

MONEYWEB: Bill, would you be putting your money into
South African gold shares, or would you look elsewhere
in the world?

BILL MURPHY: No, I think the South African gold shares
are just fine, and Gold Fields and AngloGold and Durban
Deep are great companies to buy.

MONEYWEB: Bill Murphy, chairman of GATA, the Gold Anti-
Trust Action committee, an organisation that many
believe has played an important role in getting the
gold price to turn around. What an exciting prospect
that would be. Imagine, the gold price getting to $600
an ounce, and, as he says, he wouldn't be surprised to
see it happening even this year, although his timing is
more into the year 2000.