Bullion banker integrity doubted in London


11:25p EST Tuesday, November 23, 1999

Dear Friend of GATA and Gold:

Three items of interest tonight:

1) A statement by the managing director of Anglogold,
Kevin Williams, about the third Bank of England gold
auction, scheduled for next Monday. Williams says
Anglogold, the world's largest gold miner, is considering
bidding. Let's hope AU does so and thereby strikes
another blow for the industry, as AU's chief executive,
Bobby Godsell, did this year when he led a South
African delegation to Britain to protest the Bank of
England's ruinous and deceitful policy against gold
and in favor of bailing out the financial institutions
that were short gold.

2) Some comments from GATA supporter Andre
Andrew Haeff about hedging, in response to the
comments recently posted here from Adrian Day
and Harmony Mining Chief Executive Bernard

3) Tonight's "Golden View from The Tower" at

Please post this as seems useful.

GATA wishes its U.S. readers a golden

Gold Anti-Trust Action Committee Inc.

* * *

Statement by Kevin Williams
Managing Director, Anglogold
November 23, 1999

The Bank of England auction probably offers an
opportunity for buying. I'm not sure we will bid. We
will certainly look at it because it is an opportunity
to do an off-market transaction, meaning that there is
a real seller wishing to enter into a transaction and
you don't have to go around looking for one. If I had
to do something with J.P. Morgan, for instance, they
would have to find another counterparty to do a trade
with. With the Bank of England it would be a real

We've got a large hedge position which we actively
manage, and that means in any period of time we have
transactions maturing, we have business that we have to
do, and it would fall absolutely into that category,
between now and the end of December, that we may wish
to do certain things and the Bank of England may offer
us an opportunity.

At our last report we had 430 tons of gold hedge,
maturing at different times. The gold price is looking
quite healthy at the moment. It feels like it's got a
good flow to it. We'll take a view on whether to bid
when we get closer to the auction.

* * *


By Andre Andrew Haeff
November 23, 1999

Next year, I think, many positive developments for
gold will be forthcoming.

In the meantime, apart from holding physical gold, if
one were to wish to invest in gold mining shares,
investing in the sort of gold mining company that
qualifies as a "proportional hedger" would be the
safest way to maintain a position with the least risk.

When evaluating a gold mining company from the
standpoint of a good value at a given share price,
since Sept. 25 the hedge book has become a significant
criteria. Before Sept. 25, in general, the larger the
hedge book, the better the financial prospects of a
gold miner, but since Sept. 25, the more questionable
those prospects.

There are other factors that bear on how much a hedging
program should affect the value of a gold miner's share

1. Recent average earnings/share.

2. Recent average dividend yield.

3. The size of the company.

Dividend yields are very important, for dividends
indicate that the company is generating surplus cash
over and above debt repayments and expenses, not just
counting on the future.

The size of the company is very important in that a
large gold mining company, which in recent years has
usually contracted certain unprofitable operations, has
the capability of re-opening certain previously
unprofitable areas of operation. If not that, the
larger company has the resources to expand production
by other means relatively quickly, as through
acquisition, buying minority interests (as Gold Fields
purchased the rest of St. Helena), construction of new
facilities on currently owned properties, etc.

A large company can actually maintain a hedge program
that is not too large in proportion to its production,
and can expand that production to take advantage of
higher prices and still maintain certain hedge
obligations at fixed future prices. In other words, it
can have both protection on the down side, and, by
expanding production, take advantage of much higher
gold prices, which undoubtedly will come.

* * *

The GOLDEN VIEW from The Tower
November 23, 1999

The Dow lost nearly 1 percent and the Nasdaq composite
index lost nearly 1.5 percent today on heavy volume.
(The long bond ended even on the day at 6.189 percent.)

With the Thanksgiving holiday, this is historically one
of the slowest trading weeks of the year in the U.S.
markets. But with the shares exchanged on the NYSE and
the Nasdaq continuing to reach 900 million and 1.4
billion, respectively, you've got to wonder why people
haven't relaxed a bit to enjoy this festive holiday
season. Rob Chopowick, manager of research services at
TD Evergreen, may have hit the nail on the head in
regard to the pre-holiday trade we saw today:
"Everybody is trying to get a trade done now, to get
out of a position they're nervous about." Anyone not
able to execute a trade today has no need to panic. The
New York Stock exchange will be open tomorrow, closed
Thursday, and open again for a short day of trade on

It would seem that those who hold gold will be the
relaxed ones, sitting back and enjoying the warmth of
the hearth and the company of their loved ones.
Liquidity of trade was described as "low" today,
Reuters citing that many U.S. players were looking
ahead to the Thanksgiving break. Let me tell you, those
of us with gold hearts really know how to live right,
to the extent that the COMEX division of the New York
Mercantile Exchange will be closed both Thursday AND
Friday, AND will be closing early tomorrow.

Give yourself the comfort and security of knowing that
you've locked-in a reasonable conversion of paper
assets to real assets by giving MK and company a call
tomorrow at USAGOLD/Centennial Precious Metals -- 800
869-5115. You're sure to like the price and there's no
sales tax on the gold coins of your choice. Here in The
Tower we're sure you'll like the peace of mind that
comes with gold ownership.

And remember, this is your final opportunity to move
some wealth into gold ahead of the next gold auction
which will be over with by noon in London ... when the
United States is just waking up. You'll recall that the
previous two auctions were oversubscribed, and that the
last one marked a turning point in which the bid price
was higher than the cash price for gold, promptly
sending the gold price much higher that day and
throughout the following days. Reuters reported one
gold dealer in London said of the price potential
following Monday's auction: "Our view is that the
upside risk is much higher and that we will see higher
prices after the auction due to still existing
shortages in the market."

Gold did nicely today, with steady gains during New
York trade after level trading in the overnight
markets. Spot prices last quoted in New York were
$297.70, up $3.40 from yesterday. Here are some
excerpts from Bridge News New York Precious Metals
Review to give us an idea of what went on in the
futures markets and in the minds of some traders:

"December gold settled up $3.1 at $298.7 after hitting
the high of $299.2. Traders said positive feelings
about how the UK auction will go underpinned gold
prices, but also warned that there isn't too much
upside potential given that lease rates remain very

(Shrug that one off. Evidence is abundant that many
institutions are folding up their gold-gambling
operations. As the gold carry trade is abandoned, the
demand for new gold loans would naturally fall, taking
the pressure off of lease rates.)

"One dealer said Dec gold's ability to get above $297
gave a technical boost to the market, with much of
Tuesday's activity linked to the continued rollover
from the December to March contract months. There were
also suggestions that the surge in crude oil prices
Monday to $27 a barrel -- prompted by reports that Iraq
halted oil shipments -- may be providing some
psychological support to gold on fears the higher crude
prices will lead to inflationary pressures. Gold is
sometimes used as a hedge against inflation.

"David Rinehimer, director of futures for Smith Barney,
said the market may be benefiting from a 'bullish bias'
ahead of Monday's auction. The last auction in
September saw strong demand, and even though price
levels were much lower then, there are expectations
Monday's auction will be met with keen interest.
Rinehimer said gold should remain well supported at
$290 and could see further price strength as 'the
underlying fundamentals support higher prices.'"