Text of GATA ad in Roll Call


1:30a EST Tuesday, December 7, 1999

Dear Friend of GATA and Gold:

Here's the always interesting Golden View from The
Tower for Monday at www.usagold.com.

Gold Anti-Trust Action Committee Inc.

* * *

The GOLDEN VIEW from The Tower
December 6, 1999

Today's decline in gold price was certainly a knee-jerk
reaction to the news that The Netherlands would sell
300 tonnes in five years, though the $3.40 drop in spot
prices by day's end was comparatively tame when viewed
against the recent Bank of England announcemnt, and the
earlier Australian announcement of (much smaller)
sales. It is likely that further time is all that
traders need to more carefully conclude that this is a
positive development for gold.

With the price having slid all last week, traders'
moods were in a funk and they weren't able to see this
development clearly. When the Washington Agreement was
signed just over two months ago, there was room for 300
tonnes of sales in addition to what was already on the
table. Now we know that that the 2,000-tonne figure
wasn't arbitrarily rounded up to an even 2,000 from the
United Kingdom and Swiss potential sale allocations of
1,700. Finding out the details that the full remaining
300 tonnes would come from the Dutch Central Bank (as
opposed to some other) was in itself distinctly a non-
event ... or at least should have been.

But the sketchy details provided of the method of their
gold dispursal should have been seen as positive.
Rather than bring in the full weight of the market in a
public auction to help find enough takers for this gold
(cough, cough, wink), they are content to let the Bank
for International Settlements broker the sale behind
the scenes and without any pre-sale publicity. That
speaks of a calm confidence in the ability to get
adequate attractive bidders without any effort put into
seeking them out.

* * *

Reinventing the International Monetary Fund ... again?

Anyone who has a nose for history knows that the IMF
was created out of the agreements at the 1944
conference at Bretton Woods, New Hampshire, in which
the dollar would be held to a guaranteed convertible
value of $35 per ounce of gold and all other currencies
would adopt par values that they would hold within a
tight range of fluctuation of 1 percent. It was the
task of the IMF to facilitate these stable exchange
rates through such things as loans if a nation ran into
balance-of-trade difficulties.

When an excess of dollar-production and subsequent
calls for conversion by internationals holding excess
dollars threatened to bankrupt the U.S. Treasury,
President Nixon in August 1971 closed the "gold
exchange window" at the Treasury Department, at once
putting the United States in default on its payments,
and laying waste to the IMF's specific mandates.

But as with any government agency, evolution can occur
quite rapidly to adapt to changing times. Here we had a
complete abandonment of the gold standard of the
Bretton Woods agreements, and yet the offspring of
Bretton Woods, the IMF, found a new niche and is still
with us. Is another significant change of the currency
structure in the works?

Reuters reports that the IMF may be in the beginning
phases of another transformation. Reuters says the
United States is taking a close look at the IMF, which
drew sharp criticism for its rescue efforts throughout
the Asian contagion. Deputy Treasury Secretary Stuart
Eizenstat told reporters: "We believe, at this period
of relative calm in the international financial
situation, that this is a time to begin to look at a
variety of options with respect to further reforms of
the IMF. We have come to no conclusions at this point,
but this is something that we will be looking at
further and elaborating on over the coming months."

And The Wall Street Journal reported that the Treasury
was prepared to propose "significant changes to the way
the IMF operates, streamlining its lending programs and
concentrating on emergency programs for countries in

As we recently pointed out, IMF managing director
Michel Camdessus said the IMF would work with the World
Bank to put much emphasis on relieving the plight of
heavily indebted poor countries. It stands to reason
that the IMF would be reinventing itself and its
niche/mission if the global financial architecture is
in the midst of a major retooling.

On that note, the euro surged out of its recent slump,
gaining an almost unheard-of 2 cents on its previous
close against the dollar, now at $1.0224.

Returning to the day's market action in gold, as we
said at the top, spot shed $3.40 in a bout of confusion
selling by traders that will surely be looked back on
as a prime buying opportunity. Barring an unforseen and
unlikely renewal of massive shorting interest, what is
left to surprise to the downside and weigh heavily on

The euro seems to have regained its footing, and the
banking industry is primarily concerned with going that
extra painful mile to give the impression that there
are no monetary worries ahead of Y2K. If part of that
effort is to maintain a strong dollar and a relatively
weak gold price, brother, we'll take it. The clamps
will surely come undone soon enough.

Spot ended the day at $275.70 in NY. We'll take a look
in at the FWN report to see what they were saying and
thinking in the Comodities Exchange....

* * *

NY Precious Metals Review: Gold down $3.90 on Dutch
sale news.

By Cristine Denver, Bridge News, New York, Dec. 6.

Comex February gold futures settled down $3.90 at
$278.20 per ounce after hitting a fresh 2-month low of

Gold came under pressure following news overnight that
the Dutch central bank intends to sell 100 tonnes of
gold next year and 300 tonnes in total over the next
five years. Gold tumbled overnight on the Dutch news,
falling to its lowest level in just over two months. It
initially bounced back somewhat in European trade, but
fell again as New York players reacted to the news amid
some early puzzlement about how the latest European
official gold sale fit in with an earlier European
central bank gold sale scheme.

The European Central Bank, 13 EU central, banks and the
Swiss National Bank released a statement in September
to clarify their positions on their gold reserves. The
statement said that annual sales will not exceed
approximately 400 tonnes and that total sales over a
period of five years will not exceed 2,000 tonnes.

The Dutch central bank said the sales were in
accordance with the agreement of the European system of
central banks. The central bank will not announce to
the market when it will actually sell the gold although
the sales should be easily monitored through the
European Central Bank's regular release of its balance

The World Gold Council also issued a statement saying
that the Dutch plan is within the terms of the
Washington Agreement on Gold and should not be seen by
the market as a disruptive factor.

The Dutch bank had already sold 700 tonnes of gold in
the 1990s and will be left with 712 tonnes of gold
reserves after the proposed sales. Switzerland has
already said it will sell 1,300 tonnes, while the UK
sold 50 tonnes before the Washington agreement was
announced and plans to sell a further 365 tonnes.

Although analysts stressed that the news really only
gave a name to the central bank seller that would fill
in the gap left by the UK and the Swiss, the market
remains vulnerable to news about central bank selling.
Concerns about central bank selling and lending have
been a major factor in gold's prolonged weakness,
traders said.

One other negative about the latest announcement is the
fact that the Dutch will not announce the timing of its
sales in advance.

[Noooo ... As we explained earlier, the whole terms-of-
sale package is a positive thing.]

Given that the Dutch have indicated that, unlike the
UK, they will not announce to the market when they will
sell gold, the potential for Dutch gold sales
introduces considerable uncertainty into the market.

Selling into the market "at their whim" will benefit
the Dutch but it will dent sentiment in the gold
market, said LFG Billion Services chief bullion dealer
Leonard Kaplan. "Anyone who is long will assume that
the Dutch will sell into any rallies," he said.

[But Lenny, if they sell through the BIS as an earlier
report indicated, this won't exactly be hitting the
streets to flood your feet in gold. Spread the word ...
nothing to fear.]

Even without the Dutch news, gold most likely would
have declined Monday, as the market appears to be going
through a long liquidation phase, said David Meger,
senior metals analyst with Alaron Trading. Although it
was not so much the case today, the strong dollar of
late has made gold and other dollar-denominated
commodities more expensive in other countries, which
leaves the market lacking in support in terms of
physical demand, he said.

[Boy, I dunno about that, Dave. If this $3-$4 drop was
the worst gold could do on news that seemed instantly
bad to the casual observer, The Tower would have to
conclude that the weakness has fully run its course.
Look out above.]