Gartman gets GATA's name right, but not other things


11:40p ET Thursday, July 16, 2009

Dear Friend of GATA and Gold:

Regardless of whether Dennis Gartman, publisher of The Gartman Letter (, is as obsessed with GATA as GATA is supposed to be obsessed with him, he always manages to get our name right, as he did in his letter today. But some other things about GATA in his letter today were not right.

"The gold bugs are up and at it again regarding futures, ETFs, derivatives, et al.," Gartman wrote. "If the gentlemen and ladies involved in GATA and other organizations would put their efforts toward curing cancer, or fighting injustice, or ending the infield fly rule and the American League's pinch hitter in place of the pitcher, or the reason for the BCS in college football or other some such worthwhile endeavor ... cancer would be cured; injustice everywhere would be eradicated; the infield fly rule would be rescinded; pitchers would actually take their bat and strike out rather embarrassingly at the hands of their foes; and the playoff system via the bowl games would be in place ... all by week's end. But they won't."

But of course none of the people who hold office in GATA have any medical background, even as they are old enough so that, by the time they qualified in disease research, they'd be long past retirement age. And of course, as GATA board member Adrian Douglas remarked today, the GATA people do consider themselves to be working for justice and fighting a sort of cancer -- surreptitious market manipulation.

"There are," Gartman continued, "all sorts of arguments made by the bugs that the gold ETF is not covered properly by actual gold in the vaults in New York; that the futures are not covered by actual gold in the vaults in New York, etc."

Actually, the main gold ETF claimed to be keeping its gold in a vault or vaults in London, not New York, even as it also reported that it might engage any number of "subcustodians" whose identities and vault locations would not necessarily be reported.

"One argument put forth by the bugs," Gartman added, "is that gold futures are to be covered 1:1 by gold in the vault, and that if they are not there is a problem. There is not. Wheat futures are not covered 1:1 by wheat grown in the field, for of course at any one time there is more wheat traded on the boards than is grown, and over the course of any crop year that crop will be traded hundreds if not thousands of times as the price is discovered and rediscovered and rediscovered again and again. Wheat futures upon delivery will of course equal the amount of grain in storage, but otherwise to expect each wheat contract to be covered by real wheat is nonsense. So too with the fears of the bugs."

Actually, GATA has never asserted that there is any requirement that gold futures are to be "covered 1:1 by gold in the vault." Rather, GATA has asserted that much if not most gold shorting is facilitated by central bank sales and leasing, and by the exceedingly deep and thus manipulative pockets of the shorters, pockets likely made deeper still by subsidies, direct or indirect, from the U.S. government, which has an intimate relationship with them, since they are the government's "primary dealers" in the government bond market.

"We shall not argue that the exchanges and even the ETFs could be a bit more transparent and can and should make their positions more obvious to the public," Gartman continued, "but the demands brought upon them by the bugs are illogical, detrimental, and a waste of our time."

Here Gartman wastes our time, asserting that we're right on transparency but wrong on things he won't bother to specify.

"We do agree that recent decisions to allow for the 'delivery' of ETF shares instead of actual physical gold against a futures position do cause us some concern," Gartman conceded. "Indeed, this causes us some very real concern, for if we stand for delivery of wheat, we expect to receive wheat, not paper. The same holds true for delivery processes on the Comex, and if GATA and the bugs have a complaint, it is this new decision by the Comex. On this, we'll grant that the bugs have something to complain about."

Actually, the Comex decision to allow ETF shares to be delivered in place of real metal is not "recent" at all. As GATA's Douglas disclosed Saturday
(, the Comex announced this modification of its delivery rules more than four years ago, in February 2005. Douglas also disclosed that the Tokyo Commodities Exchange announced a similar rule change last October. But the world could not count on futures market experts like Gartman to alert it to these curious changes. No, these disclosures came only from those gold crazies -- the ones who should leave the futures markets to those supposed experts and try curing cancer instead.

Well, we're with Gartman about getting rid of the designated hitter, but we'd leave the infield fly rule alone.

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

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