An alert to the gold world, Part 1


Copyright 2000,
Not to be reproduced without the author's permission.

Midas commentary for April 29, 2000

By Bill Murphy

Spot gold $272.80, down $3.40
Spot silver $4.95, unchanged

It took me an extra day to get this commentary done.
Nobody wanted to hear about gold's miserable
performance yesterday anyway, so what was the point?
Even I needed to take a deep breath and charge the
batteries. This is tedium extraordinaire. More than a
week has gone by and not one of the 24 gold producers
that GATA faxed an eight-page presentation bothered to
reply. Not entirely unexpected, but disappointing when
gold trades like a submarine. More money has been lost
by all of our camp and the only good news some of these
producers could put out was about their hedging
prowess. Did that make you feel better?

I have spent this extra day trying to figure out what
might worth a "tinker's darn" for you to read. There
actually is a great deal to focus on, but it all can
sound so hollow and feel so distant at times when the
price of gold is not even allowed to advance to an
insulting $290 per ounce.

The bottom line is this:

The gold price should be more than $600; yet it is $272
and still going south. It is trading at these low
levels because of one of the biggest financial scandals
in the history of our country. That will be proved in
time when the price of gold skyrockets -- and it will,
probably when we least expect it to.

But I can see it doing so for only three reasons, as
the manipulation crowd is going to play this one until
the bitter end:

1. The economic scene deteriorates to such an extent
that the bullion banks are forced to call in many of
their gold loans, which causes a gold-buying panic.

2. A major surprise bags the shorts, such as the
European Central Bank decides to raise its gold
reserves from 15 percent to 25 to bolster the ailing
Euro. (Being long gold in dollars is a blessing these
days compared to being long the Euro.)

3. GATA is able to focus the attention of certain
members of the U.S. Congress on the gold derivative
disaster that is looming and they take steps to prevent
it. In laymen's terms, GATA will alert certain
congressmen (especially banking committee members) to
the cancer that is destroying the financial system. The
choice is to take the medicine now and survive, or go
into denial and probably "kick the bucket" down the

On that note, after I finish this commentary, I have to
work on the massive document that GATA is preparing to
deliver to banking committee members in Washington and
other politicians. One of those politicians is one of
the most powerful men in Washington. He knows of our
claims and is making the time to meet with our
delegation. That is what is so exasperating about the
gold producers; they can't be bothered to respond to
our pitch to help their own shareholders.

This is not a whining routine. Just emoting some facts
as I see it while Chris Powell and I gather the energy
to deal with what has to be done. Not only will it be
done and done to the best of our ability, it is going
to somehow help us all win the day against the monsters
of manipulation. I wish I could tell you that day would
be next week, or month.

The scintillating news:

From the disinformation specialists:

"London-based Gold Fields Minerals Services (GFMS)
predicted in a report on Wednesday that the price of
gold is likely to hover between $250 and $300 for the
rest of the year.

"For the time being, the price elasticity of supply and
demand indicates that spikes above $300 are probably
just as unsustainable as slumps to $250 dollars," the
commodities research company said in its annual survey
of the world gold market.

"GFMS' report said: 'The absence of any 'genuine'
investor demand for gold (as opposed to short covering)
on these rallies is ... identified by GFMS as the most
important reason why gold prices above $300 an ounce
proved to be unsustainable.'

"Referring to the relative reluctance of investors to
seek out gold as a safe haven during the stock market
volatility of recent weeks, GFMS added: "The lack of
investor interest was manifest again recently when gold
barely reacted to record declines in equity prices.

"The research body forecast that 'continued East Asian
recovery (and stable local exchange rates), a
turnaround in the Middle East (encouraged by higher oil
prices), and forecast world GDP growth of 4.2 percent
in 2000 should encourage robust physical demand this
year at prices below 300 dollars.'

"But it said that the ability of gold to appreciate
would be limited, particularly if inflation remains
relatively low and if there is no major decline in the
value of the U.S. dollar."

Poppycock again. The Black Knights stop the price of
gold from rising above $290 and induce the black box
crowd to sell as technical systems all go negative. All
rallies are sold into as they have been for years now
by those financial institutions that want to protect
their gold loans -- all written right below $290. Most
producer hedges have been structured in this area too
(plus the contango, plus the very dangerous exotic
derivatives, which allow them to crow of higher

By keeping the gold price down, they are ENCOURAGING
gold investment demand in the form of jewelry, bars,
etc. in the gold-consuming part of the world. The World
Gold Council reports gold demand up 7 percent and in
record territory.The East buys gold price weakness and
always has.

The West is a different story. The press is replete
with stories of how gold is no longer an investment,
does not offer a safe haven anymore, etc. That kind of
propaganda works because the West tends to buy price
strength. Just recently I wrote about how price action
makes press commentary. The barrage of negative
commentary does affect Western gold investment demand.
If gold were $350, gold would fly off the bullion and
coin dealers' shelves.

Much is made about the weakness in bullion coin sales.
That is a small percentage of overall gold consumption
and it is natural that that demand would be soft the
first few months this year. For much buying was done
over Y2K fears. That that Y2k has proved to be a non-
event and gold has been a dud caused some buyers to
dump. Also, much of the public that wanted to buy gold
as some sort of financial insurance policy or
investment, bought prior to year end. It is only
natural that there is a lull. That should not last too
much longer.

Leave it to Goldman Sachs to lead the bearish

From the April 27 edition of the Globe & Mail in

"'In the last two weeks there have been reports of a
larger than expected number of investors selling back
into the market,' said Daniel McConvey, a senior
analyst at Goldman Sachs & Co. in New York. The U.S.
Mint did not sell any gold coins in February and only
3,500 ounces of them in March, about 1 percent of sales
a year earlier, according to Mint figures. 'Obviously
if the U.S. Mint isn't selling any coins, demand is
weak,' Mr. McConvey said."

Mr. McConvey: GATA has exposed to the gold world the
incredible increase of derivatives on the books of the
commercial banks. How much did they go up on your books
the past six months? Perhaps that has a great deal more
to do with the poor performance of gold than this
Mickey Mouse stuff the press is more than willing to
report from your firm.

The good news is that it won't be long before you are
exposed too. This from a member of

"In accordance with FAS 133, all publicly owned
companies must not only report their derivative
positions, but most importantly, these positions must
be marked to market and resulting gains or losses must
be included in P&L on a quarterly basis starting
January 1, 2001, or earlier if possible.

"As a CPA in the consulting arena, I am attempting to
compile all this information for one of the largest
utilities in the country; it is a nightmare! All data
from 1998 forward must be disclosed (three years' worth
of data for the annual Form 10-K).

"I would buy 1 share of GS stock (and/or J.P. Morgan
and applicable others) and ask for their 10-K when
available next March or April. If they are a fiscal
year reporting company (other than 12/31/00), the
information may be available sooner or later in time.

"In either case, the information should all be there.
Then review and give them hell!"

Speaking of Goldman Sachs, it was venting time for Cafe
member Mifty, who might best express the way many of us

"My great-great grandfather was imprisoned at
Andersonville in Georgia during the Civil War. His
brother died there at the age of 17. He wrote of his
experiences and of the cruel Captain Wirtz, the
overseer of that compound, where 30,000 boys and men
died. Here is one passage, and you can substitute
'them' for 'him' and drink a toast to Goldman Sachs:

"'I loathe his name, and if I should ever be permitted
to drink a toast to him, I would say, 'May he be set
afloat in an open boat without compass or rudder, may
that boat be swallowed by a shark and the shark by a
whale and the whale in the devil's belly and the devil
in hell, and further may he be chained in the southeast
corner with the wind in the northwest blowing ashes in
his eyes until all eternity damn him.'"

The Trilateral Commission met in Tokyo April 8-10.
David Rockefeller, founder of the Trilaterals, was
among many familiar faces in attendance. Others
included Paul Volcker, former Fed chairman; Allen
Andreas, head of Archer Daniels Midland; Michael
Armacost, head of the Brookings Institution and former
ambassador to Japan; Gerald Corrigan of Goldman Sachs;
and Winston Lord, former assistant secretary of state.

Knowledgeable Swiss sources tell me that Volker was the
instigator for the Swiss selling gold. Corrigan is an
former New York Fed man.

Former Goldman Sachs Chairman Jon Corzine was the 47th
largest soft money donor to the Democratic Party with
donations of $320,000.

I debated with myself about presenting the following,
but it is weekend time and maybe good for a bit of
comic relief. This from the Goldman Sachs Yahoo board,
followed by a rebuttal from someone who knows the

* * *

My Investigation Into Gold Conspiracy. by:
Madonnas_Housekeeper 4/25/00 5:47 pm Msg: 2582 of 2627

I have hit the most interesting speedbump here on the
Yahoo Boards: Maniacal Gold Conspiracy Theorists. I had
no idea such theories existed, or that people would
believe them so passionately.

Love it!

I discovered an organization today on the Net called
GATA, run by two men called Mike Murphy and Chris
Powell. The cause of this organization is to "prove"
that the US Treasury, US Friendly Central Bankers, and
"Bullion Banks," such as Goldman Sachs and JPM (which
serve Big Gold Producers as clients) have conspired to
rig the price of Gold.

How I love to discover such a Moron Heaven!

The sad, low-IQ ideas of these people would just make
you weep.

What's frightening, though, is that they want blood-
revenge. A particular poster, known as
carry_trade_avenger, who also posts as goldmoonrising
and bullion_bank_basher, mixes his verbatim recitation
of the GATA theorist's essays with the only ideas he
himself can muster: The call for violence against
bullion bankers.

I look forward to speaking to any conspiracy theorist
who does not in addition want some sort of twisted,
blood-revenge. As a journalist, I intend to get the go-
ahead from my Editor to write up this story.

This is better than Area 51!


New Era Scam Story vs. Gold Conspiracy by:
bullion_bank_basher (50/M/Princeton, NJ) 4/25/00 6:46
pm Msg: 2584 of 2627

Hey, I wonder who is telling the truth and who is not.
Heaven forbid that gold investors might have discerned
some kind of collusion and market rigging taking place
in the "free" financial markets of America.

Good luck writing up the story, Madonna.

Not a mainstream newspaper in America will touch it, is
it any surprise? Maybe you can get one of the little
rags who employ you to put in paragraph somewhere.

Your buddies at GS have a lot of power, or didn't you

So yes, go write it up little girl even though it is
inconceivable you could ever write a neutral analysis
of the matter given your severe hatred of gold and gold
investors. With your junior college education, you are
a near illiterate joke and it is laughable to hear you
denounce anybody else for lacking IQ.

Sure is nice to know from such an authority as you that
financial conspiracies do NOT exist. Is that why Japan
just threw Goldman out of its financial circle? Gee, I
wonder why Japan believed Goldman was rigging markets?

Hey maybe for a change you might read the information
posted at GATA instead of reverting to your indelible
beliefs that gold investors are idiots and gold is a
piece of trash. Oh I forgot you cannot read
polysyllabic words.

Yeah that would be tough for a (snort) intellectual
like you who holds no beliefs (except the belief that
gold should be consigned to the trash bin of history
and bubble stock markets are wonderful).

* * *

Bad news, good news: from Cafe member Andy Brown in

"A couple of days ago I sent you that heart-rending
message from the Zimbabwe farmers. The latest news
today is that it is probably worse, with one of the
largest tobacco farms in the world being occupied by
the so-called war veterans. Major annual tobacco crop
auctions are about to take place, but who will be
there? Farmers now must now plant wheat to feed the
population and for export. Mugabe is preventing that
from happening. Who is going to pay and feed the
starving masses when there are no crops to harvest?
World leaders should declare him a potential mass
murderer and Public Enemy No. 1 unless he redresses his

"However, amongst this doom and gloom, next door
neighbor Botswana is booming. For 10 years it has had
the highest growth rate in the world. We have low
crime, the largest diamond mines, true organic beef,
friendly people with work ethic, the highest education
standards, strong disciplined police and army, stable
democracy, beautiful climate, best wildlife,
magnificent Okavango Delta, press freedom, no foreign
exchange controls, two years foreign currency reserves
cover on imports, 15 percent company tax for
manufacturing, a 25 percent tax ceiling, and the best
race relations in the world. Don't believe me, Bill?
Come and visit and I will light the barbecue. Call it
the diamond standard."

Back to the hardcore, fundamental news:

South African President Thabo Mbaki and his Chinese
counterpart Jiang Zenin are signing a bilateral trade
accord that could boost South African gold sales to
Beijing. China has been getting its gold mostly from
Switzerland. Could the Chinese be concerned about
future supply? It is also noteworthy that China's
unwrought gold imports the first quarter were up 257.4
percent over last year.

Sons of Gwalia announced that it beat the bullion
market due to its hedging for the first quarter. They
received an average of A$650 per ounce while bullion
only sold for $A459 per ounce during that period.

April platinum soared to $800 the other day and is
surely a sign of things to come in the gold market. On
Friday July platinum closed at $500 up $37.90 while
June palladium finished at $620 up $29.80. Word to us
is that the Russian mafia has control over supply and
they are going into squeeze mode. The platinum April
contract squeeze and delivery price surge may not have
been a fluke.

The base metals continue to move up as the price of
nickel exploded one day this week, climbing 5.1
percent. Much of the recent price weakness had nothing
to do with economic weakness. It was hedge fund
weakness as the likes of Tiger sold out their long

The U.S. Labor Department released the Employment Cost
Index, which exceeded analysts forecast of a 0.9
percent rise in the first quarter ECI, rose by 1.4% for
the quarter. Gold responded by dropping sharply in
price for the week. That only makes sense when one
understands what is going behind the scenes regarding
gold. Then it makes perfect sense.

The least reported comment of the week and a real
surprise, from Bridge News on April 25:

"Former Secretary Robert Rubin said on Tuesday that the
stock market, by all conventional measures, is 'very
high' and because of the current economic prosperity
there is a lack of discipline among investors in their
decision making that 'threatens our financial well-

No wonder gold is being pounded! If we are right, Rubin
was the architect of the manipulation of the gold
price. He KNOWS what he helped to create and has
learned by now that he miscalculated how difficult it
would be to keep the gold price from exploding. Why do
you think the gold derivatives went up from $18 billion
to $38 billion in the last half of last year on the
books of the Fed's pet bank, Morgan Guaranty, alone?
That is why the gold price is not going up. It has
little to do with this silly gobblygook coming out of
GFMS and Dan McConvey of Goldman Sachs.

How about them Swiss trying to outdo the Abbot and
Costello British when it comes to selling official
sector gold!

Rueters reported from Berne, Switzerland, on Friday
that the Swiss National Bank plans to start selling its
gold in May even though it has no idea of what to do
with the proceeds.

"As soon as possible, effectively next week, we will
start with the sale of part of our gold reserves that
can be used in the future for other public means," SNB
Chairman Hans Meyer told the bank's annual general

There is clearly an agenda here other than trying to
get the highest price for the Swiss people. All
Chairman Meyer had to say is that the Swiss will sell
gold (they are limited under the Washington Agreement
to the amount) only when the price is right. That would
have sent the price of gold up sharply. But no, he does
a Bank of England-type of announcement and the gold
price tanks going into his May selling.

The Swiss are noted for their acumen. Can their central
bank chairman be the most naive trader in history even
after having just watched over the British debacle? I
don't think so. There is something else going on here
and it has far-reaching ramifications. Either that or
the British and Swiss are doing another great rendition
of Abbott and Costello's "Who's on First?"