Midas commentary for May 4, 2000


3:40p EDT Thursday, May 4, 2000

Dear Friend of GATA and Gold:

A few minutes ago the XAU was up 4.6 percent and
Barrick Gold, ABX, the hedge fund that masquerades
as a gold miner, was running from even to DOWN a
third of a percent. Some would call this irrational, but
not us at GATA. And if the markets are going to be
irrational, they might as well be irrational on our side
once in a while. In any case gold is getting attention

You may enjoy the following column posted today at

Please post this as seems useful.

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

* * *

Revenge of the Gold Bugs

By Dan Colarusso
Associate Editor

12:54p EDT Thursday, May 4, 2000

With a 50 basis-point interest rate hike likely in
the offing and concern about inflation lingering,
the gold bugs and their single-digit stock prices
may no longer be the market's most trod-upon sector.

Action in the options market today may be pointing
toward some spark of interest in gold as an asset,
with unusually heavy volume cropping up in the
Philadelphia Stock Exchange Gold/Silver index
contract -- known as the XAU -- this morning.

"Gold has gone from being a mandatory 10% of an
investor's portfolio to being like it doesn't
exist," says Jay Shartsis, the senior options
strategist at R.F. Lafferty in New York. "But the
market cap of the sector has gotten so low that any
shift back can bring an explosion."

The XAU was up almost 4 percent from the get-go this
morning, as traders bid up key components such as
Newmont Mining, Homestake Mining, and Placer Dome.

The spurt was somewhat unexpected, especially in the
wake of a report yesterday from Lehman Brothers
analyst Peter Ward, downgrading four major gold

Options action came early and often on the XAU.
Before 11 a.m. EDT, more than 3,000 of the in-the-
money June 50 calls and 1,000 May 55 calls had
traded. It appeared to be action inspired by buyers
and while the price of the June 50 calls rose only
3/4 ($75) to 12 3/4 ($1,275), the market for the
contract had risen 13 1/2 to 13 5/8.

By midday, the XAU was up 2.32 to 62.12.

Open interest on both call options was slight and
was far outstripped by today's action. If the volume
seen today was indeed initiated by buyers, it would
indicate some significant interest in a bullish play
on gold. If the call action came from sellers, those
players would essentially be speculating on a weak
finish to the month for contract.

Newmont calls were also busy. With the stock up
15/16 to 27 3/16 before midday, the June 27 1/2
calls traded more than 500 contracts and spiked 1/4
($25) to 2 1/2 ($250).

Shartsis says the rebound in Newmont has been
impressive. After being battered for the better part
of the past year, Newmont is up more than 20% since
March 2.

"There's no real news propelling it either, and
that's impressive," he says. "It's been a long night
for gold stocks. Gold is the antithesis of the paper
money explosion ... but has the world changed so
much that gold isn't considered money anymore?"

Calls were also busier than normal in Homestake,
which was up 5/16 to 6 7/8, and Placer Dome, up 1/4
to 9 3/8.