Ferdi Lips warned about gold market's 100-1 leverage nine years ago


9:30p ET Sunday, July 18, 2010

Dear Friend of GATA and Gold:

Our friend Ben Davies, CEO of Hinde Capital in London, among the few gold advocates lately given time on CNBC, points out that the late, great Swiss gold banker Ferdinand Lips made in his 2001 study "Gold Wars" the same observation made at the March 25 hearing of the U.S. Commodity Futures Trading Commission by CPM Group executive Jeffrey M. Christian -- that the leverage in the gold market is around 100 to 1, that each ounce of gold is supporting as much as 100 ounces of gold trading.

Lips, whose work is preserved by the Lips Institute (http://lips-institute.ch/) and whose books are available at a page at the institute's Internet site (http://lips-institute.ch/en/books/), wrote in the book's "Part IV: Gold Rush and the Gold War":

"It is estimated that the 'paper gold' market in 1999 is many times larger than the actual physical market. Estimates range from a minimum of 90 to an excess of 100 paper-ounce contracts being written for every ounce of physical gold that changes hands. This is not only mind-boggling, or a Frankenstein monster, as James Dines calls it, but a king-size horror trip."

Last week Davies gave MiningMaven.com an interview about the gold and silver markets whose first part is 17 minutes long and mentions GATA's work. You can listen to it here:


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


Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property

On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.

Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."

For complete information on Sona Resources Corp. please visit: www.SonaResources.com

A Canadian gold opportunity ready for growth

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Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.

For Prophecy's complete press release about its production plans, please visit: