Michael Kosares'' commentary at USAGold

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COPYRIGHT 2000 / www.LeMetropoleCafe.com
NOT TO BE DISTRIBUTED WITHOUT PERMISSION
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By Bill Murphy
www.LeMetropoleCafe.com
Tuesday, September 19, 2000

The API Oil data figures were released at 5 p.m. EDT
and were constructive for the price of oil -- again.

Indications prior to the report were that:

* Crude oil stocks would be up .8 to 1.2 million
barrels.

* Heating oil stocks would up 1.4 to 1.7 million
barrels.

* Gasoline stocks would be up .3 to .6 million barrels.

In fact, the figures came out this way:

* Crude, down a surprising 2.035 million barrels.

* Heating oil, up only 1.251 million barrels.

* Gasoline up only 21,000 barrels.

Crude oil rose after these numbers were issued.

It would appear that some sort of energy crisis will be
upon us by late fall/early winter and there will most
likely be a mini-heating oil panic when the first
really cold weather shows up.

There are calls for increased OPEC production. What no
one is talking about is that non-OPEC production is
decreasing. Next year the oil scarcity problem is
supposed to be alleviated. Few are noting that oil
demand is expected to go up by 1 million barrels to 1.5
million barrels a day in 2001.

This has to extremely bullish for the price of gold.

As a long-time trader and market observer, I can feel
the tension in the financial markets. Many are at
extremes. Certainly that is the case for the dollar
(high), gold (low), and oil (high). In addition, many
feel that the U.S. stock market is extremely overvalued.

Some sort of market chaos is right around the corner.
Certainly there is realization in the financial world
that the U.S. Bureau of Labor Statistics inflation
numbers make little sense and that something is very
amiss with the gold market. GATA is being heard on that
one.

Fasten seat belt time could be upon us soon.

Tomorrow the U.S. trade deficit numbers will be
announced. Nobody has paid any attention to our
astronomical trade deficit in so long that it is hard
to get up for it any more. Maybe this time will be
different. Recently the euro and pound have been
trashed, but the Swiss franc is noticeably diverging
from the euro, while the yen has been very steady.

The XAU, Homestake, and Barrick Gold made 52-week lows
today. All are sad cases. The XAU is now partly a copper
index, but don't blame the copper price, which is very
strong, so how bad is the gold part of it?

Homestake does not hedge, but despite being presented
with enormous evidence of what is really going on the
in gold market, the company's management appears to be
clueless.

One has to wonder about Barrick and its great hedging
prowess and program. If all is so wonderful, as Barrick
management says, why the 52-week low?

My take on part of the problem: If Homestake (and
others) do not get their act together, they will be
liable to negligence lawsuits by ex-shareholders who
pitched Homestake stock at the share price bottom.
Lawyers will have a field day because they will know
that senior management has been made aware of what is
really going on, and if management does not explain it
to shareholders, it might be construed as negligence.
If Homestake shareholders were to be fully informed of
what is being seriously discussed about what is really
suppressing the gold price, many of those shareholders
might choose to hold on for the inevitable gold share
bonanza that is coming.

Barrick may have a much bigger problem. One is that it
may be overly hedged and too exposed to the coming gold
price explosion and two, it may be proven that the
company has been complicit with the gold cabal in
holding down the price of gold. J.P. Morgan, a gold
cabal member, is one of Barrick's main bullion bankers,
and Morgan has an office in Toronto on the floor
directly below that of Barrick.

Barrick stock could be poison. Certainly there will be
subpoenas about its hedging activities after the price
of gold explodes and few can explain why it occurred.

Finanzwoche, one of the leading German financial
newsletters, did a little story on GATA last week. Here
is an English translation, courtesy of
www.LeMetropoleCafe.com member Reinhard Deutsch:

* * *

FINANZWOCHE
Kapitalbrief fur Anleger in Deutschland und der Schweiz

The American Gold Anti-Trust Action Committee warns
that by covering the big gold sales in the amount of at
least four and maybe six times annual production, the
gold price advance may trigger a banking crisis.

Similar to the many other imbalances in the world
economic system (zero savings in America, extreme
consumer indebtedness, an external debt of the United
States of about $2,000 billion, which, as a percentage
of social product, is more than most less developed
countries owe, and a shaky relation between dollar,
euro and yen), the evidently gigantic manipulation of
the gold price must not have an impact at the world
financial system or at the stock market in the near
future. However, here we have another extreme
imbalance, which might lead to big problems in the
worst case, without any possibility of timing it in
advance.

* * *

Reg Howe said the following in his latest marvelous
essay:

"If the Frankfurter Allgemeine does not publish GATA's
response to the slurs contained in the Sept. 7 article
by its London correspondent, based on sources at Gold
Fields Mineral Service, the World Gold Council, and the
bullion banks, it will definitely give the appearance
that the Bundesbank used the FAZ to send a message and
then, having achieved its purpose, directed the FAZ to
close down the story with as little damage to Deutsche
Bank as possible."

Reg has been nailing things left and right lately.
Seems he has done it again. I received the following
from Germany today:

"Mr. Siegel edits a newsletter for speculative
investors in the gold market. It is called GOLDMARKT.
The GOLDMARKT has favorably reported about GATA. Mr.
Siegel wants to phone the FAZ freelancer, Arnd
Hildebrand, to get some information from him. He asked
the editorial staff of the FAZ for his address, but
they refused to give it to him. Do you have another
source of information? Could you get his address or
telephone number?

"We contacted a German judge on the German press law.
It seems to be very difficult to demand a counter-
representation from the FAZ. This is possible only if
you are personally offended or insulted.

"Thanks.

"Klaus."

If anyone can assist Klaus, he can be contacted at:
Klaus.Ellerbusch@t-online.de.

It does not look like GATA's careful response to the
World Gold Council, Jessica Cross, and Gold Fields
Mineral Services will be read much in Germany soon.

How ironic, for since that slur in Frankfurter
Allgemeine, Reg Howe and GATA have been proven right
about the data of the Bank for International
Settlements, and the WGC, GFMS, and Cross have been
proven wrong. But that old saying, "truth, justice, and
the American way," is catching on in Germany.