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Au Capital report suggests Morgan Chase gets brazen and desperate to stop gold

Section: Daily Dispatches

Why gold is under pressure

By James Sinclair and Harry Schultz
Courtesy of
Friday, July 26, 2002

There is no question in our mind that the extreme
selling in gold by Chase/Morgan/Goldman, which
occurred for the third time at $322 and continues
today at $305 from the same source, has the
distinct purpose of making sure that the enormous
derivative on Morgan's books (as reported to the
U.S. Office of the Comptroller of the Currency)
does not show the loss that, we believe, would
have existed at $322, as Morgan's credit standing
is certain to be re-evaluated.

With the recent negative publicity concerning
derivative transactions at Morgan with Enron, it is
reasonable to assume that debt-rating services will
examine Morgan's status. That has become normal
procedure in such situations.

Clearly this has created an uncomfortable position
for the gold bulls who are themselves not yet fully
convinced of the integrity of the gold bull market.
We can tell you only that we believe in that

The forces at hand that are motivating the gold market
lower, which is the derivative situation, are just
what will contribute to the final higher prices.

We have told you that this is a battle of titans, and
the public so far has very little interest in the recent
building of the price of gold. This drama is very far
from over. It's barely into Stage 2.


James Sinclair is chairman of Tan Range Exploration
and a gold analyst with expertise in gold derivatives,
gold hedges, gold trading, and gold futures. Harry
Schultz is editor of the International Harry Schultz