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A Home Run for Bill in Radio Interview

Section: Daily Dispatches

Hello GATA Members,

Here are extracts from the last few days' postings at Le Metropole
Cafe (

GATA Chairman Bill Murphy wrote (as Midas) on Friday, April 9:

"The most bullish set up in the history of the gold market! The CFTC
Commitment of Traders Report was released after the close today and
it was a whopper and even more bullish than we told you it would be
yesterday. . . there never has been a set up for a big move like we
have now. That does not mean we WILL GET that move, but what a set

(big slice related to Technicals, to support the last and following

"The total (anticipated) buying ( 2560 tonnes ) is one year's mine
supply. That kind of buying, and set up that we have now, should
drive the price of gold up $50 to $70. That is what has happened over
and over again in the past and should happen again. . .

"One thing for sure. If we go up and the price of gold does not fly,
it will be the surest sign of manipulation that anyone could ever
see. This ying yang activity can only occur if the big buys are
concertedly manipulating the market for the reasons we have laid out
to you in previous commentaries.

"We will monitor the market activity very closely. Even if the
colluders intend to squash a rally between $288 and $296, they still
could lose control of the situation. The Chinese cannot be too happy
that they have been prevented from joining The World Trade
Organization. Yeltsin and the Rooskies are making noises about a
World War. The oil price came right back in the bears face and is
gunning for $17+ per barrel again. Aluminum and nickel prices have
firmed and the CRB made a dramatic u turn to the upside today closing
above 190 again."


"There is a scheduled Tuesday meeting for a congressional sub-
committee about Africa. We were informed today that two of the
world's leading gold producers were quite concerned about this
meeting and assumed the IMF gold sale subject would come up. So, I
decided to do some checking into the matter.

"My congressional sources tell me the subcommittee is headed up by Ed
Rolfe, an ultra conservative Republican who disdains the IMF. My
source used to work for him, so he knows. If anything, my guy said,
he will trash the IMF on that subject, if it is brought up. I have
passed my info on to the producers. My source also told me that Dick
Armey, Majority Leader of the Senate, recently asked Jim Saxton, the
Chairman of the Joint Economic Committee, to get him up to speed up
on the IMF gold sale issue. That is subtle big news. The IMF gold
sale issue has taken on greater political overtones.

"On that same subject. GATA is making real headway. As I have told
you in the past, a meeting with Jim Saxton is being arranged. They
are looking forward to hearing our views as to the real reasons why
IMF gold sales are being promoted. It gets better. They have put me
in touch with a House Banking Sub Committee staff member. This
Committee would be the one to look into GATA's allegations that one
of the bigger scandals in American history is taking place right now
in the gold market ( that is exactly how I phrased it to him ). The
staff member was very impressed when he heard GATA was going to
retain Berger & Montague on that issue. He suggested I send an
official letter so that they could review our contentions. We
discussed the strong possibility of me also seeing this committee
when I made my trip to Washington.

"Here is GATA's plan. Congress wants to know more about the IMF gold
sale issue. We intend to let them know what the real issue is all
about ( and it is not the poor people ). We will tell the banking
committee that something is "rotten in the State of Denmark ( and the
State of the Bullion Banks ) and we think the gold loans ( to
speculators ) have risen to such high dangerous levels that a sharp
move up in the gold price could now create "systemic problems".

"We will suggest that the "BANKING COMMITTEE" contact certain bullion
banks and investment banking houses that we have identified as some
of the biggest culprits and just ask them to disclose what their gold
book looks like. Just for precautionary purposes. No fanfare. No
hype. Just write about 20 letters and see what responses come back
about the size of their gold loans."


One of the brightest minds I know that is associated with the gold
industry ( in this case, not my former colleague, Frank Veneroso )
told me this morning that his numbers show that there are 10,000
tonnes of shorts out there right now when you add up the totals from
the producer forward sales, OTC participant short sellers, trend
following Comex shorts, gold borrowing shorts and writers of gold

10,000 tonnes of gold is almost 4 times that of the 1998 mine supply
and is about 1/3 of all the gold reserves in the central banks. My
former associate, Frank Veneroso, who wrote the 1998 Gold Book Annual
came up with an 8,000 tonne number about two years ago. As Frank
thinks there is a larger natural supply/demand deficit than almost
anyone else, it is most likely that he also thinks a 10,000 tonne
number is reasonable right now.

A set up like this would normally be explosive; especially with a
market that is so demoralized like the gold one is today; and with a
market that is so complacent about the price of gold not going up to
any great degree. The spring CMRE dinner was held in New York last
night and Le Metropolecafe's Charles Peabody was one of the speakers.
He told me that he was surprised that this very, pro gold crew was so
negative about the future price prospects for gold. I expressed my
opinion that this is a result of the very effective bear propaganda
machine. Even a very pro gold crowd has been demoralized by the very
poor price action, declining gold share prices and the unending talk
about diminishing importance of gold as a monetary entity

But if the shorts are so exposed and could not possibly cover
thousands of tonnes of gold on a swift price rise without driving the
price of gold up to $500 or so, why does the situation continue to go
on? We have gone over the myriad of reasons in the past, but the
bottom line is that the manipulators of the gold market are making a
fortune with the proceeds of 1% gold loans and investing them in
every investment scheme known to man that has returns greater than

It is our opinion that this very dangerous, but very profitable
situation for the gold price manipulators, is the reason that we have
collusion occurring. If the price of gold were to rise unexpectedly,
these price riggers could have big, big problems. Instead, they have
transferred these big, big problems to the gold miners, gold stock
shareholders and gold producers ( most gold producers ) - to people
like you and me. But what do they care? The gold industry is of
little relevance to this ilk."

For example: Harold Kamins, Managing Director of the Morgan Stanley
Commodity Department is on record as saying: "EVEN IF THE ENTIRE GOLD

Bill's comment: "This is another example of the haughtiness of the
top honchos at these bullion banks and of their total disregard for
an entire industry, just because it suits their momentary, greedy
needs. "

- - - - -

David Tice of the Prudent Bear Fund posted two MIND-WRENCHING essays,
on Wednesday the 7th and Friday the 9th. On Wednesday David wrote
about how the Commerce Department had just reported that 4th quarter
profits were down 17% for US manufacturing corporations, compared to
the fourth quarter of 1997. "This sharp decline in profits was posted
with revenues largely unchanged. After-tax profits at manufacturers
averaged 5.1 cents per dollar of sales compared to 6.2 cents during
the third quarter and 6.0 cents during 1997s 4th quarter."


"Recently, the Federal Deposit Insurance Corporation (FDIC) released
fourth quarter earnings results for the US banking industry.
Unimpressively, earnings for the 4th quarter declined 1% from the 3rd
quarter, the second consecutive decline. In fact, earnings for the
quarter were below $15 billion for the first time in five quarters,
and were actually 2.5% lower than 1997s 4th quarter. . . And,
importantly, this earnings decline came despite aggressive lending
and a booming economy. "


"Virtual chaos has come to fully dominate the marketplace, as wild
and unpredictable moves are now commonplace for individual stocks,
groups and the stock market generally. Certainly, it is anything but
the type of trading action one would expect from a healthy market.
Instead, the stock market is now almost completely dislocated, with
speculation, short covering and both hedge fund and derivative
trading having overwhelmed traditional prudent investing. Quite
simply, the market has regressed to the point of running completely
out of control and, undoubtedly, heading for quite an accident. "


"It was quite an euphoric week for the bulls . . . the Dow gained 340
points, or more than 3%, and the S&P 500 rose 4%. The transports
gained 2%, the Morgan Stanley Cyclical index 3% and the Morgan
Stanley Consumer index 2%. Even the small caps came to life at weeks-
end, rising 2% for the week, while the Utilities continue to
struggle, closing unchanged. . . (slice)

"Financial bubbles are just so seductive. They create an environment
where the economy grows rapidly, financial markets boom and the
populace enjoys the feeling rapidly expanding wealth and prosperity.
Incomes rise, asset prices rise, and the perception is that money and
wealth are in great abundance. And bull markets, almost by
definition, give the perception of endless liquidity. . . And it is
certainly human nature to extrapolate prosperity for years into the


". . . the household sector at the end of 1998 had total assets of a
staggering $43 trillion, of which 70% or, $30 trillion, were
financial assets - stocks, fund holdings and credit market
instruments. Since the beginning of 1995, household tangible assets
increased $2.6 trillion to $12.9 trillion. Financial assets, on the
other hand, grew a staggering $11 trillion, or 57%."


". . . Over time too many financial claims are created that can not
be supported by the real economy; too much perceived wealth is
created in inflated asset prices that are not supported by the cash
flow of the underlying businesses; and too much damage and distortion
is done to the real economy as the major focus of major portions
within an economy shifts away from saving and investing to create
real economic wealth to simply working to profit from and consuming
the rewards of the expanding bubble."
. . .
"Indeed, the degree to which financial services has come to dominate
our stock market and economy is truly astonishing. The New York Stock
Exchange Financials index of 968 companies now has a market value of
$2.15 trillion. Looking closer at industry groups, the AMEX
Securities Broker/Dealer index of 12 companies now has a market value
of $755 billion. The Standard & Poor's Bank index of 32 major banks
has a market value of $770 billion. The Standard & Poor's Insurance
Composite of 20 companies has a market capitalization of $340
billion. Fannie Mae and Freddie Mac combine for a market value of
$110 billion. And with NASDAQ, the 100 largest financial companies
have a market value of $201 billion.

"But it is not just so-called "finance" companies that are working
diligently to profit from the financial bubble. Just look at General
Electric, with the largest revenues of any company in America. With a
market value of almost $370 billion, it has become a top Wall Street
favorite for its ability to consistently grow revenues over many
years. GE is also widely viewed as a patent example of America's
industrial renaissance and global dominance. Well, at the end of
1998, GE had total assets of $356 billion, of which about 10% were
"Property, plant and equipment". GE's aggressive move into financial
services is most notable, as GE Capital Services now has total assets
of $303 billion, or 85% of total GE assets. In 1998 alone, GE Capital
increased assets by $48 billion, or more than 90% of total asset
growth for consolidated GE. And looking at recently released first
quarter results, GE's reliance on finance only grows more extreme.
With year-over-year revenues actually declining for 3 of 8 business
segments, it was only aggressive growth in financial services that
allowed total revenues to grow 8%, the weakest revenue growth in
years. In fact, with revenues growing 11%, GE Capital was responsible
for 80% of total GE revenue growth. "

"Clearly, GE is finding it much easier to create profits by providing
financial services than it is in building products. And in this
regard, GE much exemplifies the entire US economy. As massive global
overcapacity for producing most goods works to crush profits for
manufacturer and, at the same time, is a major factor behind the
Fed's monetary accommodation, more and more companies are choose the
financial sphere to satisfy Wall Street. And as GE and other
industrial companies aggressively grow their financial arms, this
only adds additional aggressive players to an already overcompetitive
and extended US financial system.

"In this way, ironically, the global financial crisis and
deflationary forces have thus far greatly fueled the US bubble. And
as companies and investors alike shift away from production based
businesses to companies profiting from the financial bubble,
investors, speculators and US corporate management are rewarded for
such activities as aggressive lending, investment banking, stock
trading and the like. . ."

- - - - -
Murphy and Tice and the other contributors at Le Metropole Cafe are
like watchdogs of values, barking out hard facts. HOWEVER, so busy
are the Clintonesque Yuppies making happy, sex and war, they hear
nothing for the most part, and when they do hear, they couldn't care

What shall we tell our children and grandchildren when they ask, "And
what were you doing in 1999?"

Will it mean something to say, "I was going for GATA, to bring the
goons, the stupids of Wall Street to justice I was protecting
Gold"?? Yes, that will mean something I am sure.

GO GATA, Go Gold

Boudewijn Wegerif (Bodwin)
Moderator GATA E-mail Group.