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From the Cafe this Week
Hello Friends of GATA and Gold,
I have something important to share with you in my opening letter.
Following on that you will find five VIEWPOINTS and E-MAIL CAMPAIGN
1. The FED Responds to GATA Member Richard Harmon's Letter
2. Ken Reser Appeals to Members to Activate Canada's Politicos
3. Responses to Bill Murphy's Vancouver Radio Interview
4. THC tells GATA to join E-gold
5. Josh Wright is doing well with his Gold links site
I hope that you get encouragement from this for further action.
As regards the personal sharing: Sadly, I have to advise you that
this is the last posting I am sending out as moderator of the GATA E-
mail Group. I have decided that it is not possible for me, from this
distance, in Sweden, to properly exercise what I regard as the
responsibilities that go with being on the Committee of GATA
Committee in the U.S. and executively engaged (albeit voluntarily)
for the Committee. There is also the fact that I have important other
work to do for the Monetary Studies Programme that I lead.
I have very much enjoyed and learnt a lot from the connection with
you and with Bill Murphy, Chris Powell and John Meyer, the other GATA
Committee members. I am sure that the right people will come forward
to assist GATA in the months ahead people closer to base, which is
what is needed. The Internet is amazing, incredible, stupendous, and
all the rest of it, but when push comes to shove, it cannot replace
the eyeball to eyeball contact necessary for executive teamwork.
I want to thank GATA members Ken Reser, Jim Bruce, Richard Harmon and
Don Bogle in particular, for their very friendly co-operation. And I
wish GATA success. I am certain that there is an anti-trust case to
answer by Goldman Sachs, JP Morgan and the other Investment Banks,
which have come together into the Counterparty Risk Management Group.
Before retiring off the scene, I would like to be more specific about
the anti-trust case.
On January 20, Bill Murphy wrote the Scandale Gold essay (James Joyce
Table, Le Metropole Cafe), which got Chris Powell pounding out the
famous Invitation to a Lawsuit, which got GATA launched, thanks to so
many of you responding immediately and strongly.
In Scandale Gold, Bill wrote (as Midas): "Whether planned or not, 12
major banks chaired by Goldman Sachs and JP Morgan in early January
formed a 'Counterparty Risk Management Group' 'with the intent of
enhancing best practices in credit and market risk management. The
policy group will develop standards for strengthened risk management
practices'. We realize this group was not just formed because of the
gold issue, but why the need for it to be formed now? Is this not a
'cabal planner' of sorts. Looks like a duck to me." And to me, and
most of you, and to the lawfirm, I am sure, otherwise we would not be
for GATA and the lawfirm would not be interested in handling the case.
In the excitement of taking action at last to right a wrong in the
gold market, there has been a lot of discussion about the different
ways in which dealers, bankers and politicos appear to be colluding,
and a good deal of misintepretation of GATA's bottom line position on
For example: In the four-in-one posting of Miners Viewpoints and
Queries towards the end of March, I relayed a letter I had received
from Jeffrey Christian, CEO of CPM Group, which advertisers itself as
"the world's premier precious metals and commodities research and
consulting company" and "independent of all mining companies,
fabricators, bullion banks, and other companies that have commercial
positions in the commodities markets."
In his letter, Jeff Christian, drew attention to the CPM Group's
Gold Survey of 1998, in which there is a discussion of "collusion
versus a meeting of minds". Mr Christian took pains to stress
"traders, almost universally, are technically based, and use the same
computer systems and charts. There is no need to conspire, since they
all use the same technical buy and sell points." However, he agreed
that "there is a problem, not only with gold but with all financial
markets, in that the proprietary traders and banks and brokers exert
undue and inappropriate behavior through their activities. He then,
significantly to my way of thinking, side-stepped the issue and
wrote, "As advisors to many monetary authorities, we can assure you
that you are completely misplaced in your views regarding central
bank and treasury attitudes and activities regarding gold."
Well, we have never specifically based the GATA case on the gold-
depressing comments from politicos and central bank governors. We are
not entirely without nonce. There is what I call "wink and nod
collusion" and there is "hard evidence collusion", and Bill and Chris
and John are equally well aware of the difference.
Again, for example, let me tell you how in further correspondence
with Don Bogle last week, Jeff Christian went on to show how very
easy it is to blow holes in the peripheral "coincidences" (his term)
of politicos and CB governors proposing IMF and more CB sales. And I
was impressed with Mr Christian's information and grateful. It will
be very difficult to find hard evidence in this area. Not that hard
evidence isn't worth looking for in this area, but it is not worth
GATA basing its whole campaign on it.
HOWEVER, go back to what Mr Christian agrees is a problem, relate
that to the formation of the Counterparty Risk Management Group, and
you have the take off point for the gold anti-trust action, I believe.
One has to ask oneself whether anti-trust laws are broken when just
ten investment banks have 77 percent of the $4 billion a year "fee-
based and advisory business" financial services market, and 20 banks
97 percent, from 80 percent in 1990? (Stern Business School in New
York, reported in Financial Times, March 1). And one has to concede,
against the background of other cartels, like De Beers re diamonds
and OPEC re oil, that this fact in itself is probably not sufficient
for an anti-trust action. However, if one goes on to ask oneself
whether anti-trust laws are being broken through the concentration,
and manner of concentration, of more and more "advisory" financial
services into fewer firms, joined together in a Counterparty Risk
Management Group, I think one has grounds for an anti-trust
investigation that could lead to a successful lawsuit.
In fact, I read Jeff Christian as half-advising GATA to focus on the
"undue pressure and inappropriate behavior" of bullion dealers. And
let me go on to state quite clearly here that there is no argument
whatever between myself and the rest of the GATA Committee about this
being a main line of enquiry that the lawfirm, Berger and Montague,
will probably pursue when it is retained.
Good; I am glad to have shared that with you. It makes me feel that I
am making my farewell a fare well indeed.
GO GATA, GO GOLD fairly and well.
Boudewijn Wegerif (Bodwin)
Moderator this one last time, GATA E-mail Group
- - - - -
THE FED RESPONDS TO A GATA MEMBER'S LETTER
When Richard Harmon wrote to Senator Allard regarding gold, the good
Senator forwarded the letter to the Federal Reserve, and surprise,
surprise, several weeks later this reply " a little something from
'the Gods of the Universe'," write Richard:
From the Board of Governors of the Federal Reserve System
March 29. 1999
Dear Mr. Harmon:
Senator Allard has forwarded you concerns regarding the gold market
to the Federal Reserve for our response.
Your communication quotes Chairman Greenspan's July 24,1998,
testimony before the House Banking Committee in which Chairman
Greenspan stated that "...central banks stand ready to lease gold in
increasing should the price rise." This statement was made in the
context of demonstrating the unlikelihood that private market
participants could restrict supplies of commodities traded in over-
the-corner (sic: yes, that is the way it appears in the letter
"over-the-corner"!) derivative markets, thereby distorting settlement
You draw the conclusion from chairman Greenspan's remark that the
Federal Reserve, together with other central banks, has manipulated
the gold market by leasing quantities to prevent the price rising.
However, the Federal Reserve is prohibited by law form buying,
selling, or owning gold. The U.S. gold stock is owned by the U.S.
Treasury. Accordingly, the Federal Reserve cannot take and has not
taken any action in the gold market to manipulate the price of gold.
More broadly, the Treasury has taken no action to manipulate the
price of gold.
As for the actions of other central banks, it has been widely
reported that an increasing number of them are participating in the
gold-lease market to earn a small return on their holdings. When the
price of gold rises, it can become more attractive for gold producers
to hedge by selling gold forward, an activity that depends on the
availability of leased gold form official holdings.
Market forces are unleashed that induce improved incentives to lease.
("And this statement makes me know we have them," comments Richard.)
Central banks stand ready to respond to such incentives and have
often, but not always, done so. The Federal Reserve has played no
role, and intends to play no role, in the decisions of other central
I hope this information is helpful.
Donald J. Winn
Assistant to the Board
cc: Senator Allard
Richard harmon's GO GATA COMMENT: "If it is not manipulated, how does
he know 'Central banks stand ready to respond to such incentives'? We
know this is a lie, because the Federal Reserve agrees with the IMF
statement which prevents members from the use a gold standard! Of the
derivatives that the Government writes, how much is gold related? And
which department writes them? Is it not manipulation if the Federal
Reserve allows brokerage houses and banks to borrow from the discount
window to pay for the bail-out of the short gold position of LTCM in
I know we are on the right track now, it took me less time to get an
answer than it has a member of Congress."
- - - - -
KEN RESER APPEALS TO MEMBERS TO SEE TO IT THAT CANADIAN GOLD ISSUE IS
RAISED IN PARLIAMENT:
Please E-Mail your views and concerns regarding GATA, Canadian Gold
sales by the Mulroney Government and proposed IMF Gold sales to the
Reform Party of Canada. Mark the e-mails: attention of "Monte
Solberg". He is the Finance Critic for Official Opposition Party.*
It would not hurt to send your viewpoints also to "Peston Manning" as
well!* Lets turn up the Heat in Parliament and get some answers once
and for all.
SOME BACKGROUND INFORMATION FOR YOUR E-MAILS
From 1990 to March 1999 Canada sold down it's Gold Reserves from
14.8 million ounces to 2.3 million ounces. The money received from
these sales has been used to invest in U.S. Government Debt
instruments. The major part of these Gold sales took place during the
Mulroney Conservative years. Now, ironically, Brian Mulroney is a
Director of Barrick Gold!
To further understand the relationship between Gold Sales and
Canada's $0.66/Dollar one should read these two enlightening reports
from the "Gold-Eagle" editorials and analysis sections.** Imagine
what would happen to the Canadian Dollar if the US ecomomy or Wall
St. fell drastically.
The Canadian Government has pegged our Currency reserves or Backing,
if you will, to the Americans' known' 5.6 Trillion Dollar Federal
Debt. So now we have NO Gold reserves (which are debt free) and we
have compounded the worthlessness of our own Dollar!
This food for thought is not taken in by most Canadians and that is a
shame. Where is Government accountability? Why does Switzerland need
a country-wide referendum to sell off Gold reserves and we let ours
go out the window with no press or fanfare what so ever, much less
the consent of Canadian Voters? Speak out to Monte Solberg and the
Reform Party through your E-Mails and lets get this discussed in the
House of Commons, once and for all!!
*For e-mail addresses see: http://www.reform.ca/forms/feedback.html
** For relevant Gold-eagle editorials see
Central Banks Sell Gold, Their Currencies Devalue (Vronsky) and--
http://www.gold-eagle.com/editorials_98/arnold052798.html --What If
Canada Bought Back It's Gold? (Ken Arnold)
PS: Here's the latest Canadian Mining Newsletter "Bulletin Board"
And I have just mailed GATA info and web sites to "Canada StockWatch"
---Read by every Broker in Canada!!!! If these editors bite, we'll
really get Press in the right places!! Ken.
- - - - -
RESPONSES TO BILL MURPHY RADIO INTERVIEW
There have been a few responses following on GATA chairman Bill
Murphy's half-hour radio interview with Rafe Mair on Vancouver Radio
98 last Thusrday morning:
Don Bogle, who set the ball in motion for the show by e-mailing
Vancouver Radio about GATA, wrote:
I think Bill came across very well in the interview today,
particularly as you pointed out, in the third session. I plan to
forward to Rafe Mair any future information (newpaper, magazine
articles, etc.) that would tend to support our contention of
collusion/manipulation. In other words I hope to keep Rafe informed
until such time as he either tells me to "**** ***" or invites Bill
back -- the latter I hope.
GO GATA, GO GOLD
- - - - -
Mifty Honda wrote direct to Bill: "I heard your broadcast today, you
sounded very good and powerful, it just came off so well, and I feel
there will be positive results."
- - - - -
Norm Wilkinson wrote:
As I live of B.C.'s west coast I heard the broadcast live and it
was great to hear Bill tell the story. My only constructive crit.
would be for us to be able to tell the story in very (very) simple
terms that ordinary people can understand. Try to tell it without the
use of financial jargon. Raif Maier did an excellent job in putting
questions that had Bill answer in simple terms.
It's a tough job to tell it in simple language and I admire and
compliment Bill for doing an excellent job. One important point that
got across was the destructive effect that the gold price is having
on mining and miners worldwide.
Check-out www.quicken.ca for a commentary on gold that came via the
Toronto Star newspaper. I posted a response directing them to check-
out the GATA website. I hope it helps.
I responded: Thanks for the feedback, Norm. I took a quick look at
www.quicken.ca and am glad you posted your "to get another
perspective" message. I hope whoever wrote the downer on gold gets
- - - - -
And there was this e-mail from Joe Martin, showing how one things
leads to another:
I just listened to Bill Murphy interviewed by Rage Mair on Vancouver,
BC radio 980 at 10:30 a.m, PST, Thursday, April 8. I believe this is
the same Bill that attended our Montreal 98 Investment Conference
with Frank Veneroso. Bill's Email address is not working - indicates
no server. If I have the right Bill, could you have him contact me.
We produce Canada's investment conferences. Our big focus has been
gold as our income is from exhibiting juniors, which in Vancouver
means gold - Doug Casey, Bob Bishop, Frank Veneroso, Jim Dines, Ian
McAvity, John Kaiser, the Coffin brothers, etc., are all regular
speakers. Our website is www.cambridgeconferences.com
- - - - -
THC WRITES TO TELL GATA TO JOIN E-GOLD
I applaud your efforts and hope that you will continue. However,
please look at the following statement:"encourage GATA members to
beat debt with gold as money." Now think to yourself, 'Does GATA use
gold, silver or Pt as money?'
I and others like myself would like to donate precious metals, not
fiat money. Please sign up for e-gold, and let everyone know that
GATA is ready to make and receive payments directly in metal, not
GO GATA COMMENT: Indeed, yes, THC. I have had a look at the e-gold
website, www.e-gold.com, and agree, GATA should be signed up there.
This is a GATA Committee matter, and I have forwarded your e-mail to
GATA secretary Chris Powell. Thanks for the push.
- - - - -
JOSH WRIGHT IS DOING WELL WITH HIS GOLD LINKS SITE
Wished to Thank You for your acknowledgement of De Goldmine Links
World in your GATA newsletter.
You are aware of some of my multi-lingual goalsfor my sight. This
morning when I was logging into Hotmail I was pleasantly surprised to
find that French, German, and either Japanese or Chinese not sure
which, has been added to the English option. Although I am sure I had
nothing to do with MSN's new features, it is still gratifying to be
on the forefront of this new technology. After I have developed my
foreign sites it is my goal to translate the best foreign Gold sites
into English with the hope of gaining a more global perspective.Best
Regards and Thank you Again,
GO GATA Go Gold
De Goldmine Links World -- http://angelfire.com/de/goldmine