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Financial Post on Bank of England

Section: Daily Dispatches

The English Poodle and TheStreet

Friday, May 7, 1999

By Bill Murphy

Last night, in the Midas du Metropole commentary at the
James Joyce Table (as many of you know), I went over
the supply/demand situation of the gold market, as I
saw it.

If you recall, it was clear from the commentary that
the bears were running out of ways to talk down the
market and the price of gold had risen to a point that
the gold leasers ( with their 3,000 tonnes of borrowed
gold ) were in danger of seeing these leases begin to
"go under water" (from a principal payback standpoint),
if the price of gold were to get much above $290.

We told you that Goldman Sachs, Chase Bank and Deutsche
Bank ( among other bullion dealers ) were heavy sellers
yesterday, and that Deutsche Bank has been an
especially big seller the past 3 days. Deutsche Bank
was also out telling its clients yesterday that the
price of gold WOULD NOT GO ABOVE $290. Now how would
they know that?

The XAU was soaring. Bond yields were rising sharply
and broke an 18 year down trend line. The Australian
Gold Index had its biggest move up in 6 years on
Friday. Alan Greenspan also spoke publicly of potential
U. S. inflation pressure.

We suggested it looked to us that new spec longs had
entered the gold arena to take on the gold leasing
crowd. We insinuated that the bullion banks had created
a big problem for the central banks by encouraging too
much gold borrowing at virtually interest free interest
rates (1%) to invest in the markets. "The savants were
making a fortune at the expense of the gold miners,
gold producers, gold shareholders and those that
believe in free markets."

Central bankers, like Alan Greenspan, use the gold
price and the gold market's behavior as a report card
of sorts on how they are doing. A sharply rising gold
price might suggest that that their central banking
policies are not "sound."

The bond market vigilantes will not let anyone mess
around with what is the real story and the bond market
(5.81 long bond yields) tells us inflation is right
around the corner. A rising gold price right now would
be the "clincher" that the central banks might have a
"tiger by the tail", and that their policies might not
be as "Godlike" as they are perceived today.

So what to do? The big bullion banks (who would be in
serious trouble if the price of gold were to move up )
and Alan Greenspan, with his "don't prick the stock
market bubble," attitude, send out a distress call to
"THE ENGLISH POODLE", The Bank of England and the
British Treasury. Today, they announced that they plan
to sell 415 tonnes of their gold reserves. I will
discuss this in greater detail in the next Midas du
Metropole in a piece called "Scandale Gold 3".

To no one's surprise, the gold market was blasted today
and the XAU, which was roaring, was hit very hard. And
of course, Chase, Goldman Sachs were the big buyers
around the lows today. The colluders cleaned up again.
They took more of the futures crowd's money, your money
if you are a gold shareholder, the gold producer's
revenue,etc. And, of course, they further demoralized a
demoralized industry.

Yesterday, we also suggested someone was messing with
silver in the OTC market because they wanted to make a
precious metals market look sloppy. Today, that same
crowd covered after many other spec longs panicked some
18 cents lower at one point. Silver clawed its way back
today and eventually closed 5 cents HIGHER. No need to
hold silver down with the price of gold headed towards

Yes, of course, we are mad as hell and are not going to
take it anymore. Enough is enough.

The good news is: The bears are in deep doo-doo. They
are so desparate they had to ask the UK citizens to
dump gold at ludicruosly low prices to bail out the
bullion dealers ( P.S. Hail Brittania-"good people of
England-you will be hearing from us soon via the

GATA is ready to move into high gear. Today, the
Financial Times of London called, the Canadian
Broadcasting Company called, the Mining Journal called
and 3 wire services called.

And, Aaron Task of did a story
about GATA which was posted this afternoon. We thank
him for taking the time to look into what we have to
say. If you are interested in the gold market, or are a
GATA supporter, I think you will like this read.

I will have much more to say in the next Midas at, but if you are a
newcomer, you might want to get some background of what
GATA is up to by reading about my trip to see 3
Congressional committees. It is served at the Matisse

GATA needs your support. We intend to expose to
Congress what these manipulators are doing and to
continue to alert them to the financial "systemic risk"
danger that they are creating. Your contribution, if
you care to make one, can be confidential. If you
cannot support us financially, send this around the
internet so that the word will be spread all over about
what is really going on in the gold market. If you
already are a supporter, we thank you very much. Your
contribution may be one that someday could be
considered historic.

Every major gold producer has been sent 5 letters by
GATA. We are going to call everyone of them next week
to ask them to support their own interests by
supporting us. Three of the biggest gold producers in
the world just commissioned a consultant ( with a fat
fee ) to do a study on the spec derivative market. We
are not doing a study- we are confronting the enemy and
going to the Congress of the United States of America
and alerting them to the potential danger that is now
lurking out there. This is real life, no study, and the
3 Congressional committees that we met with want to
hear all we have to say. We are going to ask every
major producer to consider what we are trying to do for
them and will ask them for substantial support.

As far as the junior gold mining companies are
concerned, it is our hope that every one of them will
buy (or have a shareholder buy) one of the limited
edition GATA prints by Absolut Vodka artist Alain
Despert. They are only $500 plus shipping. For your
information, the prestigios Fairmont Hotel in Dallas,
Texas is setting up a gallery to exhibit Alain
Despert's art.

What a day! Discouraging, but encouraging. We received
word from all over the world today that the mining
industry is getting ready to support our efforts
because it is now clear to so many of them that "in so
many respects" GATA's assesment of "what is what" is
right on the money.

All the best,

Bill Murphy
Le Patron