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Gold bugs'' dream is Barrick''s nightmare

Section: Daily Dispatches

11:25p EST Thursday, December 16, 1999

Dear Friend of GATA and Gold:

Looks like the gold issue can't be suppressed in
London, thanks, today, to Anthony Hilton and the
Evening Standard.

Gold Anti-Trust Action Committee Inc.

* * *


By Anthony Hilton
City Editor
London Evening Standard
December 16, 1999

Treasury Minister Melanie Johnson must be wondering why
she entered politics. As well as being charged with the
management of the Financial Services and Market Bill,
which I predict will come to be seen as one of the most
repressive and pernicious pieces of legislation ever
passed by a non-right-wing government, she is also
under siege from those who believe the government is
trying to conceal an almighty scandal in the gold

The gold bugs' basic thesis is as follows:

Central banks, including the Bank of England, are
supposed to look after national gold reserves but for
the past decade they have tried to make a turn by
lending the gold to other people who use it for
speculation. Most of these people have sold short in
the bullion market, with the result that the price has
fallen steadily, despite the fact that demand for the
metal for jewellery and industrial uses exceeds newly-
mined supply -- a shortfall that ought to mean prices
edge upwards.

Recently, however, the price has fluctuated wildly.
This has caught out some participants and brought into
semi-public view the extent of the speculation and deep
involvement of certain financial houses.

Clearly, some huge losses have been made and if the
gold price were to rise it is possible they would become
unbearable. This has also raised the question in some
people's minds of whether all the gold has been lent
will ever be returned.

It is not a frivolous question. Ten years ago Portugal
lost almost all its gold, having lent it to the New
York broker, Drexel, which went bust.

Gold bugs have asked Johnson for a straight answer to a
straight question: Is she sure the Bank of England will
get our gold back? Unfortunately and unnervingly she
has so far failed to give a straight answer.