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8:30p EST Saturday, January 29, 2000
Dear Friend of GATA and Gold:
GATA Chairman Bill quot;Midasquot; Murphy sent this commentary
Friday night to his subscribers at www.LeMetropoleCafe.com.
Please post it as seems useful.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
WHAT HAPPENED WITH GOLD ON FRIDAY
By Bill quot;Midasquot; Murphy
Friday, January 28, 2000
The U.S. economic numbers continue to strengthen while
the inflation outlook becomes more worrisome. The Gross
Domestic Product for the United States was close to 6
percent for the fourth quarter while the Employment
Cost Index was 1.1 percent. Both numbers were higher
In the meantime, U.S bonds continue to rally because of
reduced available supply as the government buys some
30-year bonds back. Because of the inflation numbers,
the yield curve is becoming more and more inverted;
that is, the two-, five-, and 10-year notes all have
higher yields than the 30-year bond.
This is causing market players who are quot;longquot; short-
term credit instruments and quot;shortquot; the Treasuries to
be squeezed. Rumors are rampant of financial
institutions suffering massive losses.
I received a call that the mortgage desks of two big
banks are in trouble. Deutsche Bank and Mellon Bank
were in the rumor mill as two likely candidates. In
addition, there may be many smaller problems out there
for financial institutions that are also quot;longquot; short-
term money and quot;shortquot; long-term money. Market
participants who have hedged commitments by shorting
Treasuries are really being squeezed. That includes
many types of players.
The irony is that the U.S. buying of bonds -- which
normally would be VERY supportive for the stock market
as long-term yields come down -- is causing financial
distress for many financial institutions caught in the
That is why stock market rallies failed all day today
and the Dow closed down nearly 300 points.
The economic news was bullish for gold. Gold fluttered
either side of unchanged for a while, but as soon as
the rumors started to fly and the stock market swooned,
Deutsche Bank and Chase Bank came in and bombed gold
and the price collapsed, ending the day $4.50 lower.
The good news is that the modus operundi of the
Hannibal Cannibals is so blatant that cries of
manipulation are being heard by more and more of the
mainstream gold market participants.
Over and over, it is Deutsche Bank, Chase, and Goldman
Sachs doing the selling at strategic moments. Why
today? Because with banking rumors flying and the stock
market in a big dive, the bullion banks could not
afford a rising gold market after the latest news of
The banks have to deal with yield curve problems now.
They do not want gold rising above the critical gold
loan area of $290, when they would have to deal with
their gold loans going under water too. SO THEY GET
TOGETHER and SELL.
They also fear that a rapidly rising gold market would
indicate the financial distress now creeping into the
markets. In other words, as always, hide the truth --
and always at gold's expense.
It is not too hard for them to win the battle in the
short term. There are not too many longs around. The
Comex open interest has dwindled to 139,790 contracts,
the lowest in many years.
Who wants to bet in a casino that practically announces
that the game is rigged against you? Would you take
your hard-earned money and sit down to play quot;21quot; in a
casino that had this blazing neon sign out front: quot;All
card games in this casino are rigged. If you start to
win, the dealers have the right to pull cards out of
That is why speculators do not want to play the gold
game anymore. That is why they are selling off the
North American gold shares, and why the XAU, at 59, is
on a slow road to oblivion.
Short-term. That is the bad news.
The good news is that it won't be long now before
either this fraudulent scheme is exposed, as it is
becoming obvious, or another surprise like September's
Washington Agreement will confound the bears again.
In either case, the price explosion in gold is likely
to be dramatic and sustaining this time. Holders of
bullion and gold shares will clean up.
This is NOT a day to be disheartened. Daylight is not
that far off and the events in the market today set the
stage for gold market fireworks in the not-too-distant
Lost in the fray today was that platinum closed very
near $500 while palladium continues its own relentless
One final note. I had some email chat with Reginald
Howe this afternoon. Part of his email included the
quot;I watched the Greenspan confirmation hearing (yawn).
Senator Bryan, D-Nevada, in his opening statement
mentioned that he had appreciated the chance to meet
beforehand with the Fed chairman to discuss certain
unspecified matters. Since Nevada is the biggest gold
mining state, perhaps gold was one of those matters.
Maybe Senator Bryan's office could be helpful.quot;
I almost fell off my chair as I read that. Two days
before Greenspan's confirmation hearing I had spoken
with two members of Senator Bryan's staff and sent them
a great deal of material about GATA, Senator
Lieberman's questions on our behalf, and Greenspan's
response to Lieberman. I also sent them a proposed
question that Senator Bryan might ask Greenspan. As
Reginald said, Bryan is from a big gold mining state.
The senator's staff members told me that they would
bring the gold matter to his attention.
Did Greenspan squash the gold question from GATA that
Bryan might have asked? I have no way of knowing. But I
will call Senator Bryan's office next week. Friends of
gold in Nevada members might follow up also and try to
see if Senator Bryan would be receptive to meeting with