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The Year of the Golden Dragon
11p EST Friday, February 4, 2000
Dear Friend of GATA and Gold:
There's a great compliment for GATA Chairman Bill
quot;Midasquot; Murphy in the commentary of Rick Ackerman,
who writes the quot;Market Directionsquot; column in the Sunday
San Francisco Examiner and runs his own web site of
financial commentary, www.blackboxforecasts.com.
What follows below is an excerpt from Ackerman's
commentary for this coming Monday.
Forgive the commercial for both -- it's been a great
day for gold!
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
By Rick Ackerman
Commentary for Monday, February 7, 2000
There is an old saying that if you can keep a cool head
while those around you are losing theirs, perhaps you
don't understand the situation.
As much could be said of the investors and pundits who
have contrived recently to remain blithely bullish
amidst perilous turmoil in the financial and commodity
There is first of all the matter of the 30-year bond.
Just as Fed Chairman Alan Greenspan and his cronies at
the Fed are tightening short-term rates, Treasury
announces that it's going to drastically curtail the
supply of long-term bonds. This immediately drives up
their price and pushes down yields at the long end,
which in turn sends some big hedgers into a panic.
It's not rocket science to figure out why. Our biggest
banks are mostly in the business of borrowing short and
lending long. This works fine as long as short-term
rates stay below long-term rates. But when they become
quot;inverted,quot; especially as precipitously as they did
last week, it plays havoc with interest-rate hedges,
not to mention with the portfolios of some of the
biggest players in global finance.
There is also the matter of Fed strategy, which lately
has looked less like a game plan than spin control run
amok. How else to justify a tightening of short-term
rates to quot;coolquot; the economy while plummeting long-term
rates promise to flood the mortgage market with fresh
Gold went nuts Friday, and even though we held a very
small position against the trend, I found myself
rooting for it to go higher. For the rally was most
clearly meant to punish the greedy and perhaps even
criminal excesses of some of the sleaziest players on
Goldman Sachs is one of them, and whether you believe
in conspiracies or not, the evidence is overwhelming
that the firm has conspired with friends in high places
to profit by suppressing the market for bullion.
Supposedly they got caught with their pants around
their ankles on Friday and had to cover huge short
positions just above $300 an ounce. Somebody surely had
And if that isn't enough to rattle the markets, there
is crude oil, which looks to be staging a run at $30 a
barrel. The Wall Street Journal may think that the
broad growth of our quot;service economyquot; has reduced
America's exposure to rising energy prices, but my
feeling is that, at the margin, rising crude prices are
about to zap the airlines, the truckers, and just about
everything else in this world that either moves in the
air or on wheels, or that makes heat.
I could rant for a bit longer but will instead refer
you to a more knowledgeable source, Bill Murphy's Le
Metropole Cafe -- www.LeMetropoleCafe.com. The site's
heavyweight commentators are so very far ahead of
whatever you might find in The Wall Street Journal, The
New York Times, Business Week, or all the rest that it
should be considered a must-read for anyone interested
in the markets.