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Veneroso report documents large official seller
1:50p Sunday, March 19, 2000
Dear Friend of GATA and Gold:
Here's GATA Chairman Bill Murphy's gold market
commentary for March 17 at www.LeMetropleCafe.com.
It's now copyrighted and distributed to you by GATA with
the author's permission, but please don't distribute it further
without such permission.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
quot;MIDASquot; COMMENTARY FOR MARCH 17, 2000
By Bill Murphy
March 17, 2000
Spot Gold $283.95 down $1.80
Spot Silver $5.10 up 1/2 cent
Does anybody know what time it is? It does not matter
what bullish market factors surface outside the gold
world, the gold price is not allowed to rise; so the
technical, black box crowd is forced to exit the scene
with losses and usually goes short before the ensuing
rally. We have seen the same for years now as the specs
are dumping once again.
The technicals are truly meaningless in the gold
market. They look terrible at the moment and that is
why gold will probably turn back up soon.
Silver is a different case at this point in time. It
has a very bullish smell to it. The spreads between the
contract months are very narrow, indicating stronger
physical demand relative to the weaker price action. In
addition, the right kind of buyers of silver have
appeared on Comex as indicated in the last Midas.
They also have surfaced in the silver share market.
This from a Cafe member:
quot;An Apex Silver director on Feb. 4 sold 666,210 shares
at $10, leaving him with 590,554 shares. That would
normally sound bad except that the other side of the
trade was taken by couple of guys you've probably never
heard of before: 100,000 were bought by Paul Soros and
the other 566,210 by George Soros.
quot;I think you're correct that a silver moonshot is
around the corner. Especially with the likes of Soros
and Gates taking huge positions in the silver stocks
and presumably the Oracle of Omaha still on board with
the physical, one has to conclude these guys know
something. Time will tell.
quot;Stay after 'em. Signed, Jim.quot;
First oil rocketed and soybeans are now on the move.
How far behind can silver be? If silver is ready to
move much higher, it usually does so when least
expected and moves up with greater speed than most all
market participants are prepared for.
Why is the gold market so weak in the face of such
Gold demand is very firm, so where is the supply coming
One of the most visible quot;Hannibal Cannibalquot; bullion
dealers tells a Cafe source that there is a big mystery
seller out there.
Hmmmm! Three guesses who is behind the mystery seller!
Press reports hit the tape on Thursday about the
Central Bank of Brazil selling gold as they
acknowledged a 1.16 million ounce drop in their
available reserves between November and December.
quot;The Brazilian central bank denied that it had sold a
parcel of gold in December but did not comment on
whether possible future sales expiring in December
accounted for the drop,quot; a GNI Research report said.
Childish drivel about whether they sold gold or not.
Why not just say what you are doing instead of this
nonsense? Brazil has only 3.17 million ounces of gold
reserves left. Let them sell it all down in the hole
down here. They will be buying it back at $600 someday.
That is the way of the central banker.
Even if Brazil sold into last fall' rally, that is
Oddball sales such as these are more than compensated
by the producers delivering into their forward sales
rather than rolling over positions. Take this Anglogold
quot;AngloGold continues to wind down hedging.quot;
quot;By Belinda Goldsmith. CANBERRA, March 16 (Reuters) --
The world's biggest gold miner, South Africa's
AngloGold Ltd., said on Thursday it would continue to
unravel its gold hedge book in a bid to further
unshackle world bullion prices.
quot;Chief Executive Bobby Godsell said AngloGold had
changed its hedging programme as an instrument of risk
management in mid-1999 on a bet that at $250 an ounce,
gold was oversold and ready to rocket.
quot;Bullion jumped to $340 an ounce last September after
Western European central banks gave assurances they
would limit sales of their gold reserves for at least
five years, but has since retreated to around $290 an
quot;The company plans to further reduce its forward-
selling position on the view that gold still has more
upside, Godsell said.
quot;`I think it is extremely unlikely that you would run a
company of this size without a degree of hedging,'
quot;'What we are thinking at the moment is that our extent
of hedging is likely to decline rather than grow or
stay where it is.
quot;`But we are bullish about the gold price prospects and
if you are bullish you don't want to remove all the
upside of price increases for your shareholders.'
quot;Godsell said AngloGold did its long-term planning on
conservative gold price projections, with modest
adjustments for factors like U.S. inflation, but shied
away from picking a gold price.
quot;When AngloGold announced in February it was cutting
its hedging significantly this year, entering 2000 with
less than 50 percent of its output uncovered, bullion
prices rose $6 an ounce.
quot;AngloGold is not the only big gold digger to do a U-
turn on its forward-selling policy. Canada's Placer
Dome Inc., the world's fifth largest gold miner,
announced it was suspending its hedging programme in
February. This triggered a rise in the spot gold to
quot;Hedging of future gold production is a way of locking
in fixed revenue in anticipation of gold prices going
down but this system is under review after well-
publicized debacles by some miners who actually lost
money when bullion prices soared, if only briefly, last
quot;Australian mining houses are among the most hedged,
with some 1,500 tonnes of gold still in the ground --
about five year's total production -- sold forward at
fixed prices. AngloGold expects to mine 7.6 million
ounces in 2000, up from 6.92 million ounces in 1999,
thanks in part to the acquisition of Acacia Resources
Ltd., a half-million ounce a year Australian miner.
quot;Godsell said Acacia was the first move in a drive to
expand in Australia and in the Asia-Pacific region.
quot;`We have not done any further transactions (in
Australia) although we certainly would hope to,' he
quot;`We are looking at a number of things in Australia. We
also are looking to develop a fully fledged exploration
program which is well-established in Acacia in
Australia but is not well-established in the region
quot;`Our industry is awash with rumors ... but I will not
comment on any rumors,' said Godsell, who refused to be
drawn on possible targets.quot;
As far as the Australian hedgers go, a change could be
in the wind. Frank Veneroso has been invited to speak
at the Australian Gold Conference in Perth in the first
week in April. Some of the most noted Australian
hedgers of gold want to hear what he has to say. Frank
is a great speaker and I believe he understands the
gold market better than any one else.
Frank and I were chatting today about the gold market
and he now believes the move up in the gold market will
be much greater than he ever dreamed of. He thinks this
way because of the extent of the manipulation of the
gold market. Too much gold has been devoured at too
cheap a price. He now believes that the gold loans
could be as high as 13,000 to 14,000 tonnes. They just
cannot be paid back.
Frank also believes that the eventual stock market
collapse will be so overwhelming and confidence in the
stock market so shattered that gold will become the quot;go
toquot; investment vehicle. That is why has come to feel
that the gold price will rise to heights that,
heretofore, he could not even imagine -- like $2,000
per ounce or higher.
I do not know what kind of speech he will deliver to
the Aussies, but I cannot imagine a good number of them
not rethinking their hedging strategies by the time the
conference is over. Maybe the Barrick Syndrome will
take over down under. Even though the gold price has
been heading straight south lately, the heavily hedged
Barrick Gold continues to lose ground to Newmont
Mining. Newmont closed today at 22 13/16, Barrick at 16
5/16. They traded around parity last summer.
Potpourri and the Gold Shares
The XAU continues to stink up the place and closed
today at 58.20 down 1.65.
While the CRB closed down a tad today, it still
finished the week right below 217 -- a new weekly high
close for the move. Today, May beans were up 12 cents
and finished at $5.37 3/4, May corn was up 5 1/2 cents
and closed at $2.41, while May wheat finished up 6
cents at $2.725 cents per bushel.
Of course there is no inflation, because food and
energy are not important anymore. What a wacky stat
analysis world we have now!
On that note Cafe member Chris Harris sent us this
quot;Back in the 1970s energy price increases caused 80
percent of CPI increases and we had double-digit
interest and inflation rates. Now energy rises
contribute to an annualized 12 1/2 percent PPI increase
but we don't have to worry because we `factor' out
energy to get a core rate. At the same time the
Treasury Department causes a short squeeze in 10-year
notes and 30-year bonds with its debt buy-down, driving
long interest rates down to 6.04 percent, down from
more than 6.8 percent a month or so ago. Also note that
wood pulp prices are up 30 percent in the last year,
and tobacco and cigarette prices (whose 4.7 percent
decrease was credited with keeping PPI and CPI down
last month) were up 5.6 and 6.3 percent respectively.
quot;Remember when you hear tomorrow's nonsensical CPI
numbers that housing prices are up over 10% in the last
year (and roughly 30 percent of Americans move each
year), fuel and diesel oil are up 100 percent, gasoline
is up 60 percent, tobacco is up at an annualized rate
of about 20 percent (including last month's drop),
commodities in general are up roughly 15 percent since
this time last year (check the CRB index), and even
food is now increasing at a 5 percent annual rate
(don't trucks and tractors use fuel? Isn't fertilizer
production oil-intensive? Isn't food trucked to
market?) But don't worry because computer prices are
down 3.3 percent. (Are they really? Is this more
`hedondics'? I think they are actually up significantly
since last November.)
quot;Look for the Clinton administration to pull out all
stops to win in November, from cooking government
statistics to doing everything to drive interest rates
down through the floor. Margin debt has increased from
already record levels by another 50 percent in the last
four months. They have essentially turned Greenspan
into a castrati. Unfortunately, the result of their
efforts to reinflate what is already the largest
financial bubble in history will be all the more
catastrophic. God save us all.quot;
Well said, Chris.
Yes, all is well.
The CPI came out right on schedule today and was higher
than expected, but of course the core was only up .2
percent, so that is what the market focused on.
There is no wage inflation anywhere to be found,
according to the administration economic apologists.
quot;Stock Options Charade: High Cost Gets Buried in the
quot;San Diego -- Qualcomm Inc., whose wireless
communications systems have made it a stock market
darling, earned a record $200.9 million for its fiscal
year ending Sept. 3 -- or at least that's what the
company reported to shareholders and the public.
quot;Qualcomm told a different story on Page 72 of the
annual report it filed with the U.S. Securities and
Exchange Commission almost two months later. In a
footnote, the company said earnings would have been cut
by 26 percent to $149.1 million if it had counted as
compensation expense the cost of stock options paid to
most of its 7,000 employees.
quot;The San Diego-based company isn't the only one that
boosts its profit by refusing to include options as an
expense right along with salaries, office furniture,
and electric bills. All companies among the 10 whose
shares were the best performers in the Standard amp;
Poor's 500 Index last year -- Qualcomm, Nextel
Communications Inc., and LSI Logic Corp. were Nos. 1,
2, and 3 -- excluded the cost of options. If those 10
companies had booked options as an expense, they would
have had their profits reduced -- or losses increased
-- by as much as 139 percent, according to annual
reports they filed with the SEC.quot;
If the new economy is the new thing, why are is the new
quot;stock policy wage compensationquot; not included in
figuring out wage inflation?
Debt is receding in the United States because of a
budget surplus, yes? That is why the Treasury is buying
some of the 30-year bonds back. Then how come this?:
From Bureau of Public Debt
U.S. Public Debt on March 16, 1999: $5,639,342,063,058.30
U.s. Public Debt on March 14, 2000: $5,748,566,517,856.04
The chat room for www.LeMetropoleCafe.com has been
delayed because our new internet server is merging with
another company. But it will be up soon and I hope some
of you will initiate chat rooms for your favorite gold
company or topic.
Good news for GSR
In this crummy gold week I thought I would share some
very good news with you about my favorite gold company:
Golden Star Resources (GSR, 1 7/16 on the Amex). I am
loaded up with GSR shares and buy on every dip I can.
Besides six outstanding properties in the Guyana Shield
that will probably become mines when the gold price
goes up, GSR has a diamond find in French Guyana called
Dachine. Its joint-venture partner is mining giant Rio
Tinto, which is looking for a micro-diamond property to
replace its depleted supply. They have now sampled 400
tonnes of material and results should be in by June or
But today's news was spotted in Australia and came from
GSR's mining partner, Anvil Mining NL. It refers to
GSR's Bogoso property in Ghana, which has thrown off a
cash flow of $500,000 to $700,000 per month for the
past four months. GSR owns 80 percent of the project.
These results are very juicy and add to the homerun
potential of this gold company and made my St.
The price of gold has dropped $35 since the last spike
up, but GSR has gone down only 3/16 on a closing basis
during the gold price drop. Maybe these just-released
results are part of the reason. For those who are
interested, I have included the entire press release at
the end of this column.
My favorite silver stock is ECU Silver, trading on the
Canadian Exchange. I went to Torreon, Mexico, over a
year ago to see their silver mine with some real pros
in the industry. Everyone loved what they saw and I
started to buy it up.
Management dropped the ball and failed to deliver on
all this tremendous promise. New management has taken
over this silver project turnaround and I am keeping my
fingers crossed that it will be a successful one. The
production numbers are starting to roll in. If they can
keep up the progress, this could be my silver winner.
Perhaps the word is getting out, as 300,000 shares
traded today and the stock edged up to 15 cents
Canadian. I will set up a conference room for ECU when
our chat room/bulletin board is ready to go so that you
can follow the company's progress.
Bo Bo Sullivan
Right after I returned from my speaking engagement at
the Alaska Miners Association Convention in Fairbanks,
Alaska, late Sunday night, I received word that my
favorite cousin, Bo Bo Sullivan, had died of a stroke
in New Jersey, so I hopped on a plane Wednesday morning
to attend the funeral.
I am paying tribute to Bo this St. Patrick's Day
because he was instrumental in helping GATA get off the
ground in gaining attention of the U.S. Congress. Bo
set me up in Washington with Rep. James Saxton,
chairman of the Joint Economic Committee.
Bo was quite the character. He was a very successful
New Jersey businessman with his own plant in Dublin,
Ireland, and was very well known in Republican
political circles, as he was chairman of New Jersey's
Republican Party as well as the chairman of President
George Bush's 1988 campaign there. I learned that the
former president was shocked to hear of this death and
was preparing a letter to Bo's wife, Eileen.
Yes, Bo (a Princeton grad with a law degree from Seton
Hall and a Marine) was something else -- a family man
who loved his four sons and who was also the life of
the party. He loved the bells and whistles and he had
them on his way to his final resting place, as the
state police blocked off intersections in five towns on
the way to the cemetery, where he got a Marine salute.
I don't think there was a dry eye in the church when a
bagpiper played the Marine Corps Hymn.
Bo and I had great fun together. I remember when he
came down to see me play against the Miami Dolphins in
the Orange Bowl. The night before the game we went out
to dinner with Bob Scarpitto, punter from Notre Dame;
Art McMahon, defensive back from North Carolina State;
and Jim Nance, Hall of Fame fullback from Syracuse.
Since he was a former footballer himself, we talked
about that for years.
At the reception following the funeral, a good friend
of Rita Jenrette came up to me to say hello. Bo got
such a kick that I hired Rita to work for me in New
York. Ring a bell, old-timers? My baby sister, Kris,
who was a model in New York at the time, introduced me
to Rita at the Marble Collegiate Church in the city.
Marble was Dr. Norman Vincent Peale's Church (Dr. Peale
was the author of quot;The Power of Positive Thinking.quot;)
That is also the same church where Donald Trump met his
second wife, Marla Maples.
Anyway, Rita had been married to U.S. Rep. John
Jenrette, who was involved in the Abscam scandal. Rita,
who was gorgeous, became well-known because she did a
Playboy centerfold in which she revealed that she had
once made love to her husband on the steps of the U.S.
Capitol. It created a furor.
Rita was very bright and terrific at sales. She
introduced me to a billionaire client, Abe Hirschfeld,
who ran for lieutenant governor of New York. That was
something because Abe was the most hated man I have
ever known. His secretary told me how lucky I was that
he had sent in the money to pay for a $250,000 deficit
in his account once. He was in Hong Kong at the time
and she told me years later that I caught him on a good
day. He was renowned for stiffing people.
What goes around comes around. At the funeral I heard
that Abe, still a billionaire, is serving 90 days for
contempt of court. He is in trouble for conspiring to
kill (I guess he graduated to snuffing from stiffing) a
former business partner, but he is jail on contempt of
court charges for paying $2,500 to jurors who
acquitted him in another case. Abe is that crazy man
who wrote out that monster check to Paula Jones.
I told Rita's friend to tell her that I was working on
something that I thought would eventually be much
bigger than Abscam.
I go into this because no man knew how to laugh better
or more than Cousin Bo. He loved stories such as these
and loved to crack jokes about them. I can see that
Irish grin and hear him cracking up about all of this
as I reflect back on our friendship.
It is St. Patrick's Day, Bo. I am finishing this up and
going out to the local pub to find me a Guinness and
salute you for being such a caring, charismatic, and
* * *
17 MARCH 2000
(For Distribution in Australia Only)
DRILLING AT BOGOSO GOLD MINE IN GHANA
ADDS A FURTHER 2 MILLION TONNES OF RESOURCES
Anvil Mining NL is pleased to announce the preliminary
results of the ongoing sulfide drilling program being
carried out at the Bogoso Gold Mine in Ghana. Anvil has
a 20 percent interest in Bogoso Gold Limited, owner and
operator of this mine.
The program to date has provided some excellent
intersections and the preliminary work on updating the
block models for Chujah and Dumasi (but not yet for
Bogoso North) show a likely increase in the resources
contained within existing pit shell designs of
approximately 2 million tonnes. Additional in-fill
drilling is expected to confirm the 2 million tonne
increase, however if further drilling does not
intersect anticipated mineralised widths and grades,
the increase in the resource may not be as substantial.
Drilling at Chujah to test for down dip extensions of
existing ore blocks encountered broad zones of high-
grade mineralisation including:
* 47.80 metres averaging 6.91 g/t Au from 60.40 metres
downhole depth, and
* 54.00 metres averaging 6.72 g/t Au from 87 metres
The sulfide drilling program commenced in December
1999, and has been focused on the Chujah, Dumasi and
Bogoso North areas. The program was designed to (a)
test for lateral and depth extensions of the sulfide
resource, (b) validate the results of the previous
drilling, and (c) increase the proportion of Measured
Resources. This program is part of the sulfide bankable
feasibility study which is expected to be completed at
the beginning of the December quarter of 2000.
Up until the end of February 2000, a total of 94 RC
holes for 9,022 metres of drilling and 49 diamond holes
(with RC pre-collars) for 6,705 metres of drilling had
In the latter part of 1999, as part of a sulfide pre-
feasibility study, Anvil's joint venture partner at
Bogoso, Golden Star Resources Ltd (GSR), in conjunction
with Bogoso Gold Ltd (BGL), carried out a total review
of the sulfide deposit, developed new ore body and
block models, and derived a series of optimised pit
shells for varying gold prices. At a US$325 gold price,
GSR and BGL estimated the sulfide deposits to have an
Indicated Resource (according to the JORC Code) of 7.1
million tonnes at an average grade of 3.36 g/t gold.
The maximum vertical depth being considered at this
stage for future open pitting operations is
approximately 150 metres. Significant potential exists
for deeper drilling to extend the mineralisation to
Particularly encouraging intersections coming from each
of the three locations drilled include:
* CHU-DD005 intersected 18.8 metres at 7.25 g/t Au.
* CHU-DD007 intersected 47.80 metres at 6.91 g/t Au.
* CHU-DD009 intersected 54.00 metres at 6.72 g/t Au.
* CHU-DD017 intersected 11.00 metres at 4.09 g/t
* DUM-DD006 intersected 57.33 metres at 3.24 g/t Au.
* DUM-DD012 intersected 27.00 metres at 3.39 g/t Au.M.
* BGN-DD002 intersected 47.00 metres at 5.08 g/t Au,
including 16.50 metres at 7.40 g/t Au.
* BGN-DD003 intersected 9.20 metres at 5.59 g/t Au,
* BGN-DD006 intersected 11.16 metres at 3.29 g/t Au.
A full listing of the more significant intersections
from Chujah, Dumasi and Bogoso North can be found in
the attached two-page table.
The drilling program reported on here and the sulfide
bankable feasibility study, together budgeted at a
total of US$2.4 million, are being funded entirely from
project cash flows. In addition, BGL made capital
repayments totaling US$3.2 million during January and
February 2000 to be offset against the up-front cash
component of the acquisition cost, which was financed
entirely by GSR on a non-recourse basis to Anvil Mining
Anvil Mining NL
Telephone: (61-8) 9384 4545