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Treasury Department starts to answer GATA
9p Sunday, March 26, 2000
Dear Friend of GATA and Gold:
Here's GATA Chairman Bill Murphy's gold market
commentary for March 23 at www.LeMetropleCafe.com.
It's now copyrighted and distributed to you by GATA
with the author's permission. Please don't post it on
the Internet or otherwise publish it without such
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
MIDAS COMMENTARY FOR MARCH 23, 2000
By Bill Murphy
Spot Gold $284.90, down $2.70
Spot Silver $5.08, down 4 cents
The Goldman Sachs gold market. We have experienced yet
another example of how meaningless the technicals are
in the present gold market. The outside day performance
to the upside of Tuesday was classically bullish action
as gold reversed course on supposedly bearish Bank of
England auction news -- to the surprise of many market
All that meant little as Goldman Sachs stopped the gold
price cold basis $290 on that day for the 70,000th
time. It is important to understand that the collusion
crowd acts at quot;the margin.quot; They are not always the
sellers. They just stop the market cold at key
technical points or strategic times. Other market
participants see this, so they start selling too,
knowing that the market cannot advance due to the
activities of these rogues. Simply put, Goldman Sachs
is the conductor of this conspiring orchestra that
knows how to play the same tune over and over and over.
Legendary fund trader John Henry of Boca Raton, Fla.,
saw exactly what was happening as gold failed to take
out $290 yesterday. Today he bombed the market early in
the European session, causing a $2 drop on the New York
open. Other funds joined in the selling as the morning
went on. Goldman Sachs urged the early selling on but
So now the technicals look crummy again. Maybe that
means we have a rally coming.
Highly regarded Cafe sources tell me Dubai sources tell
them that gold demand out of India surges on the dips,
especially below $285. It is significant that this
continued strong physical demand surfaces to support
the gold price on any meaningful setbacks. That is why
follow-throughs on the downside do not last long.
Silver continues to bide time but finds big-league
support on all dips below $5.08.
The gold industry is a bit weird. Potential gold buyers
and gold share investors around the world are backing
off from gold investments because they have come to
understand that the gold market is rigged and will not
be allowed to rise at this point. Gold is becoming the
We all know there has been an orchestrated effort to
keep the gold price down. There have been some surprise
developments that have created enough buying power to
take out the collusion crowd in the short term. But
these spikes are always very short-lived once the
conspiracy crew regroups and mobilizes supply.
It is my theory that $290 (or right below) is where
many of the gold loans are being rolled over and have
been for more than 20 months now. If the gold price
were to advance way above $290, these gold loans would
go under water and become very expensive to hold. That
is why the Hannibal Cannibals (certain bullion banks),
led by quot;Hannibal Lecter,quot; Goldman Sachs, keep the gold
price from advancing.
The U.S. Treasury Department adds fuel to the bear camp
fire by using gold derivatives to add gold supply to
the market at strategic times to foster the notion that
gold is dead. As we have said many times, they think
gold is a barometer of how well the Federal Reserve and
the Treasury are guiding the U.S. economy. They fear
that a rising gold price would signal inflationary
dangers and threaten King Dollar as the only reserve
for foreign countries.
One has only to turn on television and listen to CNBC
chief economist Lawrence Kudlow, who constantly points
to the low gold price as how all is well, to understand
how important the manipulation and suppression of the
gold price has become to the U.S. administration in
Before Robert Rubin left his CEO position at Goldman
Sachs to become Treasury secretary, Goldman Sachs was
not a prime-time bullion dealer. It is now estimated by
two Cafe sources who know the dealer market well that
Goldman Sachs is 30-40 percent of the New York market.
They have become very large players and very arrogant
It is GATA's opinion that the manipulation of the gold
market may have been hatched when Secretary Rubin took
over. If we are correct in that assessment, it would
make sense that Goldman Sachs would be the perfect
quot;Hannibal Cannibalquot; to carry out the gold selling
scheme. Only a handful of other most senior bullion
department executives at a few other bullion-dealing
banks would need be recruited to pull this off. I don't
think that most of the traders at the conspiring
bullion dealer banks really knew (or know) what was
happening. The fewer parties privy to such information,
I say that because orders to go to many of these
trading desks as numbered accounts. In many cases the
traders do not know who the seller is. It is just a
guess on their part, which is probably why the press
gets fed such poppycock much of the time.
Because Goldman Sachs has the inside track on all
this, they have emerged as the leader in the gold
market. This is not hard to do when one has the U.S.
Treasury as an ally. The New York Times says Goldman
Sachs reported a surge in earnings as a result of their
trading activities. If I had the Treasury in my back
pocket, I could rack up some great trades myself. I
certainly could have cut out my bummer gold share
investments. If you knew what Goldman Sachs has known
for years, would you have invested in gold futures,
options, bullion, or gold shares? I don't think so.
The Goldman Sachs quarterly profits story as reported
by The New York Times:
quot;Goldman Sachs Group, the big investment bank, reported
on Tuesday that a surge in revenue from trading shares,
bonds, oil, and other commodities pushed its first-
quarter net income to $US887 million ($1.46 billion),
or $US1.76 a diluted share, easily surpassing analysts'
quot;The earnings for the three months to Feb. 25 were 67
percent higher than the $US532 million Goldman reported
for the period of the previous year, when the firm was
still a private partnership.
quot;On average analysts had been expecting Goldman to earn
$US1.48 a share. Investors bid up the firm's shares to
$US118.25, a gain of $US4.8125, in trading on the New
York Stock Exchange.
quot;Last year, when Goldman executives were marketing
shares in the firm to investors, they insisted it would
become less dependent on unpredictable trading revenue.
But Goldman, which went public in May, derived just as
much of its revenue -- about 45 percent -- from trading
and principal investments last quarter as it did a year
Maybe Goldman Sachs knows the Treasury-inspired gold
manipulation game is going to end soon, especially if
the Democrats are voted out in the fall, so they know
they will need another scheme to keep those trading
profits up. Competing honestly like everyone else and
not having an edge is not the Goldman Sach way. After
all, they have made a fortune by rigging the gold
market casino with some help from their friends. That
in mind, why not start their own gold casino?
And that is exactly what it appears they intend to do
along with some other powerhouses in the gold and oil
industry. From The Wall Street Journal, March 21:
quot;Seven Banks, Energy Firms Will Form Online Market
quot;By Peter A. McKay
quot;Staff Reporter of The Wall Street Journal
quot;NEW YORK -- Seven large investment banks and energy
concerns agreed to form their own online metals and
energy market Monday, a potential behemoth in a
commodity industry in which traditional U.S. exchanges
have been slow to embrace electronic trading.
quot;Agreeing to establish the IntercontinentalExchange by
year end were BP Amoco, Deutsche Bank, Goldman Sachs
Group Inc., Morgan Stanley Dean Witter amp; Co., Royal
Dutch/Shell Group, Societe Generale Investment Banking,
and Totalfina Elf Group.
quot;The market will at first offer only precious metals and
energy products -- including gold and crude oil -- to
be traded in cash and private derivatives transactions.
Those commodities already are the world's most actively
traded, accounting for about $1.8 trillion in over-the-
counter deals annually.
quot;'What's attractive to us is the ability to serve
customers online and eventually carry out these trades
on the Internet without a human hand touching them,'
said Neal Shear, head of worldwide commodities trading
at Morgan Stanley.
quot;Other fledgling online energy markets have sprung up in
recent months, such as HoustonStreet.com
(www.HoustonStreet.com), operated by several energy-
marketing and trading firms, and EnronOnline
(www.EnronOnline.com), operated by Enron Corp., the
mammoth Houston-based gas and electricity concern.
quot;But the list of partners in the
IntercontinentalExchange could nevertheless prove
daunting, given the amount of volume they would
automatically bring just by doing their own business on
the new trading platform.
quot;'We were very interested in assembling the liquidity
with the other top players in this market,' said Chris
Moorhouse, chief executive of BP Oil Trading
International. 'We were anxious to try to avoid
fragmentation in the market.quot;
quot;He left open the possibility that the parent firms
could offer public stock in the new exchange, which
will be based in Atlanta.
quot;That's the home of the Continental Power Exchange,
whose president, Jeff Sprecher, will become chief
executive of the new online market. He said the seven
partner firms are buying CPE's assets and technology
for an undisclosed price to use as the backbone of the
quot;Mr. Sprecher will have an equity stake in the exchange,
and the partners have agreed to invest an additional
$20 million in its development, he said.
quot;An exchange spokesman declined to say how much equity
each partner firm would have in the
IntercontinentalExchange, although he said none would
have a majority, controlling interest.
quot;Monday's deal was certainly a coup for CPE, which
hadn't traded any products since 1997. Before then, the
company had functioned as a computerized electricity
cash market and delivery mechanism.
quot;'Because of electricity deregulation, we realized that
business had become somewhat obsolete,' Mr. Sprecher
said. 'We decided to refocus on developing the
technology, which we thought would eventually offer us
quot;The new exchange will just be one of several new
ventures, including the online BrokerTec derivatives
mart, that could eventually pit commodity trading
houses against the traditional exchanges where they
quot;Just last week the New York Mercantile Exchange
snubbed a proposal by Goldman and Morgan Stanley to
create their own online market. Exchange Chairman
Daniel Rappaport complained that the market had too
little time to evaluate the plan and would have
received too small an ownership stake.
quot;Officials said the products the
IntercontinentalExchange plans to offer at first won't
compete directly with NYMEX contracts, since the
majority of over-the-counter deals now take place over
the telephone, not on exchange floors.quot;
The way I hear it, Goldman Sachs went to the Comex
crowd and said, quot;We will offer you 10 percent of the
profits to go along with this and you have two days to
make up your mind. Take it or leave it.quot;
quot;Arrogantquot; was too kind a description for GS's
behavior, according to my sources. Goldman Sachs
believes they have a right to stick it to everyone else
without regard to propriety. They are the money lords,
so to heck with what is right.
Of course as soon as they have a problem, they call
their sugar daddy for help. Last August there was a
potential squeeze on the August Comex gold contract.
Goldman Sachs and another big name New York firm were
short and were having serious trouble making good on
delivery commitments to Comex. There was just not
enough physical gold in deliverable Comex form to
present to the longs standing for delivery.
It could have been a big problem and caused a spike in
the gold price.
Reinforcements needed to be called in by the big shorts
to bail them out.
The longs were standing for delivery at a commission
merchant like Refco. Would it surprise you that the
appropriate person at quot;the firmquot; was called by the Fed
and told NOT to pressure Goldman Sachs and the other
firm for delivery -- that the Fed would make sure they
were taken care of? To say that this person was floored
by this extraordinary phone call would be a big
At the end of the delivery period, Mocatta came up with
the gold for the shorts but charged them a healthy
premium over the spot price for engineering the rescue.
The good news is that Goldman Sachs is really upsetting
many people. Maybe one of them will quot;John Deanquot; it and
give GATA the smoking gun we need to take Goldman to
court for anti-trust violations or for front running
the U.S. Treasury gold orders. Hello, out there! We are
mad as hell! Are you? Had enough from these tyrants?
While all this is so obvious to anyone who is paying
attention -- and that is most of the word outside of
the gold industry -- gold market participants go quot;duhquot;
when explaining what is really going on here. Worse,
many of them still decry GATA to the press instead of
at least being neutral by saying that some volunteers
are out there trying to uncover some truth about why
the gold price is never allowed to rally.
They think concerns about conspiracy are for loonies. I
did not hear that kind of talk about Sotheby's when its
top executives resigned recently after being accused of
rigging prices at art auctions in New York.
Why should gold be so different?
Credit Suisse First Boston is a Hannibal Cannibal. They
are in trouble in Japan for hiding losses from clients
and have been severely sanctioned; several of their
traders were thrown out of Sweden for rigging stock
market trades (CSFB was fined $250,000); and now the
House Banking Committee is investigating them for
possible involvement in diversion of IMF loans by
Ukraine's central bank between 1997 and 1998.
More on this to come, but why is there so little talk
about this Hannibal Cannibal's nefarious activities? I
listed only about half of their recent scandalous
predicaments. Are you telling me it is farfetched to
say they would not be a conspirator in rigging the gold
Here is the kicker for the evening. The gold market
scandal and price rigging grows and grows. The gold
loans and financial exposure have grown to such an
extent that they now threaten systemic collapse. The
gold loans (10,000 to 13,000 tonnes) just cannot be
paid back without prompting a meteoric rise in the
price of gold. Even the, that will take time. Last
April GATA told U.S. Rep. James Saxton, chairman of the
Joint Economic Committee of Congress, that the crisis
could be much worse than the savings and loan scandal.
It is understandable that this is taking time to get
the attention of Congress. It is a very complicated
subject and implicates some folks that are highly
regarded by much of the public.
But when I see this article in the Financial Times in
London, I just shake my head:
quot;OPEC may face legal action from US
quot;By Richard Wolffe in Washington and Carola Hoyos in
New York, March 22, 2000
quot;The Financial Times
quot;Antitrust officials are examining whether the
Organisation of Petroleum Exporting Countries has
violated U.S. competition laws, as Congress intensifies
political pressure over the surge in oil prices.
quot;The Federal Trade Commission is reviewing court
rulings, dating back more than two decades, that give
OPEC sovereign immunity from U.S. antitrust laws.
quot;Robert Pitofsky, FTC chairman, said: 'We are thinking
about it, but there is a decision by our courts many
years ago that OPEC's cartel is a form of state action
and entitled to sovereign immunity.'
quot;The agency is increasingly facing calls from senior
members of Congress to take action against the oil
cartel. The House Judiciary Committee will hold
hearings on the possibility of antitrust action next
quot;Rep. James Leach, chairman of the House Banking
Committee, this month urged the administration to warn
OPEC countries that Congress was demanding antitrust
intervention. 'I would like to make it very clear from
a congressional perspective, under U.S. law on
Wednesday, this kind of cartel is illegal,' he told
Energy Secretary Bill Richardson.
quot;Lawyers specialising in the oil industry suggest the
administration is keen to use the threat of antitrust
action in its negotiations with OPEC.
quot;Martin Lobel, partner at Lobel Novins and Lamont in
Washington, said: 'The administration can tell the
Saudis that ... an antitrust case will be expensive and
unpleasant for everyone, but that they would be forced
to do it if OPEC does not increase production.'quot;
Leach is the chairman of the House Banking Committee
and is demanding antitrust intervention. Why not demand
the same in the gold market? Hello, Congressman Leach.
Hello! You are investigating Credit Suisse about its
Ukraine mess. What about its scandalous activity in the
gold market? You are sleeping at the switch on this
one. One of the biggest financial scandals in the
history of the United States is being perpetuated by
some of the very banks you are supposed to be
overseeing and you are out there yapping about the oil
It is only a matter of time, Congressman Leach, before
the manipulation of the gold market blows up on the
collusion crowd. Too much gold is being consumed at too
cheap a price. The gold price will have to rise to a
minimum of $600 per ounce to ration future supply. It
probably will happen quickly, as a buying panic will
kick in. There will be a banking crisis when that
GATA is coming to Washington in the months to come to
alert you to what is going on. We intend to give you
the exact road map to check out what we have to say. We
are going to tell you whom to talk to and what to ask
them to find out the truth. It will be very easy for
you to determine if we are correct. We have crosschecks
being developed. If someone lies to you, we think we
can catch them. That will all be in the material we are
preparing for you and other congressional leaders.
To be forewarned is to be forearmed. GATA is not
partisan, but if the Republicans win in the fall and
their congressional leadership fails to respond to
GATA's pleas, they will be held responsible when the
gold market financial scandal blows up. That is just
the way it is. If you start a simple investigation now,
you can get your answers in a couple of months and then
you can determine how to deal with what you learn,
before the election.
Does that not make sense?