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The Plunge Protection Team at work?
Copyright 2000 / www.LeMetropoleCafe.com
Not to be reproduced without the author's permission
MIDAS COMMENTARY FOR APRIL 4, 2000
By Bill Murphy
April 4, 2000
Spot Gold $284.80 up $6.60
Spot Silver $5.13 up 10 cents
Chaos: The volcano smolders. Goldman Sachs pressured
gold early today, but as soon as they got word what was
about to occur in the equity markets, they and Morgan
Bank turned massive early buyers. By late morning gold
was advancing in staunch fashion -- $10 higher -- when
Goldman turned massive seller and the stopped the gold
price rally at $289.50, right below the magic $290
I am so sick and tired of reporting to you the same
scene over and over. As I said in my speech to the
recent conference of the Committee for Monetary
Research and Education, all rigged gold market roads
lead to Goldman Sachs. Microsoft is sued by the Justice
Department for violating anti-trust laws in the
computer world and Sothebys and Christies are charged
with rigging art auctions in New York. It is clear as
day that Goldman Sachs and its cronies have been
manipulating the gold market in violation of the
Sherman and Clayton Anti-Trust Acts for some time now.
It is about time the gold market investigation gets
rolling and Goldman Sachs is made to pay the piper for
its crooked ways with gold.
Another outside day to the upside for gold, as today's
upside reversal assaulted moving averages and minor
technical resistance. I would like to say this
technical development is very constructive, but the
last time I did so, Goldman Sachs bashed gold down from
the $290 level to protect the gold loans, etc, and that
technical signal turned out to be useless.
That is why I keep saying technical analysis is for the
birds in this gold market. At least that is the way I
have seen it for almost two years now. The gold price
is going to explode like a volcano when the goons
controlling this market lose that control. The good
news is that it appears that their tight leash is
getting looser. External market forces are making it
harder for them to hold the gold price down.
One day the gold price will be $326 fiery bid out of
nowhere and will rise from there. You know the rest of
the spiel -- got to be in it to win it, etc. Where
there is smoke, there is usually fire, and we have seen
a great deal of smoke the last six months when it comes
to the convulsive movements in the gold price.
Now that I got that off my chest, the short-term gold
price picture changed overnite. Cafe sources tell me
that that today's close was regarded as very
constructive by the Chase Bank traders and that the
funds remain VERY SHORT, as they have been piling on
the short side the past week. These sources also said
that today's buying was of a professional nature and
that the black box technical fund crowd did not cover.
Goldman Sachs bought silver early and sold it late as
stops were touched off on the early upside move. Silver
could not take out $5.20 resistance and thus is right
back where it has traded for years. Silver has become
an elephant market. The big traders do what they want
and just play with the rest of the field. They have
maneuvered the silver market for 10 cents here, 20
cents there, for so long that they have probably
accumulated more profits than if silver had run up to
$20 per ounce in a straight shot.
The silver base continues to expand. That base can
support a move to much higher prices -- in the $10-15
per ounce vicinity.
John Brimelow reports that the India gold premiums were
14.1 percent this morning, which is high as either of
us could remember. That means physical gold needs to be
secured to import into that gold-devouring country.
There were very large first notice day deliveries of
gold. Deutsche Bank took 2,542 contracts and Cargill
What should the price of gold be today? If one accepts
the numbers coming out of the research of Gold Fields
Mineral Services (GFMS), the bullish case for gold is
more muted. If one believes that Frank Veneroso is
correct, the gold price should be more than double what
That is some difference.
Markets are often priced based on perception. The
recent downdraft in the Nasdaq is a good example. One
day 5,000, a few days later it is headed for 4,000 and
then 3,000. The fundamentals did not change overnight;
the perceptions did. Market participants then acted
accordingly. Today those perceptions were changing
hourly; first there were fears that the stock market
was headed for a crash, and then sighs of relief that
the correction was over.
Nothing could be more important to gold bullion and
gold share investors than the changing of the
perception of the fundamentals of gold and its price
Last week there was talk of the French selling gold
reserves because of a remark by a French politician.
That France had signed the Washington Agreement, which
limits European central bank selling to 400 tonnes per
year, was lost in the shuffle for awhile. The bullion
dealer crowd has the access to the press. They feed the
press with what they want them to hear and that is what
is reported to the public. In this case the press
slanted its reports around the idea that the central
banks are going to sell all their gold, and this French
report was just another example of that. That was the
notion fed to them by the traditional bullion dealer
The gold market is very demoralized and has been for a
long time. Bearish press commentary such as this does
not do anything to attract buyers; it encourages the
shorts to press their case.
This week started the same way yesterday with the
following Reuters story from Vienna:
quot;The Austrian National Bank said on Monday it sold 30
tonnes of gold from its reserves in 1999 and was
planning to sell another 60 tonnes by 2004 as part of a
portfolio management policy dating back seven years.
quot;In a statement, the central bank said the sale of 90
tonnes of gold was being carried out under an agreement
signed by 15 European central banks last September and
included sales to the Austrian Mint for coin
quot;Director Peter Zoellner told Reuters the Austrian bank
had sold between 30 tonnes and 50 tonnes of gold from
its reserves each year since 1993. Monday's
announcement meant sales would actually slow over the
next four years.quot;
Off-the-cuff commentary by many gold analysts took this
story as just one more example that the central banks
are going to sell their gold, so why buy it?
That brings me back full circle to Frank Veneroso and
GFMS, which furnishes supply demand stats to the gold
industry. Veneroso has been saying for years that there
have been undisclosed official-sector gold sales that
were affecting the gold price. Gold Fields Mineral
Services did not acknowledge that in the past and only
recently acknowledged undisclosed selling. This
announcement is important because it proves Veneroso
was right and GFMS wrong.
If GFMS was understating supply, it was also
underestimating demand. GFMS thinks the gold loans are
only around 4500 tonnes; Veneroso thinks they are
10,000 tonnes and could be as high as 13,000 tonnes.
This is the first public bit of tangible evidence that
contradicts GFMS' numbers and gives credence to
Austria was misreporting its gold market transactions.
How many other central banks were doing the same during
I know how diligent Veneroso was in calculating his
gold loan numbers and I watched the sleuthing he did in
prying out this information. He did not come up with
these large gold loan numbers by chance.
If the gold world understood that Veneroso is correct,
it would realize how bullish the price prospects for
gold really are. The perception about gold could change
overnight. Certainly if gold market participants come
to understand that Veneroso is right about gold demand
and the gold loans, they will not want to be short
gold. Again -- mine supply was 2,559 tonnes in 1999, so
if the gold loans are 10,000-13,000 tonnes as we think
and the shorts try and cover as the longs tried to get
out of the Nasdaq in the past two days, how will they
do so? They won't! Not until the gold price rallies
several hundreds of dollars anyway.
All that has to change for the price of gold to soar is
that perception. When that happens, away we go. The
colluding crowd will not be able to contain the buyers.
They will be overpowered by hoardes of buyers from all
over the world.
I go into this because it might not take as long as you
think for the industry to see the gold world according
to Frank Veneroso. Veneroso has been invited to Perth,
Australia, to present his case at the end of this week
to gold producers at the Australian Gold Conference.
This is a very important development and is a big first
step in changing perceptions.
In early May GATA will take the same message to the
U.S. Congress, and we hope that it will start a gold
market inquiry and check out what we have to say by
simply asking the bullion banks to report their gold
positions to the inquiring committee. GATA has prepared
a document that explains whom a congressional committee
should talk to and exactly what it should ask. If the
ball gets going, an investigation could get answers in
weeks. How easy that would be to do and I am sure the
bullion banks would have no reason to hold back such
basic information from Congress!
I may also be able to help a bit. Yesterday I had lunch
with Chris Sanders, director of Sanders Research in
London and a director of Union WorldInvest. In addition
to managing pension fund money, Sanders Research has
been consulted by the Dallas Federal Reserve Bank, the
European Central Bank, the Saudi Monetary Authority,
and the Joint Economic Committee of Congress. It is a
small world, as Sanders and I know the senior economist
for the Joint Economic Committee, Bob Kelleher, and
Sanders has high praise for his acumen.
The good news is that Sanders would like to do an
interview with me about the gold market. Since it will
be read by some of the people who can affect the
market, I was delighted to say yes. That is how
perceptions change and I am pleased to be able to get
our side of the gold story in front of some of the big
* * *
From Silverbaron at Kitco Inc.:
Net export data (exports-imports) of gold from the
United States in metric tons per month:
Jan-98 37.02 Feb-98 -5.18 Mar-98 0.69 Apr-98 -6.19 May-
98 -7.8 Jun-98 8.3 Jul-98 -0.6 Aug-98 29 Sep-98 24.3
Oct-98 51.7 Nov-98 28.7 Dec-98 -5.5
Jan-99 -7.1 Feb-99 -2.6 Mar-99 -8.6 Apr-99 7.3 May-99 -
9.1 Jun-99 12.1 Jul-99 -14.6 Aug-99 10.5 Sep-99 80.1
Oct-99 13.6 Nov-99 72.7 Dec-99 52.4
* * *
Note how gold is flowing out of the United States since
September and the Washington Agreement was announced.
The tonnage has dramatically increased.
Potpourri and the Gold Shares
The XAU (58.44 up 1.84) and the gold shares continue to
attract little attention from the investing world.
There is little belief that gold will be allowed to
advance in price. That will change, but that is a fact
of life at the moment. How else to explain so little
share excitement on such a bold, gold day?
Fallout from the Cambior/Ashanti disasters. Cambior's
chief financial officer, Henry Roy, and vice president
of exploration, Jean Boissonnault, resigned.
Last night late from Bill King of M. Ramsey King
Securities on yesterday's stock market action:
quot;SPM's were marked up almost 4 points near the SPM
close. Someone keeps marking up SPM's. Who needs to
mark up their positions? These things were investigated
at one time.quot;
What a wild day! In the end gold was not allowed to
take out $290, the stock market mysteriously rallied
way off its lows once again and was not allowed to
close in panic mode and the dollar regained ground to
close only slightly lower after being clobbered
It's amazing how the scenario is always the same. But
as several savvy Cafe members pointed out to me this
afternoon, things are changing behind the scenes. The
stock market is being exposed for the casino it has
become. One day they won't be able to bring it back.
And even that gold rallied $10 as a correlation to the
spanking of the stock market is a change of recent gold
price response to outside market stress. Comments were
even made once again that gold was the beneficiary of
quot;safe havenquot; buying.
Platinum closed up $18.20 today, with July closing at
$516.90 per ounce. The backwardization (spot price over
back months) is widening, as there is little supply to
be had and the orders for platinum are very robust.
Central bank gold feedback from a savvy Cafe member:
quot;I heard some information recently that I believe to be
reliable regarding central bank selling. Namely, the
largest sells have been coming from South America, most
likely Brazil, in my opinion, and recently from an
anxious ECB member. The reason I suspect Brazil is that
if you are backed with the full faith and credit of the
United States and International Monetary Fund, why
bother holding reserves at all, since you are such a
key state that is too big to fail? Can we say moral
quot;According to my source, the ECB member originally
planned to sell gradually but for some reason had
become very anxious to sell its gold quickly. He
continued to say that he didn't think this member was
particularly sophisticated, as they thought their
selling had been 'priced into the market' following the
announcement. He said the central bank doesn't
understand that buyers still have to be found and with
an anxious willing seller, who is going to pay up?
Supposedly, there are also some hedge funds that went
long in the $315 area that are hitting their uncle
Thanks to so many Cafe members for your concerns over
my recent mugging and one-punch knockout outside a
local restaurant. The neighborhood is a very good one,
which is why the assault was so unexpected. On
reflection, I think my assailant was wearing brass
knuckles. I can still hear the quot;thwomp,quot; and can hardly
chew or sleep on my left side. I am pretty sure it is
OK, but tomorrow I get X-rays.
The last time I was hit like that was by Willie Lanier,
the Hall of Fame linebacker of the Kansas City Chiefs.
I was running a pass pattern over the middle at
Arrowhead Stadium and he just punched me in the face,
also out of nowhere, and down I went. The difference
was that I was wearing a football helmet at the time.
As far as what to do about the stealing of my car and
the attack, I will be as careful as I can, but the die
is cast with what has to be done. It is time to win the
day. There is no turning back.
Cafe member Meg sent me the following quotes. Perhaps
they sum it up best:
quot;He who does not bellow the truth when he knows the
truth makes himself the accomplice of liars and
forgers.quot; -- Charles Peguy
quot;I speak truth, not so much as I would, but as much as
I dare; and I dare a little the more as I grow older.quot;
quot;The life of every man is a diary in which he means to
write one story, and writes another; and his humblest
hour is when he compares the volume as it is with what
he vowed to make it.quot; -- J.M. Barrie
quot;If we value the pursuit of knowledge, we must be free
to follow wherever the search may lead us. The free
mind is no barking dog to be tethered on a 10-foot
chain.quot; -- Adlai Stevenson
quot;It is a matter of regret that many low, mean
suspicions turn out to be well-founded.quot; -- Edgar
quot;The wise man in the storm prays God not for safety
from danger but for deliverance from fear.quot; -- Emerson
quot;The paradox of courage is that a man must be a little
careless of his life even in order to keep it.quot; -- G.K.
quot;A wise man gets more use from his enemies than a fool
from his friends.quot; -- Baltazar Gracian
quot;He makes no friends who never made a foe.quot; -- Alfred
quot;It is a mistake to look too far ahead; only one link
of the chain of destiny can be handled at a time.quot;
Winston S. Churchill.
quot;The core of our defense is the faith we have in the
institutions we defend.quot; -- Franklin D. Roosevelt
quot;The corruption of every government begins nearly
always with that of principles.quot; -- Montesquieu
quot;A thought which does not result in an action is
nothing much, and an action which does not proceed from
a thought is nothing at all.quot; -- Georges Bernanos
quot;Great perils have this beauty, that they bring to
light the fraternity of strangers.quot; -- Victor Hugo
Thanks Meg and thanks to all my friends.