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GATA discloses what the big gold players know
$9 Gold Move and Internet Release of
quot;Gold Derivative Banking Crisisquot; report:
Just a Coincidence? Maybe Not
By Bill Murphy
June 3, 2000
Spot Gold $281.40, up $8.90
Spot Silver $4.99, up 9 cents
Friday was rock 'n' roll time for gold. A welcome
change of pace. From a Cafe source:
quot;You should have seen this fight during the last couple
of minutes on the floor. Funds were buying like crazy
to keep it up, pushing it up toward a $285.30 print
(basis August), and some trade houses (the usual
suspects) were selling it hard down to 283.80 again,
and it settled at 284.10. The gaps between prints were
some 50 to 80 cents.
quot;Now we are above $280 basis spot but not above $282
spot -- kind of a danger zone technically -- the
absolute top for the bears.quot;
The bullish consensus was only 18 on Thursday night,
with the world almost unanimously bearish about the
price prospects for gold. It was only recently that I
reported 10 out of 10 money gold analysts were bearish
in the forecasts. Firms like Goldman Sachs lowered
their 2000 price forecasts from $325 to $275.
From my Midas commentary for May 25 with spot gold at
* * *
The Gold Price Action Is Telling Us Something
The CRB: 224.55, and was over 227 at one point this
morning. Crude oil: $30.51 per barrel. Platinum: $547.
For the first time ever, natural gas is priced over $4
at the same time crude oil is over $30.
Demand is strong. Supply is down. The gold price sinks
like a submarine. Makes sense? What a joke!
This is my take on what is going on:
My guess is that behind the scenes there is serious
concern regarding some financial market stress or event
that is about to happen or have a bad effect on a
fragile stock market. It could be that the dollar is
about to take a sudden beating. It could be that the
price of oil is about to soar toward $40 per barrel....
These same powers (bullion banks and the New York
Fed/ESF) know that a gold derivative banking crisis
could develop if the price of gold started to move
higher during a period of general financial
It is the buildup of these gold derivatives that is
keeping down the gold price.
That is clear from the data GATA has discovered. If
investors were to turn to gold in a time of financial
chaos, a gold-buying panic could quickly get out of
hand and set off a chain reaction.
That is coming anyway. I think they know it and are
just desperate to do what they can to hold the price
down and hope for a miracle.
They are not going to get one. One day we are going to
wake up in the United States and gold will be $50
higher. It will go up from there.quot;
* * *
Some Cafe members joked with me about my analysis that
the decline in the gold price was telling us something
bullish for gold. It is only a week later and gold has
In addition, since then the price of oil HAS shot way
up and the dollar HAS been trashed.
Yesterday the pundits were pointing to the sinking
dollar as the reason gold was moving up so sharply. No
doubt that was a bullish factor for gold, but the
dollar has been getting hit hard for a week now. What
made yesterday's dollar bashing so important for gold?
Much was made of the weakening U.S. economic numbers
and slowing U.S. economy due to higher interest rates.
Perhaps if that is the case it is bearish for the
dollar and thus a bit bullish for gold.
But I think something else is up. A $9 move up in gold
is more than short covering or a minor event. Except
for the rare occasion, the gold price has not been
allowed to rise more than $6 a day over the past
several years. Check that one out if you care to. You
will be stunned to see gold price rallies that always
stopped at $6 higher on a given day.
That is why a $9 move is significant in my book. Could
it be that the shorts manipulating gold are losing
control once again as they have twice over the past
It also might be helpful to put this $9 in perspective
with the past. At one point last year the specs were
net short some 70,000 contracts. Gold then rallied and
that 70,000 net contract position evaporated.
Astonishingly, that ENTIRE GOLD RALLY WAS ONLY $9. It
was devastating for the gold bulls.
After the close on Friday the new CFTC open interest
figures as of last Tuesday were released and the specs
were net short about 43,000 contracts, a big number in
itself but not 70,000, and ALREADY we have had more
than a $9 move from the recent bottom -- with the specs
still mega-short. This is very contstructive.
What else could be going on that is giving the gold
manipulators fits in their ripoff of gold investors,
gold producers, miners, and the poor gold-producing
First, I suggest that the quot;Gold Derivative Banking
Crisisquot; report that was presented to every banking
committee member in Congress, to members of the Senate
Subcommittee on Technology, Terrorism. and Government
Information, and to a powerful Washington politician
and was made available to the world via the Internet on
Thursday is starting to have an effect.
From Marc Trimble at International Strategic Assets
Inc. in Minneapolis: quot;We have printed 50 Gold
Derivative Banking Crisis reports bound with cover for
our larger institutional clients.quot;
quot;I am a Portuguese journalist writing about management
and technology trends and I am preparing an article for
next week before the oil meeting of 21 June and the FT
Gold Conference of 26/27 June and I would like to
interview you via email about this document, the GDBC
Report. Please let me know if you are interested. Best
regards, Jorge Nascimento Rodrigues.quot;
And this came in Thursday from Cafe member Alfred Hill
quot;Today I spoke up at a small town meeting sponsored by
U.S. Sen. Craig Thomas. (In Wyoming they are all
small!) I briefly described the gold mess, and told him
I was giving him a heads-up, not asking for a response.
He looked concerned as I related the concerns about the
tons of gold at Fort Knox and the Western world's gold
quot;At the end of the meeting the senator's staff person
was already over asking me for written material, and
said she had already telephoned Washington and asked
their intelligence person to check with the Senate
Intelligence Committee. I gave her a copy of GATA's
recent advertisement in Roll Call and of your essay
about why the Intelligence Committee should be
concerned. On the paper I noted the congressmen
checking into it, and mentioned Rep. Dick Armey's bill
on Exchange Stabilization Fund accountability.quot;
From my email Thursday announcing that the GDBC report
was available on the Internet at the www.GATA.org web
quot;The Gold Derivative Banking Crisis document is
lengthy, comprehensive, and somewhat technical at
times. It is the nature of the beast. But there is no
more bullish report anywhere on gold than this one. The
Gold Anti-Trust Action Committee hopes that the
Internet will speed it to money managers, the press,
and governments around the world.
quot;Various forces are repressing the true equilibrium
price of gold by hundreds of dollars. This cabal of
bullion banks, with the probable assistance of the
Exchange Stabilization Fund or New York Fed, is being
found out. As this information is understood by
investors around the world, they will start buying
physical gold in earnest.
quot;The shorts are trapped. There will be a buying panic
when they try to cover those shorts.
quot;It is only a question of time -- weeks, months, a
year. One of the most favorable risk/reward trades in
history (buying gold now) is staring you right in the
face. This document explains WHY that is so.quot;
To date, NO ONE has refuted GATA's findings in this
Something else may be up too. I smell gold production
cutbacks coming -- cutbacks that may even be announced.
This many be very important, so again I will repeat
Midas commentary from a week ago:
quot;Dow Jones: Normandy Mining Ltd. said Thursday it will
deliver a total of 450,000 ounces of gold borrowed from
bullion banks from up to five years ago, Colin Jackson,
group executive corporate, told DJN.
quot;'In the fourth quarter ending June 30, 450,000 ounces
of gold from the Normandy Group and the Great Central
Mines, whose books we manage, will be delivered back to
bullion banks. It won't be sold into the spot market,'
quot;'We don't anticipate new positions and no new
replacement positions,' Jackson said. Normandy's hedged
positions declined by 356,000 ounces in the March
Following my comments this week regarding Normandy, I
was told that Jackson made a couple of interesting
observations about Normandy's hedge book two weeks ago
at a Merrill Lynch Global Minerals and Metals
Conference in Phoenix. He indicated that Normandy Group
companies had delivered into maturing hedge contracts
for the last six months without refreshing (replacing)
them and that a similar situation was likely in the
current three months to June 2000. This means that
Normandy has reduced its book by nearly 1.2 million
It prompted Jackson to reflect that Normandy, a hedged
company (where hedged is past tense; that is, the
hedging activity was completed some time ago), is not
having any impact on the spot market because the
contracts are not being replaced, while an unhedged
producer selling gold at spot WAS influencing the
market. Interesting thought!
By the way, the misunderstanding with Robert Champion
de Crespigny, Normandy chairman, has also been
This is why Barrick Gold remains such an aggravation.
Barrick is rolling over its hedges, adding gold supply
to the market. Normandy and some other big hedgers are
delivering into their hedges, thereby RETURNING gold to
the bullion banks, not selling it in the physical
market, which naturally tends to depress the price.
But there is more. Word at that Merrill natural
resource conference was that the question most asked of
resource producers was: Are you cutting back
production? Oil production cuts and resulting tripling
in the oil price made a big impact on resource
analysts. They are looking to promote resource
industries that are now supply-conscious.
These increasing queries by institutional analysts are
surely making an impact on the CEOs of the major gold
producers. Recently the gold market has been rife with
rumors about a Gold Fields Ltd. merger with other
producers. Newmont, Placer Dome, Euro-Nevada, and
Normandy are mentioned. I am convinced that something
big is going on behind the scenes. A merger of the big
producers would make it much easier for the new entity
to cut production. A huge new gold company also could
deal more assertively with the bullion dealers and not
be pushed around by the Hannibal Cannibals.
From the former CEO of the London Bullion Dealers
Association, Peter Fava, now head of precious metals
trading at HSBC Bank Plc in London:
quot;New York, June 2 (Bloomberg) -- 'The stock market is
blazing, the gold market is blazing,' Fava said. 'This
market makes no sense. By Monday, the market will be
down $4 or $5 from here.'quot;
FAVA has been an outspoken critic of Cafe commentary
and the GATA camp.
Gold basher Wayne Angell is having his own troubles
quot;New York, June 2 (Bloomberg) -- In testimony to a
federal jury in New York on May 5, the chief executive
officer of Bear Stearns, Jame Cayne, said the 69-year-
old economist 'is an entertainer' and can't be blamed
for $300 million in currency trading losses incurred by
a customer who said he relied on advice from Angell and
others at the firm....
quot;Nice try, but it didn't work. A jury ordered Bear
Stearns to pay Canadian investor Henryk de Kwiatkowski
$111.5 million in damages. The firm's liability may
grow to $163 million if U.S. District Judge Victor
Marrero grants a request of interest of roughly $52
When the gold investing public realizes what the likes
of Goldman Sachs have done to them, the lawsuits are
going to be of a lvel never seen before on Wall Street.
Does J.P. Morgan know what is coming, and is that why
Morgan is letting traders go in New York and London?
In the days to come, the Cafe will be presenting some
gold numbers, analysis, and information yhat are so
bullish you will be beside yourself.