"a bunch of [GATA] nuts", causing Barrick Gold & Goldman Sachs to go nuts.
... a well known fund manager was looking to buy shares in gold companies.
...we heard he was shying away from Barrick because...
...The common thread here is Goldman Sachs...
...very clear from this article is that one can see Barrick's motive
in cheering on the lowering of the gold price and positioning itself
to pick up the pieces after the decimation of some of the gold industry.
Especially when one reviews Barrrick's hedge book. The following information ...
The James Joyce Table
Midas du Metropole
August 15, 1999
The 20 year bear market has ended...
...Excitement is in the air. I can feel it. Something big is up!
...Goldman Sachs taking delivery of half the gold in New York Mercantile
Exchange warehouses...very unusual...People smell a rat here...
Let us review a chain of sequences...
Starting May 6....price of gold about to break $290 to the upside.
The "Hannibals," bullion dealers, spread the word to their clients that
the price of gold will NOT break $290 to the upside. The next morning
there is a surprise announcement by The Bank of England that they will be
selling 415 tonnes of gold. Goldman Sachs is seen to be selling gold in
quantity almost every day on Comex after the Bank of England announcement...
The U.S. Congress...banded together on the IMF gold sale issue and will
not let the gold sale proposal pass in Congress. That was a big blow
for "Hannibal Lechter"(Goldman Sachs) and the rest of the "Hannibals,"
as they will not be able to cover their massive short positions by
buying cheap gold from the IMF stash. That has been a shock to them.
The "collusion crowd" has also been counting on two other sources of
supply. One is from the proposed Swiss gold sale but recent reports show
that supply from that source is now far from certain. And even future
Bank of England sales may be altered...
Capetown - August 13 - South Africa's talks with Great Britain about
organizing its planned gold reserve sales so as not to harm gold prices
are likely to "pay off," the minerals minister said in parliament...
...All of a sudden, gold supply sources that the shorts were counting on
will probably not be there...
...about the incestuous relationship among Goldman Sachs, The N. Y. Fed,
England's Chancellor of the Exchequer, Gordon Brown, and Great Britain's
Prime Minister, Tony Blair, as a background point here...
...the following chain of events.
Goldman Sachs has an IPO and becomes a public company in June close to
the top of the stock market bubble. Former Goldman Sachs CEO and U.S.
Treasury Secretary, Robert Rubin, resigns on July 4th. Around the 3rd
week in July (or so) Goldman Sachs has a hurried conference call for its
clients announcing that it expects the price of gold to average $275 for
the year which insinuates the gold price will rally. BUT, they do not
allude that the price of gold will rise to any great degree (no reason
to spook the market while you are scrambling to cover your butt)
...Goldman had led the gold BEAR parade on the way down. All of
a sudden they are buying up all the August gold contracts that the
shorts will give them. Questions will be asked!
Not just by the likes of us, but by the CFTC who admitted recently that
they had contacted the major gold players...
...during this period, there is a secret hush hush
bank meeting in Philadelphia. There are rumors of an emergency Fed
meeting and rumors that famed hedge fund, Tiger, had to be bailed out as
it has incurred significant losses accompanied by substantial
redemptions (our sources say there is more to come as the last day in
August is the last day in this period of time for investors to pull
their dough out of Tiger - will it be reDemption Day?) The swap spreads
(a liquidity baromenter) blow out to decade highs, the TED spread goes
to levels that signals danger, bond yields rise to 6.27% (unthinkable 8
months ago), Iridium goes bust , General American Life Insurance Company
cannot meet payments and...
... the same time, there are trillions of dollars of derivative plays
out there that just as few have a handle on...
GATA has two recent converts. First, there was Roger Kebble, Chairman of
JCI in South Africa, who expressed his opinion publicly that the gold
market was manipulated. Now, we have another stalwart of the gold
producing industry, Robert Champion de Crespigny (Chairman of Normandy
Mining Ltd. in Australia) saying the same thing.
GATA Secretary, Chris Powell, sent me the following:
Robert Champion de Crespigny was interviewed on the Australian
Broadcasting Company's late-night television talk show, "Lateline,"
along with Haruko Fukuda, chief of the World Gold Council, and Tony
Warwick-Ching, a consultant with Virtual Metals, a company that analyzes
the precious metals market.
...summary of Chairman Champion de Crespigny's comments:
* Investment banks are "making a fortune manipulating the gold market."
* Many important investment advisers have "substantial conflicts of
interest" when they advise their clients against gold.
* The Bank of England is selling its gold against the wishes of the
British people...
The common thread here is Goldman Sachs! Tiger does a mess of business
with Goldman Sachs ( that is a well known fact) and Tiger owns, or
owned, 10% of Chairman de Crespigny's Normandy Mining. Perhaps, and I
say perhaps, the good Chairman knew of the raison d' etre behind the BOE
sale. Until very recently, Normandy has been among the most formidable
of hedgers. (A Cafe member and very highly esteemed member of the gold
community has a revelation on all of this. Since he has quite an
interesting story coming out soon, I will say no more except that you
will want to know what he has to say and "The Cafe" will alert you to
his newsletter.)
But something got the good Chairman's goat. Could it be that Tiger,
because of their redemptions has to sell Normandy stock? Could it be
that the good Chairman knows that Tiger hedged their stock purchase by
borrowing gold and shorting it and has to cover now? Reports have come
to us that Tiger is short anywhere from 200 tonnes of gold to 350 tonnes
of gold. (That is called a Texas Hedge; ie, shorting much more than one
need to for proper "hedging purposes"). Was the purported extra gold
borrowing put on to finance "other circumstances?"
Could the physical market be so tight that Goldman Sachs has to find
gold anywhere they can (either for their own account or for clients) and
now has to undergo some sort of humiliation as to be seen cornering
available gold by taking delivery on as many August Comex futures
contracts as they can - when that is the last kind of impression they
want to create for their firm?
Why has the good "Chairman" suddenly changed his tune and made a 180
degree turn on the BOE gold sale, etc.? Why is he so bullish now? What
does he know that the public does not know? Say you were him - what
would you do or say to the public for image building purposes- knowing
what is really going on behind the scenes?
For my two cents worth, it is my deduction that Robert Champion de
Crespigny does know something significant about the gold market and it
is VERY bullish; ergo, the explanation for his remarkable statement on
Australian television.
...but it will be about his bullion dealer sympathies:
"Sans doubt" - Barrick is: "A "Hannibal" in Sheep's Clothing."...
Months ago it came to my attention that Barrick CEO, Randall Oliphant,
told a highly respected journalist doing a story on the gold market that
GATA was "a bunch of nuts."...
... He also was recently PROMOTED to CEO from CFO.
What to think? A U.S. source told me that ten months ago Barrick and
Normandy opposed a "Millenium Coin" proposal that would have spurred
gold demand. They were going the same way then. But now something is
happening here as Barrick and Normany are no longer on the same wave
length. Voila!- from the FT on Friday:...
Placer Dome, North America's fourth largest producer, has recently
joined the ranks of the more pessimistic producers. Following the Bank
of England's decision to sell more than half of its gold, the company
said it would review its long-term pricing assumptions. The company said
the months-long review was prompted by the realisation that bullion
would not rebound as quickly as the company had initially anticipated.
...The industry has already seen a number of smaller mergers and
acquisitions in the past year. Homestake, the US producer, acquired
Argentina Gold, while Barrick snapped up Sutton Resources. Franco-Nevada
and Euro-Nevada, the Canadian mining royalty groups (mining venture
capitalists), merged earlier this year, while Australia's Normandy
entered into a partnership with TVX, the struggling Canadian group.
...He says it is only a matter of time before large scale
consolidation hits the gold industry...
The most often talked about combination involves Newmont and Barrick,
North America's two largest gold producers and companies that could
generate important synergies from their assets in Nevada and Peru.
Newmont, the continent's largest, is widely seen to be the most
vulnerable of the big gold producers, due to its $1.2bn debt and its
small hedging position. On the other hand, Barrick's strong financial
position makes it the most likely acquirer in the current environment.
But Barrick's dilemma is that its position as the lowest cost producer
would be eroded if it were to make any acquisition.
... has caused Barrick and Normandy to dramatically diverge their
course of directions. What is very clear from this article is that one
can see Barrick's motive in cheering on the lowering of the gold price
and positioning itself to pick up the pieces after the decimation of
some of the gold industry. Especially when one reviews Barrrick's hedge
book. The following information ...
...That must be taken into account when it comes to
the percentages, but the gross numbers are revealing, especially for
Barrick shareholders. A source told me Friday that a well known fund
manager was looking to buy shares in gold companies. At last contact, we
heard he was shying away from Barrick because of the "size" of their
hedge position.
Maybe GATA is a "bunch of nuts" but if we are right about the gold
market and the price takes off to the upside, Barrick could look like
the "bunch of nuts." Goldman Sachs is scrambling to find gold for
someone - almost 500,000 ounces so far. What if there is not enough
physical gold around to satisfy the shorts? Physical gold!- not paper
gold available at a future date. NOW GOLD! How easy will it be for
Barrick to cover its shorts to enhance shareholder value on a
substantial move up in the gold price?
Loop back to the derivative risk questions that are haunting the
financial markets today. Many of the gold producers have these magical
high prices they are receiving for their future gold production. The
bullion dealers have sold them derivative packages that require the
producers to write calls on their future production - in some cases
maybe much more than their production. The call open interest on Comex
and in the OTC market has soared the past couple of years.
The producers are happy to sell "paper" gold at such high prices,
especially in today's gold price depression. The "Hannibals" have sold
them a bill of goods that the gold price is not going much higher in the
years to come, so the producers go along with the dealers feeling very
smug about the transactions. The problem will come when the gold price
takes off. If the herd all tries to cover these massive gold loan
borrowings and in many cases, naked calls, there will be a gold buying
panic the likes of which the world has ever seen.
Some gold producers could go belly up in this type of scenario...
...we have been told that $315 gold is the number to watch...
Zillions of calls have been written around that strike price area.
A move north of $315 could bring on that gold buying panic. VERY
INTERESTING times are ahead of us.
I started with Goldman Sachs in this segment of the Midas and will end
with them. In my opinion they have set the scene for a dramatic move up
in the gold price. "The Hannibals" are losing control of their gold
market manipulation..
...has to do with the growing risk to the financial banks.
The simple KEY to understanding this is that banks borrow
the gold for short periods and lend it for long periods.
The CBs are aware of the growing risk of not getting back their gold and
are winding down their leasing. Some of the producers have been having
problems repaying their loans and their books are looking bad. There are
several banks that are in hot water I write. These banks unlike the
commercials will not be bailed out by the CBs...
...One of my sources told me two weeks ago, that a BIG bullion bank is
currently in trouble with liquidity problems and trying to cut a deal with
...The CBs are aware of the growing risk of not getting back their gold
and are winding down their leasing...And Goldman Sachs is NOT buying gold
to short it. A coming liquidity crisis is coming and they know about!"
..."Stay away from heavily hedged producers such as those in (Australia).
Let them suffer the consequences of their stupidity and greed. Purchase
unhedged gold companies to prosper in the coming gold short squeeze...
...In my January 20 Midas du Metropole piece called "Scandale Gold,"
I noted that: 12 major banks chaired by Goldman Sachs and JP Morgan in
early January formed a "Counterparty Risk Management Group" "with the
intent of enhancing best practices in credit and market risk management.
The policy group will develop standards for strengthened risk management
practices."
It was upon this discovery that GATA was formed. GATA co-founder and
Cafe member, Chris Powell sent me a note saying that what I was writing
about regarding the gold market manipulation seemed like a violation of
the Sherman and Clayton Anti-Trust Laws. "Would General Motors, Ford and
Chrysler be allowed to do the same thing?" Chris pondered.
Chris suggested that we stop complaining about the obvious gold market
collusion and do something about it. So we did!
...these blue blood banking firms that every one Kow Tow's to are not
"Little Lord Fauntleroy's." Since GATA was formed,
Counterparty Chair, Goldman Sachs, was subpoenaed by the Justice
Department for anti-trust violations in a securities underwriting
scandal. Counterparty Risk Management Group member, Credit Suisse, is
being kicked out of Japan for financial violations and unethical
conduct. And now the other Counterparty Chair, J.P. Morgan has this
story in Saturday's N.Y. Times:
August 14 - New York Times - By Timothy L. O'Brien
Sumitomo Sues J.P. Morgan for Role in Copper Debacle
"J.P. Morgan & Company, one of the most prestigious banks in the nation,
has been sued by the Sumitomo Corporation, one of Japan's largest banks,
..."Morgan, which prides itself on being on of the country's most cautious
lenders, is the only bank to have been singled out by United States
regulators for its role in the scandal. In 1997, the Federal Reserve
Bank of New York reprimanded Morgan for lax controls and supervision in
its commodities lending business,."
"Morgan is a leading provider of the complex financial instruments known
as derivatives and has been an aggressive advocate of looser regulatory
controls over the lucrative products."
"Morgan structured the loans to Mr. Hamanaka as derivatives, which
allowed him to account for them as trades rather than simple loans -
a move that may have allowed him to borrow money more freely."
"J.P Morgan, in one series of transactions alone, loaned Mr. Hamanaka
roughly $535 million disguised as complex derivatives transactions,"
Sumitomo said in a statement released last night. "When those
transactions came due, Mr. Hamanaka was secretly forced to pay J.P.
Morgan almost $1.2 billion to satisfy the debt - representing an
effective interest rate of 150 per-cent. .were plainly usurious
loans provided for the sole purpose of supporting Mr. Hamanaka's
illicit copper trading."
Counterparty Risk Management? Talk about the "Fox in the Chicken Coop."
Got 3 of them here. All of these 3 Counterparty Risk Management Group
members are bullion dealers ( "Hannibal The Cannibals").
Do I need to say any more? Bill Murphy ( Midas )
Send mail to lepatron@lemetropolecafe.com with questions or comments
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