FWIW :-)
10:30p EDT Monday, October 25, 1999
Dear Friend of GATA and Gold:
>From the following dispatch from Reuters, it seems that
the Bank of England is directly involved in bailing out
the gold shorts, starting with the Ashanti Gold disaster.
This raises exactly the same question GATA has been
trying to put to the U.S. Federal Reserve Board and the
U.S. Treasury Department through members of Congress:
Are they aware of any major financial institution that
is having difficulty meeting its obligations as a
seller of gold, and are they doing anything to help
that institution?
GATA friends in the United States, please forward this
to your congressmen and senators and try to enlist
their help in getting an answer to this question.
We in the United States often criticize the rest of the
world for "crony capitalism." Let's see how much of it
we're practicing right at home.
Please post this as seems useful.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
BANK OF ENGLAND DECLINES COMMENT
ON GOLD MINES RESCUE REPORT
LONDON, Oct. 25 (Reuters) -- The Bank of England
declined to comment on Monday on a newspaper report
that it intervened on behalf of gold producers threatened
by losses made in the derivatives markets after the recent
gold price rally.
The Independent on Sunday reported the Bank had asked
several banks to give mining companies extra time to
repay debts incurred after the gold price surge hit
positions they had taken to hedge against price falls.
The Bank declined to comment on the details of the
report, but a spokesman said: "It is frequently the
case in major city episodes that the parties like to
discuss the situation with us and the bank is always
happy to talk to them."
Ghana's Ashanti Goldfields Co Ltd, struggling with big
losses on its gold hedge book, last week won a third
margin call reprieve until close of business on Monday,
industry sources said.
Ashanti itself said late on Thursday it had secured a
"short" extension of the standstill agreement from
counterparties after a previous 72-hour extension
expired, without specifying a timescale.
Ashanti's case for a stay on margin calls has been
helped by a decline in gold prices which has reduced
the losses on its hedge book to a more manageable
level.
If gold stays below $305 Ashanti does not actually face
margin calls since its losses are covered by an
existing revolving credit facility.
But with gold still volatile its liability could easily
shoot up if prices rise. At $325 an ounce it faces
margin calls of some $270 million, rising to $500
million at $350 an ounce, mining analysts said.
-END-
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