(GATA) Murphy's Law ... made its way ... for the big gold shorts.
The James Joyce Table
Discussion du Jour: Gold, Commodities, Midas du Metropole
Midas Special - The Year of the Golden Dragon
Friday's Action
... Suffice to say, Murphy's Law made its way onto the financial scene
in typical fashion for the big gold shorts. Meaning that everything
that could go wrong for them is doing so at the worst possible time.
Rumors continue to circulate that "Hannibal Lecter" (Goldman Sachs).....
... Thursday's Midas, I pointed to how the yen move in 1998, the gold
move of last September and the recent bond market have been violent,
unprecedented and ruinous to certain financial firms. It appears that
the derivative LTCM blow up and subsequent bailout did little to stop
the derivative trading frenzy for firms seeking greater and greater
profits. Greed and hubris thrive.
... basics that long time Caf‚ members are aware of: there is a 120 to
150 tonne monthly supply/demand deficit at $285 gold with around 10,000
tonnes of gold lent out by central banks.
The big shorts have been counting on producer forward sales every month
to fill the monthly supply/demand gap. Placer Dome just announced they
will deliver into forward sales as they come due, not sell forward
anymore as has been their practice. Gold shorts can color that future
gold supply gone! Barrick may do the same. The pressure will be on other
producers to follow suit.
The reason for the pressure on hedged gold producers could not be more
obvious. Gold press reports all credited the Placer announcement as the
reason for the big Friday $23 rally in the price of gold. Does that mean
if 5 other major gold producers announce the same thing, the gold price
rallies $115? If just one announcement can have that dramatic effect on
the gold price, shareholders will scream for all the heavily hedged
producers to the same thing.
Gold share prices soared on Friday.
One has to wonder what has taken the producers so long
to make moves such as Placer's?
Do gold producer shareholders want their firms to reduce hedging
and have their investments double in value - maybe triple - because
of soaring gold share prices?
Or, do they want what they had the past couple of years:
big hedges on the books and share prices in the dumpster?
Talk about begging the question!
The pressure on Barrick Gold will be immense when it makes a financial
presentation to analysts.....
If just Placer Dome's announcement can move the price of gold up that
much, then how can Barrick tell financial analysts that they will not
change their policy? My guess is that if that happens, many of the
attending financial analysts will just go home and sell Barrick stock.
It would be a disastrous decision by Barrick and probably would only
be made if the call comes in from Washington to do so, which would be
further evidence of U.S. "officialdom" meddling in the gold price.
One more thing. Let us bring back Ashanti and their hedge book with
its hundreds of millions of dollars in losses. What is to be done about
that? If their hedges have not been covered, then losses are mounting
again. How many other Ashantis or Cambiors are out there? There have
to be other overly hedged, and therefore exposed, gold company blow ups
ready to surface on the next sharp rise in the price of gold. With this
Ashanti class action suit now a reality, top brass at these companies
are going to freak when they realize the implications of the new law suit.
That is just one more reason why the Barrick top brass had better get
their act together and start making decisions that at least "look"
responsible. If they do not follow Placer on Monday and also.....
That is a NO BRAINER and the Bushs and Mulroneys and other big names on
the Barrick board will be getting their own wake up call, if they have
not been given one already.
Barrick Chairman, Peter Munk, is supposed to be on CNBC on Tuesday morning.
That should be a smile.
Here is some additional input from the www.kitco.com web site about what
Barrick will do on Monday:
Copyright 1999 Gambler/Kitco Inc. All rights reserved
There's a rumour that Barrick.....
... means that the manipulation crowd has, for the moment, lost control
of their scheme once again. Maybe for good this time. Only a staggering
central bank bailout will save big gold shorts butts if I am right.
Can that happen, a la the obviously politically inspired Bank of England
announcement? Sure, but GATA is breathing down their throats this time.
Congress is starting to be all over this fraudulent scam. If our
"officialdom" increases its role in the gold market manipulation, there
will be hell to pay down the road. Someone will most likely have to pay
a price for the ruse by going to go jail at some point.
Just today, Chris Powell (GATA Treasurer/Secretary) and I received this:
"Dear Mr. Powell,
"I am an investor who has a number of positions in the precious metals.
Thus, I have an interest in the success of GATA re: possible
manipulation of the Gold Market. To that end, I may be able to assist
your efforts." " I represent my friend Speaker Hastert in the Illinois
General Assembly I know Denny is a very busy man, but I can probably
arrange time for you and possibly other GATA members to meet with him
and prevail upon the Speaker of House of Representatives to get answers
for the questions you have raised. "
That is on top of Senators Lieberman, Dodd, and Gramm and other
Congressmen all asking the same questions and looking for answers.
It is not just Congress that has been made aware of collusion in the
gold market. Dow Jones Theory guru, Richard Russell, said this on Friday
to his subscribers:
"Remember this -- rising gold is the LAST thing the Fed wants to see.
Rising gold, although nobody seemed to have noticed it today, will be in
the financial headlines if it continues. Rising gold is the market's way
of saying that inflation is in the hopper. Greenie knows what rising
gold means, and if gold continues higher you can most definitely expect
higher rates out of the Fed. Rising gold is a red flag waving under the
nose of the Green man.
"Can the Fed stop gold from advancing, maybe through sales of futures
via its Stabilization Fund? I don't think so, not if the primary trend
of gold is actually in the process of turning up. The situation is now
very interesting. And gold, it seems, has finally awakened from its
long, long sleep."
From hawkeye Marshall Auerback in London:
Read what the largest bond fund manager in the world, Bill Gross, from
PIMCO has to say in his Feb. 3 commentary about Greenspan underwriting
stock markets. See particularly pages 3-4 on their web site:
pimco.com
"Stocks and therefore bonds are the object of policy and not the tools
of implementation."
Bill Gross virtually says that Greenspan has rigged the bond and stock
market! This is extraordinary copy. If Bill Gross is correct, is it not
clear that "officialdom" is manipulating the gold market too to achieve
their misguided goals.
Gross's statements are to the stock and bond market what GATA'S statements
have been to the gold market.
Almost lost in the commotion on Friday was that silver rallied 32 cents
to close at $5.56. Sky could be the limit for silver as Midas has been
saying for one year. This strong rally is of particular note because it
may signify the manipulation crowd is in trouble. On the late Sep. run-up,
silver went higher but with a great struggle.
Silver was no great shakes this Friday either. until the Placer Dome
news broke. Then it rocked. That is what makes me think some of the
collusion crowd knows the jig is up and may have decided to abandon
their silver scheme of selling silver on rallies so as not to encourage
buying in the gold market.
Not only was silver strong, but the CRB closed in high ground at 213,
a new high for the move. March crude oil closed in contract high ground at
$28.70 per barrel with the crude products just as firm. The average hour
earning index and prices paid component for prices paid are also on the
upswing. All of this has inflation watchers rightfully concerned.
This will make any manipulation of the gold market and holding down the
gold price increasingly more difficult.
So what does all this mean for the gold price and for the share prices
of the gold companies of your choice? Many of you are concerned this
move up on Friday will just be another blip.
Let me begin by prefacing what my thoughts are with this email from Caf‚
member Peter S:
Recently I've noticed that.....
Pete is right on. The risk of borrowing gold becomes more apparent by
the day. Who cares if the lease rate is .4% or 1%. None of that matters
if the gold price can go bonkers to the upside in hours and thereby turn
a 1% gold loan into a prohibitive 25% gold loan - or worse (due to
having to pay the gold back at a higher price than it was borrowed).
The "such a deal" gold loan is becoming a dinosaur. The supply hitting
the market from those trades will disappear.
That is a big blow to the manipulation crowd that is going to only get
more painful for them in the days and months to come.
There is no reason we could not see $365 gold this coming week.
Why not?
Friday's action was more explosive early in the move than in late September.
That may, or may not, happen, but I stick with my big picture outlook.
It is my opinion that a fair supply/demand equilibrium price for gold
today (with the manipulation game players exiting stage left) is around
$600 per ounce. That is the gold price I expect to see flashing up on
the scoreboard before the end of the year if the manipulation buggers
have to run for the hills.
As far as the price of silver goes, $9.78 was the silver price target
all last year. Since it has been held, too much silver has been devoured
at too cheap a price. Could see $12 silver this year.
The investment game plan all along has had that price in mind as a
realistic target. It will come. And that is why it is I stayed stay with
my favorite gold and silver investments all this time. The risk reward
ratio does not get any better.
The Gold Shares
Tuesday, a Deutchse Bank (one of the "Hannibal Cannibals") analyst
DOWNGRADED Placer Dome!! And it soared 24% on Friday!
Great call!
Until Friday, the gold shares were given up for mortsville.
Nobody wanted them.
My, how things change in a day.
Well, not really yet.
But, very very soon gold shares will be the "in" thing to be "in."
Some of the reasons for the horrible performance of the gold shares is
that big gold funds are being dismantled while portfolio managers who
invested in the gold shares are being fired. An entire 6 man crew in the
Ohio State Pension Fund was let go, for example. They loved the future
for gold shares - Homestake in particular - and were canned for it.
I have had many queries the past two months. What is wrong with Homestake?
What was wrong was the money managers who inherited the Ohio State Pension
Fund gold share equities had been selling since $10 and drove the stock price
down to right above $6. Nothing wrong with the company, just the misinformed
judgment of those who fired the portfolio managers.
That is another anecdotal sign of a major, major BOTTOM in the gold shares.
I am partial to the junior golds and smaller gold companies. Many have
been priced at near bankruptcy prices. Even with Friday's dramatic gold
price rise, there was very little relative interest in the smaller gold
stocks with some players using the gold price rally to unload shares into.
Because of mainstream press reports, the investing public does not believe
a big gold market move can happen. Boy, are they in for a surprise!
Investors will have 10 to 20 baggers in their portfolios if they locate
the right smaller gold companies. The share price moves up of the quality
baby gold stocks will, in time, make the moves of some of the internet stocks
look "rinky dink."
More on that.....
There are so many good juniors out there. My favorite is still.....
There is also a little gem in Canada.....
For a pure exploration play there is.....
Midas
Bill Murphy ( Midas )
Chairman, Gold Anti Trust Action (GATA) gata.org
Le Patron, Le Metropole Cafe lemetropolecafe.com
The above mention of GATA is as follows.
Bill Murphy, Chairman, Gold Anti Trust Action (GATA) gata.org
Also, GATA related articles can be obtained at the pay for view site.
Bill Murphy, Le Patron, Le Metropole Cafe lemetropolecafe.com |
