(GATA News) ... not just gold being attacked, but all rival money to paper.
Midas du Metropole
November 30, 1999
... Yesterday's gold price plunge cleaned out a good number of specs
and gave the trade another chance to cover shorts - which they did...
... the big boys do no want gold over $300 at the moment and the
orchestration of a non free gold market goes on. This same crowd
continues to bomb the market when it is most vulnerable...
As soon as gold pokes its head up...the goons came in and whacked it down...
In my book this is a very bullish development. The trade does not want to be
as short as it has been - going into next year. If there any market surprises,
they are now likely to be bullish ones...
Fundamentals
Have to start with the Bank of England gold auction. The English are
very consistent in their attempt to get as low a price as possible for
their citizens. Gold finally looked like it might get over the magic
$300 number, so something had to be done. Easy to do. The LBMA bullion
dealers just had to spread the word to their clients not to bid. Then
start selling as soon as the Australian market opened. They knew there
would not be much pre-auction bidding as potential buyers were waiting
for the auction results - thus, it did not take much selling to knock
the gold price down ahead of the auction results. The rest of the day
was all downhill.
Another day in the life of a rigged market.
Thank goodness for Anglogold. Anglogold bid successfully for 300 000
ounces of the 803 600 ounces of gold sold at the auction.
Kelvin Williams, Anglogold's executive director responsible for marketing,
said the purchase formed part of the broader management of the company's
hedge book in the run-up to the financial year-end on 31st December.
The New York Fed must be a bit desperate to in its efforts to drum up
gold supply for its gold market manipulation play:
Jordan Sells Half Its $200 Million Gold Reserve, Report Says
Amman, Nov. 25 (Bloomberg) -- Jordan's central bank sold half its $200
million of gold assets last month...
... a post from Rhody at the www.kitco.com site.
Date: Mon Nov 29 1999 15:51
(LEASE RATES: There was an immense lease driven short) attack on gold today.
" For the past several weeks lease rates have been quiet to slightly
declining until today.
All last week one month gold leases were in the range of .8% and stable
to declining. Then today, they jumped 1.32% to 2.12%! ONE YEAR leases
are 1.95%. So we went from a "normal" looking spread of .8% to 1.7%
across the board to instant backwardation in one day! The drop today was
an orchestrated attack by fiscal interests to attack precious metals at
a critical time ( BOE auction and collapse of 30 year bond and a
weakening DOW ) The attack was across the board on all PRECIOUS METALS,
even platinum where one month leases are now 66.5% up .86%. One month
leases are now triple one year rates in platinum. Talk about
backwardation! Yet platinum was shorted along with silver and palladium.
Think about it.
People are borrowing platinum at 5.5% metal interest rates per month
in order to short it down. Yet it is in screaming deficit of supply!
My interpretation of all this is this market is in end phase. This market
is about to die. This market is so manipulated that there is a feeling
of hysteria and panic about it. It is not just gold that is being
attacked, but all rival money to paper. Interesting situation. We need
these metals to operate a modern industrial system, yet they are being
shorted to death in order to protect the financial system. So if we
short down these metals to the point the mines close, we shall have our
paper financial system, and nothing to spend the paper on. This logical
inconsistency will eventually kill this manipulation because a dead
market cannot be manipulated." End.
... can be attributed to the hedging fiascos of Ashanti and Cambior.
As an example of that, here is some commentary taken from The Press
of New Zealand about an Otter gold shareholder meeting in New Zealand:
"In essence, the entire meeting was a battle of words between Mr Radford
and Dr Weiss, the spokesman for Guinness Peat Group.
Refused admittance
The confrontation began with Mr Radford refusing admittance to the
meeting of local legal counsel to assist Dr Weiss.
At issue - and it went on for a couple of hours to the virtual exclusion
of any other business - was the Otter Gold policy of gold hedging contracts
which GPG maintained had had a loss in value of about $41 million since
Otter's financial year ended on June 30.
Mr Radford called on Otter's executive director, Pat Scott, to explain
in detail how the hedging contracts worked, but the explanation was
never going to satisfy Dr Weiss.
Letters of approval from bankers and quotes from learned authorities
were trotted out by both sides to justify or condemn each claim and
counterclaim.
At the end of it, Mr Radford said the full explanation sought of the
board had been supplied although most shareholders present would be
either confused, bemused, or bewildered by the whole exercise." End.
That sort of banter does not entice generalist money managers to put
their money in the gold shares. It is too much for them to deal with.
The best analogy for that came from John Brimelow. It can be likened to
an investor who thinks he has bought a "call" option only to find out it
was a "put."...
The Financial Times, November 23, 1999
Fed Sells Y2K Liquidity Options
The New York Federal Reserve has sold almost $370bn in "liquidity
options" to leading banks in an effort to quell panic about the
millennium bug.
Bankers said the popularity of the options, which offer buyers insurance
against the possibility that markets could dry up because of Y2K
problems, had already eased fears about the bug.
The New York Fed, which conducts open market operations on behalf of the
US Federal Reserve in Washington, said it is planning further auctions
of liquidity options in the next few weeks.
The Fed's unprecedented venture into options sales has turned it into
one of the biggest derivatives dealers in the world - an unaccustomed
role for the guardian of US monetary stability.
The liquidity options are especially popular with marketmakers, because
they assure their funding even if financial markets should suddenly dry
up over the end of the year.
"The markets were expecting liquidity to get progressively worse as the
millennium approached, but liquidity has improved in the past two weeks,"
said Avinash Persaud, head of global research at State Street Bank.
"Part of this can be attributed to success of the Fed's liquidity options."
The options, which are legitimate for five days and encompass three
five-day periods starting December 23, December 30 and January 6, give
the holder the right to access cash from the Fed at a "strike" price of
150 basis points over the Fed funds rate.
This means the options would be exercised if liquidity dried up to such
an extent that it was only available from the normal inter-bank market
at a higher spread than 150 basis points over the Fed funds rate.
Bankers say that the popularity of the options combined with the Fed's
decision to expand the pool of collateral available to the market to
borrow money from its discount window had significantly eased fears of
a liquidity crunch over the millennium.
"We believe the markets have understood our message that we want the
transition to the new millennium to be as smooth as possible," said an
official at the Fed in New York.
Concerns have also been eased by the belief in bond markets that there
is little possibility that the Federal Reserve and the European central
banks will raise interest rates in the near future.
The Fed and other central banks have printed additional supplies of banknotes
in case of a rush by individuals to hold cash over the new year. End.
Is the New York Fed holding down the gold market due to Y2K concerns?
Platinum is on a tear again as spot closed up $12 today to finish at $442.
The Platinum lease rate is over 66%. What is going on here? As long time
Cafe members know, John Brimelow has predicted a run for $500 platinum
before year end. Looks like he might get it.
According to John, who knows this market as well as anyone, some specs
and a few trade houses are trapped short. The past 3 November/Decembers
the Ruskies shipped platinum into the market. So far they have not done
so - to the shorts dismay. Two more problems for the shorts. Japanese
demand is up 12 1/2 percent over last year and Chinese platinum demand
is soaring. According to John, there is a significant "secular" upswing
in demand in China which has caught platinum suppliers understocked and
platinum bears too short.
... you may be interested in the following comment by Felix Freeman,
senior gold analyst at ScotiaMcLeod (major Canadian brokerage). He is
one of the better analysts, fairly objective and rational; while he's
not a gold bug, he's at least not been as hostile to the commodity he
covers as some of his notorious colleagues (well documented by you).
In Scotia Capital's weekly research report "Golds - Views and Values"
dated 19th November, he writes: ".....investment demand is extremely
strong, and the nature of the buyers appears to be changing. Over the
last 18 months coin demand in the US has been very high, largely ahead
of Y2K fears, rational or not. Most of this business was in quite small
lots, typically US$25,000 - US$50,000 at most.
Now wealthier investors are buying larger lots, often in the US$1million
- US$10million range, and the motivation appears to be changing from Y2K
to SWITCHING FUNDS FROM THE EQUITY MARKETS FOR CAPITAL PRESERVATION.
THIS IS A VERY IMPORTANT NEW TREND, AS SUCH BUYING HAS NOT BEEN SEEN IN
SIZE FOR ALMOST A DECADE. This suggests that any new sense of urgency
from fears about the state of the equity market, even though they have
receded again, could translate into sizable demand for gold." (Please
note : HIS emphasis, not mine).
Keep up the good work! Regards, lonely Canadian gold bug
- less lonely now that I have LeMetropole to keep up my spirits!
All the best,
Bill Murphy (Midas),
Chairman, Gold Anti Trust Action (GATA) gata.org
Le Patron, Le Metropole Cafe lemetropolecafe.com |
