(GATA News) hedge fund manager chucked his 3+ million shares Barrick Gold stock
Midas Special
Throw out the technicals when a market is rigged.
This is not sour grapes talk.
I had thought the market was sold out.
For whatever reason, it was not. I was wrong.
Despair is everywhere again. One would think by the price action of gold
and silver that we are in for some tough times ahead. That is what many
of you told me today. Well, that is JUST NOT THE CASE.
Ironically, the feedback I am receiving from all my very good sources is
that the shorts are in dire shape, that the surprise $80 rocket move up
in the gold in early October devastated bullion dealers and gold producers
alike far greater than the public realizes.
The word is that there were several other Cambiors and Ashantis that are
being kept under wraps. The word is that the United Bank of Switzerland
is laying off 65 of its personnel in the foreign exchange and gold
operations. We have alluded that to you for some time now. Other bullion
dealer operations are also being pared down. That can only mean the
derivative selling game of the past years is winding down to a
significant extent.
I will have much more to say on this soon. Today was a very very busy
day. The Gold Anti Trust Action Committee received more favorable
commentary from highly regarded gold industry people than any other day
this past year. The reason for that is that it is becoming apparent to
even the most critical of our skeptics that certain powers are
manipulating the gold market to serve their own purposes. Because of
that recognition, forces are being mobilized to fight back.
In addition, I received a call today from a highly respected hedge fund
manager today who told me that he chucked his entire Barrick Gold stock
position as a result of their refusal to change their hedge strategies.
I can tell you that his (or her) position was greater than 3 million
shares and this person pleaded with them to get with the program, but to
no avail. He wanted LeCafe followers to know that he agreed with the great
novelist, Arthur Hailey, who also sold his long held Barrick Gold
position. The bottom line is that it makes no sense to own that stock.
If they do not even believe in their own market, why own it. Sell it and
come back another day when Barrick thinks the gold price is going up. In
the meantime, invest in some other industry or some other gold company.
This is a significant development and I have been passing this word on
to other money managers; owning Barrick Gold is a trip to mediocrity.
There are many other senior gold companies that are superb investments.
Especially now. So why not buy the ones that will benefit most when the
price rallies, which it surely will.
And why will it? THE HEAT IS ON THE "HANNIBAL CANNIBALS" and they are
beginning to really feel it. That is what I was told today. For one year
GATA has labeled Goldman Sachs: "Hannibal Lecter." At times, we called
them the leader of the "Goon Squad" that killed every rally attempt that
gold made. You know why by now.
For one year many looked askance of that labeling and description of
such a highly esteemed financial operation as the lordly Goldman Sachs.
Who were we to suggest that they were acting like "cannibals" towards
their own clients?
Well, take a gander at this Financial Times article.
Thursday December 2 1999
The Financial Times
ALL THINGS TO ALL MEN
The various roles played by Goldman Sachs came under strain when a
rising gold price hit Ashanti, write Lionel Barber and Gillian O'Connor
On Friday, October 1, a worried Mark Keatley, finance director of
Ashanti, the Ghanaian gold mining company, flew from Accra for a crisis
meeting in London. Mr Keatley knew his company was in trouble, but he
was about to discover that things were a great deal worse than he had
feared.....
..... agreeing to a series of temporary standstills - and after the
appointment of CIBC in place of Goldman as principal corporate adviser
to Ashanti - the 17 banks extended the moratorium to a three-year margin
holiday. But they extracted a price: the right to acquire 15 per cent of
Ashanti's equity through cheap warrants issued by an offshore subsidiary
of the company.
Ashanti was saved, although the Lonmin bid ultimately failed because the
Ghanaian government was determined not to lose control. But one month
later, questions remain over the role of Goldman. Many involved pay
tribute to its skill in resolving the crisis. But some rivals remain
concerned about Goldman's privileged access to information.
One complaint that went as far as the Bank of England, concerned a large
trade executed by Goldman in the middle of the crisis. Some rivals
believe it traded gold heavily at $325 an ounce in an effort to
extricate both itself and clients from derivative liabilities.
..... some Goldman executives admit that some of the
derivatives it sold Ashanti may not have been ideal for a
heavily-indebted company. But it argues that the deals were
"client-driven transactions" - the responsibility of Ashanti's
management.
Wherever responsibility lies, the result is beyond dispute. Ashanti is
heavily in debt, and dependent on the goodwill of its banks. In the
words of one person involved, the company is "a prisoner on the run".
End.
Nice huh. Weeks ago, I told you that a friend of the LeCafe spoke to Sam
Jonah. He told him that Goldman Sacks was squeezing them by the b's. Go
back and check the record. Even the FT article is more polite towards
Goldman Sachs than they really would like to be. The libel laws in
London are tough so the authors have to be careful. Who wants to fight
the Goldman Sachs money? GATA is a different story. If they come after
us they will have to open up their gold books. Forget about it!
That is yesterday's story. Tomorrow's is: what are we all going to do
about it, especially since the mainstream world is getting the drift now
about what the gold market has been all about for some time> I can
assure you that this FT article has REALLY raised the heat on Goldman
Sachs. I received a call today from France assuring me that is the case.
Our supporters in Europe also told me it is time to be very aggressive,
so we are going to go all out against the gold market manipulators as I
have been alluding to for the past couple of weeks.
Much of our plan has been inspired by the famed newsletter writer, Harry
Schultz, who continues to urge his newsletter readers to support GATA.
Because of his followers support, money has been coming in so that we
may soon be able to launch an effective counterattack on the "Cannibals"
and their "officialdom" bailout sugar daddies. We are not too far from
launching that campaign, but we need a bit more money in the till to
make it effective. GATA would like your support and that of all the gold
companies NOW.
The following letter was sent to many of the major gold producers today
and now to you.
Dear LeCafe member:
Last spring I met in Washington with U.S. Rep. James Saxton, vice
chairman of the Joint Economic Committee of Congress. He told me that
the best way to gain congressional support for the Gold Anti-Trust
Action Committee was to tell congressmen that we are on a mission to
find out the truth about the gold market.
GATA now believes it is time to accelerate that quest. The gold market
is rife with rumors that the U.S government is intervening in various
ways to hold down the price of gold. The rumors grew the other day after
the government of Kuwait's extraordinary announcement that it was
sending its 79 tonnes of gold to the Bank of England for leasing
purposes.
This should not be a surprise to any of us in the gold industry. After
all, on July 24, 1998, Federal Reserve Chairman Alan Greenspan told a
House committee: "Central banks stand ready to lease gold in increasing
quantities should the price rise."
Gold mining companies and their employees and shareholders,
less-developed countries that produce gold, and investors in gold
bullion and coins have all been hurt by the unnaturally low gold price.
Everyone connected to the gold industry wants to know if the gold price
is being held down by some sort of concerted action and, if so, the
reason and parties behind it.
GATA would like the Federal Reserve Board and U.S. Treasury Department
to answer 11 questions. We believe that the following plan is best
suited to ferret out some truth:
1. Place the attached letter to Fed Chairman Greenspan and Treasury
Secretary Lawrence Summers as an advertisement in The Wall Street
Journal, Barrons and The Washington Post so that we may be heard in
government and financial circles.
2. Following publication of the ad, begin an Internet campaign to gain
congressional attention for our agenda. GATA will request that all
gold-oriented Internet sites get behind this campaign.
3. Once the campaign begins, GATA will ask its congressional contacts to
help us get a response from the Fed and the Treasury Department.
Posing our questions in public is essential. A spotlight must be focused
on our issues to raise hopes that we might actually succeed. We must let
the U.S. government know that if it is acting surreptitiously to hold
down the price of gold, congressional inquiry will make the scheme
difficult to maintain.
The Treasury Department is responsible for the U.S. gold at Fort Knox,
and GATA is going to call for an audit of the gold there. It would be
the first gold audit since the Eisenhower Administration. Gold reserves
are an important government financial asset and the American people have
a right to know that it is all accounted for. They and we also have a
right to know if any government gold has been lent out. This specific
request for information should be helpful in gaining public support, as
it is easy to understand.
GATA is not reinventing the wheel here. We are just following in the
footsteps of Peter Hambro, president of Mines d'Orde Salsigne SA; Chris
Von Christierson, chairman of Rio Narcea Gold Mines Ltd.; and John
Morris, CEO of Gold Mines of Sardinia. They recently asked similar
questions of the Bank of England.
To achieve our goals, the Gold Anti-Trust Action Committee needs your
support. We have received substantial contributions from two senior gold
companies. Without them we would not have been able to retain our
excellent lawyers and gain publicity around the world in the last 11
months. We hope that you also might help us, particularly by
contributing to our ad campaign. We need additional support to pull this
off, as the ads will be expensive -- but well worth it.
If you do want to help our ad campaign financially, your contribution
will be used only for that. Communications and contributions to GATA are
kept in strictest confidence. You will not be identified with us without
your permission.
GATA has received financial support from many gold company shareholders.
Because of it we have made great progress. But we have to keep plowing
ahead on behalf of gold. We can do so with your help.
Thanks for your consideration.
Best regards,
BILL MURPHY
Chairman
The following ad is under final construction and was presented to many
gold companies in the following manner:
AD - Layout under construction
To:
Alan Greenspan, Chairman, United States Federal Reserve System
Lawrence Summers, Secretary of the Treasury
From:
Bill Murphy, Chairman, Gold Anti-Trust Action Committee
Chris Powell, Secretary, Gold Anti-Trust Action Committee
B. Ethan Stroud, Attorney, formerly Department of Justice, Treasury
Department, Washington D. C.
John R. Feather, Attorney, formerly Legal Staff Federal Reserve Bank
Dear Chairman Greenspan and Secretary Summers,
On July 24th before a House Banking Committee and on July 30th before a
Senate Agricultural Committee, Alan Greenspan made the following
statement, "Central banks stand ready to lease gold in increasing
quantities should the price rise."
Ever since that comment was made, there has been a swirling controversy
about whether the United States Federal Reserve and or The United States
Treasury has been actively involved in the gold market. The speculation
is that there are official efforts carried out to affect the gold price
in order to rescue the follies of one group or another. Aggressive
bullion dealers, hedge funds doing the ?Carry Trade? and unwise price
speculation disguised as hedging by mining companies are most frequently
quoted. Universally, the stories talk of severe risk to the financial
system because of irresponsible lending policies of the central banks.
The controversy has even reached the House of Commons in England - June
16,1999:
" We cannot allow the rumours to grow, because they are extremely
dangerous to public confidence. It has been suggested that the market is
very short of gold, that the short positions may be a substantial
multiple of the total amount of gold currently held by the Bank of
England, and that the Bank's real motive is to save the bacon of firms
that are running those short positions. If such a suggestion is being
made seriously, it must be dealt with authoritatively and definitively,
and we want an answer from the Government now," Quentin Davies.
That statement was made after the Bank of England pre-announced, in the
most extraordinary manner, that it was going to sell 415 tons of its
gold reserves, resulting in a drop in the gold price from $290 to $252.
However, when 15 European central banks announced on September 26,1999,
that they were restricting their gold sales and gold lending for the
next 5 years, the gold price soared to $337 per ounce. Word spread that
the bullion banks were panicking again. Right on cue, but in
uncharacteristic fashion, the Government of Kuwait announced it was
depositing 79 tons of its gold with the Bank of England for lending
purposes. The rumors were that the New York Federal Reserve Bank was
orchestrating the gold price down using all the means at its disposal to
accommodate the shorts.
The question goes begging: Is the "official" sector of the United States
intervening in the gold market and, if so, why? We will take you at your
own word that you are intervening in the gold market as you said you
would do if the price rose. After all, it is public knowledge that the
New York Fed orchestrated the bailout of Long Term Capital Management in
the fall of 1998.
The Federal Reserve Bank's Open Market Committee may have the authority
to deal in gold coin and bullion, but all purchases and sales, "shall be
governed with a view to accommodating commerce and business." - 12 USC
263-359
However, if the U.S. Federal Reserve or Treasury is depressing the gold
price in order to help numerous and various gold short sellers, it is a
clear and illegal violation of the Bank's purpose clause. Accommodating
one side of a private contract is illegal, fraudulent and
unconstitutional. For the country's central bank to use its own powers
for the benefit of one class of citizens to the harm of another class of
Americans is a gross violation of the constitution's equal protection
clause.
If the Federal Reserve intervened in the gold market after the early
October price rise as you said they were prepared to do, it was not to
accommodate commerce and business, but to accommodate one half of the
parties to a private contract who had shorted gold. The other half of
the parties to the same contract who had gone long gold were cheated and
deprived of a fair market price, denied the equal protection of the law
and cheated of profit potential. It appears that we have an illegal and
fraudulent act that was they were prepared to do, it was not to
accommodate commerce and business, but to accommodate one half of the
parti
The manipulation of the gold market has caused irreparable harm to gold
owners, gold companies and gold miners as well as all Americans. If, as
we suspect, there has been "official" U.S. intervention to hold down the
gold price, it has destroyed a free market, depressed the fair market
value of an important financial asset, distorted the true value of gold
companies listed on the New York and American Stock Exchanges, and
decreased the value of its own and America's gold assets. The Fed's
price fixing action should be investigated by the SEC since it may be
the sole proximate cause of the artificial dramatic fluctuations in
prices of gold shares. The SEC should be very concerned that the stock
market is being regularly and daily distorted by Federal Reserve Board
intervention to the benefit of gold short positions. Why doesn't the
Federal Reserve Board buy gold to benefit the long positions? Why
doesn't the Federal Reserve Board stay out of the market altogether?
To clear this matter up, the Gold Anti-Trust Action Committee would like
to know the following:
1. Does the Federal Reserve, either on its own behalf or on behalf of
the US Treasury or any other US government agency, such as the Exchange
Stabilization Fund, lend gold or silver or facilitate the lending of
gold and silver?
2. If it does lend these precious metals, does it do this only on a swap
or repurchase arrangement basis or does it also lend unsecured?
3. What are the credit criteria that a potential borrower needs to
establish?
4. What are the credit limits applied to a borrower? How do they vary
between secured/swap lending and unsecured lending?
5. How often are counter-party positions marked to market?
6. What happens if market price movements cause the credit limit to be
exceeded?
7. Does the Federal Reserve have any counter-party credit utilizations
that are presently in excess of 90% of the limit?
8. Have any precious metal related credit limits been amended other than
in credit limit reviews in the normal course of business?
9. Does the Federal Reserve, or the Treasury Department, or any other
government agency ever own or deal in derivatives that are connected
with precious metals? Do any of the foregoing agencies write call
options against the Treasury's gold holdings?
10. Do the above-mentioned credit limits and mark to market provisions
apply to derivatives as well?
11. Has the Federal Reserve, the Treasury, or any other government
agency, either directly or through the agency of its management of
foreign custody accounts at the NY Fed collaborated with the Bank of
International Settlements, the Bank of England, or any other central
bank with a view to managing, smoothing, or otherwise affecting the
market price of gold?
There is also great concern and omnipresent rumors that some of the gold
in Fort Knox has been lent out or sold. That gold is one of America's
great financial assets, yet there has not been an official audit since
the Eisenhower Administration. Therefore, The Gold Anti-Trust Action
Committee is calling for an official audit so that Americans may truly
know that their gold is intact.
GOLD ANTI-TRUST ACTION COMMITTEE
www.gata.org
There will be much more on this from the Cafe in the weeks to come. If
you are financially able to do so, we request your support.
Contributions for our add campaign may sent to the following address:
GATA
Attention: Chris Powell
7 Villa Louisa Rd.
Manchester, Connecticut 06043-7541
Or wired to:
GATA
The Savings Bank of Manchester
923 Main St., Manchester , CT 06040
routing number: 211-170-185
for the account of: 9500-574-053
Any contribution of $500 or more will receive an Alan Despert fine art
limited edition print that has a retail value of $750. The contribution
is tax deductible. You might like to know that original works of Alan
Despert, one of the renowned Absolut Vodka artists, are briskly selling
for $5,000 to $10,000 at the Art Gallery at the Fairmount Hotel in
Dallas, Texas. What a great Christmas or holiday present!
I know this is a brutal time for us all, but wonderful times are right
around the corner. And, you can be a part of history. GO FOR IT!
Bill Murphy ( Midas )
Bill Murphy,
Chairman, Gold Anti Trust Action (GATA) gata.org
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