(GATA News) Got to be in it to win it. Also, Gold, Frankincense, and Myrrh.
The Man Ray Table Discussion du Jour: Asia
Charles Peabody
Mitchell Securities
Mitchell501@bloomberg.net
December 22, 1999
Gold, Frankincense, and Myrrh
The three kings (central bankers, producers and financial hedgers)
have come bearing gifts, gold at a cheap price. So, I'd like to take
the other side of that trade and.....
My position has been that the Fed would be dragged into a tightening
mode, kicking and screaming, by the bond vigilantes. And thus, I am
not surprised by the bond market's negative reaction, yesterday, to the
Fed's decision to leave interest rates unchanged while maintaining a
neutral bias. The bond market smells inflation and the Fed's decision
to drag its feet now (because of Y2K fears) only means that the incipient
inflationary forces will become even stronger in the first half of 2000
Thus, I reiterate my belief that.....
I continue to recommend the sale of.....
Gold Futures
(12/21/98 Present)
The Gift of Gold
To the extent that the Fed increasingly finds itself behind the curve
in its fight against inflation, I want a hedge against this political foot
dragging. For me, that is gold. Bill Murphy, patron of Le Metropole Cafe
(www.lemetropolecafe.com - to which I am a contributor) has done a good
job of exposing the fundamental imbalances in this market. I would like
to add my two cents worth, as viewed through the banking system.
The recent spike in gold (see Chart on page 1) shows the kind of.....
In the case of gold, there are two possible catalysts, both inter-connected,
to another move up in the first half of 2000, i.e. .....
...a catalyst can only provoke a reaction if there is a fundamental imbalance.
Evidence of an imbalance in the gold markets can be seen in the.....
However, to the extent that the steps taken in..., then there is still
another day of reckoning to be had before October of.....
...It is also worth noting that Chase Manhattan and J.P. Morgan experienced
the largest dollar increases in the notional value of their gold derivative
contracts, suggesting that they were the two banks most.....
...Even more noteworthy was the dramatic rise in gold derivative contracts
at CMB and JPM with maturities of greater than.....
...Even by the OCC's own admission, contracts with maturities longer.....
...the greatest market and credit risks.
In short, for CMB and JPM, the stakes are high if the gold market.....
...Thus, I recommend the purchase of.....
The Dos Passos Table, Discussion du Jour: Guest Speaker
Robert Chapman
December 22, 1999
GOLD
The manipulation continues unabated.....
The Dutch central bank.....
Nederlandsche Bank will.....
These sales are part of a plan of.....
There is no question the FED is operating in the gold derivative markets.
This is why Alan Greenspan was so animate during the Congressional hearings
that there should be no regulation of over-the-counter derivatives.
Legislation would have stopped the FED's manipulation of the gold market.
The FED's actions particularly facilitates the gold carry trade which keeps
sustained downward pressure on gold prices and creates bogus liquidity,
which keeps the world stock markets well oiled.
...engineered in their fashion to lower gold bullion prices and in all
likelihood to bail out the FED's put or short position.....
...There is an institutional commonality of interest for lower gold prices.
That is to reflect stability in their non-gold paper system, which is
systemically bankrupt.....
...there is much at stake. If, as we have predicted, the 20% barrier
is reached, we can assure you the FED will be in the stock market
at any cost keeping it from going lower.....
Since its inception the FED has been a disaster for the American public,
but it has made untold trillions for bankers and brokers. The bubble is
there. It will be pricked and we ultimately will have a bear market
no matter what the FED does. Conversely, gold will rise again from its
depths and reassert its position as the only real money.
There is 13,000 tons a gold in.....Those who own gold trust neither the
government nor the financial system, thus we forecast the program as
another bureaucratic failure to control citizen wealth and gold prices.
Gold industry officials have been contacted by government regulators,
such as the British Financial Services Authority and the FED, in regard
to the firms' gold hedge-book exposures stemming from a little-known
detail about producers' hedge contracts, especially in regard to lack of
margin calls, which was part of the contract agreement. As gold prices
fell commercial hedgers gave increasingly favorable terms rationalizing
it by thinking margin calls are only for speculators. What pray tell
were the producers doing if not speculating. The banks who wrote the
derivatives are over extended by billions of dollars and liquidity is
now since absent from the market. The banks are selling bullion to force
the price of gold lower, putting the derivative bets on side. Kuwait
lent gold to the BofE, and the Dutch announced sales all calculated to
drive prices lower. The FED isn't investigating - the FED and other
central banks are the problem. It is transparent that all the major
central banks are manipulating the price of gold and the new preferred
range is $250-$300 an ounce. Are we the only people who see this? What
is Congress doing hiding? They have to be aware of what is happening.....
The International Forecaster
An international financial, economic, political and social commentary
Published and Edited by: Bob Chapman
FOR A FREE INTRODUCTORY COPY GO TO:
brockton_magt@hotmail.com
The James Joyce Table
Discussion du Jour: Gold, Commodities, Midas du Metropole
...this occurred before the decision by the Fed to leave interest rates
unchanged with no bias towards tightening in the future. Surely, Goldman
Sachs did not get the word what the Fed was up to before the rest of us!
Surely!
Today's action was very unusual for the usually moribund gold market.....
...suggests higher gold prices in the days.....
Somebody decided to buy in some size today. Three possible explanations.
One, the Fed's refusal to put out a positive tightening bias in the face
of soaring bond yields and having already put $500 billion into the
money supply recently, demonstrated a lack of resolve or SUPER concern
over Y2K issues, which would indicate they suspect the Y2K problems WILL
be worse than the government is letting on. Second - on the price break
today, the phone was ringing off the hook at the bullion dealers shops
with buy orders out of India, etc. Perhaps, that wall of buying support
caused the shorts to run for the hills. Three, Cambior and Ashanti have
still not come to agreement with the bullion banks. Both standstill
agreements are at a standstill. Cambior announced today that they could
not come to an agreement while Ghanian legislators are raising the gold
ante in that country by calling for a ban of surface gold mining in
Ghana. Any of these three situations may be spooking the gold shorts.
The case for forcing the Federal Reserve and U.S Treasury to explain what
they are doing in the world gold market becomes more apparent every day.
There was a piece in the Wall Street Journal today by former Fed Governor
Wayne Angell, entitled, "The Fed Should Tighten, but for the Right Reasons."
Angell is now the chief economist at Bear Stearns.
In that piece he says:
"Why, then, do I favor an increase in the.....including the price of gold."
Two points stand out the way I see it. The first is that Angell talks
about the price of gold moving back to the $250 to $280 range. What is
that all about? Gold moved down to that range this summer while the bond
market moved from 5% yields to 6.4% yields. How does he reconcile that
dichotomy? Are the bond vigilantes brain dead or just ignorant about how
significant the low gold price really is? I don't think so. Yields are
going up because of inflationary expectations. The bond market is too
big to be manipulated. Gold has not reflected those inflation expectations
because the Fed/US Treasury is holding the price down to foster notions
such as Wayne Angell's.
The second noticeable disturbing point is that Angell mentions the word
"target." That is exactly what GATA says our Fed is doing - "targeting"
a lower gold price. Angell just about comes out and lays it on the line
with unequivocal bluntness. This former Fed Governor then explains why
they are doing so: the world perceives the price of gold a barometer of
how central bank monetary policy is being conducted. The US Fed wants to
foster the notion that they are doing a marvelous job and they perceive
that a low gold price gives them a "A" on their performance report card.
Extraordinary, that a barbarous relic like gold has taken on so much
importance at such high levels among the Washington financial power
structure elite. Whether gold has an important role in the next century's
financial matters could not be more clear. IT DOES. If that were not
the case, the powers that be today would not be going to such lengths
to orchestrate the price lower to suit their own short term agenda.
The sad part about what they are doing is that it is going to backfire
in fireworks fashion. The longer they keep gold down, the higher the
price will eventually go to ration the remaining available supply.
Gold demand is at record levels at the moment. If the gold price were
$150 higher, that might not be the case. If the gold price were $150 higher,
exploration and mining companies would be scouring the earth to find new
supplies. Because of the present day manipulation and artificially low
gold price, too much gold is being consumed at too low a price and many
exploration projects have been mothballed. The piper for this folly is
going to be paid in the years to come as gold prices roar to the upside.
Well I'll be dog goned or bond goned. I wrote the previous diatribe
about Angell a couple of hours ago. After the Fed's failure to show
any resolve, the bond market just reversed to the downside after being up
3/4 of a point on the Fed news. This is what should have happened and it
has as bond yields hit a new high to close at 6.46 %. The bond vigilantes
have spoken, Mr. Angell. I repeat - how can Mr. Angell reconcile a $287
gold price with those high bond yields that are going even higher?
It does not jibe.
Not only did we have an outside day to the upside in gold,
but the bond market had an outside day to the downside.
To have both happen on the same day
IS AN EXTRAORDINARY OCCURRENCE
and should be telling volumes about US inflation in the pipeline.
There is no reason for the gold market not to go higher from here.
Much higher.
Producers are COVERING.
Demand is SOARING.
Bullion banks are PULLING BACK on their lending.
In my opinion, only the FED/TREASURY can stop the gold market.....
More potentially bullish news emanating from Chinese circles.
From the www.kitco site:
Date: Sun Dec 19 1999
(Gold Flash News & Press Releases) ID#22793:
Copyright 1999 EpicAutumn/Kitco Inc. All rights reserved
indian-express.com
"To prevent financial risk, China needs to boost gold reserves.....
..."I think the state should transfer part of its dollar foreign reserves
to gold," he said.....
Some economists said China could take advantage of current low gold
prices to buy gold from the world market to boost gold reserves.
"Compared with cash, gold is stable and safe," Liu said. The state.....
European sensitivities about the orchestrated low gold price may be on
the rise again. Maybe the Dutch are getting their own heat. I am using
the word unusual a lot in this Midas, but this letter yesterday to the
FT editor from the chief Dutch gold trading honcho is just that (maybe
even unprecedented):
"Gold price steady following report of Dutch sale plan"
"From Mr Jos R. Heuvelman.
Sir, in my view the headline "Dutch sale plan knocks gold price"
(December 11) did not correspond to the facts and gave the wrong
impression to the readers...headline gave the wrong impression."
Jos R. Heuvelman
Director, Financial Markets Dept.
De Nederlandsche Bank
For such sensitivity to surface in the FT may be telling us that the
European crowd is not happy that the gold price was orchestrated all
the way back down to $275 after their announcement.
Snippets from the widely followed Bridgewater Associates:
The Calm Before the Storm?
"Recent market action has been painfully dull. You can see it on.....
...If history is a guide, this is the calm before the storm."
Bridgewater goes on to note that "recent patterns are at polar extremes.
Interest rates, currencies and commodities have stabilized, contributing
to unusually strong equity trends." They go on to say that it is most
probable that central banks will probably tighten, interest rates will
rise, foreign interest rates will rise relative to the U.S. and narrow
the interest rate differentials, foreign lending will be insufficient to
finance the U.S. current account balance, leading to dollar weakness.
A storm of this nature will not be bullish for U.S equities.....
Potpourri and the Gold Shares
The XAU lunged up somewhat to finish at 67.41 up 1.51. The action of the
senior gold producers in North America still leaves much to be desired.
A 5 point surge up day could change the whole feel.
Perhaps, we are wrong about the US Fed/Treasury monkeying around with
the gold price. If that is so, they should not hesitate to answer the
11 questions GATA has asked of them. According to our Berger & Montague
attorneys, who researched this matter thoroughly, "The Fed is generally
subject to the provisions of the Freedom of Information Act ("AOIA"),
5 U.S.C. s 552, and would most likely be required thereby to disclose
any records of meetings held within the two years preceding any request.
However, it would not be required to disclose any details regarding the
deliberative processes which precede those dealings."
It is on that basis that GATA is filing a formal FOIA request to the
questions that we posed to Alan Greenspan and Lawrence Summers in our
Roll Call open letter.
I will keep you apprised as to all developments in this endeavor to get
some truth out of the U.S Government. If they have nothing to hide, they
should have no trouble answering our questions in the time allowed by law.
Speaking of syndromes. The Arthur Hailey sell Barrick Gold syndrome
has caught the attention of the highly regarded Richard Russell.
This is what he had to say yesterday in his daily comment:
"There's no herd instinct into gold. Feb. gold was up .5 to $286.
AXU down 1.64 to 65.83. ABX does not act well (too much forward selling
of gold?) and it closed at 17 13/16. But NEM does act well, closing down
5/8 to 23 13/16."
For another unique take on the Barrick situation, I highly recommend
what Ted Slanker has to say at the following web site. Barrick has to
be reeling a bit from the inordinate amount of negative commentary about
its stock.
thebullandbear.com
From Bridge News in Accra, Ghana - Dec. 21 - "Ghanian legislators are
angry over allegations that surface gold mining in the west African
nation involves the use of ruinous environmental practices, and have
called for the method to be banned."
Is this a shot across the bow by the natives of Ghana to foreigners
resulting from the Ashanti blow up?
Holiday time is upon us and is usually a very dull for the precious metals.
Because of the Y2K issues, this year might be different, although various
world gold markets will be going half speed from now through the new year.
Gold did not rally $84 eleven weeks ago because it was a fluke.
The manipulating crowd lost control.
They got it back.
They will lose it again.
The next time we might have a $168 move.
Got to be in it to win it.
All the best, Bill Murphy
Chairman, Gold Anti Trust Action (GATA) gata.org
Le Patron, Le Metropole Cafe lemetropolecafe.com |
