(GATA) Rumor - Trizec Hahn (firm of Barrick's Peter Munk) Financial Problems?
The James Joyce Table
Discussion du Jour: Gold, Commodities, Midas du Metropole
Midas du Metropole, "The Gold Market and Precious Metals Commentary"
February 15, 2000
MIDAS TIME
Late this afternoon, I received word that Bloomberg has taped a presentation
given by Fed Governor, Ed Gramlich, at the Business School of the University
of Virginia. After his presentation, he entertained some questions.
This is just a recap of what I was told and I hope to get the exact wording
between Gramlich and his questioner as soon as possible.
It goes something like this:
Gramlich was asked if the government was leasing gold (wonder where that
question came from?) and reportedly said no. Of course, that still
leaves the entire derivative market.
Then, the questioner asked him about a 1998 Investors Business Daily
interview in which he said that he was concerned about inflation and
that gold was an indicator that he watched regarding inflation. In an
extraordinary comment, he said, "at the moment, there are funny things
going on in the gold market." From what I was told, he went on to say
that banks (not sure whether he meant central or bullion) are going to
be "adjusting their positions" so the gold price could be "erratic."
The inference (as I understand) was that if the gold shot up it might
have nothing to do with inflation or be an indicator of future inflation
as it would have been in 1998.
I will get more on this, but that is what GATA has been talking about
for a year now and have said so a zillion times. The gold price can
shoot up like crazy, not because of inflation, but because those banks
that have been manipulating the gold market and "not allowing" the gold
price to rise decide to stop their manipulation, or because of outside
market forces, lose control of their manipulation and collusive activity.
More anecdotal evidence from Fed Governor Gramlich that what GATA
has been shouting from the mountain top is RIGHT ON THE MONEY !!!
Along that line, I also just received word that mega bear gold analyst,
Kevin Crisp, of "Hannibal Cannibal" J.P. Morgan, has been let go as a
result of a reorganization and downsizing of Morgan's bullion operations.
This may be of significance for several reasons. First, word is that
J.P Morgan might be turning bullish. Second, they know that the producers
are not going to be giving the bullion dealers as much business in the
future. Not with their intentions not to roll their hedges forward and
not after the Ashanti fiasco. Third, Kevin Crisp has been their apologist,
mega bear foghorn. How can he change his mind quickly and be a bull without
looking like a dummy? No problem for the "Cannibal" crowd. Easy solution:
give the guy the hook. When in doubt, throw out.
Nice group of folks these big bank "Hannibal Cannibals."
Moving right along.
Had to go to the weight room today and pound the iron to get the anger
out of my system. From three sources over the past two days, I was told
that the bullion dealers were going to MANAGE DOWN the gold price.
And, that is what they have done.
The first indication of this was from a well known bullion dealer commentator
in London. The second was from a bullion dealer in New York who told Caf‚
sources that the dealers were orchestrating a move down to $290 and were
circulating a bunch of half baked reasons why that would happen. The third
was from a big trader with close connections to the lovable "Hannibal Lecter"
(Goldman Sachs). That trader was told by his Goldman Sachs contact that
Goldman Sachs was bringing the gold price down to $295. This trader sold all
his gold calls a couple of days ago based on that news and is happy as a clam
right now, although I hear he intends to buy them back.
These arrogant, hypocritical, lying GS guys stink and some time,
some day, they will get their comeuppance.
Not that any of us should not have expected "The Goons" to do their thing
again by taking the gold market down ahead of the Ashanti workout.
We know what we are dealing with. Actually, I think the excitement about
the gold market is going to erupt soon. Just feels like it. There is too
much high level smoke about the "funny things going on in the gold market."
In the last 6 weeks the questions and discourse about the manipulation of
the gold market have been resounding and are clearly headed for a crescendo
down the road.
As I said last night, word is out, courtesy of GATA, that the gold market
has been kept at an artificially low price. That is a form of price controls.
When the manipulation ends, the price of gold takes off and who knows where
it will stop.
March palladium closed today at $658.35. That is where the price of gold
is headed. Historically, the palladium price has led the gold price.
Also last night I suggested that the gold shares are getting ready to move up
after acting so poorly for so long.
The XAU went up 1.37 today to 66.94, even though gold dropped $6.90.
An extraordinary divergence, but it does not surprise me at all.
Not with what we all in the Cafe know plus the hullabaloo of $30 oil.
According to a Reuters report, Ashanti announced late it was "close to
concluding a deal acceptable to dissident shareholders, its bankers and
the Ghana government, which hold a 20 percent and golden share in the group."
The bullion dealer crowd were spinning and spreading the word all day
that a deal would be bearish because the bullion dealers would not have
to buy back the hedged shorts. Maybe yes, maybe no.
It looks like the government is getting their way with the Board
of Directors and the government has already stated that they want
the forward sale positions reduced.
In addition, Ashanti's Mark Keatley, their CFO, has become the scapegoat
and was fired because he was the man responsible for the hedge losses.
Do you not think other CFO's of gold producers that hedge are going to
get this not so subtle message: screw up by over hedging and you will
get canned! That can only reduce forward sale gold supply hitting the
market at these pathetic gold prices. I consider anything below $370
to be pathetic. Just now, Normandy Mining, Australia's mega gold miner,
reaffirmed in a press release that it is delivering into its forward
hedges and not selling forward.
Nobody knows how the bullion dealers involved in the Ashanti fiasco
will fare in this one. Word is that they all came to the conclusion
that the government was not going to lose out to the hedge advising bankers,
which has been my conclusion for you. Sources close to the Caf‚ say the
bullion dealers will eat big losses and bury them in their books so as
not to be embarrassed. Could Goldman Sachs have to absorb losses in the
hundreds of millions for their inappropriate role in the Ashanti affair?
Word from Caf‚ sources says yes, and they will be sizable.
As further anecdotal evidence that the big hedging producers are going
out of favor with investors is what happened to Barrick and Newmont
Mining today. The gold price was down $6.90 which should have hurt the
relatively unhedged Newmont much more than the heavily hedged Barrick.
But low and behold, Newmont went up 13/16 today while Barrick could only
manage a 3/8 gain. A sign of the times. Wake up Barrick! Get with the
program. Stop wasting your time giving hedging seminars around the world
and just cover your forwards. How long are you going to let your arrogance
get in the way of performance of your share price? How long are you going
to penalize your shareholders so that your egos won't be wounded?
Speaking of Barrick:
Could Trizec Hahn, the firm of Barrick Chairman, Peter Munk, have some
big financial problems? I received this email from a Caf‚ member today:
"Go to Bloomberg and do a search you will find a report on Trizec Hahn
4th quarter, buried in the story about cash flow, states Trizec has hired
firms to sell properties, to make Trizec more liquid. Also, it notes,
Trizec stock has dropped about 25%, sounds like Barrick.
"Then go to the Toronto Globe and Mail, search Peter Munk, there is a story
12 Feb., some related to the Bloomberg story and in this story they talk
about Trizec selling and reorganizing its holdings due to poor performance.
Suspect more to stuff under the surface if you know any body."
Very interesting.
The following Bloomberg report details the current derivatives philosophy
of the Federal Reserve and Treasury Department:
bloomberg.com
A shrewd Cafe member tells me: "Their testimony seems to indicate that there
should be NO ceiling to the notional value of derivatives--currently near
$USD 36 Trillion. In addition, they believe there should be no additional
regulation of the CFTC derivative markets."
This is too much to get into now. But, the former CFTC chairman,
Brooksley Born, was fired, some say at the urging of Robert Rubin,
because she wanted more government transparency.
Why does the Fed and Treasury feel so strongly about this issue?
Until Secretary Summers answers the GATA questions asked of him
in the Roll Call open letter of December 9, 1999 and re-asked of
him by Senator Lieberman, et al, it can only be my conclusion
that the Fed and Treasury want to hide something.
Yes, the manipulation crowd is trouncing the gold market by managing it down
as they told most of their cronies they would do. It will be short lived.
Indian gold demand is beginning to soar again and the jig is up about their
nefarious activities with people that count.
Just ask Fed Governor Gramlich.
The shares of so many of the good gold companies are going to soar very soon.
It is going to be a rocket ship ride.
"Billy the Kid" here will be buying his favorite gold shares while
the gold price is setting back. I want my "Ticket on a Fast Train."
Midas
Bill Murphy (Midas)
Le Patron, Le Metropole Cafe lemetropolecafe.com
Bill Murphy, Chairman, Gold Anti Trust Action (GATA) gata.org
GATA related articles can be obtained at the pay for view site.
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