News from the Gold Anti-Trust Action Committee Inc.(GATA)
Hello everyone, Bill Murphy here.
March 17, 2000
The technicals are truly meaningless in the gold market.
Why is the gold market so weak in the face of such strong fundamentals?
Gold demand is very firm - so where is the supply coming from?
One of the most visible "Hannibal Cannibal" bullion dealers
tells a GATA source that there is a big mystery seller out there.
Hmmmm! Three guesses who is behind the mystery seller!
Press reports hit the tape on Thursday about the Central Bank of Brazil
selling gold as they acknowledged a 1.16 million ounce drop in their
available reserves between November and December.
"The Brazilian central bank denied that it had sold a parcel of gold
in December but did not comment on whether possible future sales expiring
in December accounted for the drop," a GNI Research report said.
Childish drivel about whether they sold gold or not.
Why not just say what you are doing instead of this nonsense.
Brazil has only 3.17 million ounces of available gold reserves left.
Let them sell it all down in the hole down here.
They will be buying it back at $600 some day.
That is the way of the central banker.
Even if Brazil sold into the Fall rally, that is yesterday's news.
Oddball sales such as these are more than compensated by the producers
delivering into their forward sales rather than rolling over positions.
Take this Anglogold story, for example:
AngloGold continues to wind down hedging
By Belinda Goldsmith
CANBERRA, March 16 (Reuters) - The world's biggest gold miner,
South Africa's AngloGold Ltd , said on Thursday it would continue
to unravel its gold hedge book in a bid to further unshackle
world bullion prices.
Chief Executive Bobby Godsell said AngloGold had changed its hedging
programme as an instrument of risk management in mid-1999 on a bet
that at $250 an ounce, gold was oversold and ready to rocket.
Bullion jumped to $340 an ounce last September after Western European
central banks gave assurances they would limit sales of their gold reserves
for at least five years, but has since retreated to around $290 an ounce.
The company plans to further reduce its forward-selling position
on the view that gold still has more upside, Godsell said.
"I think it is extremely unlikely that you would run a company
of this size without a degree of hedging," Godsell said.
"What we are thinking at the moment is that our extent of hedging
is likely to decline rather than grow or stay where it is."
"But we are bullish about the gold price prospects
and if you are bullish you don't want to remove all the upside
of price increases for your shareholders."
Godsell said AngloGold did its long term planning on conservative
gold prices projections, with modest adjustments for factors like U.S.
inflation, but shied away from picking a gold price.
When AngloGold announced in February it was cutting its hedging
significantly this year, entering 2000 with less than 50 percent
of its output uncovered, bullion prices rose $6 an ounce.
AngloGold is not the only big gold digger to do a U-turn
on its forward-selling policy.
Canada's Placer Dome Inc (Toronto:PDG.TO - news), the world's fifth
largest gold miner, announced it was suspending its hedging programme
in February. This triggered a rise in the spot gold to $319.
Hedging of future gold production is a way of locking in fixed revenue
in anticipation of gold prices going down, but this system is under
review after well publicised debacles by some miners who actually lost
money when bullion prices soared if only briefly, last year.
Australian mining houses are among the most hedged,
with some 1,500 tonnes of gold still in the ground
- about five year's total production
- sold forward at fixed prices.
AngloGold expects to mine 7.6 million ounces in 2000,
up from 6.92 million ounces in 1999,
thanks in part to the acquisition of Acacia Resources Ltd,
a half-million ounce a year Australian miner.
Godsell said Acacia was the first move in a drive to expand in Australia
and in the Asia-Pacific region.
"We have not done any further transactions (in Australia) although
we certainly would hope to," he said.
"We are looking at a number of things in Australia. We also are looking
to develop a fully fledged exploration programme which is well established
in Acacia in Australia, but not established in the region outside Australia.
"Our industry is awash with rumours ... but I will not comment on any
rumours," said Godsell who refused to be drawn on possible targets. End.
As far as the Australian hedgers go, a change could be in the wind.
Frank Veneroso has been invited to speak at the Australian Gold Conference
in Perth, Australia the first week in April. Some of the most noted Australian
hedgers of gold want to hear what he has to say. Frank is a great speaker and
I believe he understands the gold market better than any one else out there.
Frank and I were chatting today about the gold market - what else - and
he now believes the move up in the gold market will be much greater than
he ever dreamed of. In a nutshell, he thinks this way because of the extent
of the manipulation of the gold market. Too much gold has been devoured at
too cheap a price. He now believes the gold loans could be as high as 13,000
to 14,000 tonnes. They just cannot be paid back.
Frank also believes that the eventual stock market collapse will be so
overwhelming and confidence in the stock market so shattered, that gold
will become the "go to" investment vehicle. That is why has come to feel
that the gold price will rise to heights that, heretofore, he could not
even imagine - like $2,000 per ounce, or higher!
I do not know what kind of speech he will deliver to the Aussies,
but I cannot imagine a good number of them not rethinking their hedging
strategies by the time the conference is over. Maybe the "Barrick Syndrome"
will take over down under. Even though the gold price has been heading
straight south lately, the heavily hedged Barrick Gold continues to lose
ground to Newmont Mining. Newmont closed...[ok girls, stop it!]
The XAU continues to stink up the place.
There is no inflation, because food and energy are not important anymore.
Right after I returned from my speaking engagement at the Alaska Miners
Association Convention in Fairbanks, Alaska, late Sunday night,
I received word that my favorite cousin, Bo Bo Sullivan, had died
of a stroke in New Jersey so I hopped on a plane on Wednesday morning
to attend the funeral.
I am paying tribute to Bo this Saint Patrick's Day because he was
instrumental in helping GATA's efforts get off the ground in gaining
attention of the U.S. Congress. Bo was the one who set me up in
Washington with James Saxton, Chairman of the Joint Economic Committee.
Bo was quite the character. He was a very successful New Jersey
business man with his own plant in Dublin, Ireland and was very
well known in Republican political circles as he was Chairman
of New Jersey's Republican party as well as the Chairman of
President George Bush's campaign in 1988. I learned that the
former President was shocked to hear of this death and was
preparing a letter to Eileen, Bo's wife.
Yep, Bo (Princeton grad with a Law Degree from Seton Hall and a Marine)
was something else - a family man who loved his 4 sons and who was also
the life of the party. He loved the bells and whistles and he had them
on his way to his final resting place as the state police blocked off
intersections in 5 towns on the way to the cemetery and a Marine salute.
I don't think there was a dry eye in the church when a bag piper played
the Marine Corps Hymn as his coffin was taken out of the church.
Bo and I had great fun together over the years. I remember when he
came down to see me play against the Miami Dolphins in the Orange Bowl.
The night before the game, we went out to dinner with Bob Scarpitto,
punter from Notre Dame, Art McMahon defensive back from North Carolina
State and Jim Nance, Hall of Fame fullback from Syracuse. Being a former
footballer himself, we talked about that for years.
At one point at the reception following the funeral, a good friend
of Rita Jenrette came up to me to say hello. Bo got such a kick
that I hired Rita at one time to work for me in New York. Ring a bell
old timers? My baby sister, Kris, who was a model in New York at the time,
introduced me to Rita at The Marble Collegiate Church in the city.
Marble was Dr. Norman Vincent Peale's Church (Dr. Peale was the author
of "The Power of Positive Thinking"). That is also the same church where
Donald Trump met his second wife, Marla Maples.
Anyway, Rita had been married to John Jenrette, who was involved in the
Abscam scandal. Rita, who was gorgeous and had some figure, became well
known because she did a playboy centerfold in which she revealed that
she made love to her husband on the capital steps. It created a furor
at the time.
Rita was very bright and terrific at sales. She introduced me to a
billionaire client, Abe Herschfeld, who ran for Lieutenant Governor
for the State of New York. That was something because Abe was the most
hated man I have ever known. His secretary told me how lucky I was
that he sent in the money to pay for a $250,000 deficit in his account once.
He was in Hong Kong at the time and she told me years later that I caught
him on a good day. He was renowned for stiffing people.
What goes around comes around. At the funeral I heard that Abe, still a
billionaire, is serving 90 days for contempt of court. He is in trouble
for conspiring to kill (I guess he graduated to snuffing from stiffing)
a former business partner, but is in jail on contempt of court charges
for paying $2500 to jurors that acquitted him in another case. Abe is
that crazy man who wrote out that monster check to Paula Jones.
I told Rita's friend to tell her that I was working on something
that I thought would eventually be much bigger than Abscam.
I go into this because no man knew how to laugh better or more
than cousin Bo. He loved stories such as these and loved to crack jokes
about them. I can see that Irish grin and hear him cracking up about all
of this as I reflect back on our friendship.
It is Saint Patrick's Day, Bo. I am finishing this up and going out
to the local pub, find me a Guinness and salute you for being such
a caring, charismatic special spirit. Goodbye!
[End. Bill Murphy talks about GATA activity.]
Bill Murphy, Chairman Gold Anti-Trust Action Committee Inc.(GATA)
gata.org |
