The following is a quote from a letter written by Mr. Johnson, a retired financial analyst in his eighties, to his sons.
"Houston Texas"
My Dear Sons,
This is about the sting that will smash the great bull market. This is about the sting that will derail the gravy train the sting is already in place and it's a trigger has already been pulled. The sting merely has to unfold. The public suspects nothing.
The sting is a confidence game in which the victim is set up to believe that he can not lose, that he has a birds nest on the ground. Then at the last moment the trap is sprung, and his dreams of riches turn to rags. This sting was made in Japan, with a strong assist from Switzerland.
To get a better idea of the Swiss connection, we have to look at the Bank of International Settlements (BIS) in Basle. The BIS is the central bank's bank. It was formed in 1930 to handle the collection of German war debt following World War 1. It's members are the central banks if the industrial world, such as the Bank of England, the German Bundesbank, the Federal Reserve bank, and Bank of Japan, and so on. It is certainly the most powerful financial institution in the world. Never once in it's long history has it ever had to ask for help from any government.
A definite coolness exists between the BIS and the United States. This goes back to the Bretton Woods Conference in 1944, held to set up the machinery for resuming world business after World War II. Even through this conference established the gold backed U.S. dollar as the only reserve currency, the U.S. did everything it could to torpedo the BIS and give sole power to the American sponsored International Monetary Fund. The was was not over in 1944, but the combatants still together in their efforts to defeat U.S. grab. In the final showdown, the Europeans and Japan never completely trusted the U.S.
As the years went by, the BIS suspicions were justified. The U.S. began to abuse it's reserve currency role by simply printing dollars. American companies began to buy control of businesses all over the world. In 1971, President Nixon took the dollar off the gold standard, and introduced the novel idea of floating currencies. Meanwhile, the U.S. national debt began to increase each year, until it now stands at over $5.5 trillion, an astronomic amount that can never, ever be repaid. It was clear that the U.S. was out of control.
Along about 1972, I began to spend a great deal of time and effort in studying the BIS and it's agenda. The first thing I found was that although the U.S. had turned it's back on gold, the BIS were by far the largest holder of gold, with more than a billion ounces. This amounts to an outright corner on gold.
The next thing I learned is that the BIS are extremely closed mouth. It keeps a low profile. It's favorite M/O is the sneak attack. They have their own word for this "coup." Their ideal coup is one where the victim is taken by surprise, and does not even know what hit him. The BIS tries to leave no figer-prints. Thus, their coups often become perfect crime.
The third thing I learned was that the BIS had two ironclad objectives. Both were so bold they would take your breath away:
To destroy the Soviet Union, as a threat to world peace.
To destroy the dollar as the world's reserve currency.
We all know that the Soviet Union collapsed in 1989. This was done by the BIS without firing a shot. They simply loadned large sums of money to the Soviets, and then called the loans. Just a routine castration! A simple foreclosure. This is how they got the Russian gold.
The second goal, of bringing down the dollar as reserve currency, has not yet been reached, but I believe it soon will be. This brings us to the present sting operation.
If you are going to derail the dollar and the great bull market, you better bring a pretty big check book. He new money coming into mutual funds is running about $20 billion a month. Unless you can top that kind of buying pressure, you don't have a chance. How in the world do you shoot an animal that big and powerful? In my opinion, the BIS and it's Japanese partners have come up with an ingenious answer. It is big enough to work. It goes like this:
The sting began two years ago, in August 1995, when a rash of bad loans and insider scandals brought the Japanese banks to their knees. The BIS became alarmed, and advised the Japanese to lower their loan rates to 1/1%. This created an enormous gap between the Japanese rate and the 6-1/2% U.S. rate. Into this gap poured speculators from Japan and everywhere else. The speculators would borrow yen in huge amounts. They would then sell the yen, and put the proceeds into U.S. paper thus making an enormous guaranteed return. This came to be known as the "yen - carry trade". This yen carry trade has been going on for over two tears, in virtually unlimited volume. It created a huge demand for U.S. bonds, which in turn sustained a huge and unprecedented bull market in stocks.
In similar fashion the Japanese found that they could do the same thing with gold and this became known as the "gold carry" trade. The speculators could borrow gold at 1%, sell the gold, and then invest the proceeds in U.S. paper, with a huge guaranteed return. How delightful! How delicious! But how lethal!
I say lethal this yen carry, gold carry Ponzi scheme has created a "potential short squeeze of colossal magnitude:. (Michael Belkin, Strategic Investments, May 4 1979) Sooner or later, these fantastic leverage schemes must be unwound. The gold and the yen which were borrowed and sold short will have to be brought back and the bonds that were bought with borrowed money will have to be sold. The totals involved are probably well over a trillion dollars, or far beyond the mutual funds yearly take. Anything could trigger this debacle. As long as gold keeps going down or as the yen keeps going down, no problem. as long as bonds keep going up, no problem. But once gold starts to rise, or the yen starts to rise; or once bonds start to fall, these huge positions will be unwound. There would be a run for the exits, and the panic would feed on itself. Margin calls would ruin the leverage speculator in short order. There would be no way to stop the carnage. All it will take is a coup to the waterfall. we had the coup on June 24, 1997, though it was only vaguely understood at that time. The Japanese Prime Minister Ryutaro Hashimoto, told a luncheon meeting at Columbia University, "I hope the U.S. will engage in efforts and in cooperation maintain exchange stability so we will not succumb to the temptation to sell off treasury bills and switch our funds to gold".
In a matter of minutes, the NYSE collapsed, and the DOW closed down 192 points in a mini-panic. The victim's saw the trap for the first time! Then the media and Wall Street fell all over trying to control the damage, saying Hashimoto was misquoted,etc., etc. The various exchanges staged a desperate anti-gold raid, and soon had gold down to 12 year lows. The street breathed a sigh of relief and returned to it's summertime siesta.
But the damage was done. Now look at the mess that confronts the big time gamblers. we now have gold at new lows and the bonds at new highs. Surely this is a speculators dream come true-well, isn't it? No, his is the sting. The yen-carry and the gold-carry is still in place and they still have to be unwound. The temptation Hashimoto mentioned now becomes unbearable. The Japanese cannot resist the chance to sell the bonds near their highs, or the chance to buy gold near it's low. Do you imagine that the bonds will stay high or will stay low? No way! The unwinding begins to feed on itself, and the 5000 mutual funds and all their friends will be unable to do a single thing about it. That's what you mean by the sting.
I have no idea whether Mr. Hashimoto was acting on his own, or whether his words were part of a larger plan. I know one thing though. This guy is no innocent babe in the woods. Before he became Prime Minister, he was Japans Finance Minister. He knew the ropes. He knew the big wheels at BIS. He knew all about yen-carry and gold-carry. He was telling his people that the game was over. Remember these are friendly little folk's that gave us Pearl Harbor and the Kamikaze, when Hashimoto spoke, the thought flashed across my mind that the Japs had won World War II.
Another thought- the Japs could acquire fold in a different way. They could sell our bonds and buy the EMU, the new European currency that the BIS are sponsoring to replace the dollar. The EMU is expecting to be a package combination of gold and paper.
So there you have the anatomy of the greatest sting in history. It is real! It is in place. It cannot be stopped. It can only feed on itself and get more and more desperate as the shorts are squeezed to death. And best of all for the BIS, the figer-prints on it are not Swiss - they are Japanese. Call this "Karate Chop."
Think about this, and call me with your reactions. There is more to this story. Stay tuned.
Much Love, Dad
This is the most Earth shattering information I have ever had the privilege to read, and I am anxious to speak with Mr. Johnson at great length in the future. With our compliments, Alger International, 1-800-894-0540 or 1-800-809-6753.
secure.cnchost.com
From the Desk Of Peter Grandich
March 7, 1999 Peter Grandich Homepage
From The Desk Of Peter Grandich March 6, 1999
In the latter part of 1998, I began to write about my belief that some sort of manipulation of the gold market was taking place. I was delighted recently to learn of GATA, and hope all us who believe in its mission will support their effort as noted in their latest e-mail to me.
On a separate note, while I stopped providing investment advice back in October, 1995, I still spend an extensive amount of time doing my own technical and fundamental analysis. I would like to tell you as a matter of personal excitement, my gold model has given its strongest bullish signal in nearly fourteen years. There are over 35 different factors that make up my model and it's overweighed.
To best describe the overall sense of it, the model says that an enormous effort (we all know that already) has gone into pressuring the price down. However, through a variety of data, the model says that pressure has all been exhausted and there are now several factors showing strong accumulation.
As bullish gold players, we have been frustrated in its lack of upside movement. But, we mustn't forget that despite the overwhelming increasing short positions, these folks have been frustrated as well, only the media coverage gives them hope that their side is winning (you know all the crap they keep reporting about Central Bank sales, etc.:).
While there's still room for one marginal new low, I believe we are about to embark on a new gold bull run and will surprise many on how high we end up going before it's all over.
On a side note, I have followed Steve Kaplan's site for some time now. I would like to personally congratulate him for showing he is a true expert by having the ability, and more importantly, the courage, to forecast a serious decline in silver while maintaining a bullish stance on gold. That type of action would usually bring on severe pain for any goldbug forecaster.
Several thousand Dow points ago, I stated that despite a lot of technical and fundamental reasons to believe otherwise, I felt they would have to take the DJIA above 10,000 before the party ends. I also stated that I hope the internet mania hadn't ended before this happens, as I felt it would be a tremendous chance to profit from the shortside. I would like to thank the, "Don't Worry, Be Happy" crowd on Wall Street for apparently giving me my wish soon.
-----Original Message-----
From: Bill Murphy lepatron@lemetropolecafe.com
To: Peter Grandich pgrandich@injersey.com
Date: Sunday, March 07, 1999 7:59 AM
Subject: Re: Thanks for the support
Peter,
Here is our latest for your perusal.
Best regards,
Bill Murphy
GATA is pleased to announce that we are now ready to make an all out effort to mobilize the gold community to confront those that we believe may have colluded to hold down the price of gold.
Our web site www.gata.org can be viewed on the internet and explains what the Gold Anti-Trust Action Committee is about. As the construction of our internet site has been completed, we are ready to accelerate the contribution phase of our campaign.
This week we will be contacting gold companies around the world to elucidate our position and solicit their financial support. We will explain that we believe various financial institutions in the U.S. have colluded to hold down the price of gold. We intend to launch an investigation into the Long Term Capital Management bailout, the Counterparty Risk Management Group and to other situations that have been brought to our attention.
It is also our position that many of these financial institutions are short hundreds of tonnes of gold as a result of "gold carry" trade positions. We believe that, as a group, their short positions are greater than one year's mine supply. We believe they know this is a very dangerous position to be carrying and that is why they may have "colluded" to keep the gold price from rising. It is our intention to expose the size of this short position.
Second, we are going encourage everyone associated with the gold community to support GATA. We would like them to verbally announce their support, make a financial contribution if possible and, if they have a website, to set up a mutually beneficial link up to www.gata.org.
It is our goal to raise the funds necessary to retain the services of an anti-trust law firm that will spearhead the investigation.
Thus far, we have had serious discussions with Philadelphia based, Berger & Montague on the issues we are raising. It is our goal to retain them as our attorneys. The karma seems right. Senior partner, Merrill Davidoff, became a member of www.lemetropolecafe.com the day before I appeared on CNBC in behalf of GATA. As a result of that appearance on TV, committee members, John Meyer and Chris Powell and I flew to Philadelphia to meet with Davidoff and two other Berger & Montague attorneys.
Davidoff is extremely knowledgeable about the gold market and has a very good grasp on the fundamentals of the gold industry. His associate, Jerome Marcus, has become somewhat of a legend in that he was one of the behind the scenes brains in the Paula Jones case for 5 years.
New York Times-Jan.23-"..Mr. Marcus drafted legal documents and was involved in many of important strategic decisions in her lawsuit....As much as any of Ms. Jones's attorney's of record, Mr. Marcus helped keep Ms. Jones's case alive in the courts".
Berger and Montague won a $2 billion settlement in the Drexel Burnham/Michael Milken case, and, among many other cases was, or is, a litigant in the Exxon Valdez case, the Orange County case, one of the tobacco cases and one of the holocaust cases.
The Gold Anti-Trust Action Committee believes that we have enough momentum now to raise the funds necessary to retain a law firm of this caliber and to carry our agenda forward.
We ask you for your support and contributions.
All the best,
Bill Murphy
Chairman
GATA
-----Original Message-----
From: Peter Grandich pgrandich@injersey.com
To: Bill Murphy lepatron@lemetropolecafe.com
Date: Tuesday, February 02, 1999 1:07 PM
Subject: Re: Thanks for the support
I truly admire your courage. please let me know if there's anything I can help you with.
-----Original Message-----
From: Bill Murphy lepatron@lemetropolecafe.com
To: pgrandich@injersey.com pgrandich@injersey.com
Date: Tuesday, February 02, 1999 6:12 AM
Subject: Thanks for the support
Peter,
Thanks very much for your kind words of support. It is very much appreciated. I am concerned also, but we have to do what we have to do. Off the record, we are meeting with one of the most highly regarding anti-trust firms in the US late this week. Have to see what happens, but they have set aside an entire afternoon for us and watched my appearance on CNBC. Should be an interesting day.
Best regards,
Bill Murphy
GATA
The Grandich Letter
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