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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Alex who wrote (33961)	5/15/1999 11:55:00 PM
From: Tomas	Read Replies (1) \| Respond to of 116791

Conspiracy theorists pan Net for gold price scandal - Sunday Times, May 16 Kirstie Hamilton, City Editor THE gold market is seething with Internet-inspired rumours of a huge conspiracy in which some of the world's biggest financial institutions are alleged to be suppressing the price of gold. Everyone from major European and American investment banks through to the Bank of England and America's Federal Reserve have roles to play in the story, which at its most dramatic stretches the credulity of even the most dedicated conspiracy theorist. But milder versions are being taken seriously by some of the gold business's establishment figures, including the chairman of South Africa's second-largest gold producer and the heads of two European gold producers. Those allegedly involved in the plot throw up their hands in despair at the tales being given any credence. "This is complete baloney," said the representative of one bank alleged to be part of the conspiracy. The stories, which have been building over recent months, have exploded since the Treasury announced earlier this month that it will sell half of Britain's gold reserves in a series of auctions. Bill Murphy, an American Internet commentator, has even set himself up as chairman of the gold anti-trust committee, a pressure group calling for an investigation into the price-fixing allegations. The group has hired Berger & Montagu, a Philadelphia law firm that specialises in anti-trust cases. "We are conducting an investigation into what we believe is going on, which is manipulation of the gold market," Murphy said. He has also been to Congress to explain what he believes is happening. The Treasury's decision to announce its sale programme was the stuff of nightmares for producers hoping the gold price might finally be starting to recover. It sent the price tumbling by $8 to $280 an ounce. Analysts and commentators have begun to create elaborate theories about why the gold price has stubbornly refused to rise despite a rise in underlying demand. Central to these is the suggestion that a number of big banks have huge short positions in gold, either on their own account or on behalf of clients. Short positions are created by selling gold into the market in the expectation of being able to buy back later at a lower price. While the gold price remains low, the banks profit from their short positions. Should the price suddenly rise, their gains quickly become losses. At its extreme, the theory suggests that the big investment banks may have been able to persuade central banks around the world to help them keep the price of gold down. "There are parts of this conspiracy theory that I am sure are not true," said Chris Thompson, chairman of Gold Fields, one of South Africa's biggest gold companies. But he said that there was a large amount of circumstantial evidence that investment banks were involved in a plot. Internet gold commentators have suggested one American bank's exposure to the gold market could be up to 1,000 tonnes - more gold than is stored at Fort Knox. Insiders at the bank concerned deny the position approaches those levels, but officially the bank declines to comment. "The behaviour of the gold price has been very odd over the last six months," said Peter Hambro, a member of the Hambro banking family and owner of a gold mine in the south of France. "In spite of reports of substantial demand for physical gold and major economic and political uncertainties, such as the war in Kosovo, the gold price has not responded in the way one might expect. "Parallel to that we have seen insistent reports from Internet commentators of big market operations by a few investment banks. Circumstances support the theory that there is a cap being put on the price." Chris von Christierson, chairman of Rio Narcea, which mines gold in Spain, is also concerned. "I have never been a believer in conspiracies but every time the gold price is about to break out, it gets hit again," he said. But some analysts dismiss the conspiracy option, maintaining that the gold price is likely to remain under pressure while central banks continue to offload supplies of what they see as a poor-performing investment. The Treasury's gold sales announcement has attracted criticism from a number of quarters, particularly for the manner in which it was done. By flagging the sales ahead of time, some critics have suggested, the Bank and the Treasury have further depressed the price. Even a former Bank executive has joined the chorus of disapproval. Terry Smeeton, former head of foreign exchange at the Bank, said the gold sales would damage the gold market, and that he would not have undertaken them had he still been at the Bank. The Bank defended the sale decision, and insisted that it had agreed with the Treasury on the policy. "This is exactly the way the gold sales were done in the Seventies by the IMF," said a spokesman. "We think markets work best where they have full information." The conspiracists hope that publicity will help to uncover any plot to suppress the gold price. The worst-case scenario, of course, is not so much of a giant conspiracy but something far more miserable. Without a conspiracy the gold producers might have to face the unthinkable: has gold lost its shine forever?

To: Alex who wrote (33961)	5/17/1999 6:35:00 PM
From: Ken Benes	Read Replies (3) \| Respond to of 116791

Alex: It is a very difficult task for GATA to prove a conspiracy. In the article you found, the response has already taken shape. The attempt to control the price of gold is the next conspiracy theory . The response is already set in motion, Gata represents a bunch of archane gold bugs who cannot understand modern financial theory that is responsible for gold losing its lustre. Gata does not have the resources to prevail nor a sympathetic audience who will be outraged by the Gata exposures. Gata should be focusing on the hedging programs by the producers, they are the marketing agents for the central banks to unload their gold into the markets. Why don't the oil producers sell the oil in the ground forward. Quite simply, they have no one to borrow it from to sell today what they will get out of the ground tomorrow. The producers have the central banks. This additional supply is the hammer that has slammed the price of gold. The producers are not on the goldbugs side. Ken