RE: Gold Standard?!!!!If these guys are even half right, gold could go through the roof. :)
11:45p EDT Monday, October 11, 1999
Dear Friend of GATA and Gold:
GATA Chairman Bill Murphy tonight dispatched the
following letter to his subscribers at
www.lemetropolecafe.com and has invited me to
share it with you.
It remarks on the growing desperation of the gold
bears and maintains that this and other developments
are evidence of the turn of the tide and an imminent
stampede into gold shares.
Please indulge two quick observations from me.
1) A few months ago GATA's claims of manipulation of
the gold market were denied and derided by
establishment types like Andy Smith and Ted Arnold. But
now that the market has turned against them, Smith and
Arnold are publicly BEGGING for governments to
intervene and manipulate the gold market back in their
favor. Arnold has just suggested that governments have
been manipulating the price of gold all along after all!
2) As GATA has gained recognition and achieved a
certain success in exposing the manipulation against
gold, we and Murphy have begun to suffer some
misrepresentation throughout the Internet, with people
attributing to Murphy and GATA things that we've not
said or done. Of course most of the people disparaging
Murphy and GATA remain anonymous, so there is no way to
hold them responsible. Murphy and GATA work in public.
We sign our names to everything we do; it becomes
public record, and archives of what we do can be found
at Murphy's own Internet site and at the GATA web
sites:
https://www.lemetropolecafe.com
https://www.gata.org
https://www.egroups.com/group/gata
We can be found around the clock, every day, and we
take responsibility for what we do -- which is more
than can be said for the Internet posters
misrepresenting us.
We are working day and night to restore gold to its
rightful place in the world monetary system, its place
as the truth teller, the measure of paper currencies,
and as a competitive form of money. We are trying to
rally a demoralized industry, some of whose leading
members have actually turned traitor and joined those
who have made billions seeking to destroy gold. We ask
only for fair play. We believe that we may be at a
historic turning point in the world's economic history
and the history of gold, and everyone must beware of
disinformation at this crucial time.
Please post this as seems useful.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
BULLETIN: GOLD SHARE STAMPEDE IMMINENT
By Bill "Midas" Murphy
www.lemetropolecafe.com
October 11, 1999
In my opinion, the following news stories are,in toto,
explosive news for the gold market. I will explain
after you have read them. In essence, they validate
what Midas du Metropole has been telling you all year.
* * *
October 11.
UBS turns screw on gold firms
Swiss bank acts on debts as hedging contracts go sour
By Dan Gledhill
UBS, the Swiss investment bank, is thought to have
tightened the screw on struggling gold producers by
calling in debts on outstanding derivatives contracts.
Many mining companies took out these complex derivative
positions this year to hedge themselves against further
falls in the gold price. However, gold's sudden
recovery in the last fortnight means that these
contracts are now heavily in the red.
The concern about the ability of gold producers to make
good these losses is believed to have prompted UBS to
take the unusual step of requiring early margin
payments. Among the companies affected is thought to be
Ashanti, whose derivatives exposure is reported to
total $450 million. UBS's credit exposure to Ashanti
alone is said to be $61 million. Other investment banks
affected by the malaise in the gold market are Goldman
Sachs, J.P. Morgan, and Credit Suisse First Boston.
Fears that the gold sector has suffered enormous losses
in the derivatives market drove the share prices of
producers sharply lower last week. Ashanti, the Ghanian
producer that has entered into merger talks with
Britain's Lonmin, fell heavily, as did Canadian miners
Cambior and Barrick Gold. There is also concern that a
number of hedge funds, which had sold gold short to
prosper from lower prices, have been caught out by the
sudden rally.
Gold's recovery, to close on Friday $70 above this
year's low at $320.15 an ounce, was prompted by the
decision of European central banks two weeks ago to
suspend the selloff of their reserves. It brought to an
end four years of almost continuous decline, which saw
the price of the precious metal plummet from $415 to
$250 an ounce. Analysts believe that many gold
producers, assuming gold would continue to depreciate,
took out derivatives positions so large that they would
actually profit from lower prices.
One derivatives specialist said: "I think that, judging
by the events that have unfolded in the market, the
reasonable explanation is that some mines have
aggressively overhedged."
It is unclear whether the banks that took out such
positions with mining companies and hedge funds decided
to cover their risk elsewhere or chose to leave their
books open in the belief that the gold price would come
back. UBS declined to comment on its exposure.
Most analysts believe that gold's current strength will
continue as customers with bearish derivatives
positions are forced to buy gold to square their books.
However, they remain convinced that by the end of the
year the commodity's downward spiral will resume.
"Gold won't subside suddenly," said a derivatives
specialist. "It is possible that we will see further
rallies, but I think we will still find that when it's
all over, gold will move below $300 before the end of
the year."
Lonmin, formed from the old Lonrho mining company,
already owns 32 percent of Ashanti and announced on
Tuesday that it is negotiating to acquire the remaining
68 per cent.
* * *
The disinformation crowd just won't quit. How can
anyone who knows anything about the gold market say
that reigning in gold loans will eventually be bearish
for gold?
* * *
London (Dow Jones) Oct. 11 -- Central Banks are selling
gold in order to prevent a further sharp rise in prices
from causing a major financial crisis, according to Ted
Arnold, analyst at Prudential Bache Securities Ltd.
Many funds and banks sustained heavy losses over the
past two weeks as gold surged after 15 European central
banks stunned the market by saying they would cap sales
of gold for the next five years.
If gold prices continue to rise sharply, they could
cause major losses at U.S. and European investment and
bullion banks and cause a domino effect that could lead
to a major financial cisis, Arnold said.
"Central banks, according to our sources, have acted
swiftly to prevent a repeat of an LTCM-type of crisis
by making sure that gold prices remain in a tight
range. Enough selling is done by agents of the monetary
authorities involved to cap gold ... around the $330
area basis spot London while the floor is very solid in
around the $315-$316 area basis spot," Arnold said.
Central bank "regulation" of the bullion market always
seems very farfetched to most observers, but it is a
"cheap" option compared with the potential cost of
bailing out banks and generally injecting liquidity
into an economy if there were a full-blown financial
crisis, he said.
A relatively small amount of gold would be needed to
sell toward the top end of a range and then buy back at
at the lower end. The one thing that is absolutely
certain, however, is that no central bank is going to
annnounce that it is acting in the market to achieve
stable and range-bound prices, said Arnold.
* * *
A quote from highly regarded Barry Riley in Saturday's
London Financial Times:
"A gigantic short position -- some say 10,000 tonnes in
aggregate -- has been built up during the past few years
and it has created a new threat of instability related
to derivatives."
Lordy, Lordy! This news is a horror show for the
shorts. The conservative Financial Times has a
columnist who now is touting the gold loan numbers of
Frank Veneroso. They are more than twice the Gold
Fields Mineral Service numbers that gold producers,
hedge funds, and the general media have acknowledged to
the investing world.
The Swiss are so concerned about the gold loan
situation that they are turning up the heat on the
producers over them. The European central banks have
already told the world that they were going to curtail
their gold lending. Now this statement.
Then we have the Abby Joseph Cohen of the gold industry
-- "the bear of bears" the past few years -- telling
the gold world that the floor for the price of gold is
now around around $316. What happened to all his $220
bearish forecasts?
This is staggering information.
Think about these things. If you are a producer and the
"bear of bears" suggests that $316 is where the central
banks will buy, why not cover all your forward sales?
Why stay short for a downside risk of only $2? It makes
no sense at all not to cover. If you are a hedge fund,
why stay with your gold loan at 4-5 percent gold lease
rates with the understanding that the central banks can
lose control of this situation? The manipulators
already HAVE lost control.
This is bombshell news. Since it makes no sense for
producers or hedge funds to stay short, most should now
begin to cover. Ted Arnold is one of the most visible
Hannibal Cannibal apologists. Even HE now admits that
the gold market situation is so explosive that $315-
$316 is support.
Gold closed today around $318. That is the MEGA BEAR
talking. What do you think the MEGA BULLS like me are
saying tonight?
GATA has been talking about market manipulation since
January. The Ted Arnold types mocked us over and over.
Now Arnold has declared that the market MUST be
manipulated or there will be financial havoc!
What crap! It is Arnold's ilk that has brought
financial havoc on the gold industry: Miners out of
work, gold company bankruptcies, gold shareholder wiped
out, etc.
I have said over and over that before all this ends,
one of the biggest financial scandals in the history of
the United States will reveal itself. How clear can it
get?
The manipulation crowd has lost control of their
collusion game and now they are crying to Daddy for
help. What wimps! This is disgusting and calls for a
full-scale congressional investigation.
On April 26 I met with U.S. Rep. James Saxton, chairman
of Congress' Joint Economic Committee, and told him
that this was going to happen. I also met with Chris
Frenz, his staff director, and their chief economist,
Bob Kelleher. Then I met with Jim Clinger, senior
counsel of the House Committee on Banking and Financial
Services. Also there was Greg Wierzyski of the Capital
Markets Committee. I invite everyone to contact them to
find out if what I am telling you is so.
I told them exactly what Arnold is telling the world
now. The difference is that Arnold is trying to tell
you that the gold maket will be capped. He obviously
was told to put this out by the Hannibal camp, which
is scared to death that the gold price could explode
and wipe them out.
This is crazy. Oil doubled in price this year. Did we
have to hear of nonsense like this in regard to oil?
What is wrong about gold doing the same?
I cannot stress it enough. The gold market was
manipulated by the bullion dealers. They told their
clients that the fix was in. Their clients believed
them. The Hannibals were using erroneous supply/demand
information and now have lost control of the gold
market cartel. They listened to the discredited GFMS
and not to Frank Veneroso, as they should have.
I can't say what the price of gold will do tomorrow,
but the die is cast. Uptown we go. Shareholders around
the world will demand that producers cover their
hedges. Hedge fund managers who have borrowed gold will
have to come to grips with the new reality and cover
too.
What central bank wants to just throw away its valuable
gold reserves at these prices?
It's rock 'n' roll time.
When the investment world understands this, there will
be a STAMPEDE to buy the shares of gold companies that
have not overly hedged. The junior golds and top-
quality exploration gold and silver companies are going
to go bonkers. In my last "Midas" I suggested that soon
the little gold companies that have been given up for
dead will begin acting like Internet stocks. This news
could do it.
Just look at what is happening to my biggest holding,
Golden Star Resources. A few days ago I mentioned it
here as my favorite. It was 15/16. But today it closed
at 1 7/8.
Does that seem impressive? Not to me. When I owned
Golden Star at 21, Paul Stephens, the renowned
portfolio manager of the Contrarian Fund, said in a
Forbes article he thought this stock could go to 50 to
100. That was him saying that, not me.
He made that statement because GSR has found so many
exciting gold resources and may have done what no other
exploration company in history did. At least that is
what Frank Veneroso thinks.
What is important here is there are many great junior
gold companies and gold exploration companies that will
go ballistic in price when the crowd realizes that the
price of gold inevitably will skyrocket. Even the bears
are starting to admit it now. When government takes its
foot off the brakes, bye-bye.
Support your favorite small gold company. Tell your
friends about them now before price go to the moon.
There is easy money on the table here.
Within two weeks, www.lemetropolecafe.com will open its
chat room. There we will have various conferences
("threads") in which you will be able to learn and talk
about your favorite gold and silver stocks. You will be
able to get answers to many of the questions you might
have from knowledgeable investors around the world.
Janet Whitman of Dow Jones did a great story today for
her wire service called, "Gold Gains In One of Biggest
Gold Rushes in History." Whitman mentions
www.LeMetropoleCafe.com. This is a big breakthrough for
us in the mainstream press. The cafe is growing by
leaps and bounds. And as I reiterate often, we are
being fed the best information in the world on the gold
market because gold people want us to succeed.
I urge all of your friends to read my last "Midas" and
the two pieces by Reginald Howe and John Hathaway. In
my opinion that is the gold market story in a nutshell.
Vox populi, vox dei.
All the best,
BILL MURPHY
Le Patron
www.LeMetropoleCafe.com
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