Internet trading sends gold futures to nearly $293


1:09a ET Friday, September 14, 2001

Dear Friend of GATA and Gold:

It's probably time to make contact with you after this
week's horrific events in the United States, lest
anyone get the misimpression that GATA's officers and
consultants were too close to them. Thankfully, we
weren't. God help those who were.

We are Americans first, gold and anti-trust bugs
second, and commenting about the impact of these events
on the gold price while they were unfolding was the
last thing we wanted to do. But life goes on, and
patriotism requires that we go on, for our country's
sake, as well as for our cause, so here we are again.

You can follow the gold price as well as those of us at
GATA can. If you've been doing that, you have seen that
the latest Bank of England auction, conducted in the
middle of the disaster, took the gold price up about $7
to $280, and that gold's exchange price was a good deal
higher than that for a while. While this was not really
much in comparison with the horror, it may have been an
indication that the capacity of the governments and
bullion banks to suppress the gold price has its limits
and is reaching them.

With the New York commodities markets disrupted and
much of the Comex gold buried in the rubble of the
World Trade Center and inaccessible for a while,
controlling the gold price may get harder still -- or,
perhaps more accurately, controlling it surreptitiously
may get harder still.

Government intervention aimed at stabilizing the
financial markets was more or less done in the open
this week and was openly called for, and this may get
more obvious in regard to gold in the next few days. Of
course the more obvious this becomes, the less useful
it will be. Only fools are taking the long side of a
paper trade in gold now, and because of this,
eventually there may be no more paper trades in gold at
all, just physical trades. In which case gold again may
be recognized as scarce and precious, something quite
different than paper.

One has to laugh bitterly at the news media's
repetition this week of the cliche that investors turn
to gold as a haven in times of world turmoil. For those
who offer this cliche are thinking, of course, of paper
gold, and they don't seem to have noticed that paper
gold is of limited use right now, not just at the
corner of Broad and Wall but, in fact, everywhere south
of 14th Street in Manhattan. That is, the New York
exchanges are closed, the offices of many New York
traders have been destroyed, and many traders
themselves are dead in the rubble. And the horror was
accomplished in just a couple of hours.

No, paper gold may be of some use again someday if gold
ever trades freely, without manipulation by governments
and bullion banks, but only as one of several hedges
against currency depreciation. The only gold that
serves as a hedge against both currency depreciation
and national catastrophe, such as the one experienced
in the United States this week, is gold itself, the
independent money.

But, dear gold bugs, may God forbid that we should ever
come to that. For if we do, even real gold will be
horribly inadequate. Before making any use of it then,
we'll need an arsenal and a private army to defend it.

* * *

The September 12 commentary of Michael Kosares,
proprietor of, again seems to catch the
essence of events, so here it is.

* * *

By Michael Kosares
September 12, 2001

Gold ran up over $20 yesterday in the aftermath of
yesterday's horrific events, and then gave up about
half that gain in the wake of the Bank of England's
gold auction earlier this morning. The auction was 4.3
times oversubscribed which, when stated another way,
translates to the market being willing and able to
absorb the next three auctions as well as this one at
$10 over where the market was trading just a couple of
days of ago.

What this says to me is that when physical gold is
available in size, price is not an object. When the
underlying strength of the physical market for gold
sinks in, along with the realization that the paper
markets are being used to hold the physical price down,
the public worldwide will become even a bigger buyer of
the yellow metal than it already is.

Obviously, the yellow is being held down for a reason,
and we continue to believe that that reason is twofold:
1) as a palliative to the various currencies, the
dollar included; 2) as a necessity for the unwinding
gold carry trade, which owes thousands of tonnes of
gold to various lenders. One group -- the bullion banks
-- has institutionalized the paper restriction on the
price, while the other, government and the central
banks, stands by and watches without objection for its
own reasons.

What we learned yesterday -- all of us -- is just how
vulnerable we all are to random and unpredictable
events. Beyond the physical reality of the collapsed
World Trade Center, we have the subtler reality of
systemic vulnerability in the world financial and
economic order symbolized by the devastating event.
Americans are no more immune to the vagaries of
financial stress than we are immune to terrorist
invasion. That is not a pleasant reality to contemplate
on top of everything that happened yesterday, but for
some of us, it is a reality nevetheless -- a reality
that must be contemplated and deal with.

Washington Post columnist Paul J. Samuelson captured
the essence of what's on many people's minds this
morning: "What was destroyed yesterday was not just the
World Trade Center and part of the Pentagon but
American's serenity and sense of security. ... It will
no longer be possible to maintain the illusion of
invulnerability, and the change in attitudes and
assumptions will have profound effects -- just what, no
one can yet say. ... [America] has tragically lost much
of the innocence and illusion of the past decade."

* * *

As for that innocence and illusion cited by Paul
Samuelson, good riddance. The sooner we Americans take
the world for what it is, the better chance we'll have
to survive in it. And the bad guys aren't really so
strong; they just don't believe that Americans will
ever summon up the gumption their parents and
grandparents had to on December 7, 1941.

Most Americans don't have a clue right now about the
sacrifices that soon will be required of them, nor of
the blows they may suffer, like chemical and biological
attacks on cities, attacks that may make this week's
casualties look small. But in the belief that Americans
will find the moral resources to prevail, just as they
did in 1941, I'll share here a prayer of a poem from
that era.

* * *

By Wendell Phillip Stafford

O Thou whose equal purpose runs
In drops of rain or streams of suns,
And with a soft compulsion rolls
The green earth on her snowy poles;
O Thou who keepest in thy ken
The times of flowers, the dooms of men,
Stretch out a mighty wing above --
Be tender to the land we love!

If all the huddlers from the storm
Have found her hearthstone wide and warm;
If she has made men free and glad,
Sharing with all the good she had;
If she has blown the very dust
From her bright balance to be just;
Oh, spread a mighty wing above --
Be tender to the land we love!

When in the dark eternal tower,
The star-clock strikes her trial hour,
And for her help no more avail
Her sea-blue shield, her mountain-mail,
But sweeping wide, from gulf to lakes,
The battle on her forehead breaks,
Throw Thou a thunderous wing above --
Be lightning for the land we love!

* * *

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.