Somehow Turk gets quoted by Bloomberg on gold price capping

Gold, Silver Tumble As Investors
Sell to Counter Credit Rout

By Pham-Duy Nguyen
Bloomberg News Service
Thursday, August 9, 2007

http://www.bloomberg.com/apps/news?pid=20601081&sid=aGM8Mxtekti4&refer=a...

Gold in New York fell the most in two months as some investors sold the precious metal for cash to cover losses related to the U.S. subprime-mortgage collapse. Silver also declined.

European and U.S. stocks fell after France's biggest bank halted withdrawals from three investment funds. The European Central Bank loaned 94.8 billion euros ($130.2 billion) to help ease a credit crunch. The metal is up 5.5 percent this year.

"It's the fear of the subprime losses and the collapse of the credit market," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. "They're selling gold to cover margin calls and to get rid of all risky assets."

Gold futures for December delivery fell $13.50, or 2 percent, to $672.80 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage drop since June 8.

Silver futures for September delivery plunged 46.5 cents, or 3.5 percent, to $12.705 an ounce. The metal is down 1.8 percent this year. Today's percentage decline was the biggest since June 26.

In early March, gold dropped 6.2 percent, the biggest weekly loss since July 2006, after a selloff in global equities erased $2.4 trillion in market value.

"When markets have an initial or sudden difficulty, you many times see a move toward Treasuries instead of gold," said A.C. Moore, who manages the $500 million Dunvegan Growth fund, which has about 20 percent in gold and gold-related stocks. "That's the easiest choice. Short-term Treasuries also provide income where gold doesn't.'

The fund is based in Santa Barbara, California.

U.S. Treasuries rose today, led by short-maturity notes, which are more sensitive than longer-maturity debt to possible changes in monetary policy. Yields on the two-year note fell more than 16 basis points to 4.5 percent. The benchmark 10-year note's yield declined more than 8 basis points to 4.79 percent. Prices move inversely to yields.

Rising Treasuries drove the dollar higher against a basket of six major currencies. Gold generally moves in the opposite direction of the dollar.

Central banks may be selling gold reserves to push down the price and calm investors, said James Turk, founder of GoldMoney.com, which manages $191 million of investments in gold and silver. Some investors buy gold during times of financial turmoil.

"A rising gold price warns of troubles ahead," Turk said. "That's why central banks are capping the price of gold."

The Bank of Spain sold 25 metric tons of gold in July. It has sold a total of 149 tons in the third year of the Central Bank Gold Agreement, London-based research firm GFMS Ltd. estimates. Spain sold 30 tons in the first year and 62.5 tons in the second year.

Under the accord, banks in Europe can sell as much as 500 metric tons a year. The ECB said on Aug. 7 that one member bank sold gold worth 29 million euros the previous week after member banks sold 483 million euros worth in the preceding two weeks.

The banks had reported selling 294 tons as of June 12, according to the producer-funded World Gold Council. The banks sold 497 tons in the first year and 396 tons in the second year of the five-year accord.

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