Letter to The Wall Street Journal


10p EST Thursday, February 24, 2000

Dear Friend of GATA and Gold:

Here's today's "Midas" commentary by GATA Chairman
Bill Murphy at www.LeMetropoleCafe.com.

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

* * *



Spot Gold $298.40, down $1.40
Spot Silver $5.15, down 9 cents


Brutal! The collusion crowd made sure gold did not
break its downtrend line as, they continue their scheme
to hold down the gold price. Their tactics have worked
again so far, as some of the black box technical specs
that were long are now pitching those longs and maybe
even going short.

These goons are very good at demoralizing any investor
who dares show interest in the gold market.

This is a real pain in the butt. Yet he who laughs last
often ends up laughing best.

As chairman of the Gold Anti-Trust Action Committee, I
am officially putting Hannibal Lechter, the Hannibal
Cannibals, and a certain sector of U.S. officialdom on
notice. It is time for the truth to come out.


The gold lease rate is almost ZERO. Mitsui has the one-
month rate at 0.05 / 0.35. With a potential of another
gold spike occurring at any time, gold borrowers say
"no, thanks."

Midas reported that gold production in Australia was
down last year. Reuters reported today that it was down
in South Africa last year too. Production fell in that
country to 449.5 tonnes from 464.4 tonnes the year

Not all is despair. Goldman Sachs was spotted taking in
the "fences" today. It might be a very bullish big-picture
action. When gold traded at $320, GS bought 290
puts and paid for them by selling 370 calls. That trade
should have been a big winner, as the price of gold has
dropped by $20 and is closing in on the 290 strike

Surprise, surprise. Today GS was spotted taking OFF
that trade IN SIZE and it had netted them about a
mere 30 cents. And, they were seen undoing the trade on
Comex which is not their normal option trading style.

We think this is bullish because the call prices are
not coming down with the fall in the gold price.
Extraordinary! The option volatilities remain high. The
big boys know that the gold market could explode
upward at any time. Call premiums remain very high and,
at the same time, few want to borrow gold. It is no
fluke why this phenomena is occurring. Gold is a
ticking time bomb.

The silver stocks rose sharply yesterday and again
today (more than 8 million ounces in total). They now stand
at 86,167,000 ounces. Word is that Goldman Sachs and
Republic Bank are moving silver out of London for
deposit on Comex. Seems that Ted Butler harangued the
Comex's Daniel Rappaport about the silver short
position on Comex. Supposedly the disturbed Rappaport
is reacting by having the dealers bring silver into the
warehouses. Interesting development. Not sure what it
all means. Why right now?

An extraordinary day. The durable goods number released
this morning was stronger than expected, yet the 30-year
Treasury bonds rose on the news and the Dow
cratered. So did the submarining banking index, which is
now all the way down to 656.28, having dropped another
12.4 points by day's end. One does not need to watch a
horror movie to get a scare. Just take a gander at the
chart of this index.

The bank shares are headed south because something is
very wrong in Financial Land. I have gone over my
thoughts on this so often for so long I won't go there
again today except to point out once again that the
bullion dealers are financial institutions. If there is
chaos in the banking world, it is only common sense
that it will affect the thinking about their gold
loans, as it will affect policy on ALL loans.

We know that if there is a rush to call in a decent
number of gold loans by the banks, it will most likely
cause a gold-buying panic that could shock the
uninformed financial community. It does not take an
Einstein to understand this one. Outstanding gold
loans: 10,000 tonnes or so. 1999 gold mine supply:
2,560 tonnes. Oh boy!

Will it come to the following?

When asked about the Tokyo Commodities Exchange's
decision this week to cap the price of futures
contracts, Trevor Pitts (Standard Bank's platinum
marketing manager) said it was done in "to save the

This is a revolting development. The gold market is
manipulated FOR by the shorts for years and NO exchange
does ANYTHING. Then a market explodes due to
dramatically bullish supply/demand considerations and
the shorts change the rules for their own benefit. Just
as they did to the Hunts on the big silver runup in

It is time for the short crowd to be investigated, and
that is just what may finally happen. GATA has been
working behind the scenes at the highest levels of the
U.S. Senate and U.S. House of Representatives. We
have been asked to submit a summary of our take on
what has been going on in the gold market, backed up by
various documents. It has been suggested to us by
friends of certain senators and representatives to
request a congressional investigation into the gold
market. In that regard, if anyone we have not already
spoken with has ANY pertinent information on the
manipulation of the gold market, now is the time to get
that information to GATA. If you prefer, to go directly
to our attorneys at Berger & Montague in Philadelphia.
Merrill Davidoff can be reached at 215-875-3084. Please
do not contact him just to chat. That stuff costs

More on the palladium scandal. Here is what Reuters put
out today:

"LONDON, Feb 23 (Reuters) -- Palladium prices fell
heavily on Wednesday afternoon from early peaks above
$800 an ounce, undermined by Japan's TOCOM and
NYMEX in the U.S. acting to cool overheated markets,
traders said.

"The Tokyo Commodity Exchange (TOCOM) has effectively
scrapped free trade by locking prices, while NYMEX is
to more than double margins.

"Palladium lost more than 5 percent between today's two
fixes, with the price fixed at $755 an ounce this
afternoon, down from the morning setting of $798.
Platinum was fixed at $493.00 on Wednesday afternoon,
its lowest since Feb. 1 and down from the morning's

"`It has been crazy, really,' one trader said.

"Earlier Wednesday TOCOM, the world's largest futures
market for palladium and platinum, said palladium
futures contracts bar spot February would only be
allowed to trade at today's closing prices for an
indefinite period.

"TOCOM said it acted to prevent `widespread disorder in
palladium trading. It comes soon after two reductions
in the daily price limit and moves to favour small
clients as TOCOM struggled in vain to curb a panic as
prices surged.

"The move appears to be designed to force some
professional traders to liquidate long positions, and
designed also to try to help some small-scale traders
who are still short as they have been unable to
cover,' analyst Rhona O'Connell of broker T. Hoare
Canacord said.

"The rule change was seen favoring one side of the
market -- small-scale traders who had miscalculated and
sold metal forward.

"The losers were seen as the big Japanese houses who
were riding the metal's climb on haphazard supply and
car maker demand, and who could now no longer expect
higher prices.

"The European market responded negatively to the news,
with the price falling from $800/$850 to $730/$780 this
afternoon. However, the unprecedented wide spread
reflected extreme uncertainty, with liquidity and trade
drying up.

"`What sort of signal does a $50 buyer/seller spread
and a rule change send? They are penalising the longs
in favor of the shorts," another analyst said.

"Palladium has soared this year as demand, principally
from the auto catalyst sector, has outpaced supply,
which has been hit by haphazard Russian shipments.
Russia, the world's largest producer, has failed to
deliver palladium in the first six months of each year
since 1997 through bureaucratic red tape."

LeMetropole Cafe's John Brimelow nailed the platinum and
palladium market as long time Cafe members know very
well. He just sent me his thoughts on these markets:

"Palladium has been smashed over the last two days by
brutal action taken by the Japanese futures exchange
(TOCOM) to rescue the shorts. Having endured 18
successive limit-up days, this group (which we suspect
includes far more powerful and influential parties than
just small traders from the public, as is usually
asserted) has been rescued by measures taken of the
Hunt Brothers/silver variety. These include huge
increases in margin, liquidation-only trading -- no new
longs allowed -- and a severe reduction in maximum
positions, which seems to be being enforced more
rigourosly than originally indicated.

"TOCOM palladium had yesterday more than nine times the
volume of metal outstanding in open interest than NYMEX.
It is far more important.

Where do we go from here? Open interest today fell by
28 percent -- almost a half million ounces of paper metal.
Platinum was caught in the backlash (some desperate
palladium shorts had bought platinum contracts hoping
for some kind of protection). I think this squall will
not last longer than this week at this rate and, since
the Russians show no evidence of shipping, the party
may well resume."

Potpourri and the Gold Shares

The lunatics have truly taken over the stock market
asylum. The Dow ends the day down 133 points while the
Nasdaq roars to a new record, up more than 60 points. Value
is out, out, out. Stocks of companies that make no
money and might not even be around in a few years are
in, in, in. It is a brand-new day!


The XAU can't get out of its own way, closing today at
61.93. Portfolio managers realize that the gold market is
rigged against them and want no part of it.

GATA just received a sizable contribution from a major
gold producer. A big thank-you goes out to the company.
These will be the best bucks they ever spent.

I did a radio interview yesterday with a station in
Fairbanks, Alaska, as a warmup for my trip there in two
weeks to speak on behalf of GATA at the convention of
the Alaskan Miners Association.

At a commercial break, I heard a local retail store
alerting the listeners that it is now "mush" time. It
turns out that temperature in Alaska has risen to the
point where the locals can go dogsledding and play
outside. Geez, how warm is it, then? I asked. Minus-10
degrees was the answer. For a month or so it was 40-to-
50 below every day. My, oh my! Time to buy some long

At least it is not the North Pole.

Just in case you are interested.... This is the latest
from Fairbanks, courtesy of AMA Chairman Rich Hughes:

"Finishing of the Yukon Quest competition sled dog
race. The race began in Fairbanks about 1 1/2 weeks ago
and the winner arrived in White Horse Yukon at 10 today.
This event preempted all other items and caused
the delay. A woman by the name of Ali Zirkle won
the race. Quite a big deal here and got precedence over
all else when it comes to media coverage."

Two tidbits on Barrick Gold from a Cafe member in the

"In respect to Barrick, just read a report on Barrick
by a European institution, late last year. They were
concerned by the derivatives and recommended other
companies that were not hedged.

"Received an E-mail from a European bank that sat in on
Barrick's European Road show. They called it `Fiddling
as Rome Burns.'

"Barrick outlined their hedge book, as much as they are
telling people, reallocation of forward sale gains from
this year and next to 2002, etc., to ensure that they
can continue to get $360 going forward to 2005.

"Barrick is getting deeper and deeper into the PAPER
GOLD and derivatives.

"Needless to say, this European bank was skeptical going
into the road show and definitely does not recommend

From the famed Harry Schultz: "ABX's Oliphant is an
elephant in the gold market tea room, breaking dishes

I have loaded the boat on my favorite gold stock,
Golden Star Resources (GSR on the Amex), adding to my
position every day during the past week. It is holding
like a rock, and the vibes from Cafe members who know
the company intimately just get better and better.
Word must be getting out, as GSR is not setting back
like so many of the other shares in this beat sector.
GSR closed today at 1 1/2.

We are about six months behind schedule, but in about
two weeks, the Cafe hopes to unveil its own "conference
room" -- a chat room in which members can talk to each
other about the markets and YOUR favorite precious
metals companies. To accommodate the traffic, we have
secured our own server. Webmaster Geoff Barnes has
been working hard to pull it all together and is doing
a great job. Should be fun.

A news item from the Aussie financial press:

"By Tom Allard, Economics Correspondent.

"A doubling in mining earnings underpinned an 18.3 percent
surge in corporate profits in 1999, indicating the
benefits of the stronger global economy and the
likelihood of a bumper December-quarter economic growth

"The result came yesterday as Reserve Bank Assistant
Governor Glenn Stevens said the economy was
expected to maintain its momentum this year as the
strengthening of the global economy compensated for any
slackening in domestic demand."

It is hard for me to get my mind off the fact that
there is a strong probability that Congress will
actually begin an investigation into the shenanigans
going on in the gold market. I can see it now.

June 2000, Washington, D.C., United States Congress

"The committee calls Jim Riley, commodity top dog at
Goldman Sachs: Please raise your right hand. Do you
swear to tell the truth, the whole truth, and nothing
but the truth?

"Mr. Riley, could you please tell this committee about
why the Financial Times stated that your firm had a
conflict of interest in advising Ashanti Goldfields Ltd.
and how that conflict may have contributed to their
financial disaster? While you are at it, how is it that
your name shows up week after week in the thick of
controversy in these documents that the Gold Anti-Trust
Action Committee turned over to us? Mr. Riley, your
firm's trading volume and activity in the gold market
have grown dramatically this past year. Would you please
tell this committee about that?

"Two more questions, Mr. Riley. Why is Goldman Sachs
sometimes called Hannibal Lecter, and do you have any
offshore accounts on your books for the U.S. Treasury
or the New York Fed?

"And now Charles Van Arentschildt, chief gold trader for
Deutsche Bank. This committee would like to know about
your alerting clients the day before the May 7 Bank of
England gold sale announcement that the price of gold
would not go above $290. That quote was put up on the
www.LeMetropoleCafe.com web site on May 6 with gold
trading at $289.

"And Mr. Frank Arisman, chief gold trader at J.P. Morgan.
Your firm and Goldman Sachs are co-chairs of the
Counterparty Risk Management Group, formed a year ago
January. Does your risk management include capping the
gold price?

"Mr. Dinza Mehta, chief gold trader at Chase Bank. This
committee would like to take a look at your gold book.
You report your consumer loan book, your mortgage book,
your LDC loan book, etc. Why not your gold book? What
are you afraid of disclosing? This does not pass the
smell test. This committee would like to see what you
have been up to in the gold market. Oh yes, just
curious, Mr. Mehta. If your firm is so `with it' on gold
analysis, how come you managed to get Newmont Mining to
buy all those puts and write all those calls on the
lows last summer?

"Mr. Peter Munk, chairman of Barrick Gold. This
committee appreciates you flying in from Europe while
your real estate firm is having financial difficulties.
We have looked over your operation and it appears to us
you are more of a hedge fund than a gold producer. As
an aside, we are recommending that your firm be taken
out of the XAU. Your overweighted presence in that
widely reported index distorts its value as a share
proxy for the gold market. Mr. Riley, can you tell us
why EVERY TIME there is stock market chaos, the
bonds weaken, the oil price takes off, there is financial
market turmoil, etc. -- market activity that is normally
bullish for the price of gold -- the price of gold goes
down on that day?


"This committee thanks you all for coming to Washington
today. We will be back in touch. It is clear that the
gold market has been manipulated. Many have suffered
unnecessarily as a result of the gold price not being
allowed to rise. It also appears that certain firms
have benefited financially in significant amounts from
this manipulation. That activity was inappropriate,
unethical and, possibly, fraudulent, to put it mildly.
This will require further congressional action.

"Good day."