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Bullion banks told to cover by month''s end, source says

Section: Daily Dispatches


By Bill Murphy
May 14, 2001

Gold $268.30 up 30 cents
Silver $4.34 up 1 cent

Here's a bombshell from Bob Chapman that fits in perfectly
with the information you have been getting from Midas for
the past four weeks or so. Bob, who is a big GATA supporter
and editor of the International Forecaster, sent us the
following even before he published it in his own newsletter:

Our intelligence sources have informed us that
Fed Chairman Alan Greenspan has given the
bullion banks until the end of May to clear up
their hedging and outstanding gold derivative
positions. Evidentially this process has been
going on for some time. Further, British Prime
Minister Tony Blair will try to make available,
at the upcoming British gold auction, additional
gold that will go to banks designated by
Greenspan. We were also told that AngloGold
will sell forward a designated amount of gold to
banks also specified by Greenspan. Our source
for this intelligence has been very accurate in
the past. They also said they thought that gold
would break out over $275 an ounce by Friday.

Subscription information for Bob's newsletter: one year
$79.95 U.S. Funds. Make check payable to Robert Chapman,
Box 510518, Punta Gorda, Florida 33951 USA. Please include
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accepts Visa and MasterCard charges. Please provide your
card number and expiration date. Bob publishes twice a
month by surface mail and three or four times a month by
e-mail. His email address is

I can't see how the bullion banks can cover without being
bailed out. The weekly supply/demand deficit is too big.
The only way for them to cover without the price going
bonkers is for someone else to take on their shorts.

This ought to be interesting. If Bob's intelligence is on
the money again and the Gold Cartel has run out of protection,
look out.

old was very quiet today ahead of the British Auction tomorrow
and the Fed's decision on cutting interest rates, also to be
announced tomorrow.

Of interest:

-- The gold price action remains very constructive and is
different than it has been the past four years.

-- Spot bullion remains above its 200-day moving average
and has formed a small bullish flag formation.

-- The gold open interest on Comex has dropped to only
105,491 contracts. This is very bullish as it is
extraordinarily low from a historical perspective. That
means the trade does not want to be short, possibly
because they do not have the physical gold to hedge.

-- The gold stocks popped late today and remained firm. It
is my guess that gold is getting ready to rock again to the

I thought you might like to see some of the feedback I am
receiving on the GATA African Gold Summit that was held
in Durban. I think it will help you understand what a big
success this was for all of us.

From Dick Trostler:

The following information was passed along to
me by Christine Maggiore, author of the book
quot;What if everything you thought you knew about
AIDS was wrong?quot; This information is in two parts.
The first is a message from Anita Allen, who is
apparently in South Africa. The second part is a
letter to Business Day, the South African
newspaper, by David Rasnick, Ph.D., who is a
member of South African President Mbeki's AIDS
Advisory Panel. I had to read Anita Allen's portion
several times in trying to understand what she is
saying. She writes in a sort of shorthand. But I
think that you will find it of value.

From: quot;Anita Allenquot;
Date: Wed, 9 May 2001 16:58:36 #43;0200
Subject: Golden Good News South Africa flash
9 May 2001

Dear All:

Thought you might be interested to know that
the Boston US Anti-Trust Men are in town just
a stone's throw away. Guess what they are
doing here? Telling Big Business the game's
up. Expect soon the rise of bullion to somewhere
between $600-$1000. South Africa finally has
control of the gold price. This coincides with US
off the Human Rights Committee, Bush jetting in
for a private hey, Thabo, I hear HIV doesn't cause

The Boston Boys were all over Tim Modise's Show
this morning. And you should have heard the callers!
They even asked the Boston Star on his show to
repeat everything he had just finished saying, and say
it again from the front (so they could record it -- no
doubt, and study what exactly the hell he is saying).
Callers in between already knew all about it and
asked for phone numbers to contribute to the costs.
This is the greatest show on earth in my lifetime so far.
I am so happy its virtually in my back yard, so to

From South Africa's Andy Brown:

My son-in-law, a promising apprentice gold bug,
yesterday attended a Johannesburg family 21st
birthday, where there were about 50 friends and
relatives of all ages and he did a small survey.
He asked about 15 attendees if they knew about
the cold conference in Durban on the May 10.
Without exception, all said yes. Wow! GATA's
efforts in Durban are an unqualified success,
although many sections of the mainstream
written press seem to be worried more about
their jobs rather than printing the truth. However,
South African Broadcasting Co. television have
given GATA incredible exposure. What a contrast!
As a member I would sincerely thank all those in
GATA for their tireless efforts over the past two

From Steve Munnings, responding to Business Day's article
today by Ilja Graulich, quot;GATA's conspiracy theory.quot;

Dear Sirs:

I consider myself a rational, intelligent, and
somewhat sceptical person. For the record, I am
not 100 percent convinced by GATA's claims, but
am listening with an open mind, and have yet to see
any credible counter-evidence that which refutes
GATA's. Opinions galore, on both sides, but evidence
is what counts!

Ilja seems to be presenting a mostly anti-GATA
opinion. His credibility (in my mind) suffers
immensely when he states the following: quot;The
group dismisses what is taught about supply and
demand in Economics 101 that if demand drops and
supply rises, which it has done due to central
bank selling, the price of a commodity should
drop.quot; This is demonstrably untrue. They are not
only well aware of the supply/demand theory of
economics, but it forms a central part of their

To wit: They maintain that an unusual and unexpected
source of supply -- the unprecedented level of gold
selling and leasing by the central banks -- is not
only unusual but is larger than is generally held,
and is (at least partly) as a result of a quot;gold
price suppressionquot; conspiracy.

They maintain that gold derivatives (especially quot;short
sellingquot; and quot;shortingquot; in all forms) amounts to
ADDITIONAL supply side pressure. And maybe
Economics 101 does not cover that, but Economics
201 surely supports that thesis!

Also hurting his case is the following: quot;But to prey on
the innocence of some and keep hope alive may hurt
their cause in the end.quot;

Surely quot;preying on the innocentquot; is the activity of
fraudsters, not that of people who believe in their
cause -- even if they were eventually to be proved
wrong. Is Ilja accusing the GATA group of
deliberately misleading people? Their actions are
highly consistent with those of people who believe
in the truth of their cause, not deliberate con artists.

Ilja states that the question quot;Why, if this evidence is
so compelling, have so few joined GATA's crusade?quot;
needs answering. Does it? Does Ilja not know that
most people do not actively join a cause until it has
become popular or politically correct? How many
people does he expect to join such a cause even if
they are convinced that it has the truth? Is a
measure of a crusade's worth and credibility the
number of joiners? What happened to the truth?

By this implied standard Jesus' crusadequot; was not
worthy until years after his death!

The truth (or lack thereof) of the allegations made
by GATA stand (or fall) on their own merits, not on
how many people have joined! Whether they are
effective as a political force, on the other hand,
could very well be measured by how many people
join the cause. Two very different issues.

Here is a counter-question:One of the things GATA
is urging the conference attendees to do is to ask
some very pointed questions to some very specific
individuals. Would it not be best to suspend
judgment on the merits of their case until those
questions have been answered? And, if it is within
one's power to do so, press for the answers?

And finally, a response to the findings reported to the
World Gold Council by Professor Anthony Neuberger of the
London Business School, as reported in the Financial
Times last week.

I am a 1996 graduate of London Business School
and had Professor Anthony Neuberger for a class
in options and futures. He seemed like a nice guy,
but my impression was that he's a very
mathematical, risk-immunization type of finance
guy with no feel for the realities of the markets.

By the way, you might be interested to know that
one of the head professors of economics at LBS
is Lord David Currie. From what I understand, he
once was (and maybe still is) one of the so-called
quot;seven wise menquot; of the Bank of England. He's
probably well-connected these days; I've heard that
he's a Labourite and has been an adviser to Blair
and the Labour government in general.

I quickly looked at the LBS website but couldn't
find him listed. My year 2000 Alumni Handbook
has him listed as the deputy director of external
relations. Anyway, my information is pretty dated,
but that's something that you might want to look
into. There may be a connection between the
BOE and the LBS study.

I would have loved to be a fly on the wall last week
for this one:

BASEL, Switzerland (Reuters) -- U.S. Federal
Reserve Board Chairman Alan Greenspan and
European Central Bank President Wim
Duisenberg will both take part in a meeting of
central bankers on Monday at the Bank for
International Settlements in Switzerland.
Greenspan and Duisenberg attended a dinner
on Sunday along with Bank of England Governor
Sir Edward George and other members of the
Group of 10 central bankers. As he left the
dinner, Greenspan was asked by reporters
whether he was there to urge the European
Central Bank to cut interest rates. He replied
only: quot;I am here because I am a member of this
group.quot; Duisenberg, who left the dinner a few
minutes after Greenspan, declined to say what
had been discussed during the evening. The
chairmen of the central banks of the Group of
10 countries meet periodically at the Bank for
International Settlements in Basel, Switzerland,
to discuss the world economic situation.

I can see Alan Greenspan now at the BIS: quot;Gentlemen, we
have a slight problem. It involves a letter sent to me by
Senator Joe Lieberman...quot;