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Expecting higher prices, Goldcorp withholds a third of gold production
9:18p ET Monday, February 21, 2005
Dear Friend of GATA and Gold:
Dennis Gartman mentions GATA in The Gartman Letter
again tonight, but this time favorably, if
reluctantly so, in regard to the British government's
disingenuous campaign to raid the International
Monetary Fund's gold hoard in the name of debt relief
for poor countries but more likely to bail out big
financial institutions that are short gold.
Gartman writes:
"Turning to gold, where we have once again rejoined
the bullish camp for the first time since early
December, when we exited all long positions when spot
gold was trading just above $450, we note that
confusion reigns regarding potential IMF sales of
gold from its reserves ... or the possibility of
revaluing its reserves to current spot gold prices.
"The chancellor of the exchequer in the UK, Mr. Brown,
has led the campaign for such sales and has opened
the debate. Obviously, most of the gold mining industry
is opposed to them, and so too are we the more we
consider them. Far better to allow the IMF to revalue
its gold hoard to present market levels and then use
that upward revision to its balance sheet to sponsor
debt-forgiveness efforts for less-developed countries
than to keep pressure upon gold prices through gold
sales that we think do damage to the nations that mine
it.
"We find it disconcerting, then, that we find ourselves
agreeing with GATA on this issue, but we do. There are
better ways to accommodate debt forgiveness and/or debt
consolidation than through gold sales. Those other paths
should be explored."
But Gartman shouldn't be too disconcerted about agreeing
with GATA, for any agreement here is quite limited and
certainly accidental. We seem to agree that the British
campaign for selling the IMF's gold is as phony as a
three-dollar bill (or, for that matter these days, as
phony as ANY dollar bill). But it might be fine with
GATA and gold advocates generally if ALL the IMF and
central bank gold was sold ALL AT ONCE.
Such a massive sale really might not depress the gold
price much at all. For selling all IMF and central
bank gold all at once would necessarily disclose
immediately that, on account of gold leasing, those
gold reserves are only a fraction of what the central
banks have been claiming. And while it was faced with
what was meant to be a fire sale, the world well might
realize that when the gold on offer was gone, there
wouldn't be much more. Such a realization might turn a
fire sale into panic buying.
But more importantly, the central banks' and the IMF's
selling all their gold all at once would be the end
of their intimidation of the gold market and a huge
blow to their manipulation of the currency and
commodity markets generally. For as has been admitted
at least by one central bank, the Reserve Bank of
Australia, in the absence of a currency's
convertability into gold at a fixed rate -- something
outlawed by the IMF's own protocols -- the only
purpose of central bank gold reserves is currency
market intervention.
So far from trembling in fear of the central banks'
tiresome threats of selling gold, gold's friends might
do well to challenge them this time: Yes, sell it ALL,
RIGHT NOW, and thereby forfeit your tyrannical power.
On the outside chance that Mr. Gartman would care to
pursue this issue and others with us, GATA Chairman
Bill Murphy today sent him an invitation to participate
in our Gold Rush 21 conference in August in Dawson
City, Yukon Territory, where our hosts will show us a
few glittering streams that put central banks to shame.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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