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Page 2, Midas commentary for 5/12/99

Section: Daily Dispatches

Evening Update 5/12/99 8:27 PM ET

By Aaron L. Task

Gold Intrigue Deepens, Perhaps

Rumors percolated through the zany, nutty, madcap
gold market this evening about some "announcement"
out of Europe tomorrow that could boost the
flagging metal.

"Late in the day today I received a phone call from
London saying that a bombshell is coming out in the
London financial press in the morning," Bill Murphy,
chairman of the Gold Antitrust Action Committee, wrote
in an email this evening to members of his Web site, "The essence of what I was
told is that GATA is right on target in its allegations
and that will become very clear tomorrow." Murphy told
his members he understands a large Wall Street firm
will be reported to hold a major short position in

Reached by phone, Murphy said "respectable" sources in
the gold community in both London and Toronto told him
officials at the Bank for International Settlements
"were shocked to hear the extent of the carry trade" in
gold and will make some pronouncement regarding the
issue tomorrow. He declined to reveal his sources.
( ran a story last week on GATA and its
charges of manipulation in the gold market.)

Independent of Murphy, Ronny Kraft, CEO of Gotham
Capital Management, reported hearing similar rumors and
was buying gold stocks today in anticipation of a bump

The BIS headquarters in Basel, Switzerland, was closed. was unable to confirm any allegations.
Gold stocks and the metal itself fell today, suggesting
most market players aren't expecting any good news. The
Philadelphia Stock Exchange Gold & Silver Index fell
2.2% while the price of gold fell 90 cents to $277.90
the ounce.

One possibility could be the unwinding of a derivative
contract tied to gold, theorized Philip Klapwijk,
managing director at London's Gold Fields Mineral
Services, whose regular reports on the gold market are
widely read.

"The Russians sent quite a lot of bullion to the West
last year," Klapwijk said.

"With Russian export regulations having [been] changed,
maybe a commercial counterparty couldn't make delivery.

"But if a commercial bank defaulted on a swap with a
London bank, I would doubt at this stage it would be of
sufficient scale to warrant huge concern," he
continued, reiterating he's heard nothing of this sort
is in the works. "It's a business risk which you have
all the time in that part of the world."

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