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Part 3, House of Commons sounds like GATA

Section: Daily Dispatches

11a EDT Saturday, June 26, 1999

Dear Friend of GATA and Gold:

Here's a special dispatch from GATA Chairman
Bill Murphy to members of his web site,

While signs of manipulation of the gold market are
everywhere, I am encouraged by the growing and
increasingly influential opposition to the proposal to
have the International Monetary Fund sell gold
assigned to it by its member nations. It is now generally
acknowledged that Congress is not likely to approve the
plan, and it can't happen without congressional
approval. Further, and just as important, the phoniness
of the proposal has started to get reported. It is
getting into the press that the plan, offered in the
guise of debt relief for poor nations, would relieve
only a tiny portion of their debt while devastating an
important part of their economies.

Bill's dispatch follows. Please post this as seems

With good wishes.

Secretary, Gold Anti-Trust Action Committee Inc.

* * *

Friday, June 25, 1999

Dear LeMetropole Cafe Member:

I smell a rat!

The bond market cannot rally for diddly -- 114.07 basis
September futures has stopped several feeble rallies.
Bond yields have soared to 6.15 percent, unthinkable
just six months ago.

We have had a hush-hush meeting of leading world
banking officials in Philadelphia a couple of weeks ago
and strong indications of massive redemptions at hedge
fund biggies, Tiger and Soros. There were the rumors
and a denial of an emergency Fed meeting all over the
wire services, followed by a stunning $20 billion
intervention implemented to hold back the yen (the old
yen carry trade problem surfacing again).

And the last two days the word is that two more hedge
funds are in trouble. Ross Capital and Monroe Trout are
the names that have surfaced. Monroe Trout was a heavy
seller of German Bunds the past two days as that market
has been hit very hard. It would appear that the de-
leveraging process that David Tice and Charles Peabody
have been telling you about in the Cafe for some time
is exactly what is going on here.

Then today the gold market was trading quietly when it
dropped a quick $2 just as the bond market was breaking
after a failed rally. What happened? The XAU was steady
as a rock. Well, I found it was a customer of Goldman
Sachs that just happened to sell 50,000 ounces at the
right time, which set off stops.

Not the time and place to get into the whole program
yet, but it feels more and more like part of that
Goldman Sachs 1,000-tonne short position that our
sources tell us has been uncovered might be part of a
Fed trading account. Goldman Sachs was a featured
seller almost every day after the Bank of England
auction. You are aware of that because we reported
that info to you. Soon we will lay out our
comprehensive thesis of what we think is going on here.
But before you new Cafe members think I am a bit daft,
here is Article 354 from the Federal Reserve System
book. (We will tell you soon, but you might want to
look who is behind the Federal Reserve. Most people
have no clue. I know because until recently I had no
clue either.

quot;No. 354. Transactions involving gold coin, bullion,
and certificates.

quot;Every Federal Reserve bank shall have the power to
deal in gold coins and bullion at home or abroad, to
make loans thereon, exchange Federal Reserve notes for
gold, gold coin, or gold certificates, and to contract
for loans of gold coin or bullion, giving therefor,
when necessary, acceptable security, including the
hypothecation of United States bonds or other
securities which Federal Reserve banks are authorized
to hold.quot;

So the Fed has the right to trade the gold market.

Perhaps this makes the picture a bit more clear about
the BOE sale and Goldman Sachs. The Fed knew about
Long-Term Capital Management way before it blew up.
After all, LTCM had the Central Bank of Italy as an
investor, as well as former Fed officials. That is
probably why Alan Greenspan made his statement --
quot;Central banks stand ready to lease gold in increasing
quantities should the price risequot; -- before two
congressional subcommittees on July 24 and July 30 of
last year. He knew what lay on the horizon. After all,
he prides himself on that. His smoke signal statement
was a clear one to the bullion boys. You can check the
record, but gold cratered before LTCM blew up and after
Greenspan's statement.

It is now clear that problems were surfacing again a
couple of months ago. (Remember Peabody's comments
about unintended consequences as a result of the LTCM
bailout and the three interest rate cuts.) Greenspan
could not go to the same well again. So just as the
price of gold is taking off this time and gold share
prices were having their greatest surge in six years
all over the world, our officialdom calls up the
English poodles to make their ridiculous gold sale
announcement (May 7) -- the first advance announcement
like that in 20 years. And then Greenspan has the gall
to tell the Joint Economic Committee in Congress that
the English did this so as to not take advantage of the
private marketplace. Thus Greenspan suggested that the
central banks that have sold gold for the past 20 years
and have announced their sales only after it was
completed all quot;took advantage of the marketplacequot; and
were amoral.

We do think a big gold price rise is coming on the eve
of the BOE auction, but the Fed's nervousness over the
bond and stock markets may be a restraining factor.
Regardless, we are doing our due diligence to find out
the truth about who is manipulating the gold market and

Cafe members know that Long-Term Capital Management
sent GATA a letter and an affidavit denying having
traded in gold. We are preparing to respond cordially
responding to LTCM and will ask for some specific

In the meantime and interestingly we were bombed today
by Cafe members who sent us this comment from The
Gartman Letter for Friday, June 25. The Gartman Letter
is read all over the world.

quot;Precious metals are firmer, helped, of course, by
rising interest rates but helped even more by reports
that the major Wall Street firm long associated with a
large short position in gold (Goldman Sachs ... having
apparently inherited that position from LTCM last year)
may be in fact quot;the bidquot; to the BOE's offer when the
latter auctions a goodly portion of its gold reserves
next month. The BOE's auction has pressured the gold
market and reports of this firm's intention to take all
of the first 25 tonnes of gold, when it becomes more
publicly understood, stands to push gold prices rather
sharply higher. Goldman, according to our sources, has
proven to be a formidible bid to the futures all week,
making the rumors all the more readily understandable.quot;

This is very strange. Just a few weeks ago Gartman
condemned GATA for suggesting that the gold market was
being manipulated. Now Gartman cites the 1,000-tonnes-
short position rumor that we have told you of, and does
so acknowledging what the market talk is even though
Goldman Sachs is a several-client subscriber to the
Gartman newsletter.

So what gives? Where did Gartman get information about
Goldman Sachs inheriting an LTCM gold position? That is
just what we said, yet we get abuse for saying the same
thing Gartman does now.

Even though Gartman condemns us, we thank him for
pointing out to the world what our inquiry about LTCM
was all about in the first place.

One thing I promise you. The Cafe will be jumping this

All the best.

Bill Murphy, Le Patron


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