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WorldNetDaily features GATA chairman
10:55p EDT Thursday, July 29, 1999
Dear Friend of GATA and Gold:
WorldNetDaily.com distributed the following story
yesterday. GATA Chairman Bill Murphy figures in it
If you haven't checked out his Internet site of
financial commentary, I highly recommend it. I pirate
from that site much of what I post to you, but there's
a lot more there, and a trial subscription for two
weeks is free. Murphy is doing heroic work for the gold
cause. Check him out at:
Please post this as seems useful.
With good wishes.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
Wednesday, July 28, 1999
What's going on in the gold market?
Critics claim it's being manipulated
By Jon E. Dougherty
Veteran traders and gold mining companies say the price
of gold is being artificially held down to prevent huge
losses by key lending institutions.
Chairmen and chief executives at Canada's Placer Dome,
U.S. miners Newmont Gold and Homestake Mining, South
Africans Anglogold and Gold Fields and Ghana's Ashanti
Goldfields have been seeking answers primarily from
British Prime Minister Tony Blair on the Bank of
England's May 7 decision to sell over half of the
country's 750 tons of gold reserves.
They charge that the sales were prompted by the desire
to bail out lending firms running short positions in
gold, but so far neither Blair nor anyone in the
Clinton administration -- which supported the Bank of
England's decision -- is addressing the questions.
Worse, the International Monetary Fund is contemplating
a British-style sell-out that will, say critics of the
plan, further erode the trading value of gold, despite
gold's traditional economic prowess. Great Britain and
the U.S. also support the IMF sell-off plan, which is
ostensibly being contemplated to raise money to cover
the debt of poor nations that have not been able to
repay the IMF.
While few experts are openly charging U.S. and British
leaders with a conspiracy, they do say these and other
actions have resulted in a 10 percent fall in gold
prices since spring. And because of the manner in which
the sales have been handled, they amount to de facto
manipulation of the gold market at a time when prices
don't equal demand.
Last year gold production amounted to some 2,550 tons
but gold borrowings were over three times as high at
around 8,000 tons. While production has remained
steady, short-term borrowing on gold has increased
Critics say at issue is the practice of key lending
institutions allowing gold bullion dealers to borrow
inflated amounts of gold, which they then sell onto the
market at a profit. If prices rise unexpectedly or
before dealers sell the borrowed gold, both lender and
borrower stand to lose billions of dollars. That's
because deals are being made with gold that has not yet
been mined out of the ground and, if prices remain low,
may never be.
Earlier this year, after months of depressed prices,
gold began making a comeback and reached nearly $300 an
ounce. But when the Bank of England announced a plan to
sell most of Great Britain's gold reserves, prices
froze and then plummeted to their current level --
about $250 an ounce.
The pre-sale announcement by the British bank was seen
as irregular and quot;set off alarm bells around the
world,quot; according to one source.
quot;No other central bank has announced a gold sale prior
to its completion in more than 20 years,quot; wrote Gold
Anti-Trust Action Committee Chairman Bill Murphy in a
letter to Sen. Phil Gramm, R-Texas, July 20. quot;And the
Bank of England's announcement was made as the gold
price was storming past a key gold loan borrowing point
and interest in the gold market was finally rising
Murphy also wrote, quot;Because of the way the Bank of
England sale was announced, we also suspect that the
current administration (perhaps the Federal Reserve or
U.S. Treasury) may be active in the gold market through
a trading account at Goldman Sachs. ... Therefore,quot; he
added, quot;(they) may have some role in the orchestration
of a lower gold price.quot;
Britain's Prime Minister Blair has defended his
country's gold sale, saying it was necessary because
the quot;price of gold has been falling for over two
years.quot; He defended it as a quot;prudent measurequot; designed
to quot;save the taxpayersquot; from suffering huge losses.
Murphy, in his letter to Sen. Gramm, refuted Blair's
explanation, adding that if England wanted to quot;get the
best dealquot; for British taxpayers they would not have
announced the sale in advance -- a move that was sure
to make the price of gold fall.
quot;The best deal the Bank of England could have gotten
would have been $30-$40 more per ounce by carrying out
the sale as all the other major countries have done for
20 years,quot; he said.
Ironically, Murphy said, no one is taking direct
responsibility for the Bank of England's plan to sell
the country's gold reserves. Murphy noted in his letter
that Blair, the Bank of England, and the nation's
agency equivalent to the U.S. Treasury Department have
all indicated the idea did not originate with them.
Meanwhile the U.S. Mint reported that gold sales
continued to be brisk in 1999, with more than 67
percent of the maximum mintage of proof gold Eagles
already sold to the public since April 30.
quot;Total sales of the proof gold Eagles are up 16 percent
over the first 12 weeks of the program last year,quot; said
Mint Director Philip N. Diehl, quot;with sales of the one
ounce and quarter ounce coins up 45 percent and 33
Diehl said, quot;These are the highest totals at this stage
of the program since 1996, so we want to let customers
know that the strong early sales we announced in mid-
June are continuing at a very high pace.quot;
A spokesman for the mint declined to comment about why
the price of gold continues to be low despite the
quot;We're a government agency and because of that I can't
comment on that,quot; he told WorldNetDaily.
Robby Noel, a spokesman for Patriot Trading Group, a
U.S. gold wholesaler, said the reason for the proposed
IMF sell-off is dubious at best.
quot;The IMF said they want to sell their gold reserves to
relieve the debts of poor countries,quot; he said. quot;If
that's the case, then they're going about it all wrong
because many African countries will be hit the hardest
if they do, and supposedly those are the countries they
are claiming to be trying to help.quot;
Noel said many Africans, especially in South Africa,
face lay-offs in the tens of thousands if the IMF sells
their gold. The sell-off would likely cause gold prices
to fall even further and thus, force mining companies
to lay off more workers in order to remain viable.
Currently, he said, gold is selling for less money per
ounce than it takes to actually mine it out of the
As to why the IMF would consider such a move that is
obviously destined to hurt, rather than help, the
economies they are allegedly trying to save, Noel had
quot;Maybe it's because gold is honest money and these are
immoral men,quot; he told WorldNetDaily. quot;Outside of that,
I have no idea why they (Britain and the IMF) would do
what they've done or are planning to do.quot;
quot;I do believe when 'the panic' hits there will likely
be little physical gold to go around,quot; he added.
Jon E. Dougherty is a senior writer and columnist for
WorldNetDaily, as well as a morning co-host of quot;Daybreak