NY Fed''s Peter Fisher and Hannibal Lechter, overheard

12:01a Tuesday, August 3, 1999

Dear Friend of GATA and Gold:

You'll enjoy this commentary by Bill quot;Midasquot; Murphy,
GATA chairman, just posted at www.lemetropolecafe.com.

Please post this as seems useful.

CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.

* * *

By Bill Murphy

August 2, 1999
Spot Gold $254.70 down $1
Spot Silver $5.36 down 7 cents

A Conversation between Peter Fisher of the New York Fed
and quot;Hannibal Lechter,quot; the infamous bullion dealer.

Patterned after the Wall Street Journal article by
Jacob M. Schlesinger on Nov. 2, 1988 entitled, quot;Long-
Term Capital Bailout Spotlights a Fed 'Radical.'quot; For
reference, this article may reviewed in the library at
the Dos Passos Table dated May 26, 1999.

PETER FISHER: Hello, Hannibal. This is Peter. How are
you?

HANNIBAL LECHTER: Fine, Pete. Nice to hear from you.
This is the same secured line that you always call me
on, correct?

PETER FISHER: Of course, Hannibal. I would never call
you on an unsecured line. Thought I had better touch
base with you again. Seems like the markets are acting
up a bit and making our gold scheme a bit more
difficult to control. Also, I thought I had better
relay to you some feedback that my intelligence sources
are filtering to me.

The day started out poorly for us with interest rates
going up in Europe and Japan. We already have 6.12
percent long bond rates and don't need that to be
aggravated by rates going up all over the world due to
increased economic activity in so many countries. It
got worse as the day went on. Yes, I know the National
Association of Purchasing Managers July report showed
that manufacturing growth was less than expected, and
that gave our bond market a big boost after it was in
the weeds due to the overseas markets. But then
analysts saw that the prices-paid component was up more
than expected and the bonds gave up all their gains,
plus some.

Hannibal, I have a big concern. We actually skated
through the day today. Did you see the commodity
markets? The CRB closed above its 200-day moving
average and made six-month highs, and all technical
indicators on the CRB will turn bullish on a close
above 194. Soybeans were limit-up, soybean oil was
limit-up, soybean meal was limit-up, corn was limit-up,
hogs were limit-up, lumber was limit-up, and wheat was
almost limit-up (19 cents higher). That put the CRB
Index at 193.52 -- up a whopping 3.16 today -- with a
half-dozen markets locked limit bid! That does not bode
well for tomorrow.

Fortunately, we have done such a job on this gold
market that it closed lower. We have succeeded in
taking gold off the radar screen for the moment as a
reasonable investment vehicle, but I do not think we
can hold out much longer.

Today on CNBC some analyst from R.J. O'Brien (out of
Chicago, no less) pointed to gold's closing lower as a
sign that there are no inflation worries. We have
really pulled this one off so far, suckered the press
and analysts to believe that the bearish research of
your fellow Hannibals is relevant and the price action
of gold is all-telling; that is, quot;pricequot; is analysis
and truth telling.

But the general world cannot stay so ignorant and naive
for much longer. This is not the quot;Gong Show,quot; you know.
If the outside markets keep acting the way they have
been recently, they are going to realize they have been
duped.

HANNIBAL LECHTER: Peter, you read my mind. We have been
very nervous lately and have been trying to figure our
way out of this. That is why we have been aggressively
buying the last couple of weeks. We bought a couple of
thousand contracts on the Comex alone today. And we had
a conference call with our clients telling them that we
thought the price would be going up from here. We
realize that the spotlight on our manipulation is
growing. And, as you point out, all the normal factors
that drive the price of gold higher are in place and
occurring, so it is raising great suspicions as to why
the price of gold goes down on a day like this. I think
what we have done is a bit out of control and attracted
some panic selling at these levels.

Clients call us up and say, quot;What about gold? It is so
cheap.quot; They then point out how the dollar looks like
it has topped, yen intervention has failed, oil is
trading at $20 to $21 per barrel, and now the grains
are on fire. They do not understand why the price of
gold is not $100 higher than at present. We have
buffaloed them until now with our stories of central
bank selling, gold is dead, etc. But the stories about
Congress killing the IMF gold sales and the stories
circulating about how the Swiss will not sell their
gold are having their effect. We can't spout off our
propaganda so easily now.

And Peter, have you caught the flack that Tony B is
getting in London from all the African countries about
the Bank of England gold sale? He is also hearing it in
spades from the Tories in the House of Commons. And
stories are surfacing about who was behind the decision
and why it was made. You know this silly GATA group has
let everyone know of the Hannibal connections to the
Bank of England -- and people are publishing it. Drats
to those people. They even sent a 21-page document to
Senator Phil Gramm, chairman of the Senate Banking
Committee, about what they have somehow found out about
our operations.

PETER FISHER: Well, Hannibal, yes, unfortunately, I
have heard of that letter. It is being circulated. Much
to my regret, it will be very hard to deny what they
have to say. If we ever get subpoenaed on this, we have
problems. I received a phone call today that said the
CFTC has started an investigation into certain bullion
dealers and brokerages about manipulating the gold
market. This came out of nowhere and it makes me a bit
nervous. You know those GATA clunkers sent their
document to Phil Gramm. Wendy Gramm, his wife, used to
be chairman of the CFTC.quot;

HANNIBAL LECHTER: What do you make of that?

PETER FISHER: You see, Hannibal, she and Brooksley
Born, the recently resigned CFTC chairman, respected
each other as dames and respect each other as
colleagues, as they held the same position. You
remember how Brooksley was fighting for greater market
transparency and was rebuffed by my administration and
Secretary Rubin? She just would not stop pushing for
what she believed was good for the country and needed
to be done. So Secretary Rubin had her canned. End of
her efforts and her CFTC chairmanship. You know what
happens to those that oppose Bill. She got hers!

Problem is, Wendy Gramm knows Brooksley got a raw deal
that should never have happened. She goes and tells her
powerful husband that something is very wrong -- and
that Brooksley was wronged. Then these GATA chumps send
him this well-documented bit of information. Next thing
we know rumors are circulating about a CFTC
investigation. One of my moles at the CFTC called to
tell me today that a wire service called them to
inquire about the rumors, but they did not respond as
of yet. They also told a newspaper editor in
Connecticut that they would get back to him within a
half hour, but haven't responded to him either.

PETER FISHER: This is what I mean, Hannibal. The heat
is turning up.

HANNIBAL LECHTER: Geez, Peter, you are right, this is
not good. I have something to tell you too. The word is
getting out about Tiger, the hedge fund that GATA
thinks you helped bail out. The secret banking meeting
in Philadelphia, the rumor of the emergency Fed
meeting, and the rumors about Tiger's redemptions are
all resurfacing. My sources are telling me that GATA
has been informed that Tiger is short more than 10
million ounces of gold and they are telling people
Tiger borrowed much of the gold around the time of the
Bank of England's announcement to help them out of the
jam they were in. This is not good for us, to have this
get out, because our firm sold practically every day
after the BOE announcement. Many thought we were
selling for you. Now they will think it was for Tiger!

And word is out all over London about our 1,000-tonne
short position. They say it was revealed to some very
prominent Brits, and they are telling others about it.
Even the Financial Services Authority in London is on
our case. Naturally, it is suspected that part of that
1,000-tonne position is for Tiger and, as I just said,
for you, Peter.

What troubles me is what some smart types are thinking.
Astute market people know that Julian Robertson,
Tiger's main man and hedge fund guru, is no dummy. He
got beat up trying to get out of his yen carry trade
position last year. Certainly, knowing commodities as
he does, he would not make the same mistake in gold too
-- unless, of course, he was assured that the price of
gold would not go beyond a certain point so his gold
borrowings would not go under water and jeopardize his
entire business. That reflects on you, Peter, if you
know what I mean.

PETER FISHER: Hannibal, you know as well as I that he
needed big help, and the gold borrowing position he
took helped him out of a big hole -- and helped keep
the gold carry positions of you and your cousins safe
for a while. Good for Tiger, good for us. Good for the
overall markets. And everyone has kept their mouth
shut. Besides, it saved us a market panic. Who wants
that?

HANNIBAL LECHTER: Yes, but it is not just these GATA
folks that are stirring the pot about Tiger. At the
Diggers and Dealers Conference in Australia, word was
circulated that Tiger is short 200 tonnes, not the 10
million ounces coming from GATA's sources, but still a
lot of gold. This could be a nightmare for us if this
story gets any more legs.

PETER FISHER: I have bad news for you, Hannibal. It
gets worse. These GATA clowns want to blow the whistle
on this one. They have found out that Tiger has a $250
million or so investment in Normandy Mining Ltd. in
Australia. That would give them about a 10 percent
stake in the firm and for some odd reason they have
claimed insider status. GATA has a Reuters story from
Adelaide that includes, from their point of view, some
of the strangest comments of all time from the chairman
of a gold producing company, in this case Robert
Champion de Crespigny, who said: quot;The Bank of England
gold sales could have a positive impact for the
precious metal, accelerating the closure of weaker
high-cost mines around the world.... This gold will
keep on coming out, it will come out at market price,
and the worst of production will drop off.... The
commentators that are saying they expected someone to
bid above gold, that's an absurd thing for this amount
of gold. It is very much in line with what you would
expect if you knew the industry or this quantity.quot;

quot;He also was not opposed to the Bank of England's
method of sale, a pre-announced auction, saying the
gold price was strongly affected by sentiment and could
be badly hit by sudden and unannounced large selloffs.quot;

quot;We need time to get used to this bidding type process,
which I think it is not a bad way to go because it is
exactly the same as the government sells treasury
bonds.... I don't see (the Bank of England's selloff)
as a disaster at all.quot; That's what Champion de
Crespigny said.

PETER FISHER: Hannibal, GATA is trying to make the case
that Tiger's redemption problems, its short gold
position, the peculiar, reckless comments of Champion
de Crespigny, and the secret banking meeting in
Philadelphia are all related. It is this association
that has so many newcomers talking of conspiracies.

PETER FISHER: Good friend, Hannibal, I must tell you
something else that my vast Fed network sources have
brought to my attention. It could cause us big trouble
because it fits this GATA story stuff.

I know for a fact that a highly respected man in the
gold industry wanted to promote a millenium coin to
sell millions of gold coins and promote gold sales.
GATA has learned that Normandy Mining and Barrick Gold
shot down the idea. GATA is convinced that Normandy and
Barrick, major producers, are part of the problem and
in fact in on our deal. GATA has been very patient
trying to get them to change their ways, but for the
obvious reasons we know, they got noplace. But my guys
tell me that they are now going on the offensive about
these two companies and are going to expose what
devastation companies such as these are causing the
gold community. GATA has laid off our friend, Peter
Munk, but is about to launch an offensive against
Barrick. You know our Peter. He is such a PR-conscious
guy, and GATA is planning to give him all the PR he can
handle - him and Champion de Crespigny. Just thought
you should know.quot;

HANNIBAL LECHTER: Let them yap all they want, Peter.
You are the Fed. Alan has known all about this and we
have his blessing, as you well know. Yes, Robert is out
of the Treasury, and the Goldman Sachs IPO was
remarkably consummated at the top of the stock market
mania, but Larry Summers is a good man and he can carry
out the deal at Treasury now.

We can pull this off. The public are a bunch of
dummies. So what if the gold loans are now more than
10,000 tonnes and mine supply is only 2,529 tonnes per
year? They have fallen for our routine so far and as
long as the mainstream press is too lazy or scared to
look into what we are doing, nothing will change. You
know we are following this GATA and we had one of the
premiere anti-trust defense attorneys in the United
States go to their presentation at the New York Gold
Show. Unfortunately, GATA's lawyer, Merrill Davidoff of
Berger amp; Montague in Philadelphia, spotted him and
confronted him as to what he was doing. Yes, we know
GATA gets all kinds of press outside the United States,
but the U.S. press won't touch them with a 10-foot
pole. They are too afraid of us. You know that!

PETER FISHER: That may be so, but we can fool most of
the people most of the time, but not all of the time.
Look at what just crossed my desk. Yes, this guy is an
old goat, but he is one smart old goat. Some people say
we have been messing with our stock market -- you know,
stories about the Plunge Protection Team going amok --
that we have prevented any serious corrections so as to
reduce market risk concerns.

From Reuters: quot;Frankfurt, Germany -- Former German
Chancellor Helmut Schmidt said in remarks published
Sunday that U.S. share prices were being driven to
unsustainable heights by quot;psychopathsquot; on Wall Street
and that a slump was inevitable.

quot;Schmidt told Welt am Sonntag newspaper that the United
States, despite being presented as a shining economic
example to Germany, had a private savings ratio below
zero and was creating an underclass of the working
poor.

quot;`Many people are enthusiastic about the United States
at the moment. But people don't realize that the share
price boom is totally overvalued and that psychopaths
are driving the prices up,' said the Social Democrat
who was West German chancellor from 1974-1982.

quot;`It's only a matter of time before the boom ends and
prices tumble down again -- just as it happened in
Japan,' he said.

quot;Schmidt, 80, said that by `psychopaths' he was
referring to `the young 30-year-old dealers and 40-
year-old fund managers who with their daily and hourly
fund allocations have no other aim than to get the best
possible performance.'

`These people lack an overview of the world and world
economy and also of the responsibility that entails.'

quot;Schmidt added the euro's depreciation by as much as 15
percent this year did not signify that the new currency
was weak. He said he had witnessed the dollar trading
at 3.47 marks and at 1.36 marks in the space of 1 1/2
years.

quot;`No one ever got the idea that that meant the mark was
weak,' he said.quot;

PETER FISHER: We know what we have done here, Hannibal.
The clock is ticking. I hate to agree with Herr
Schmidt, but we are running out of bullets -- we cannot
influence these market psychopaths much longer. You
know that and that is why you have been buying lately.
The problem is we have to cap rallies for a while or
you and your cousins will not be able to fully cover
your shorts. That could cause big, big problems and we
have to protect against that. Let us cover here, let
the market rally $20-$25 -- get the heat off, and then
slam the dummies again for a while. What do you think?

HANNIBAL LECHTER: Yes, I know that is the plan, but
what if all the other markets are going in the soup and
our brethren panic and the central banks start calling
the gold loans in with excessive interest due to
liquidity fears? What if we can't stop the rally at
$275 to $285?

PETER FISHER: Then, Hannibal, my friend, find a better
lawyer than GATA has, because when this all breaks --
and I am more nervous now than I ever could have
imagined because of the outside market action -- there
will be hell to pay. Especially if the stock market
dives and all those so-called long-term investors bail
out on a 50 percent correction. They will want scalps
and GATA will be sending them our way. We might have to
practice ducking.

HANNIBAL LECHTER: Life has been so good, Peter. Do you
really think we could have such problems? After all,
look who we are.

PETER FISHER: Well, who knows? But one bit of advice
for you, my friend. When you start your exit, remember
Sodom and Gomorrah. Don't look back!