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Lease rates going wild, Armstrong firm in trouble?
11:15a EDT Saturday, September 4, 1999
Dear Friend of GATA and Gold:
This commentary at www.lemetropolecafe.com by GATA
Chairman Bill Murphy is especially interesting for its
news about Princeton Economics International, the firm
of the economist Martin Armstrong, who shared his
commentary with us here a few months ago. I'll welcome
any response from him.
Meanwhile, please post this as seems helpful.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
Thursday, September 2, 1999
By Bill quot;Midasquot; Murphy
What a day! Goldman Sachs sat on the gold market (what
else is new?), as gold rallied only $1.10 while the
dollar swooned again, bond yields rose, and the stock
market dived. Silver put in a better performance and
rallied 7 cents.
Behind the scenes there was all kinds of news.
The lease rates rose again today, with the one-month
rate soaring to more than 4 percent. The six-month rate
is about 3.6 percent; all of a sudden the lease rate
market is inverted. A bullion dealer acquaintance told
me that the physical gold market is on fire and there
is just not much gold around. One-week rates are even
higher than one-month rates. There was actually alarm
in his voice. All this comes after the August gold
contract was almost squeezed. That will give you some
idea of what the gold market manipulators are up
This is only the beginning of their angst and it is
what I have been harping about for months now. The
shorts have been relying on less formidable
supply/demand deficits than is the case. Midas relies
on Frank Veneroso's supply/demand forecast. He tells me
that the deficit is now about 160-180 tonnes per month.
(I have known Frank for 20 years and he is always early
and almost always right.) That is a big number and may
be 100 tonnes more per month than the bears comprehend.
Thus they are being blindsided here if they are
listening to less-informed precious metals services.
And that is why I have said over and over that we have
the shorts and the quot;Hannibalsquot; right where we want
Desperate they are and back to their old tricks. All of
a sudden they are floating talk that the International
Monetary Fund is finalizing plans that outline a
proposal for central banks to buy some of the fund's
gold reserves, freeing about $2 billion to ease the
debts of the world's poorest countries.
Well, three cheers for Le Metropole Cafe's John
Brimelow. Here is what he had to say about this latest
quot;New York, Sept. 2 (Bloomberg) -- John Brimelow,
director of international equities research at Donald amp;
Co. in New York, comments on the International Monetary
Fund's plan to possibly sell gold to direct buyers
rather than in the open market. The IMF is considering
gold sales from its reserves to finance debt relief for
the world's poorest countries.
quot;`If the IMF takes an `off-market' approach, that means
instead of going to the marketplace and offering the
gold to all and sundry, they will negotiate with a
specific buyer,' Brimelow said. `Any large party could
negotiate directly -- a central bank, a hedge fund, or
another parastatal institution. Its rather like a block
trade in the securities business.'
quot;This approach `can avoid pressuring the market,
although that's assuming the person who buys the stuff
hangs on to it,' Brimelow said. `If they don't sell it
or they don't lend it, then it's a transaction that
won't damage the market.'
quot;The problem is that `central banks don't report what
they are lending. There's no way of tracking it,'
Brimelow said. If the IMF sells gold to central banks
that lend it to the market, `through the back door, the
IMF would be achieving the same effect as selling the
gold' directly to the market, he said.
quot;`It seems to be a thinly camouflaged version of the
original plan and I don't think it's going to fly,'
Brimelow said. The key obstacle would be getting
consent from the U.S. Congress, which has so far
blocked direct market sales. `I think the IMF
bureaucracy is displaying extraordinary arrogance and
even stupidity in its dealings with Congress. At a very
deep level, it doesn't understand how the American
political system works.'quot;
John has it nailed. The IMF and their Hannibal Cannibal
cronies don't give a tinker's darn about the poor. For
36 out of the 41 poor gold producing countries have
already asked them not to sell this gold. Yet they
persist in the charade. Why? Because their buddies, the
bullion dealer, big-money crowd gold shorts, are
desperate to have gold supply hit the market, and all
they care about is keeping the gold price down. These
devious crumb-bums need the IMF gold supply to cover
their gold shorts.
Our team will do what we can to shut them out of their
All my contacts in the Joint Economic Committee and
Senate Banking Committee, etc., have left for the Labor
Day weekend. I will contact them next week and send
them Brimelow's comments along with a few of my own.
Bank Scandals. One after another. Why there aren't more
people looking into the biggest banking scandal of all
time -- the manipulation of the gold market and
orchestration of low prices? It blows my mind.
Credit Suisse has been shown the exit from Japan, the
Bank of New York is under siege for moving the money of
the Russian elite and Russian mobsters out of that
country, and today came word of two more big banking
The first was First National Bank of Keystone in West
Virginia. They had been touted as one of the most
profitable banks in the country with a reported capital
ratio of 16.5 percent. That ratio had them one super
sound bank. But lo and behold, the Office of the
Comptroller of the Currency just shut them down. It
turns out that half of their $1.1 billion in assets was
One day a banking king, the next day a banking
disaster. What was the difference from one day to the
next? Simple: The truth came out.
That is what is going to happen in the gold market.
When the scam is exposed (along with the true size of
the gold loans, 10,000 tonnes or more) and the shorts
try to cover, the price of gold will go from $250 to
$500 practically overnight, and for the same reason.
The truth will come out. That is why it is time to
focus and to invest in the gold and silver markets.
The second big story of the day was about GATA critic
Martin Armstrong and his Princeton Economics
International. Martin has decried GATA. He is a mega-
bear on gold in the short term, looking for sub-$200,
and on silver, putting his money where his mouth is, as
far as we can tell. Sources tell us that one of his
hedge funds is short 20 million ounces of gold. He is
the most vociferous silver bear in the world and
constantly expounds that the price of silver is headed
for $2.80. He says silver ranks among the world's worst
The funny thing here is that when the price of silver
shot up last year to $7.80 after the Warren Buffet
silver-buying news, Armstrong complained that the
silver market was being manipulated. Then he called for
an investigation by the Commodities Futures Trading
Commission. There was no basis for what he had to say
and the CFTC told him so. Not that the CFTC would have
a clue what is going on in the metals markets anyway.
How quick were they to pull the trigger on the big
Sumitomo copper scandal?
Months ago I said Cafe sources told me that Armstrong's
operations were under scrutiny. This is what the press
had to say today:
quot;New York, Sept. 2, Reuters -- New Jersey Firm lies at
heart of Republic probe.
quot;At the heart of a regulatory probe that ie expected to
stall a merger between Republic New York Corp. and
Britain's largest banking group, HSBC Holdings PLC, are
the U.S. bank's dealings with affiliates of a New
Jersey economics forecasting firm.
quot;Republic's brokerage unit came under regulatory
scrutiny for allegedly mispricing investments for one
of its clients, Princeton Global Managements and
Princeton affiliate Cresvale International, sources
close to the situation told Reuters on Thursday. The
company that owns these two entities is Princeton
Economics International, a forecasting and derivatives
trading firm based in Princeton, N.J.
quot;The bank, which is cooperating with Japanese as well
U.S. regulators, said it fired the management of its
futures trading operations and suspended the head of
its Philadelphia-based securities unit, James Sweeney.
quot;Princeton Global is an investment company owned by
Princeton Economics and helps Japanese institutions
hedge their foreign currency transactions. Princeton
Economics, which employs 300, also owns futures broker
Cresvale Investments, whose Tokyo office was
investigated by Japanese authorities in May.quot;
Cafe members might like to know that Republic has been
the silver and gold floor broker for Armstrong. Plus
you might also like to know that that Armstrong's
prediction is that the yen will go to 278 to the
Get the picture? Princeton is mega-short the yen, gold,
and silver. We know what is happening to the yen
shorts. Armstrong has berated us for our views of what
is going on in the gold market. What goes around comes
around. Boomerang time here, and only a matter of time
before this guy blows up and is carried out.
Bloomberg reports that quot;Martin Armstrong is considered
to be the biggest individual silver futures trader on
the Comex division of the New York Mercantile
Exchange.quot; I will send the stretcher to the Comex for
Seriously.... The question that needs be answered here
is: Why was Republic marking up the value of the hedge
fund? What is there to hide? Is Armstrong's group in
serious trouble? Certainly he has big problems. How
easy will it be for him to cover his massive gold and
silver shorts if he has to? Does he call Alan Greenspan
as everyone else does?
More soon. Get long. Be strong.