Bullish intelligence and praise for GATA

11:25p EDT Tuesday, September 28, 1999

Dear Friend of GATA and Gold:

What I'm sending below is just an anonymous post at the
Kitco board tonight, purporting to be from a Wall
Street trader, so you have to take it even more
skeptically than most things. But it may have the ring
of truth and I know you'll enjoy it as much as I did.

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

* * *

From www.kitco.com

September 28, 1999

Gold looks to be following the palladium script. Both
markets were artificially sold down, both had large
supply/demand deficits financed by producer and spec
short selling plus the added kicker of government
liquidation of stockpiles. Both markets imbued the
players with the same sense of one-wayedness, and that
way was down. Both turned on a dime. One market is in
its 3rd year of bulling, while the other has snorted
for barely a week.

If palladium is the guidepost, then the big lesson to
be learned, is not to lose your position.

Markets which have been one way for a very long time
often turn explosively and give little or no chance for
bulls or bears waiting for a pullback. It would not be
at all surprising for the price of gold to go straight
up until it reaches a price which might be a high for
many, many months, perhaps even a year. This will
ensure that bears waiting to cover get slaughtered, and
would be bulls never make a dime, or buy at the local
top, because they were waiting for the pullback that
never came.

In this environment the only technical indicator that I
would put any stock in is the lease rate. If it is true
that central bank leasing is now on hold, then changes
to the lease rate are now purely a function of loan
demand. Loan demand only rises as a function of
speculator or more likely now, producer short selling.
It falls as producers or specs do buybacks or specs get
long.

Today lease rates went higher. The order flow at one
desk which gives me some info indicated that producers
were selling into this rally. They are insane.

If this is going to be a really quot;bigquot; move in gold,
which seems quite likely, then there are going to be
some producer casualties before this thing is over,
along with the bullion banks which supplied them with
the dope ... errrr ... gold.

Back in the last great coffee rally in '94 (I think)
the price of coffee started from a low of around 80
cents. At this point according to market lore,
Starbucks, one of the biggest consumers, could not find
it within themselves to buy any price protection. You
see, coffee was going to $0.60. At $3.00 the same
geniuses hedged about 18 months worth of consumption,
oops.

There are lots of rumors currently flying around the
market about Mr. Armstrong's position, which is
supposedly still uncovered. Rumor has it that the
counter-parties are going to take a big hit.

There is still the matter of millions and millions of
ounces of calls sitting from 360 on upwards. They
together will act as a giant attractor sucking the gold
price into an accelerating upward spiral.

They are the evidence of the real story which is the
producer hedge book, which is going up in flames.
There will be some companies that did their hedging by
selling tons of out of the money calls 'knowing' that
they could always delta hedge them back if things
started to rally. The models did not call for the price
of gold to go vertical with a concommitant rise in
option vols.

I'm still waiting to see the headline which I've spoken
of in the past, GOLD RISES $60, XYZ Gold Declares
Bankruptcy.

That will be the sell signal, and not a day before.