Tora! Tora! Tora! Help us bomb Denver gold show

2a EDT EDT sunday, October 17, 1999

Dear Friend of GATA and Gold:

Here's a very interesting post from the always well-
informed Friend of Another at www.USAGold.com.

Our hour is drawing nigh.

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

* * *

POST BY FRIEND OF ANOTHER
AT www.USAGold.com

Saturday, October 16, 1999

a href=http://www.decisionpoint.com/DailyCharts/00goldDXY.htmlhttp://www.decisi...

Once again I ask everyone to take a good look at the
above chart. I offered it some days ago as a witness to
what is about to take place. To date the dollar has
fallen and US stocks have begun a revaluation that is
far from over. Both of these trends will continue as
the whole financial system changes its tools of
valuing assets.

The gold chart shows no signs of falling as would have
been the case in recent years. Yet everyone sees this
recent slowdown in advancement as a sign that the BBs
are again working the will of the CBs. They are not!
Indeed, is the fall in lending rates a sign that fresh
gold is being supplied to cover the shorts? I tell you
the lending arena of the gold market is frozen in
loses.

Today the lease rates offer little direction because
none of the major gold sellers have covered or intend
to if they can help it. Yes many of the paper shorts
have covered, but the thousands of tonnes of gold
contracts have yet to be made whole for the
quot;originator.quot;

Is this how the game is played? Consider this as you
watch the gold charts.

Two types of contracts exist in these numbers that will
create the crisis. These are mixed in with quot;cleanquot;
deals. Yet they (90 percent of the short gold) create the
real demand that will drive prices much higher unless the
paper markets are sold into oblivion.

First, some are held by actual gold lenders (mostly
private entities) that are now demanding a speedy end
to these relationships. Mostly this gold was put quot;in
playquot; not for the low returns but for the quot;fees and
favoursquot; bullion would generate. So, in order for these
lenders to be made whole the gold must be purchased by
the dealer in the open market or it must be borrowed
from someone else to complete the transactions. The quot;BB
dealersquot; have the option of arranging this return as
able. Presently they are doing neither as they wait and
assess the situation. This process is a game we now
play as they wait for gold to fall and new supplies
become available. All the while the lender sweats his
position.

Understandably, they fear for the return of their gold
at all. If defaulted on, they will most likely receive
a cash payment that theoretically could be used to
replace their gold. Still, if this process begins, a
mad rush to buy gold using quot;default paymentsquot; would
telegraph a full crisis into the trading arena. Gold
would soar long before any large portion of bullion
could be brought.

Second, many contracts are outright quot;naked shortquot; in
that it's the contract creators responsibility to
supply gold when the term ends. In this position,
usually gold was never lent or sold into the
marketplace. The deal was little more than a play on
gold falling with the writer risking the firms capital
to profit making the difference in the gold price.
Often a long time physical holder brought his fully
owned bullion into this play and received most of his
cash back plus a contract to receive gold
(unallocated?). His gold could be sold outright or
held by the bank as partial reserves to cover the
writing of many other quot;naked shortquot; contracts. This was
the real engine that sucked private gold into the
quot;supply for fabricationquot; deficit. In the process paper
gold was sold to drive the prices down. All of the new
investment demand for gold was supplied using a glut of
paper instead of physical gold. Unbelievable as it may
seem this is where Another said years ago that gold was
falling because so many people were buying it! What
seemed nuts then is understandable today.

In any event, the holders of these contracts are the
ones that will be demanding quot;allocationquot; as they
withdraw their investment funds from the falling stock
and financial markets. Just as above, the physical
markets are so tight that in order to close these
deals, gold must be borrowed. That is if lenders can be
found!

Onward:

We have entered the largest gold bull market in
history. The major world central banks have made it
extremely clear that this bull will run as never
before. Michael Kosares pointed people to the World
Gold Council site for an explanation of the recent
quot;agreement,quot; yet no one must not have read it for they
still talk about CB and BB lending. People, it's not
happening! This small lag in the price spike is only
about shorts in major trouble trying to assess how they
can bail out. Here is a partial breakdown of the parts
we should grasp. See the site for a full writeup.

-----

a href=http://www.gold.org/Gra/Pr/Wr991006.htmhttp://www.gold.org/Gra/Pr/Wr9910...

World Gold Council Review of: The Washington Central
Banks Agreement on Gold 26 September 1999

-- First, it is an explicit signed agreement among the
European central banks, which goes well beyond earlier
'clarifications' about their gold holdings by central
bank governors. --------- it has been signed by each
central bank governor, all of whom (except the Bank of
England) have legal responsibility for their gold
reserves.-----------

During the recent fall in the gold market nothing was
said to clarify to the public. All of the quot;official
dealsquot; were done for political reasons. Read our
USAGOLD HOF site for background. Once the Euro was
born, the reasons to drop the price of gold were
removed. However, during this entire, multiyear
operation, an enormous quot;sideline playquot; of selling gold
developed. These people never would openly give their
reasons for quot;coat tailingquot; the fall in gold. None of
them understood why gold was falling and still don't.
We can understand why they continue to think gold will
fall as they have bet the bank on that outcome. The
very ones in this sector are the same entities that
will suffer the most as the IMF/dollar world is
destroyed. For them it's going to be a double hardship.
Today, the ECB/BIS has quot;openly stated for all to seequot;
that gold will fall no more! It is indeed interesting
that we spent but a few months below $280 and will now
zoom through $500 in no time at all. Note these next
items:

-- It is our understanding that the Agreement will be
monitored by the Bank for International Settlements
(BIS). -------- The International Monetary Fund and
Bank for International Settlements are to abide by the
'spirit' of the agreement -----

Perfect!!!

--- The US has already announced its intention not to
sell or lend gold and Japan followed suit the day after
the Agreement was announced. ---------

The US had changed its position on gold in the early
spring of this year. Those that still think the US Fed
is selling any form of gold short just do not
understand how this market has changed. Waiting for the
price to fall as quot;official salesquot; or quot;lendingquot; confirm
the recent price action will find you on the the
outside of a bull market.

--- In addition Australia has said it will not sell any
more gold, and South Africa is unlikely to sell part of
its reserves given the government's vehement opposition
to the UK sales. ----------- bringing the total amount
of official gold covered to 85 percent. --------

------

We have but to wait and watch as the pressure
rises under the price of gold!

------ We understand that the quotas are not
transferable, i.e. if the Swiss decide not to sell 1300
tonnes in the next five years but instead only 1000
tonnes, then no other institution can sell the
remaining 300 tonnes. --------

So, how does one prepare for the coming historic bull
market in gold. Follow in the footsteps of the only
correct Giant in South Africa. Read the Gold Fields
report presented here in partial reviewquot;:

a href=http://news.24.com/English/Business/Companies/ENG_161017_727173_SEO.asph...

--- Gold Fields said on Friday it had completed the
repurchase of its gold hedge (forward sales) position.-

--------

---it seems inevitable to us that higher, if not much
higher, gold prices are possible.----

---Gold Fields continues to hold approximately 660 000
ounces of rand-gold call options at an average strike
price of R2 171 per ounce.---------

---Thompson commented: quot;At higher gold prices the
restrictive impact on our balance sheet and the drag on
earnings from a continued hedge position would limit
our ability to make acquisitions and develop new
depositsquot;. ------------

------------

I would say that these people must be the only truly
progressive miners in the world. Not only did they buy
physical gold at the Bank of England auction, they are
long gold on contract! Other miners may have quot;bid lowquot;
to show suport, but only Gold Fields got real gold and
now is long. They not only understood where gold is
going, they positioned their company as a private
person should in protecting their estate. We can now
most easily see the other hedged miners are trapped in
the Bullion Bank web as they can do nothing. These
companies will no doubt go down with the ship. If they
can not unwind their position today during a standing
price, they will die during the coming run!

With 85 percent of the official world gold holdings
effectively blocked from lending and most all the
private lenders wanting out of this game, how could any
major forward seller close out? Price has nothing to do
with it as the bullion will not be there for 5 years,
if even then! These miners will now sit and watch as
that gold chart (above) runs out of numbers on the
upside. While everyone makes noise about how the market
is still controlled to the downside, Bullion owners and
Gold Fields will run with the wind of this historic
quot;OFFICIALquot; bull market. If only other miners would put
on a Texas Hedge, at least there bookkeeping entries
could benefit even if the bullion market cannot supply!

Good Job, Gold Field.