Bank of England at center of gold short bailout

10:25p Monday, October 25, 1999

Dear Friend of GATA and Gold:

Here's an interesting column by Patrick Bloomfield from
today's National Post in Canada that picks up on GATA
Chairman Bill Murphy's observation about Kuwait's gold
lending. The column also identifies some unhedged gold
producers, information that many people have been asking
for.

Please post this as seems useful.

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

* * *

Foresight at times can be fooled

Plausible scenario for
why Kuwait is lending gold reserves

Patrick Bloomfield
National Post (Canada)
October 25, 1999

Nothing is ever as it seems. A week ago this oh-so-
prescient columnist was talking of the Standard amp;
Poor's 500 composite index possibly flirting with the
low 1100s.

Appearances to the contrary, the Samp;P headed north
instead. It resumed nodding acquaintance with its 200-
day moving average as it moved marginally above 1300
this past Friday. Just maybe the bull is not as dead
as he is sometimes made out to be.

And wasn't this past week notable for the news Kuwait
was going to help out those hard-pressed short sellers
in gold bullion by lending out the 79 tonnes in its
gold reserves through the Bank of England?

As I said, nothing is ever as it seems. Rather than a
win for the shorter sellers, the news could be
something between neutral and a plus for gold bugs.
After all, Kuwait is a gold bug too.

The Kuwait Investment Authority is now the largest
shareholder in Thistle Mining Inc., a Toronto global
mining-finance company specializing in precious metals.

The authority acquired its major interest earlier this
year by swapping its two-thirds holding in a private
French company called CIDEM for treasury shares in
Thistle.

That little gem of information was originally brought
to the public's notice by writer Paul Kaihla in
Canadian Business magazine and repeated last week in a
commentary by one Bill Murphy of Dallas (whom I
introduced to readers last week) on his fun-filled Web
site, Cafe le Metropole (www.lemetropolecafe.com).

Thistle's president, Scotland's Willie McLucas (that is
how he signs himself), said no more in his last
president's report than that Thistle's new largest
shareholder would be an outfit called International
Civil Co.

But the notes to the accounts were a little more
explicit. It seems the company is a wholly owned
subsidiary of the Kuwait Investment Authority. It will
acquire 345 million Thistle treasury shares in the
swap. (The last interim report mentioned only 34.5
million, which I assume was a typo.)

Mr. Murphy surmises that the possible explanation for
the Kuwait gold-lending decision might run something
like this: Begin with the assumption that U.S.
officialdom (together with some very worried folk on
Wall Street) is all too keen to get the word out that
the fallout from the past stampede to sell gold short
is now under control.

So Washington seeks to muscle Kuwait into going along
with this scenario by selling gold. But the Kuwaitis,
who were not born yesterday, go along only as far as
lending the stuff.

That script sounds plausible to me, and suggests that
not everybody has been cowed by apparent muscle-flexing
to keep gold prices in tow.

Certainly the top guys at Newmont Mining Co. and
Canada's Placer Dome Inc. made it clear at the Denver
Gold Conference last week that they regard the more
likely gold price trend to be upward -- over time.

If they were talking to their book, so have the big
names in the gold bullion markets who have a vested
interest in getting the word out that the big squeeze
is over and that, anyway, central bankers are standing
by to help.

This fascinating battle could well put both a temporary
floor and a ceiling on gold.

Meanwhile I am indebted to a knowledgeable reader in
Quebec for letting me glance at a copy of the August
1999 quot;Gold amp; Silver Hedge Outlookquot; by Ted Reeve and
Susan Muir of Scotia Capital Markets.

Among other things, I learned from this excellent
research document that the following companies did not
appear to have any output hedged at the time of
publication:

Agnico-Eagle Mines Ltd. (AGE/TSE), Battle Mountain Gold
Co., whose exchangeable shares are listed in Canada
(BMC/TSE), Boliden Ltd. (BOL/TSE), Cathedral Gold Corp.
(CAT/TSE), Franco-Nevada Mining Corp. (FN/TSE),
Freeport-McMoRan Copper amp; Gold Inc. (FCX.A/NYSE),
Goldcorp Inc. (G/TSE), High River Gold Mines Ltd.
(HRG/TSE), Manhattan Minerals Corp. (MAN/TSE), Miramar
Mining Corp. (MAE/TSE), Pioneer Metals Corp. (PSM/TSE)
and Repadre Capital Corp. (RPD/TSE).

That does not necessarily make them gold picks. But it
is one of many factors to be kept in mind.