Why JCI Gold has never hedged for revenue

12:30p EST Tuesday, November 30, 1999

Dear Friend of GATA and Gold:

Here's the very interesting morning commentary on
the gold market by Michael Kosares of
www.USAGold.com.

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

* * *

Morning commentary for November 30, 1999

By Michael Kosares
www.USAGold.com

Gold cantered through the last day of November
attempting to digest the strange goings-on
surrounding this third of several planned reductions
of the British gold reserve. The most puzzling and
perhaps interesting of the day's developments --
though there were two that caught the eye --
occurred when gold interest rates rose over two and
half times (See the grid above) as the BOE tallied
its bid sheets and doled out the 25 ton allotment.
To presume that the two events were a co-incidence
would be to put too much stock in a star-struck
quot;fatequot; and not enough in baser quot;human design.quot;

Simultaneously, Anglogold, the world's top gold
producer, was awarded nearly 10 of the 25 tons
offered keeping the pressure -- intended or not --
on the scrambling bullion banks who might have had
designs on quot;cheapquot; gold themselves. There are those
who might read conspiracy into this tandem of
events, i.e., that BOE doesn't have the gold it says
it does, therefore it is forced into the market to
borrow and keep from blowing its cover. (I reject
that notion.) A more likely scenario would be that
once the bullion banks with short physical positions
saw that the mining companies were still interested
in BOE gold and that they had been pressed out of
the liquidation by Anglogold (and perhaps others?),
they moved into the open market to get the gold they
needed.

As we said yesterday, let's not jump the gun on
these auctions. Yesterday's events as described
above are long term bullish for gold -- and they
could become short term bullish if gold lenders push
for the return of gold before December 31 -- because
they demonstrate a near-urgent need for physical
metal. I disagree with the notion that the gold is
being leased to drive down the price. Until proven
otherwise, the evidence -- circumstantial as it is
-- still points to the metal being leased to fill a
past need. At the same time, the lease market shows
further evidence that the lenders are few and far
between and that gold rates are hair-trigger
sensitive to the even the slightest of market needs.

Though the shorts are being unwound in the paper
markets without much difficulty, unwinding the
shorts in the physical market are another matter
entirely, and the activity surrounding yesterday's
auction is a good example. You can create or destroy
paper gold with impunity. You can create or destroy
paper money with impunity. But, until we resolve the
Medieval problems attached to the philosopher's
stone, gold will remain a difficult item to produce
at will.