Midas commentary for March 23, 2000

1:15a EST Wednesday, March 22, 2000

Dear Friend of GATA and Gold:

Here's GATA Chairman Bill Murphy's gold market
commentary for March 21 at www.LeMetropleCafe.com.
It's now copyrighted and distributed to you by GATA with
the author's permission. Please don't distribute it further
without such permission.

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

* * *

MIDAS COMMENTARY FOR MARCH 21, 2000

By Bill Murphy
www.LeMetropoleCafe.com

Spot Gold $289.75 up $3.90
Spot Silver $5.11 up 9 cents

Technicals

Home, sweet home! Gold is right back at $290 again. Day
in, day out, week in, week out, month in, month out,
year in, year out -- we have $290 gold. It may stray up
and down a bit, plus or minus a few pips, but it goes
right back to its $290 designated price -- just about
where it has closed at the end of the last three
calendar years.

Nothing seems to matter. Oil triples, the commodity
indices make new high after new high, platinum and
palladium go berserk, a $28 billion trade deficit was
reported today, the money supply explodes, interest
rates rise, etc., yet the gold price goes to $290 like
it was magnetized.

All the while, too much gold is being consumed at too
cheap a price. The longer the price of gold stays too
low, the worse the demise of the big gold shorts. In
effect, gold has become a doomsday machine for them as
its price is going to go far higher than any of them
can imagine.

OK, on to today's action. After selling off sharply
($3) when the Bank of England auction results were
announced, the gold price reversed course and closed up
nicely for the day. In fact, it was an outstanding
technical performance, as we had an outside day to the
upside (a lower low than yesterday, a higher high, and
a close above yesterday's high). Technically, that
bodes very well for future price performance.

The big buyers today were the recent big sellers.
Hannibal Cannibals Chase, Societe Generale (this name
has been popping up much more often now than in the
past), Deutsche Bank, and Swiss Bank all were competing
to buy at one point and created fast market conditions
for a short time.

Goldman Sachs capped the rally as usual once the gold
price advanced above $290. They must have received a
phone call from U.S. Treasury Secretary Lawrence
Summers.

The gold bullish consensus at 31 this morning was very
low and is another indication of how short this market
is. So much so that many traders were obviously caught
going the wrong way, and the cry quot;short coveringquot;
emanated from all over the gold pit on Comex.

The downtrend initiated from the early January gold
spike has been broken decisively, which is another
technical positive. Our floor sources tell us that if
$292.50 is taken out, there will be much short
covering, as nervous funds that are short gold were
calling all day. If gold takes out $294, look out. It
should fly as there is little technical resistance
until the $310 area.

Let us give credit where credit is due. I hear that
Mitsui's mega bear, Andy Smith, said the following in
his London morning commentary:

quot;Assume a rally after the UK auction ... and it will go
further than you think.quot;

Smith is talking $320 gold! Will wonders never cease?

Before one could blink this morning, silver was 10
cents higher. The big, big buyer: Goldman Sachs. I have
long felt that silver was being jerked around by the
collusion crowd and continue to feel that way. Silver
rallies are capped. Dips are used as opportunities to
buy back. I think this is about the eighth time I have
brought this up over the past 18 months as silver yoyos
it, staying around $5.17.

Yesterday a big fund that likes to sell on technical
weakness sold silver off and got caught today. I have
liked the smell of silver for the past week or so and
continue to think we might not be too far away from
some fireworks.

There is some serious talk in the trade that new
applications for silver could stimulate demand in a
meaningful way.

quot;The Oatey Co. and Alpha Metals have signed an
exclusive license agreement for Oatey's Safe-Flo Lead-
Free Alloy. Through this agreement, Alpha Metals will
now be able to offer this alloy technology to the
electronics industry as an important lead-free option.
Oatey's technology covers a lead-free composition
containing tin, silver, bismuth, and copper. This
composition range has been selected as the lead-free
alloy of choice by several of the leading Japanese
electronics companies. The Alpha Metals/Oatey agreement
facilitates the use of this alloy around the world.quot;

There is also talk that silver may be used in computer
mother boards. Maybe that is a reason Bill Gates took
an interest in a silver stock.

THC sent me this silver comment from Japan. I would
agree with him. It is rare that silver goes into
backwardization, but if it does, away we go:

quot;1. The huge paper cabal short position is hugely
profitable as long as the markets are in contango. For
this reason those with these positions would probably
prefer to hold them indefinitely if the markets stay in
contango.

quot;2. But as soon as the market goes into backwardization
and stays there, these positions will be big losers.

quot;3. For the reasons above, if the markets can be moved
into backwardization, it is quite possible that the
tide will turn.quot;

Fundamentals

The noise the past few days has been about the Bank of
England' gold auction. Here are the results:

quot;H.M. Government Gold Auction Result: 21 March 2000

quot;The Bank of England announces that the gold on offer
(approximately 25 tonnes or 803,600 ounces) has been
allotted in full at a price of $285.25 per ounce.
Details of the result are as follows:

quot;Amount of gold on offer (approx.): 803,600 oz
quot;Amount applied for: 2,411,600 oz
quot;Times covered: 3.0 times
quot;Amount allotted to bidders: 804,400 oz
quot;Allotment price: $285.25
quot;Scaling factor at allotment price: 46.9925 percent

quot;All accepted bids which were made at prices above the
allotment price have been allotted in full at the
allotment price. Valid bids made at the allotment price
have been allotted an amount of gold equal to the
amount bid for multiplied by the above scaling factor
and rounded up to the nearest 400 ounces.quot;

That the auction would show poor results has been the
talk of many of the bullion dealer crowd and the press
for days.

Reuters gave us this from Prudential's Ted Arnold in
London this morning:

quot;$275 is beginning to loom in our sights and $295/$300
looks increasingly like Mount Everest and if you were
to achieve it, a lot of people would sell it.quot;

Stalwart quot;Hannibal Cannibalquot; and mega bear Kevin Crisp
of Credit Suisse surfaced again in the Reuters story,
saying that investors have deserted the gold market and
they needed a good reason to put their money back in
the old economy assets like gold.

That was bad enough but even after today's constructive
gold close, this is what Dow Jones News gives us in its
after the close commentary from other industry
analysts:

quot;William O'Neill, senior futures strategist at Merrill
Lynch described the results as 'poor,' noting that the
bid-to-cover ratio of 3.0 was lower than a 'horrible'
figure of 4.3 in the previous auction in January.

quot;O'Neill said the sale bodes ill for the next series of
U.K. auctions.... He noted that Switzerland will begin
sales from its reserves at about the same time.
Switzerland is due to sell 1,300 tonnes over the next
four years.

quot;David Meger, senior metals analyst with Alaron Trading
Corp. in Chicago, agreed with O'Neill. 'The coming gold
sales which will begin in May, are another dark cloud
hanging over the market,' he said.quot;.

Not one constructive comment was given after such an
impressive daily performance. I guess we ought to be
used to this by now.

What a depressing lot they are.

An English gold sale note: Goldman Sachs is having an
quot;Internet, B2B, and the 'New' Global Economyquot; breakfast
seminar at the Pierre Hotel in New York tomorrow and
will feature Gavin Davies, their chief international
economist. Davies is the U.S. Treasury/Goldman
Sachs/U.K. Treasury link. His wife works for Gordon
Brown, chancellor of the U.K. Exchequer.

More on Goldman Sachs from a West Coast Canada Cafe
member:

quot;This is interesting. The following comment is from Dan
McConvey. He is negative on gold because of the action.
He used to be a gold bull and was predicting a $325
gold price average for 2000. He downgraded his gold
price average yesterday to $300. Shows you how easy it
is to predict the gold market, as Andy, who was a bear,
is now a short-term bull, and Dan, who was a bull, is
now a short-term bear. Go figure. I'm with Andy and
expect $310 within a month based on the open call
position.quot;

More from me about the British auction. The Cafe's
Icarus came up with an interesting insight. She noted
some South African gold producer press statements on
Monday that they would not be participating in the BOE
auction and wondered if it might have been a sucker
play to try to get the price down so that they really
could buy back some positions as the gold price was
pounded lower. Today I received word that Chase,
Societe Generale, and Credit Suisse First Boston were
buying for producers.

Are the gold producers finally using strategy? Great
move if that is what they did. Maybe they decided to
stick it to the Bank of England too. Another lemon
trade is on, as the Bank of England and U.K. Treasury
are already down more than $4 per ounce in less than 10
hours.

About the coming Swiss sales.... Ferdinand Lips is the
leader of the Swiss opposition and is a Cafe member as
well as a GATA supporter. Ferdinand is giving the gold
world a valiant effort trying to mount political
opposition, but few are helping him.

The Cafe has many Swiss members. I would like to say I
cannot understand announcements by prominent Swiss
government officials about the coming gold sales. Do
the Swiss want to follow the British and get as low as
price as possible for their gold? Instead of their
public drooling about dumping gold as soon as possible,
all they would have to do is to come out and say: Yes,
we are going to sell some gold in the years to come,
but only when market conditions are favorable. BOOM!
The gold price would rocket on news of that kind.

I suspect they have a different agenda for the short
term, as they know the exposure the Swiss banks have
because of excessive gold loans. Serious financial
problems could develop for some should the gold price
rise too quickly and go too far.

I must have read 10 press comments today about the
coming Swiss gold sales. Not one mentioned that the
Swiss signed the Washington Agreement, in which the
European central banks agreed to limit gold sales to
400 tonnes per year. If the British sell 120 tonnes and
the Swiss sell 280 tonnes tonnes, then no one else can
sell any.

Physical gold demand continues to be very strong,
especially out of India. The basic monthly
supply/demand deficit is running around 120 tonnes
according to Frank Veneroso. If the European central
banks sell the max allowed of 400 tonnes, that still
leaves a yearly supply/demand deficit of 1040 tonnes
(120 tonnes per month x 12 = 1440 - 400).

The gold price must rally to slow down demand. The only
way it does not rally is if a big mystery seller shows
up to hold down the price to achieve other agendas.

Potpourri and the Gold Shares

The gold shares continue to lag way behind bullion, as
the XAU could manage a rally only to 61.81, up 2.38.
Newmont Mining at 24 1/8 continues to widen the gap
over Barrick Gold at 17 1/4.

Why are the gold shares doing so poorly? Word has
spread that the gold market is rigged, so why play? The
true believers like us who know of the price explosion
that is to come want no part of the big hedgers. That
is why Newmont is leaving Barrick in the dust. For that
matter, I understand that many of the big Aussie
hedgers are not doing very well either. Aussie Mike
Reid tells me that Normandy Mining made new lows the
other day. I'm trying to reach Colin Jackson.

Here is a big winner:

quot;Melbourne, March 20 (Bloomberg) -- Joseph Gutnick,
chairman and managing director of eight Australian
mining companies, is seeking financiers to set up a
US$500 million investment fund to buy ailing resources
companies while they are cheap.quot;

The stock market continues to confound me. It has been
as predictable as gold. Every time it is set up for a
serious bashing, it suddenly turns around and goes up
sharply.

Cafe commentators are not alone in their predictions of
a stock market debacle.

quot;Yale professor predicts doom, gloom for stocks

quot;By David Henry

quot;NEW YORK -- Feeling queasy about the stock market?
Worried that you're depending a bit much on compounding
stock returns to pay for retirement or college tuition?
If so, you might throw up after reading a new book by
Robert Shiller, a Yale economics professor, and
published by Princeton University Press. Irrational
Exuberance should be in bookstores in early April, and
it is likely to cause a stir as reviews come out in the
next few weeks.

quot;Shiller illustrates how the current market is like a
naturally occurring Ponzi scheme in which investors
become promoters for the game after receiving initial
payments with money taken from subsequent investors.

quot;His big push is to attack the conventional wisdom that
stocks have and will always be the best investment,
even at times like this after prices have rocketed. He
argues that what comes next may well be a grinding,
decade-long decline from which investors won't recover
until about 20 years from now.

quot;In short: Dow 10,000 in 2020. 'There's a lot of
uncertainty, but that's a good prediction,' Shiller
said this week. Between now and then, he says, it's
plausible the market could lose half its value, or
roughly the value of all U.S. homes.quot;

Why is not what is good for the goose, not good for the
gander?

U.S. Treasury Secretary Lawrence Summers urges hedge
funds to disclose more information while he refuses to
disclose what his own Treasury is doing in the gold
market. To date Summers has not answered GATA's 11
questions, posed in our ad in Roll Call last December,
nor U.s. Sen. Joseph I. Lieberman of Connecticut, who
posed GATA's questions himself.

quot;Boca Raton, Fla., March 17 (Bloomberg) -- Treasury
Secretary Lawrence Summers said the government and
financial institutions must take steps now to avoid a
repeat of crises like the near-collapse of Long-Term
Capital Management LP.

quot;Summers urged Congress to pass bills to force hedge
funds to disclose more information and to make it clear
the government need not regulate complex instruments
known as derivatives, in the text of remarks prepared
for a Futures Industry Association conference in Boca
Raton, Florida. He returned to Washington without
giving the speech....

quot;'We can be sure that other financial failures will
strike in the future,' Summers said. 'History tells us
that creditors, counterparties and investors sometimes
become complacent in making risk assessments in an
attempt to achieve higher short-term returns.'quot;

Secretary Summers, why don't you listen to your own
advice? The gold loans are now so large that they are a
disaster waiting to happen and it would appear to GATA
that you are probably making the situation worse. You
are either the most complacent treasury secretary in
history, or you must be scared to death about your gold
short predicament and that of the gold loans on the
books of the New York bullion-dealing banks.