An alert to the gold world, Part 2

An alert to the gold world (first of two parts)

By Bill Murphy
Chairman, Gold Anti-Trust Action Committee
Proprietor, www.LeMetropoleCafe.com

April 29, 2000

This is an quot;ollie ollie in freequot; call to the gold
world. GATA is going to meet with some of the most
powerful politicians in Washington about our view that
the gold market is being manipulated and that many
innocent people around the word, especially the poor
black gold producing countries, are severely affected
by what will amount to a financial scandal of
unprecedented proportions.

The quot;new worldquot; stock promoters tout technology and the
internet productivity gains for the reasons of such
high stock valuations and the justifations for quot;all is
well -- so invest, invest, invest.quot;

OK, let us go with their hype about instant information
flow, etc, to use this high technology new era to our
benefit -- for an quot;old worldquot; item of status.

In the days to come, I am going to lay out to you what
I have presented over the past 19 months to Cafe
members as far as a gold conspiracy is concerned. Not
only do I think it will pump you up, it will become
clear to you why Chris Powell (GATA Treasurer/Secretary
and co-founder) came to me and said, quot;time to stop your
blabber and do something about all of this.quot; It will be
apparent how GATA came into being.

I am going over every Midas and documenting what I had
to say at the time. This will be a part of a
judiciously binded document to be presented (hand
delivered) to all the banking committee members and to
other members of Congress that have responded to GATA
constituents.

When we deliver this MASSIVE, detailed document, we
will let them know that a synopsis will be forthcoming
in a Roll Call open letter add to all the banking
committee members (all named individually by state),
alerting the world that they have been informed
individually as to the seriousous of the gold
derivative situation and that if they do not at least
look into what GATA presents, and a gold price
explosion eventually does cause a quot;financial systemic
problem,quot; then they have NO ONE to blame but
themselves.

Many Cafe members are skeptical of what politicians
will do with what we present to them. That is why GATA
wants the banking committee members to know that if
they do not seriously look into what we have to say,
ALL of Washington will know that they had the chance to
take action when given sufficient notice!

I will update you daily as I go along here and present
to you my review of Midas commentary that I think is
pertinent to what Congress will find of most interest.

You should know that commentaries by Reginald H. Howe,
Howard Clawar, Greg Pickup and Frank Veneroso are
already in the fold.

MANY of you have already given me great ideas, some of
which Chris Powell and I will include in our document
to Congress.

What you must know is that we ARE going to win the day
and we are going to use the INTERNET and our COMBINED
effort to do so.

As I develop GATA's document, I will present it to the
Cafe members. In the meantime, if anyone has something
that the US Congress should know, don't hold back. Let
us make quot;Mr. Smith Goes to Washington,quot; the old good
guy movie.

Never have I felt the power of such an opponent (6-
foot-9 300-pound Ernie Ladd and 6-foot-10 280-pound
Hall of Famer Buck Buchanin of the Kansas City Chiefs,
pale compared to Goldman Sachs and J.P. Morgan). And
that was only two of the behemoths I looked up at after
catching a pass over the middle. Right behind these
hefty dudes were linebacker Jim Lynch from Notre Dame,
linebacker Bobby Bell from Minnesota and Hall of Famer,
defensive back Emmett Thomas, who was guarding me at
times. And, that is just some of their great defensive
players. I don't mind saying that I caught 4 passes for
88 yards that game against the best of the best in the
AFL.

But that Super Bowl team, which may have had some of
the greatest athletes ever assembled on one team, went
downhill because of upstarts.

It is time that WE ALL (The INTERNET THINKING CROWD)
become the same kind of upstarts and whoop these big
bad guys with sheer fact, communication power and
determination.

What do you say?

BILL MURPHY, CHAIRMAN
Gold Anti-Trust Aciton Committee

* * *

Sept. 9, 1998 -- As stated in the last Midas, there is
quot;Guns of Navaronequot; type of resistance at $290 basis
Dec.

Sept. 23, 1998 -- Disaster hedge fund stories continue
to proliferate. This one in particular may be a biggie
for gold players. Last year we were informed a Mr. John
Meriwether was short some 350 to 375 tonnes of gold. We
have informed you that his firm, Long-Term Capital
Management ( a misnomer if there ever was one ) has
gone belly up. Today their management met with 17
commercial lenders to bail them out and come up with a
plan to keep them from having to liquidate more of its
positions to meet margin calls. For the very serious,
potential significance of this story, see below.

Sept. 25, 1998 -- And that brings me to the most
intriguing possibility of all. If the Fed, and banks
not even involved in the Long Term Capital fiasco, had
to do the unprecedented by stepping up to the plate to
try and arrange a solution for the huge derivative
problem that Long Term faced, what else could the Fed
be up to? For a very long time now we have been harping
about the incredibly large short gold positions by the
hedge funds and what that liability could mean exposure
wise. We made special note of this in the last Midas.
Well, if we are correct and the hedge funds are short
all this gold ( true or not, it was last year that we
heard Meriwether was short 350 to 375 tonnes ) the LAST
thing the Fed can allow in the very short term, is for
the price of gold to take off too quickly. The gold
loans are cheap. Since the price of gold has not done
much compared to the movement of other derivative
positions, it would make sense the gold short would be
one of the trades Long Term Capital ( and other
troubled hedge funds ) still has on. That trade has not
collapsed on them yet, so they have not been blown out
like they have elsewhere. One thing the orchestrators (
Fed and other banking institutions ) of the bailout
might do is borrow some gold from bullion banks and
stop an out of control gold rally. An exploding gold
market would undo their fixit plans for Long Term. They
need to buy time and figure a way out of this entire
derivative problem. Besides, this potential problem (
the gold borrowings ) could be worse than the others.
Where are all the hedge funds, that are short gold,
going to find such massive quantities in a very short
period of time. That was the point of the Goldilocks
and the Three Bears story. Does that sound far
fetched?. What would you have told me just months ago
if Midas said that the Fed would puts its face in the
business of a hedge fund and stop further repercussions
from its irresponsible investment activities? The
effects of this intervention and the ramifications of
this bail out will be felt for years to come.

Oct. 7, 1998 -- One of our more keyed in sources tells
us that Long Term Capital has been let out of their
short 300 tonne gold borrowing position by a central
bank in an quot; off market transactionquot;. In our last Midas
we stressed the fact that their short position was
actually an impediment to the price of gold rising.
There is no way they could just go out and buy 300 to
375 tonnes of gold at the market. That would have
undone the quot;bail out boysquot; entire quot;save the systemquot;
program. Just look at the tremendously, violent bond
run up and yen run up. Long term was supposedly short
both of those and look what happened. Exiting the yen
short and short Treasury Bond positions was painful,
but they could get out. Buying that amount of gold
could have set off a world panic as other hedge funds
and borrowers joined in to cover at the same time.
buying panic ( instead of a catastrophic one ) when the
other big gold shorts try and cover down the road . We
think this is important news for several reasons. It
shows how desperate our government is to try and keep
order.

Oct. 15, 1998 -- Out of London, we hear that Ashanti
may have recently just put out a 7 million oz. forward
hedge. Sam Jonah of Ashanti is a good man, but if we
are right, I would not be a happy camper Ashanti
shareholder. This selling is another example of how the
producers continue to shoot themselves in the foot and
helps to explain why gold set back recently.

(Ashanti blew up in October 1999 as a result of their
hedging policies. Goldman Sachs was lead hedging
advisor)

Nov. 24, 1998 -- We have insinuated in the past that
quot;Something is Rotten in the State of Denmarkquot; regarding
the precious metals action. We are not the only ones
that smell something is afoul. Nick Moore, is a very
highly regarded base metals analyst for Flemings ( Ord
Minnett ) in London. We heard that he was in N.Y. last
week and was also not disinclined to say that the gold
market was being controlled. This is not one of the
gold family people like the Midas squad, so we were
curious and gave him a buzz in London. What we heard
about his comments were true according to Nick. Some of
the quot;buzzquot; that he had heard was that the US was now
leasing gold, but he made it clear that he had no
confirmation of that.

Nov. 30, 1998 -- In our last Midas (Nov. 24, and can be
found by going to the library below) we spoke of the
quiet buzz going around that the gold price is being
controlled. For some anecdotal evidence, we offered up
Alan Greenspan's own comment: House Banking Committee,
July 24, Alan Greenspan, quot; central banks stand ready to
lease (i.e. lend) gold in increasing quantities should
the price rise.quot;

After the last interest rate cut by our Fed, we had a
visceral reaction to Alan Greenspan's strong public
mention of low commodity prices as one of his main
reasons for the cut. This comment really hit home after
his previous July 24 comment about gold. It appeared he
was subtly making it clear that a rising gold price
would not allow him to do what he wanted to do for the
reasons he wanted to do them; certainly, a rising gold
price would make his rate cut decisions more
controversial. Therefore, we feared he might do what he
could to keep the gold price from going up. His
comments left an indelible effect.

Dec. 9, 1998 -- Hit man sought to silence goon squad.
Gold is trading very differently at times these days.
Whoop up, then wack. Whoop up, then whack. It is
trading much lighter as it pops up quickly on light
volume and then the goons come in and sit all over it.
This is a recent development and indicates less trade,
scale up selling. It also tells us that are Fed and its
CB cronies are still there; supplying whatever gold is
necessary to keep gold from moving above $300. It would
appear that some economic event might be needed to
cause them to quot; give up the ghostquot;.

Dec. 11, 1998 -- Goldman Sachs (goon squad leader) was
at it again today. They were the big seller right after
Comex opened. It cannot be more clear that they have
become the designated agent to make sure that the gold
market does not get through $300 for the time being.
Cheap gold loans are being used in a massive way by
hedge funds, banks and other financial entities to
accommodate financial stress in their operations.

Dec. 15, 1998 -- Goldman Sachs (goon squad leader of
the gold cap sellers) reported its worst profit picture
in four years today. Public reason given: poor bond
trading. First we have J. P. Morgan come out and say
they could not trade (stocks) their way out of a paper
bag last quarter and now Goldman (with its hot line to
Secretary Treasury Rubin) says it could not trade bonds
worth a darn. Phooey on both of you. You are really
caught up in the derivative mess and it is causing you
big problems. You are the leaders of the gold capper
selling cabal and are using cheap gold loans to help
maneuver your way out of this mess.

It is clear that our Fed is orchestrating the formation
of a Maginot Line around $300 gold. The Fed, by its own
admission, had to bail out Long Term Capital. Has a
Maginot Line been created so they will not have to bail
out the Morgans, Goldmans and other Wall Streeters that
are caught in derivative plays that have gone the wrong
way and not resolved themselves yet? Goldman only
reported a big drop in profits. What about the losing
derivative trades that are still on the books that have
not been reported yet? Could this have a great deal to
do with the fact they have postponed going public?

I must say that anecdotal event after anecdotal event
says that our theory about what is going on in the gold
market is on target. In recent times the derivative
markets have grown exponentially. The trading was
fostered to a great extent by borrowing cheap yen and
gold. Certain types of derivative trading had never
been tested in a recession. Trades started to go awry
(Long Term Capital went bust). When the yen surged from
146 to 113, it caught the derivative community even
more off guard. Many derivative trades went further
south. Our own Fed was surprised by the extent of the
moves (probably why Goldman did so poorly). The Fed had
to bail out Long Term Capital Management for fear of
quot;systemic risksquot; if it did not do so.

Derivative trading in the financial community was then
scrutinized by the Fed and top management of financial
institutions. A horror show was probably revealed. It
certainly is the case that the Long Term crew, who
managed to suck in central bankers as investors, was
not the only financial entity in trouble. Gold lending
by UBS and Merrill Lynch helped foster derivative
schemes over the years. They know what they helped
wrought. They also know how big the gold loans have
become (probably 7,000 to 14,000 tonnes). It is
important to remember that the gold loan area is a
shadowy, secretive one. Very few really know what is
what in this area. UBS and Merrill would have as good
an idea as anyone would. Sensing serious potential
danger that the gold loans have become too big to cover
in a crises, they have recently said sayonara to the
gold lending and derivative game.

Since some of the big lending players have pulled out
and gold supply to the market has been reduced, Goldman
Sachs was called on by our Fed to lead a goon squad of
sellers to bash the gold market on rallies up to $300.
The reason they are capping the gold market is to try
and buy time so that losing derivative trades can right
themselves. It is clear that the Fed knows the extent
of these trades and what could happen to the financial
system if they blow up ( they acknowledged this fact
publicly when they bailed out Long Term Capital
Management ).

Dec. 17, 1998 -- Like clockwork. The price of gold
rallied from the lower end of its base and then was
mauled today by the same group of sellers. They are
relentless and it is clear that the cabal is part of
one Fed orchestrated agenda that has been put in place.
The best that we can do is to continue to monitor signs
that they are losing control of the game that they have
decided to play. And we will do so with great
vigilance.

The same group went after silver causing it, at one
point, to give up all of its 19 cent gains that it made
yesterday. Silver has never traded like this ever
before (see below).

The gold selling today kicked into high gear when the
lower house of Switzerland's parliament approved a
constitutional amendment that would sever the Swiss
franc's peg to gold and allow the sale of 1300 tonnes
of gold reserves over a period of time. It is only the
first step in a process that must culminate with a
popular referendum in the year 2000. This was totally
expected. The real news is that they have asked the
governmentquot; to present a legal framework detailing the
requestquot;. According to Bloomberg, this will postpone
Swiss Bank gold sales an extra year to 2001, if they
happen at all. Outrage. I am so mad I feel like
screaming out the window like Peter Finch did in the
movie, Network. The difference between the two of us is
that, while mad and screaming, I am only warming up and
I can take a lot more. I hope you are outraged too.
What our government is doing to manipulate the gold and
silver markets is scandalous. Goon squad leader,
Goldman Sachs, was the big seller again today. What is
nauseating is that this is becoming so transparent and
we hear so few outcries. Case in point is silver. TWICE
now, silver has recently breached $5 to the upside and
the very next day it has been broken back down by the
goon squad by as much as it went up the day before.
Never before has there been anything like this. After a
breakout out of a base like we just had, silver (or any
other commodity) might run up to, at least, say $5.25.
The specs would come in, and if the fundamentals did
not justify it, the price might collapse. That could
happen over a two week to a month period. That goon
squad is so afraid of something, they will not let
silver stay over $5 even for a day. And, they have
acted precipitously twice now to bash it down. How
badly is the financial stress behind the scenes that
they fell they have to be so concerned about the price
of silver staying over $5? This smells to high heaven.
It is only a matter of time before the situation gets
out of hand and they have to pay for their arrogant,
price manipulating ways.

Dec. 21, 1998 -- Midas followers know that we think
that the price of gold is being artificially suppressed
in an orchestrated fashion led by U.S. financial
officialdom. The anecdotal evidence of that being the
case is overwhelming. You know that we believe that
Goldman Sachs is the visible ringleader of this effort.
They are pros and are good at what they do. They come
in and pound at just the right strategic times to
attract other sellers. They sell a negative producer
price index, they sell late Fridays when Europe and
Asia are mostly closed, and they sell news events to
attract commentary that is bearish, no matter how many
times that same news event has been sold.