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Subject: The Sunday London Times - The New York Post - A Dallas Story
Date: Sun, 16 May 1999 12:59:00 -0400
X-Mailer: Allaire Cold Fusion 3.1
Le Metropole members,
Slowly, but surely, our side of the gold story is
beginning to reach the mainstream media. The stories
below were in the Sunday London Times and The
New York Post.
This is an encouraging development but it would be nice
if just ONE mainstream press outlet would go into all the
material we have put together and then make an assessment
of what we have to say. It would appear that most of
the commentary about GATA is off of "soundbites".
I am going to try and rectify that tomorrow, As I told you
a couple of weeks ago, I was moving to Dallas to
be better able to launch GATA to a more visible level.
Tomorrow, I am walking into the Dallas Morning News to
ask them to take a serious, in-depth look at our
story.
On Friday, the monthly CPI for April was .7%, the
biggest one month increase since 1990. The bond yields
hit 5.95% at one point, the XAU held steady, but the
gold market swooned. Goldman Sachs was a heavy seller
all day and were big "put" buyers. Gold makes multi
year lows while the bond market vigilantes crater the
bond market because they do not like what they see on
the inflation front. This makes no sense unless,...
What is going on here is plain as day, yet none are so
blind as those that will not see. It is time that the main stream
press take their blinders off, or worse, stop suppressing
the real gold story here. The Financial Times calls
GATA dangerous ( to whom? ), two wire services killed
stories on GATA, the Wall Street Journal and New York
Times refuse to even listen, and the Dow Jones newswire editors pablemisized a story on GATA to such an extend that although
they sent out a newswire, the GATA story was presented in such
a hokey way in the end that no one ran it. And yet, what we may
have here might be one of the great financial scandals ever.
I am going to give a presentation in behalf of GATA at the
Northeast Investment in Mining Conference on June 3 in New
York City. The conference would like to help GATA in
any way they can and have generously offered to
provide a luncheon table for the press on June 2.
Tomorrow, we will begin to invite the NY press,
wire services, financial writers, etc to listen
to the many aspects of this complicated story that
we have assembled.
It will be interesting to see who is willing to listen.
Later on today, there will be some fascinating
commentary served at the various Cafe Tables.
Latest GATA press:
CONSPIRACY THEORISTS PAN NET FOR GOLD
By Kirstie Hamilton
City Editor
Sunday London Times
May 15, 1999
The gold market is seething with Internet-inspired
rumours of a huge conspiracy in which some of the
world's biggest financial institutions are alleged to
be suppressing the price of gold.
Everyone from major European and American investment
banks through to the Bank of England and America's
Federal Reserve have roles to play in the story, which
at its most dramatic stretches the credulity of even
the most dedicated conspiracy theorist.
But milder versions are being taken seriously by some
of the gold business's establishment figures, including
the chairman of South Africa's second-largest gold
producer and the heads of two European gold producers.
Those allegedly involved in the plot throw up their
hands in despair at the tales being given any credence.
"This is complete baloney," said the representative of
one bank alleged to be part of the conspiracy.
The stories, which have been building over recent
months, have exploded since the Treasury announced
earlier this month that it will sell half of Britain's
gold reserves in a series of auctions.
Bill Murphy, an American Internet commentator, has even
set himself up as chairman of the Gold Anti-Trust
Committee, a pressure group calling for an
investigation into the price-fixing allegations. The
group has hired Berger & Montague, a Philadelphia law
firm that specialises in anti-trust cases.
"We are conducting an investigation into what we
believe is going on, which is manipulation of the gold
market," Murphy said. He has also been to Congress to
explain what he believes is happening.
The Treasury's decision to announce its sale programme
was the stuff of nightmares for producers hoping the
gold price might finally be starting to recover. It
sent the price tumbling by $8 to $280 an ounce.
Analysts and commentators have begun to create
elaborate theories about why the gold price has
stubbornly refused to rise despite a rise in underlying
demand. Central to these is the suggestion that a
number of big banks have huge short positions in gold,
either on their own account or on behalf of clients.
Short positions are created by selling gold into the
market in the expectation of being able to buy back
later at a lower price. While the gold price remains
low, the banks profit from their short positions.
Should the price suddenly rise, their gains quickly
become losses. At its extreme, the theory suggests that
the big investment banks may have been able to persuade
central banks around the world to help them keep the
price of gold down.
"There are parts of this conspiracy theory that I am
sure are not true," said Chris Thompson, chairman of
Gold Fields, one of South Africa's biggest gold
companies. But he said that there was a large amount of
circumstantial evidence that investment banks were
involved in a plot.
Internet gold commentators have suggested one American
bank's exposure to the gold market could be up to 1,000
tonnes -- more gold than is stored at Fort Knox.
Insiders at the bank concerned deny the position
approaches those levels, but officially the bank
declines to comment.
"The behaviour of the gold price has been very odd over
the last six months," said Peter Hambro, a member of
the Hambro banking family and owner of a gold mine in
the south of France. "In spite of reports of
substantial demand for physical gold and major economic
and political uncertainties, such as the war in Kosovo,
the gold price has not responded in the way one might
expect. "Parallel to that we have seen insistent
reports from Internet commentators of big market
operations by a few investment banks. Circumstances
support the theory that there is a cap being put on the
price."
Chris von Christierson, chairman of Rio Narcea, which
mines gold in Spain, is also concerned. "I have never
been a believer in conspiracies, but every time the
gold price is about to break out, it gets hit again,"
he said.
But some analysts dismiss the conspiracy option,
maintaining that the gold price is likely to remain
under pressure while central banks continue to offload
supplies of what they see as a poor-performing
investment.
The Treasury's gold sales announcement has attracted
criticism from a number of quarters, particularly for
the manner in which it was done. By flagging the sales
ahead of time, some critics have suggested, the Bank
and the Treasury have further depressed the price.
Even a former Bank executive has joined the chorus of
disapproval. Terry Smeeton, former head of foreign
exchange at the Bank, said the gold sales would damage
the gold market, and that he would not have undertaken
them had he still been at the Bank.
The Bank defended the sale decision, and insisted that
it had agreed with the Treasury on the policy. "This is
exactly the way the gold sales were done in the
Seventies by the IMF," said a spokesman. "We think
markets work best where they have full information."
The conspiracists hope that publicity will help to
uncover any plot to suppress the gold price. The worst-
case scenario, of course, is not so much of a giant
conspiracy but something far more miserable. Without a
conspiracy the gold producers might have to face the
unthinkable: has gold lost its shine forever?
-END-
THEY'RE TOO INCOMPETENT TO BE CONSPIRATORS
By JOHN DIZARD
New York Post
------------------------------------------------------------------------
THERE'S something very comforting about conspiracy theories. Yes, if they're true, the world is run by evil, all-knowing geniuses to whom human life is worthless, but at least you have order and certainty. Events have an explanation, though one the conspirators would prefer to keep hidden.
In my experience, unfortunately, much more can be explained by incompetence and unwillingness to admit error. The world isn't run by geniuses, evil or otherwise; it's run by hacks and timeservers who were appointed, elected, or hired for reasons everyone has forgotten.
This matters because there's been a lot of conspiracy talk going around the gold market in the past two weeks. The focus is the May 7th announcement that the Bank of England would sell off most of its gold reserves over the next three years. The amount of the sale, 415 tonnes, was significant - but not as significant as it would be if it were anyone other than the Bank, which is supposed to know everything about the gold market.
Here's the conspiracy thesis: The major gold-dealing houses, in particular Goldman Sachs, have huge short positions in gold. That is, they would profit from a decline in the gold price. Goldman, the story goes, has close, high-level contacts in both the British and U.S. governments, and is using these contacts to ensure the gold price is kept weak. The story continues that Goldman is net short about 1,000 metric tonnes of gold, which is between $8 billion to $9 billion. But I don't believe it.
Just before the Bank of England announcement, the chart freaks, or, if you prefer, technical analysts, were pointing with excitement to a "breakout" of the gold price and the prices of gold shares. Gold has been in a slump for years - decades, really - and the goldbugs hoped that the "basing pattern," the politically correct goldbug term, had finally been broken. But, instead of a breakout, the gold longs were at the receiving end of multiple cruise missile impacts. The closing price went from $289 May 6 to $282 May 7.
That was the end of the technical rally.
The Bank didn't even blame the ensuing price crash on out-of-date maps. The damage was as thorough as anything done to any embassies in Belgrade; gold didn't even rally on Friday's high inflation news. It closed at $275.60.
"The European central bankers are absolutely furious," says one of my friends among the gold dealers. "The decline in the gold price cost them $5 billion in losses on their balance sheets. It cost the poor countries who will get the money from IMF sales $120 million. They wanted to sell gold themselves, but the Bank of England got out ahead of them."
There are really two questions here: Why did the British Government decide to dump the "precious" metal, and why did they decide to announce the sale, rather than proceeding quietly and announcing it after the fact?
The decision to sell wasn't the Bank of England's. Prime Minister Tony Blair and his Chancellor of the Exchequer Gordon Brown have the power to dispose of the country's reserve assets.
"Brown hates gold," says a well-informed Brit friend of mine. "He thinks of it as the preserve of right wingers and capitalists in top hats."
The conspiracy theorists note that Gavyn Davies, a Goldman economist, is a close adviser to the government.
The timing of the sales, and the public announcement ahead of the fact, was probably left up to the Bank of England, here acting as the agent for Blair and Brown.
"They no longer have the expertise they did when Terry Smeeton was in charge of gold reserves and regulation," says another gold-market friend of mine. The people who took his place just decided that they could avoid responsibility by announcing the sales, calling it "transparency," and blaming any decline on market forces.
For now, that's the explanation I buy. It fits in with my incompetence-not-conspiracy world view. But you can count on an antitrust suit making the opposite case.
*Please send e-mail to
dizard@xxxxxxxxxx
All the best,
Bill Murphy
Le Patron
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