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here is some mail I just received
My analysis..be long gold
long golden star resources GSR
this is better than the movies
>Subject: BULLETIN!! - EXPLOSIVE GOLD MARKET NEWS/ GOLDSHARE STAMPEDE COMING
>Date: Mon, 11 Oct 1999 21:53:46 -0400
>
>
>In my opinion, the following news stories are,in toto,
>explosive news for the gold market. I will explain after
>you have read them. In essence, they validate what Midas
>du Metropole has been telling you all year!
>
>October 11 - UBS turns screw on gold firms
>
>Swiss bank acts on debts as hedging contracts go sour
>By Dan Gledhill
>
>UBS, the Swiss investment bank, is thought to have
>tightened the screw on struggling gold producers by
>calling in debts on outstanding derivatives
>contracts.
>
>Many mining companies took out these complex
>derivative positions earlier this year in order to
>hedge themselves against further falls in the gold
>price. However, gold's sudden recovery in the last
>fortnight means that these contracts are now heavily
>in the red.
>
>The concern about the ability of gold producers to
>make good these losses is believed to have prompted
>UBS to take the unusual step of requiring early
>margin payments. Among the companies affected is
>thought to be Ashanti, whose derivatives exposure is
>reported to total $450m (£270m). UBS's credit
>exposure to Ashanti alone is said to be $61m. Other
>investment banks affected by the malaise in the gold
>market are Goldman Sachs, JP Morgan and
>Credit Suisse First Boston.
>
>Fears that the gold sector has suffered enormous
>losses in the derivatives market drove the share prices
>of producers sharply lower last week. Ashanti,
>the Ghanian producer which has entered into merger talks
>with Britain's Lonmin, fell heavily, as did Canadian
>miners Cambior and Barrick Gold. There is also concern
>that a number of hedge funds, which had sold gold
>short to prosper from lower prices, have been caught
>out by the sudden rally.
>
>Gold's recovery, to close on Friday $70 above this
>year's low at $320.15 an ounce, was prompted by the
>decision of European central banks two weeks ago
>to suspend the selloff of their reserves. It brought
>to an end four years of almost continuous decline,
>which saw the price of the precious metal plummet
>from $415 to $250 an ounce. Analysts believe that many
>gold producers, assuming gold would continue to
>depreciate, took out derivatives positions
>so large that they would actually profit from
>lower prices.
>
>One derivatives specialist said: "I think that,
>judging by the events that have unfolded in the market,
>the reasonable explanation is that some mines
>have aggressively over-hedged."
>
>It is unclear whether the banks that took out such
>positions with mining companies and hedge funds decided
>to cover their risk elsewhere, or chose to
>leave their books open in the belief that the gold
>price would come back. UBS declined to comment on
>its exposure.
>
>Most analysts believe that gold's current strength
>will continue as customers with bearish derivatives
>positions are forced to buy gold to square their books.
>However, they remain convinced that by the end of the
>year the commodity's downward spiral will resume.
>
>"Gold won't subside suddenly," said the derivatives
>specialist. "It is possible that we will see further
>rallies, but I think we will still find that when it's
>all over, gold will move below $300 before the end
>of the year."
>
>Lonmin, formed from the old Lonrho mining company,
>already owns 32 per cent of Ashanti and announced on
>Tuesday that it is negotiating to acquire the
>remaining 68 per cent. End.
>
>The disinformation crowd just won't quit. How can anyone
>who knows anything about the gold market say that reigning
>in gold loans will eventually be bearish for gold?
>
>
>
>London (Dow Jones) October 11 -- Central Banks are
>selling gold in order to prevent a further sharp rise
>in prices from causing a major financial crisis,
>according to Ted Arnold, analyst at Prudential Bache
>Securities Ltd.
>
>Many funds and banks sustained heavy losses over the
>past two weeks as gold surged after 15 European central
>banks stunned the market by saying they would cap
>sales of gold for the next 5 years.
>
>If gold prices continue to rise sharply they could
>cause major losses at U.S. and European investment
>and bullion banks and cause a domino effect that
>could lead to a major financial cisis, Arnold said.
>
>"Central banks, according to our sources, have acted
>swiftly to prevent a repeat of an LTCM-type of crisis
>by making sure that gold prices remain in a tight range.
>Enough selling is done by agents of the monetary
>authorities involved to cap gold...around the $330 area
>basis spot London while the floor is very solid in
>around the $315-$316 (a troy ounce) area basis spot,"
>Arnold said.
>
>Central bank "regulation" of the bullion market always
>seems very far fetched to most observers, but it is a
>"cheap" option compared with the potential cost of
>bailing out banks and generally injecting liquidity
>into an economy if there were a full-blown financial
>crisis, he said.
>
>A relatively small amount of gold would be needed to
>sell towards the top end of a range and then buy back
>at at the lower end. The one thing that is absolutely
>certain, however, is that no central banks is going to
>annnounce that it is acting in the market to achieve
>stable and range-bound prices, said Arnold. End.
>
>A quote from highly regarded Barry Riley in Saturday's
>London Financial Times:
>
>"A gigantic short position - some say 10,000 tonnes
>in aggregate - has been built up during the past few
>years and it has created a new threat of instability
>related to derivatives."
>
>Lordy, Lordy! This news is a horror show for the
>shorts. The conservative FT has a columnist who is
>now touting the gold loan numbers of Frank Veneroso.
>They are more than twice the GFMS numbers that gold
>producers, hedge funds and the general media have
>acknowledged to the investing world.
>
>The Swiss are so concerned about the gold loan
>situation that they are turning up the heat on the
>producers over them. The European central banks
>have already told the world that they were going to
>curtail their gold lending. Now this statement.
>
>Then, we have the Abby Joseph Cohen of the gold
>industry - "the bear of bears" the past few years -
>telling the gold world that the floor for the price
>of gold is around around $316. What happened to all
>his $220 bearish forecasts? This is staggering information.
>
>Think on these things. If you are a producer and the
>"bear of bears" suggests $316 is where the central banks
>will buy, why not cover all your forward sales? Why stay
>short for a $2 downside? Makes no sense at all not too. If you
>are a hedge fund, why stay with your gold loan at 4%
>to 5% gold lease rates with the understanding that
>the central banks can lose control of this situation?
>The manipulators already have!
>
>This is bombshell news. Since it makes no sense for
>producers or hedge funds to stay short, most should
>now begin to cover. Ted Arnold is one of the most
>visible "Hannibal Cannibal" apologists of all. He
>now admits that the gold market situation is so
>explosive that $315-$316 is the downside. Gold closed
>today around $318. That is the MEGA BEAR talking.
>What do you think the MEGA BULLS like me are saying tonite.
>
>GATA has been talking about market manipulation since
>January. The Ted Arnold type's mocked us over and over.
>Now, he comes out and says the market has to be manipulated
>or there will be financial havoc. What crap! It is his
>ilk that has caused financial havoc on the gold industry.
>miners out of work, gold company bankruptcies, gold
>shareholder's investments wiped out, etc.
>
>I have said over and over that before this all ends, one
>of the biggest financial scandals in the history of
>the United States will reveal itself. How clear can it get?
>
>The manipulating crowd has lost control of their collusion
>game and now they are crying to Daddy for help. What a
>bunch of wimps! This is disgusting and calls for a
>full scale Congressional investigation.
>
>On April 26, I met with James Saxton, Chairman of the
>Joint Economic Committee, and told him that this was
>going to happen. I also met with Chris Frenz, his
>staff director and their chief economist, Bob Kelleher.
>I then met with Jim Clinger, Senior Counsel of The
>House Committee on Banking and Financial Services.
>Also there was Greg Wierzyski of the Capital Markets
>Committee. I invite all of the Cafe to contact them
>to find out if what I am telling you is so
>
>I told them exactly what Ted Arnold is telling the
>world now. The difference is that Ted Arnold is trying to
>tell you that the gold maket will be capped. He
>obviously was told to put this out by the "Hannibal"
>camp that is scared to death that the gold price could
>explode and wipe them out.
>
>This is crazy. Oil just doubled in price. Did we have
>to hear of nonsense like this? What is wrong about
>gold doing the same? I cannot stress it enough. The
>gold market was manipulated by the bullion dealers.
>They told their clients the fix was in. The clients
>believed them. The "Hannibals" were using wrong
>supply/demand information and now have lost control
>of their gold market cartel. They listened to the
>discredited GFMS and not Frank Veneroso.
>
>I can't say what the price of gold will do tomorrow,
>but the dye is cast. Uptown we go. Shareholders
>around the world will demand producers cover their
>hedges. Hedge fund managers that have borrowed gold,
>will have to come to grips with the "new" reality
>and cover too.
>
>Just curious. What central bank wants to just throw
>away its valuable gold reserves at these prices?
>
>Rock and roll time.
>
>When the general investment world understands this,
>there will be a STAMPEDE to buy the shares of gold
>companies that have not overly hedged. The junior
>golds and top quality exploration gold and silver
>companies are going to go bonkers. In my last Midas,
>I just suggested that soon the little gold companies
>that have been given up for "mortsville" will
>begin acting like internet stocks. This news could
>do it.
>
>Just look at what is happening to my biggest holding -
>Golden Star Resources. A few days ago I brought it
>up to you as my favorite. It was 15/16. Today it closed
>at 1 7/8.
>
>Does that seem impressive? Not to me. When I owned
>it at 21, Paul Stephens, renowned portfolio manager
>of the Conrarian Fund, said in a Forbes article
>he thought this stock could go to 50 to 100. That
>was him saying that - not me.
>
>He made that statement because GSR has found so
>many exciting gold resources and may have done
>what no other exploration company in history did.
>At least, that is what Frank Veneroso thinks.
>
>What is important here is there are many great
>junior gold companies and gold exploration companies
>out there that will go ballistic in price when "The
>Maddening Crowd" realizes the price of gold will
>inevitably skyrocket. The bears even admit that
>now. When central government takes its foot off
>the breaks, bye bye.
>
>Support your favorite small gold company. Tell your
>friends about them "Now" before they go to the moon.
>Their is easy money on the Table here.
>
>Within 2 weeks, The Cafe will open its Chat room. In
>the Chat Room, we will have various Conferences
>(threads to some) in which you will be able to
>learn and talk about your favorite gold and silver stocks.
>You will be able to get answers to many of the questions
>you might have from knowledgable investors around
>the world.
>
>Janet Whitman of Dow Jones did a great story today for
>her wire service called, "Gold Gains In One of Biggest
>Gold Rushes in History." Janet mentiones
>www.LeMetropoleCafe.com. This is a big breakthrough
>for us in the mainstream press. The Cafe is growing
>by leaps and bounds. And as I reiterated often, we
>are being fed the best information in the world on the gold
>market going because gold family people want
>GATA to succeed.
>
>I urge all of your friends to read my last Midas and
>the two pieces by Reginald Howe and John Hathaway that
>are up at the Kiki Table and Dos Passos Table. In my
>opinion, that is the gold market story in a nutshell.
>
>"Vox Populi Vox Dei"
>
>
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