Home Gold Primer Q&A Daily Market Report Gold IRA Gold Coin Prices Charts Stats Essays Site Overview High Net Worth How to Buy Gold Live Gold Price Breaking Gold News Mobile Gold Price Gold Coin Images About Us-Contact Search Video Round Tables

Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

FORUM ARCHIVES

Select date of the archive you wish to view Month 1 2 3 4 5 6 7 8 9 10 11 12 Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Archives date back to September 22, 1998

WELCOME TO THE ARCHIVES!

ARCHIVED DISCUSSION FROM 7/4/1999
All times are U.S. Mountain Time

View Yesterday's Discussion.

Technician (7/4/99; 20:39:55MDT - Msg ID:8395)
Follow up
Yes, It is true. Found this for 5 July out of Japan. "The Bank of Japan rushed to prevent any strengthening of the yen by aggressively buying dollars at ¥122 in early morning trading. It has repeatedly intervened to keep the yen weak in recent days, due to fears that a stronger currency will undermine any recovery."

So, 1 yen drop, weakness in sf, dm and .60 drop in gold is as predictible. Pathethic really.

Is it true some of the guys on Kitco are drunk:) Just kidding of course.

Pete (7/4/99; 20:26:20MDT - Msg ID:8394)
Aragorn III
Thank you for your questions. As time is needed for me to answer in detail, and the 4th is upon us, my time is limited as of now.

A quick reply to your question, " why would they pay for it twice." Maybe they have no choice? A compromise would be in order not to destroy their cash(money, gold) cow. What would it gain them to stop this cow?

Next question, "they only want real money(gold) in partial for their asset, oil, and do not desire to corner market in gold." As Aristotle has so eloquently said, "the profits and market for oil has been expanding tremendously," or something to that effect, that amounts to $100 billion/yr or better. The gold production of 2500 tonnes/yr and resulting dollar value pales in comparison to oil sales. After
20 +/- yrs of accumulating hedged gold on paper, maybe their isn't enough supplies available in the future to satisfy their outstanding contracts. Could it be that they are cornering the market for gold inadvertently?

One question! Why have they raised the price of oil recently by 40% +/-? This could be a big clue. This one factor means something is amiss.

Thanks to you and Aristotle for your insights that have been thought provoking.

Pete



Technician (7/4/99; 18:53:01MDT - Msg ID:8393)
Intervention time?
If what I am seeing at Bloomerg is correct, yen is down about 1%, Despite a technical promise of a move up. I think they are playing the same movie! Gold down .75 not so bad. Battle of titans Tuesday, I think.

koan (7/4/99; 17:45:28MDT - Msg ID:8392)
silver conjecture - 75% true?
In a nutshell: DEMAND: Buffet buys 127 mil oz. He thinks a big increase in demand will be caused by new silver zinc batteries (40% silver) and other general demand - he should know! SUPPLY: You cannot really increase supply adequately because 80% of silver is produced as a by- product of zinc, gold and copper - you are not going to open a copper mine to get a couple of grams of silver per ton. Lots of silver only runs 30 grams or so per ton on its own. I think silver would have to go well above $10 oz for supply and demand to balance (I would guess 20 to 30 $ per oz) Could be a big story. Stay tuned.

SteveH (7/4/99; 15:31:58MDT - Msg ID:8391)
more
http://www.gold-eagle.com/editorials_99/banker070599.html
In this text, I see what appears to be a reference to the US being a lender of last resort with US gold. Tell me I am not reading this.

Welcom back FOA.

-- banker at above link (a snippet)

"...Under these circumstances low prices will induce the Asian bloc to come in as purchasers in particular
when the NYSE will lose its momentum and reflect a strong downtrend striking the dollar and set off
large capital outflows to safer places, even into the Euro – the next Reserve Currency – at the expense
of a somewhat lower but safer return.

The undercapitalised hedge funds presently engaged in a second gold bearer run as well as speculative
reported Yen positions versus US Treasury Bonds, will get themselves into deeper trouble. The weaker
ones will not be able to push forward the delivery dates of gold-bearer sales indefinitely, due to the
market resistance enumerated above. Already the Bank of England has now indicated to fix a floor price
for its intended gold sales!

When markets are falling, hedge funds are failing and lenders are running, then Greenspan will have no
choice but to try and avoid a complete collapse of the economic system as forecast by Kondratiev 100
years ago...."

Gandalf the White (7/4/99; 15:14:28MDT - Msg ID:8390)
Great to have FOA and Aragorn III at the same time!
The Hobbits are looking forward to another SERIAL to expand the lessons from the masters. -- Great intro FOA! --
Put out the call, Townie, the Tableround is going to be the place of action as we await the BoE "1st Auction" results. -- I am not leaving my seat.
<;-)

Aragorn III (7/4/99; 13:23:20MDT - Msg ID:8389)
FOA Your additional thoughts are eagerly anticipated.
More when I return...

Aragorn III (7/4/99; 13:19:47MDT - Msg ID:8388)
Clap...clap...clap...
Aristotle, well done. You justified my confidence and exceeded my best expectations. Your presentation of the history made for a more profound display of the many subtle elements coming together than I could have delivered. A helpful roadmap for a journey that each man must ultimately travel for himself. As with all things, that must stand alone in response to the questions such as from Cavan Man: "how can I be sure that the tale you have told is accurate?" You must read the signs for yourself, as we live in a world where even a president of a great nation can be found to ask about "what the meaning of "is" is." You must read the signs that you feel are not in dispute, and reach the truth at the end of the road when you find the shoe that fits as no other.

I would like to offer a small but important modification to this commentary. You wrote in regard to these financial arrangements with gold (money!):

"There is nothing sinister in all of this. The price of Gold has fallen simply because the principle buyer at the Golden "Rotterdam market" has found another avenue in which to obtain the Money (Gold) desired in exchange for oil. This is very much like the Bundesbank offerings that I told you about earlier. Please appreciate the patience in this approach, and the commitment it shows to Money (Gold), knowing full well that for many years it would be getting ever cheaper while you yourself would appear the fool for buying it from the top all the way down. But the big payoff in the end is near..."

Although, as you say, the principle buyer had found another avenue than the spot gold market through which to convert paper currency into money, it was not a guarantee that the spot price would FOR CERTAIN get cheaper. That outcome depended upon the willingness of all others to continue to hold paper currency, which 20 years of hindsight reveals the shoe that did fit. And while the interim might indeed make them look the fool for continuous commitment to real money since the earliest days of high paper currency prices, who knew enough of the activity to poke fun? And had this been general knowledge, the price would be properly set even today, perhaps witnessing the burning of paper years ago. As it is, the choices are made for the end of the journey, and the road is chosen as necessary.

SteveH, your summary of the BoE sale is a good one. If the CB-guarantees must be honored, how else to do this other than announce a sale to the bullion banks? Consider the circumstances that we must face today if these bullion banks might otherwise fail (without this CB source) to deliver the gold payments on the loans they facilitated as the original borrowers fall into default. The key to this mystery--that you can buy cheap gold while others cannot--is volume of business.

Pete, I will have words for you, perhaps later as time will allow. But for now, in regard to your proposition, ask why should the oil producers pay for this gold twice, and also ask why would they choose to become gold producers too? The goal is not to "corner" all gold, but to secure real money for past and present efforts.

got gold?

AEL (7/4/99; 12:42:11MDT - Msg ID:8387)
Y2K thread: gallup poll on bank runs (and etc)
http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=0012To
good thread on this subject

Golden Truth (7/4/99; 11:54:35MDT - Msg ID:8386)
To F.O.A
Hello F.O.A in your post-Msg ID:8384 you mention quote " History has shown that the assets accumulatedin this way will never be transformed into "the things of life"! Unquote. DO you mean "OIL"? The reason i ask is because i read an interesting article over at gold-eagle the posters name is "ZulaGold" he was straight to the point and mentioned that Africa should remonetize GOLD by telling the World that Africa will now be paying Arabia in Gold for their OIL purchases. Joe and Jane average public would then realize GOLD is money again.This sounds so simple. Africa has lots of GOLD,Arabia has lots of OIL. Both countries need what the other has, i think this is very sound Logic and can see it happening in my minds eye. Almost forgot ZulaGold's post was on July2/99 @02:28.

Golden Truth (7/4/99; 11:19:48MDT - Msg ID:8385)
F.O.A POSTS AGAIN!!!
Nice to hear your "Thoughts" again. Welcome back i was starting to worry we,ed never hear from you again.

FOA (7/4/99; 11:01:14MDT - Msg ID:8384)
Gold: Saving Real Money In A Time Of Transition
Introduction

------ A gentleman leans over the fence and tells his neighbor that gold is going to rise in price from it's current $300. As the person on the other side of the fence thinks differently, they both agree to a binding bet. In three months, we will settle up with a payment of the change in the price of one hundred ounces of gold. Whatever it rises, the "bull" collects that amount. Likewise,
whatever it falls, the "bear" collects from the bull. Each puts a $1500 payment guarantee into a common shoe box and gives it to another neighbor for safekeeping. ---------

As an observer of the above, we have just witnessed the creation of a wager not unlike a comex futures contract. On each side of the fence stands a long and a short, that together create an open interest of one contract. Neither has any intention of buying gold, nor do they expect
physical gold to be a part of this bet. Yet, at cocktail parties and on public internet forums, one claims to have "brought gold" and the other states that he "sold gold".

To build a further understanding of this transaction: Both of these gentlemen, probably don't have the $30,000+/- to buy or deliver 100 ounces of gold. Human nature being as it is, if they did have that much, they would most likely increase the bet to ten or twenty contracts. Clearly, the
intent of this paper market, is to bet on the price of gold as it is determined by the buying and selling of other physical traders. The western public should take these trades for the concept they truly represent. ""I (the long side) bet on the "price" of gold not because we need or want the physical metal. Rather, my wager is that others will need real gold to protect themselves from bad monetary systems. In fulfilling that "need to own", these others will drive up the dollar price and I will make money while working within the confines of our good monetary system.""" The shorts make the opposite bet, in that they think the world monetary system will work itself out and induce "the others" to sell all their gold. That is, gold they brought in the first place, because they did not know that our money managers could repair the world financial system.

Yes, today Western longs and shorts are playing out these two views of the gold market. Yet, both sides are using paper gold bets to represent their beliefs. Truly, the major majority of this market does not buy or sell physical gold to represent their investment concepts. There are a few
that buy coins and bullion, but, even in their large amounts, it is only a drop in the paper gold bucket.

This, my friends, is the very nature of western trading of gold. The mindset is to treat it as a concept for making currency, not protecting existing wealth. The exact same mentality exists when one invests in the gold mining industry. Even when these players see the faults in the dollar, and loudly proclaim it's inflationary downfall, the largest part of their assets go into the business of
producing real gold in exchange for more of the same paper currency. It is a means to build wealth through paper asset appreciation, using the very financial system the "concept" says will fail without physical gold.

There are many mental angles and philosophical side steps one can take when understanding the above. But, in this concept lies the very basis of the flaw in the current gold market. A paper market, built upon world misconceptions of currency values and the historical reasons for owning
gold. The present deployment of world assets into a paper system of valuations is liken to traveling a trail of no return. History has shown that the assets accumulated in this way will never be transformed into "the things of life"! The paper wealth you currently own is no where near the real value your currency says it is. With the above introduction, we have begun close to the end of this journey. In the upcoming chapter one, we return several miles to walk ground already well traveled. We will observe concepts on the right and the left, not discussed by other guides. The very sights that make such a trip, "worth wile".

" You will see this trail thru the eyes of history and feel old ways as new Thoughts!" Another

FOA



FOA (7/4/99; 10:57:06MDT - Msg ID:8383)
SteveH
Steve,
I have been busy for a while. Will discuss with you several things later. thanks FOA

FOA (7/4/99; 10:55:22MDT - Msg ID:8382)
Aristotle
Mr. Aristotle,
Your "Aristotle Life on Earth: Gold and the Free Market" is a fine work! Myself and everyone thank you for writing it. I did not wish to offer my posts during your composition, so I waited. If I may, some of your thoughts will make a good addition to further this cause.

Time, is very close to "proving many things"! We will most certainly document these "eye opening" revelations on this forum, as they occur. Today, I offer my brief introduction.

SteveH (7/4/99; 8:56:59MDT - Msg ID:8381)
repost
http://www.2air-inc.com/letter.shtml
from kitco from above link. This has been posted before, but in case you are just tuning in. Do you see shades of previous discussion herein. What is truth here and what is not?



Date: Sun Jul 04 1999 06:21
strat (Thanks, EpicAutumn for posting this URL yesterday...) ID#93241:
-
I decided to take the liberty of posting the whole letter. Thoughts? Comments?

The following is a quote from a letter written by Mr. Johnson, a retired financial analyst in his eighties, to his sons.

"Houston Texas"

Mr Dear Sons,
This is about the sting that will smash the great bull market. This is about the sting that will derail the gravy train the sting is already in place and it's a trigger has already been pulled. The sting merely has to unfold. The public suspects nothing.

The sting is a confidence game in which the victim is set up to believe that he can not lose, that he has a birds nest on the ground. Then at the last moment the trap is sprung, and his dreams of riches turn to rags. This sting was made in Japan, with a strong assist from Switzerland.

To get a better idea of the Swiss connection, we have to look at the Bank of International Settlements ( BIS ) in Basle. The BIS is the central bank's bank. It was formed in 1930 to handle the collection of German war debt following World War 1. It's members are the central banks if the industrial world, such as the Bank of England, the German Bundesbank, the Federal Reserve bank, and Bank of Japan, and so on. It is certainly the most powerful financial institution in the world. Never once in it's long history has it ever had to ask for help from any government.

A definite coolness exists between the BIS and the United States. This goes back to the Bretton Woods Conference in 1944, held to set up the machinery for resuming world business after World War II. Even through this conference established the gold backed U.S. dollar as the only reserve currency, the U.S. did everything it could to torpedo the BIS and give sole power to the American sponsored International Monetary Fund. The was was notover in 1944, but the combatants still together in their efforts to defeat U.S. grab. In the final showdown, the Europeans and Japan never completely trusted the U.S.

As the years went by, the BIS suspicions were justified. The U.S. began to abuse it's reserve currency role by simply printing dollars. American companies began to buy control of businesses all over the world. In 1971, President Nixon took the dollar off the gold standard, and introduced the novel idea of floating currencies. Meanwhile, the U.S. national debt began to increase each year, until it now stands at over $5.5 trillion, an astronomic amount that can never, ever be repaid. It was clear that the U.S. was out of control.

Along about 1972, I began to spend a great deal of time and effort in studying the BIS and it's agenda. The first thing I found was that although the U.S. had turned it's back on gold, the BIS were by far the largest holder of gold, with more than a billion ounces. This amounts to an outright corner on gold.

The next thing I learned is that the BIS are extremely closed mouth. It keeps a low profile. It's favorite M/O is the sneak attack. They have their own word for this "coup." Their ideal coup is one where the victim is taken by surprise, and does not even know what hit him. The BIS tries to leave no finger-prints. Thus, their coups often become perfect crime.

The third thing I learned was that the BIS had two ironclad objectives. Both were so bold they would take your breath away:

1. To destroy the Soviet Union, as a threat to world peace.
2. To destroy the dollar as the world's reserve currency.

We all know that the Soviet Union collapsed in 1989. This was done by the BIS without firing a shot. They simply loadned large sums of money to the Soviets, and then called the loans. Just a routine castration! A simple foreclosure. This is how they got the Russian gold.

The second goal, of bringing down the dollar as reserve currency, has not yet been reached, but I believe it soon will be. This brings us to the present sting operation.

If you are going to derail the dollar and the great bull market, you better bring a pretty big check book. He new money coming into mutual funds is running about $20 billion a month. Unless you can top that kind of buying pressure, you don't have a chance. How in the world do you shoot an animal that big and powerful? In my opinion, the BIS and it's Japanese partners have come up with an ingenious answer. It is big enough to work. It goes like this:

The sting began two years ago, in August 1995, when a rash of bad loans and insider scandals brought the Japanese banks to their knees. The BIS became alarmed, and advised the Japanese to lower their loan rates to 1/1%. This created an enormous gap between the Japanese rate and the 6-1/2% U.S. rate. Into this gap poured speculators from Japan and everywhere else. The speculators would borrow yen in huge amounts. They would then sell the yen, and put the proceeds into U.S. paper thus making an enormous guaranteed return. This came to be known as the "yen - carry trade". This yen carry trade has been going on for over two tears, in virtually unlimited volume. It created a huge demand for U.S. bonds, which in turn sustained a huge and unprecedented bull market in stocks.

In similar fashion the Japanese found that they could do the same thing with gold and this became known as the "gold carry" trade. The speculators could borrow gold at 1%, sell the gold, and then invest the proceeds in U.S. paper, with a huge guaranteed return. How delightful! How delicious! But how lethal!

I say lethal this yen carry, gold carry Ponzi scheme has created a "potential short squeeze of colossal magnitude:. ( Michael Belkin, Strategic Investments, May 4 1979 ) Sooner or later, these fantastic leverage schemes must be unwound. The gold and the yen which were borrowed and sold short will have to be brought back and the bonds that were bought with borrowed money will have to be sold. The totals involved are probably well over a trillion dollars, or far beyond the mutual funds yearly take. Anything could trigger this debacle. As long as gold keeps going down or as the yen keeps going down, no problem. as long as bonds keep going up, no problem. But once gold starts to rise, or the yen starts to rise; or once bonds start to fall, these huge positions will be unwound. There would be a run for the exits, and the panic would feed on itself. Margin calls would ruin the leverage speculator in short order. There would be no way to stop the carnage. All it will take is a coup to the waterfall. we had the coup on June 24, 1997, though it was only vaguely understood at that time. The Japanese Prime Minister Ryutaro Hashimoto, told a luncheon meeting at Columbia University, "I hope the U.S. will engage in efforts and in cooperation maintain exchange stability so we will not succumb to the temptation to sell off treasury bills and switch our funds to gold".

In a matter of minutes, the NYSE collapsed, and the DOW closed down 192 points in a mini-panic. The victim's saw the trap for the first time! Then the media and Wall Street fell all over trying to control the damage, saying Hashimoto was misquoted,etc., etc. The various exchanges staged a desperate anti-gold raid, and soon had gold down to 12 year lows. The street breathed a sigh of relief and returned to it's summertime siesta.

But the damage was done. Now look at the mess that confronts the big time gamblers. we now have gold at new lows and the bonds at new highs. Surely this is a speculators dream come true-well, isn't it? No, this is the sting. The yen-carry and the gold-carry is still in place and they still have to be unwound. The temptation Hashimoto mentioned now becomes unbearable. The Japanese cannot resist the chance to sell the bonds near their highs, or the chance to buy gold near it's low. Do you imagine that the bonds will stay high or will stay low? No way! The unwinding begins to feed on itself, and the 5000 mutual funds and all their friends will be unable to do a single thing about it. That's what you mean by the sting.

I have no idea whether Mr. Hashimoto was acting on his own, or whether his words were part of a larger plan. I knnow one thing though. This gu is no innocent babe in the woods. Before he became Prime Minister, he was Japans Finance Minister. He knew the ropes. He knew the big wheels at BIS. He knew all about yen-carry and gold-carry. He was telling his people that the game was over. Remember these are friendly little folk's that gave us Pearl Harbor and the Kamikaze, when Hashimoto spoke, the thought flashed across my mind that the Japs had won World War II.

Another thought- the Japs could acquire fold in a different way. They could sell our bonds and buy the EMU, the new European currency that the BIS are sponsoring to replace the dollar. The EMU is expecting to be a package combination of gold and paper.

So there you have the anatomy of the greatest sting in history. It is real! It is in place. It cannot be stopped. It can only feed on itself and get more and more desperate as the shorts are squeezed to death. And best of all for the BIS, the finger-prints on it are not Swiss - they are Japanese. Call this "Karate Chop."

Think about this, and call me with your reactions. There is more to this story. Stay tuned.

Much Love, Dad





SteveH (7/4/99; 8:42:51MDT - Msg ID:8380)
repost
www.kitco.com
So I wonder who decides the lowest accepted bid? Now wouldn't it be a gas if the lowest accepted bid was $150/ounce. That would mean gold would immediately drop to $150/ounce and they would get their gold for the same. Seems like a perfect opportunity to do the markets work for them. Smells of price fixing to me as a knowing party could bid 25 tons at $150 and be accepted.

Date: Sun Jul 04 1999 08:38
Xavier (Found it!) ID#27240:
Copyright © 1999 Xavier/Kitco Inc. All rights reserved
( from Glen )

Date: Tue May 11 1999 16:23
glenn ( Aution!! One more time!! ) ID#423288:
Copyright © 1999 glenn/Kitco Inc. All rights reserved
I thought we went threw this 'Lowest Bidder' stuff once.
It seems that some of you still do not get it so I cut
and paste what I said on ( Fri May 07 1999 11:49 )
-----------------------------
"with all successful bidders paying a single price equal to the lowest accepted bid"

This means that they are selling 25 Tons. Not a whole lot at one time. They are
expecting bids for many different sources and if you add all the sources up the
TOTAL amount they are willing to bid for my be 100-150 Tons!
They then take the bids from the highest biders until they have sold the 25 Tons.
Then all the bidders pay the same amount for the 25 Tons.

ie....
Bid 1 - 281.20 for 10 Tons
Bid 2 - 281.50 for 5 Tons
Bid 3 - 280.10 for 8 Tons
Bid 4 - 280.90 for 10 Tons
Bid 5 - 280.80 for 10 Tons

In this case Bid 1 will get 10 tons, Bid 2 will get 5 tons and Bid 4 will get
10 Tons and all three pay 280.90 for the Gold while Bid's 3 and 5 get nothing!
It a good way of doing things.
----------------------------------------------
Now just so that you don't get lost here think about it.
If you wanted to buy 1 ( one ) Ton of Gold in this aution
( and you were aloud to do so ) then just like everyone
you would want to buy that One Ton as cheaply as you could!
Even if you think that Gold is going to $1,000,000/ounce, why
over pay. So if you want that One Ton and it was a straight
aution you would place your bid at a relitively 'Low' price
not wanting to over pay, plus you might be affraid that the
market might not be able to take all that gold and tank
( or something like that ) . But the way the Brits are doing it
there is no insentive to do that. If you really want 1 of the 25 tons
they are selling you might just place a $282 bid. Even knowing that
gold is far below that price right now you would be guarenteed your 1 ton
while knowing that you will be getting the same fair price as everyone else.
It makes for a smoother auction. Really!.



SteveH (7/4/99; 8:32:03MDT - Msg ID:8379)
repost
www.gold-eagle.com
Thanks to KIWI for the post. Perhaps someone should tell the jeweller he should get a supoena for all instances where the BOE has been the lender or last resort as a guarantor of gold loans. In other words, certainly the 'fanny mae' role by the BOE wan't done on a handshake? Get the paper.

The question would then be "What do you mean the BOE used English gold to guarantee shaky gold loans?"

This would be a scandale because what it would show is that insufficient gold existed outside the BOE reserves for the BOE to have assumed said risk. Further, if this is the true reason for the BOE sale then the English might ask, "Why has the wool been pulled over our eyes as to the REAL reason behind this divestiture of our gold?"

IF the BOE sale is to settle a debt as a 'fanny mae' lender of last resort, there must be a paper holding them to it. Where is that darn shredder?

Perhaps Mr. Rose could dig that piece of paper up, eh?

In a tight physical market (or just a commodity of limited supply) how can a hedge fund or bullion bank lease gold that is still in the ground beyond one year? This is the type of legislation that was needed to prevent just this type of alleged debacle. Of course, it goes back to the traffic light accident statistic analogy whereby so many accidents warrant a traffic light, one major accident warrants it immediately. The difference in the gold market to a traffic light statistician is that in the gold market they don't keep statistics and what is know isn't divulged.

Major Australian Newspaper Article Blasts BOE Gold Sales
(KIWI) Jul 04, 09:23

A SOUTHAMPTON jeweller is taking the Government to the High Court tomorrow in a last-ditch effort to halt the Bank of England's planned gold auctions.

Kim Rose, owner of Eclipse Jewellers, is taking the unprecedented action only hours before the first auction of 25 tonnes of Britain's gold reserves. He is accusing the Government of incompetence and irresponsibility and is seeking an injunction to prevent the sale.

"I believe the Government has handled this issue in a reckless and damaging manner. It has triggered a huge fall in the price of gold and it is irresponsible to proceed with a sale at these levels, even more so to invest some of the proceeds in the crumbling euro.

"Gordon Brown has forgotten that the gold reserves belong to the people, and he owes them a fiduciary duty to behave prudently with our reserves. I am just a small jeweller, but I feel someone should make a stand and I hope others will rally round in support."

Rose has taken legal opinion, which says he has a case. He will take senior counsel's opinion today, but hopes to persuade a judge to block the auction pending a full
hearing.

While an injunction is unlikely to succeed at this late hour, concern over the Government's handling of the sale has been growing since the announcement on May 7. This triggered an immediate fall in the gold price, which dropped from $289 to below $260 at one point, before rallying last week to $263.30. The fall has wiped $650m from the value of the UK's gold reserves.

The World Gold Council plans to submit a petition against the sale to Brown tomorrow and says it has had overwhelming public support for its campaign. Last week more than 3,000 telephone callers registered their protest, causing its computer system to crash.

Tuesday's auction is intended to be the first in a series designed to sell 415 tonnes of Britain's gold reserves over the medium term and invest 40 per cent of the proceeds in the euro. Five sales are planned this year, involving a total of 125 tonnes.

Keith Irons, spokesman for the WGC, said: "The Government has seriously damaged the jewellery business and Britain's interests. It has acted in a capricious manner and woefully under-estimated public opposition."

Rose says Britain should defend its reserves. "Our gold reserves have traditionally been the nation's nest egg, provided for over the years by generations of taxpayers.

"It is my intention to do what I can in the absence of benefactors to fight on the nation's behalf and stop this EU-inspired idea which does not stand up to scrutiny. The price slide has stalled trade across the jewellery and gold coin business and to proceed with these auctions will only make it worse. Many feel exactly as I do."

After the sales the proportion of gold in the UK's official reserves will fall from 16.7 per cent to 7 per cent, about half the proportion held by the European Central Bank and equivalent to the gold reserve proportions of Burundi and Albania. Bullion market
sources say the Bank of England is unhappy about the auction and is carrying out Brown's orders "under protest".

The Treasury's reply to criticism is that pre-announcement would enhance market transparency and expedite the selling process. But Rhona O'Connell, precious metals analyst at T Hoare Canaccord, said: "The only transparency I detect is that we can all see through the Government."

Under the "single price" mechanism for the auction, all successful bidders will receive their gold at the lowest successful price. Bids are expected from central banks and the auction has drawn inquiries from individuals. The sealed bid sale, scheduled for Tuesday, is said to be four times oversubscribed with bids at or just below the current spot price of $263.30 an ounce.



koan (07/04/99; 00:03:11MDT - Msg ID:8378)
Steve H - appreciate the Princeton URL
Someone once said: "the sophistication with which one solves a hypothesis is dependent upon how many variables one can hold in consideration at any give time." As I am not an economist I cannot fairly evaluate their analysis, but I pick out what I can, and I am always looking for a few more variables. It was fun to read.



Click Here to view yesterday's discussion.

Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.

Thursday February 9
website support: sitemaster@usagold.com
Site Map - Privacy- Disclaimer
The USAGOLD logo and stylized gold coin pile are trademarks of Michael J. Kosares.
© 1997-2012 Michael J. Kosares / USAGOLD All Rights Reserved