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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...

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ARCHIVED DISCUSSION FROM 10/6/1999
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Simply Me (10/06/99; 23:59:12MDT - Msg ID:15722)
Thank yoo, Sir FOA.
Your words of encouragement are needed now more than ever.
Many of us are "in" gold to the hilt...according to our means. And the smaller the means, the more important that small store of value is. If I read you correctly, it may, next year or soon after, mean the difference of food on the table or not.
Got children?....Got Gold?

ORO (10/06/99; 23:44:47MDT - Msg ID:15721)
SteveH - Your letter - a mechanism
FOA has, once again, portrayed the basic concept of the future he sees from his position, which you assume is a Saudi point of view. For myself, I do not know and will not venture a guess. The form of expression is appropriate to a Saudi official.
The thing most of us miss most of the time, is that the simple fact that everybody's interests, save the governing class in the US, are stacked up towards this new format for floating currencies and reserves. It puts everybody on an equal footing and opens the possibility of a level playing field for both banking and trade. It also eliminates the segnorage of the US in printing the world's medium of trade and debt settlement and has a chance of revaluing the debt of the EMs into insignificance - freeing them from the trap the US bankers sprung on them. (see Mozel post) One more issue is that the gold accumulated in Europe, Asia, and Arabia through trade, and in the US through payments for services in war is given its original weight as the representation of a whole nations' past financial achievements. (again a good Mozel point)
The US elite is very much like the elite of Johnstown before the flood, enjoying the night in a cocktail party as the engineer tells them of the near certainty of the collapse of the dam if the storm outside continues, and even if it stops. As the custodians of the dam run for their lives, having seen water coming through the cracks, the elite continue talking of the new library they will have built, the wives talking of the benefits to the poor, the husbands organizing their conspiracy to rig the bidding. Notice that even the engineer, convinced of the impending disaster and its ramifications - including the high probability of his own death - still comes to the party. (This account is partly fictional - so take no offense)
The working mechanism of the new currency system ANOTHER foresees and is involved in implementing is very straightforward, though only somewhat less fictional than what we have today. It just happens to artificially favor gold.
The manner of strengthening a currency is the main difference from the current system. Each country, and the IMF as well, strengthens its currency by bidding for gold within its borders. As the price of gold increases locally, the backing of the currency has both increased in quantity and in price - and therefore in percentage of backing. Other countries respond according to their need for a stronger or weaker currency for domestic or international political or economic purposes. Through the importation of gold, there is something gained for a net exporter. Through the import of goods, one's currency is necessarilly weakened as it is eventually used to buy gold by the exporter, strengthening their currency relative to the importer. It restores the best aspects of the gold standard in trade and in the settlement of debt, but it will enslave the countries that do not have their own gold and are net debtors. Countries that are US creditors but have no gold will be left with whatever the gold value of the $ would be relative to the Euro, SF and other major currencies.
The gold price in this system has no cap. All have a vested interest in keeping the gold price high. In the meantime, the gold miners will be taxed at incredible rates and gold holders will be picked at as the capital gains taxes on their gold sales are raised over and over. Initially, there would be a strong push to have the gold holders spend the money unhindered, to jump start a shocked economy. After the initial spring time for the gold owners, there would be the atmosphere of growing taxation of gold profits (inducing people not to spend their gold).
Monetary policy would ammount to the throwing of unbacked paper into the market, which would cause the decline of the currency and a surge of exports. The exports will garner a large chunk of gold coming in, and would either displace the currency (if gold is not bought to increase its backing) or will be used by the governmnet to support the currency.
Contrast this with the current system, where one needs to devalue the $ in order to strengthen one's currency, by throwing $ into the market and buying one's own. Thus the $ gained in trade are lost in defense of a currency in what is a sure defeat if you are a debtor nation - the US Fed/banks can invent as many $ as are necessary to borrow your own currency from your banks and dump it on the market. As you raise your interest rates, your economy grinds to a halt and as you supply more of your currency to your creditors as a result of higher interest rates, you are either more in debt, or the funds fall into the market where they eventually lower the value of your currency. If this attack on your currency was accompanied by a rush of hot money out of your financial markets, your economy would be destroyed. Your $ denominated paper would be defaulted, and your debts remain hanging arround your neck like an albatros. These will force you to sell your products and real assets at a discount to their cost and real value, in order to settle $ debt.
The US has been trapped in this way too. It is by far the largest debtor the world has ever seen, in relative size to the world economy, or in relation to its own. The list of creditors is growing as each country resolves it $ debt. Japan made it in the 70s, Germany and France in the 60s, China in 97, Korea Thailand and the Phillipines (almost) in 98 and 99. Russia, Malaysia, and Ecuador are just saying "go #$^& yourself".

I will say this. This new international monetary system too will fail in one way or another, and produce unpredictable results. It is such a new concept that I can't say with certainty how it would work in reality. I have a vague thought that gold would displace the currencies in this system, since it would be the most reliable store of value, less subject to the whims of government.

Chris Powell (10/06/99; 22:50:42MDT - Msg ID:15720)
The hedging horror unfold
http://www.egroups.com/group/gata/239.html?
Latest "Midas" commentary
from GATA Chairman Bill Murphy.

Golden Truth (10/06/99; 22:46:53MDT - Msg ID:15719)
TO F.O.A
Hello F.O.A, i must say you are like a breath of fresh morning air!
It tickles my soul to hear your thoughts again, but the best part is that i don't have to ask "when" anymore. :-)))
Thanks for not forgetting about the little guy! and we'll see you at $30,000, you bet!!!!!!!!!!
Thanks as always. G.T

SteveH (10/06/99; 22:20:05MDT - Msg ID:15718)
To a friend
Leroy,

FOA posted tonight after being gone for most of the recent gold run up. In his words are comfort and angst. Comfort from the knowledge that gold's run is just beginning, but angst from knowing that, in his opinion, paper gold products will fail or be dishonored -- truly a scary thought. In the end, FOA is a Euro person. If you will, he talks his book, and that is physical gold and Euros. Why he chooses this path, I don't know. I am fairly certain that he knows what is going on behind gold's interior and what he sees isn't pretty for the dollar or anything else dollar derived. Ignore his comments many do, but I fear that in the end he will be more right than wrong. The energy in this inkling and infant gold bull is evident to all. The power to change gold from a derided old woman to a vibrant lass at a debutant ball changed in a week, in a day. What if gold hits $500? This month? That would open some eyes and have people asking lots of questions, no? If you recall, FOA means friend of Another, and is a handle of a poster at the below site. He can be considered along with a poster called Another, the deep throat insider source to the gold industry. We believe Another is Saudi or mid-Eastern and FOA an American in Europe. They both started posting over two years ago at www.kitco.com and then when disbelievers chased them off, they were invited onto the www.usagold.com site where they appear and disappear majically and with preannouncement. Does one credit them with wisdom and knowledge the rest of us don't have? Many do. Some scorn them. But at a minimum one must know of their writings or else miss out on the biggest story of the millenium: gold's rise back into favor and a once in a lifetime revaluation of gold that FOA says could be $30,000 per ounce.

If that got your attention then visit those two web site above for further information. You will see references to the gold for oil deals and not hear that anywhere else. It seems from FOA and Another that the deal started after 1971 when President Nixon defaulted the dollar off the gold standard and allowed the dollar to stand on its own. Without a competitive currency like the Euro, this allowed the dollar to be the reserve currency of choice until January 1, 1999. Now, FOA says, there is an alternative: the Euro. In 1976, the Jamaica Accords, an IMF meeting of many countries floated gold and would appear to be the start of some gold for some oil that managed to apparently keep the price of oil down in dollars as long as cheap gold could be had by the Middle East. Of late, however, hedge funds managed to knock the price of gold below $360 per ounce that had the end result of naked shorting the gold market to a possible 14,000 tons. That is one-half of all Central Bank gold in the world (reported at 32,000 tons). In short, this is the basis of FOA's theory, first put forth by the person named Another.

No one, who is telling anyway, knows the identity of FOA or Another. But their Internet personas are picking up steam on the Internet. They represent a return to a grass roots currency backed by gold and that marks a turn away from derivatives and hedging paper and dollars. In part this is a result of European and Eastern loss of confidence in printed dollars with zero gold backing. When the IMF couldn't get funded by Congress, their ultimate proposal to accept gold in payment for debt is the first time since 1971 that gold has been monetized without a conversion to another currency. If you have picked up the significane of gold as it gains steam in all countries but the US, you begin to understand the importance of the A/FOA message. Watch the gold train. A lot of behind the scene energy is being put to bear on it from all corners of the world. So much so, that many gold mines, hedge funds, and bullion banks may or are failing as we speak and no one is yet the wiser. Gold and its importance has returned with a vengeance and we got but a small taste of that last week when gold rose from a 20-year low $85 to a high of $339 (so far).

SteveH

elevator guy (10/06/99; 22:03:51MDT - Msg ID:15717)
@Goldfly- 16 tons song ! What a riot!!!
Forgive if I'm posting in the middle of something good, cause I'm startin at the bottom of the page, and reading my way up to the newer posts, but-

That was a great song, Goldfly, based on 16 tons! Lyrics fit the music, and had good meaning. Very dramatic ending, too.

Can you write lyrics to Collective Souls' "Shine"?

YGM (10/06/99; 21:04:18MDT - Msg ID:15716)
F.O.A.
Thank You, I think! In fact this last post of yours will take much reflection and consideration. Simply put you have me temporarily thunderstruck. Regards---YGM.

Chris Powell (10/06/99; 20:21:26MDT - Msg ID:15715)
WorldNetDaily.com interviews GATA's Murphy
http://www.egroups.com/group/gata/238.html?
Manipulation message is getting across.

TEX (10/06/99; 20:20:16MDT - Msg ID:15714)
Town Crier - Three Kings - Goldspoon's COMEX

TC:
I guess the best way to describe Three Kings is "Kelly's Heros with a conscience". I have a friend that fought in Desert Storm and years ago described some of the "ground level" situations that are portrayed in the film.....things that many of us really don't know or understand to this day.
It is interesting to note that there were many opportunities for the main characters to focus on other items of physical value......in the end, GOLD (and a little moral backbone)was
the primary motivator. You are right about the difference between common thievery and noble endeavors. Interesting note about improved gold-awareness......I took my 15 year old son with me to see the film. Prior to seeing the film, he bearly (I know, pad pun)had a passing interest in my GOLD endeavors over the past few months. Now, each day on our drive to school, he pays more attention to our local "business for breakfast" radio show that gives the opening markets and gold reports. He has even started to look over my shoulder and study the evening charts. In a nutshell, yep I think it puts GOLD into a positive light and could (for a few weeks or a month) increase its overall awareness.

Goldspoon:
Second go-round is the same as the first......$332.25

FOA (10/06/99; 20:19:41MDT - Msg ID:15713)
Comment
Where gold is now going, no other investment can follow!

We have been on the gold trail for a number of days now and it's time to stop and talk. Everyone has read the USAGOLD HOF site and understands the tie in of gold and oil. Now lets look at how these factors are beginning to close in on our gold markets.

Earlier this year, when gold was just falling into the $280 range we discussed how then was the time to buy large blocks of bullion. Many large entities were taking delivery to avoid the approaching storm. It seemed that $280 had been the magic number. If gold fell below that value there was a risk that the number of paper creations, known as gold derivatives could explode in a final frenzy. Indeed, in the march to $250, the fractional nature of paper gold trading has created a massive glut of "paper gold commitments" that have no gold behind them. Prior to this $250 fall, the gold market was already bursting with derivatives. Enough so to destroy the credibility of any form of real "gold delivery". Today, those numbers are off the charts. Had the ECB and it's consortium of major Euro supporting Central Banks not stepped in to stop the madness, the gold market would have been crushed to the price floor. Long before that floor was reached, the valuations of paper gold would have begun a discount phase. Where their traded price reflected the inability of the bullion markets to supply even a tenth of the real gold that these contracts stood for. Yes, for big investors the time to take delivery was before the lions begun to fight over an ever smaller supply of gold. I thank Mr. PHinLA for posting Another's analogy about the coming "Gold Lions".

One way or another, the modern gold market of today is going to fail. Weather the trading price goes to $1,000 or falls to $10, the massive overhang of gold derivatives cannot be honoured. What physical gold that remains in private hands will be cut free by this failure and trade for a while in "street form". (see Mr. Holtzman in the HOF for a better understanding of this)

I have discussed before how the modern "fractional gold system" was used to multiply the outstanding ownership of gold while the actual physical gold stocks remained static. This allowed the price of gold to fall as this new paper covered the massive demand. Physical gold could then be
used to support fabrication and, more importantly flow in a direction that increased oil supplies. Mr. ORO has searched for a formal agreement or even numbers that account for this process. The numbers are evident as presented, yet the agreement was political in nature.

A few years ago, continued good oil flow required gold below $360. But, below that number, the asian Trader would emerge with tremendous accounts. It wasn't long after the fall below $360 that the LBMA had to make public the enormous buying of their paper commitments. Even as the
Main Central bank committed to keep gold above $280 to preserve value, it was obvious that the paper market would one day implode itself from "fractional gold" creation. The end of our markets was written the day we fell below $360. We embarked on a trail of no return.

Over the last few years the gold market developed with a two tier nature. Entities that had massive oil to supply a needing world would most certainly receive their gold in "allocated" form if they asked for it. Weather it be from private investor who exchanged their physical for holding
paper derivatives or from the vaults of Major CBs, this gold would come from somewhere, "come hell or high water". Truly, with the explosion of gold commitments outstanding today, we can now clearly see how this will unfold.

The modern financing tool we call the "gold carry trade" is now becoming the poison that will kill this market. The demands of gold lenders to return their "at risk" positions are creating an atmosphere where no amount of physical gold exists that can supply the outstanding paper claims. Great blocks of gold are now lent into the markets at 4% or greater, where once 1% was considered a good return. As each new group of lenders enter the market they are followed close behind by former lenders demanding their gold return. Fear begins to grip those who were once bullion owners as they now became paper pawns. Each new demand for "full allocation" creates yet further demands to borrow. The supply of new lenders grows smaller and smaller as the
possibility of default increases.

The ECB moved to block any further erosion of the Euroland position. Most certainly, all world gold contracts denominated in dollars would have gravitated towards Euro conversion to best advantage the EMCB gold stocks. Indeed, in a brilliant move they have blocked that escape and
doomed the dollar gold market to collapse from non delivery. The ECB can now effectively support it's gold commitments thru either bullion allocation or Euro settlement. By marking to the market their gold reserves they will contrast the advantage of a dollar gold market collapse no matter what form it takes. Weather discounting of paper gold from non delivery as derivatives are sold in mass (plunging dollar gold price) or a complete run for delivery (what we are seeing now) that leaves 95% of the market shut down and still holding paper demands ( paper gold priced in the many thousands. prior to lock up), the Euro will gain reserve backing.

Onward:

The mine defaults seen today are just the beginning. For every mine that fails it's stockholders during a $70 gold price increase, fifty will fail from a $2,000 run! Weather the bullion price reflects the "street price" or the "run for delivery paper price", the turmoil will devastate most contract strategies. Why is this happening? Modern people, be them investors, mine managers or "carry trade" operators alike have never seen a true gold market. Their perception of a gold run is where jewellery demand and 6% inflation gun the price to their historical "natural level", $500! Truly, in this world, $500 is where gold starts it's great move.

Our dollar/IMF currency operates on contract liquidity by creating paper IOU that are never called. Be they cash, bonds, CDs or stocks, they represent elevated wealth only because they are never liquidated into real things. If humanity ever decides to sell them (something they will do only if forced from fear), the value of real things quickly increases to a level much higher than the total value of such paper. It does this because, in a panic, things are held back, thereby lowering supply.

The recent (last 10+/- years) gold market has reflected it's transition into a similar paper "contract liquidity" system. This was done to enhance the credibility of the dollar in the eyes of it's trading partners. Today, the Euro system has offered a reason to test the credibility of this gold system. This "new gold market" is not as before and will run in dollar terms unlike anything anyone has ever seen. Gold is now in the process of becoming money and that pricing process will destroy most any contract ever written against gold.

In the future, no investment on earth will keep up with the real value of gold, nothing! It will run until the dollar system is destroyed and a new system takes it's place. The effects and beginning events are starting now. In the background the gold market is under stress, even as small traders make quick paper gains. When the stress breaks into full view, all traders will be "eaten alive" by the next biggest trader. And so on up the food chain. So, why trade. Already, gold bullion has done very well against shares and other metals. What ever small percentage gain one has made above this is for how much risk? I would like to see the owners of Ashanti Goldfields Co trade their paper
gains for bullion tomorrow? We have discussed this often and this is only the first good example. Yet gold has only just begun to move! No option, futures, silver, platinum or gold stock will match gold when it runs $100 a day for days on end (perhaps in a Euro marketplace).

Our road has just begun and I will walk it also. Hold a tight line as we proceed down this dangerous path. It will be a wonderful hike for everyone that can stay on the trail and understand the sights along the way.

On the road to $30,000...........thank you FOA

Nice joke PH! My wife almost killed me! (smile)

TownCrier (10/06/99; 19:54:53MDT - Msg ID:15712)
After the Close: the GOLDEN VIEW from The Tower
We'll begin with two quotes that for various reasons we thought worth passing along to stimulate your thoughts. First up...
"There is no question that with the rise in the gold price that companies such as Cambior do face potential margin calls and the decision on unwinding and how expensive it may be...Every company with a hedge book is having some very intense conversations with counterparties." --John Ing, president of Maison Placements Canada Inc (a Canadian brokerage in Toronto)

And second, from the What-Pills-Has-He-Been-Taking? Dept...
"I was actually convinced the market bottomed yesterday, then the Fed hit. Now you can put it in stone. The bottom has been put in." --Gary Kaltbaum, chief technical analyst at GSG Securities (in Orlando)

Yes, he's talkin' about the stock market folks. Join with the many voices in The Tower as we ask aloud the question that is on everyone's lip..."WHAT bottom??" Must be some kind of new-fangled "phantom bottom" because the markets are still looking top heavy at a point many thousands above the level at which Fed Chairman Greenspans proclaimed "irrational exuberance" in December 1996.

On this day that saw the DOW climb with certain exuberance 187 points to close at 10,588 points, NYSE stocks reaching new 52-week lows still outnumbered new highs by 143 to 48. With the often unnerving month of October only now freshly underway, and with the Federal Reserve now accepting a broader array of banks' debt-based collateral with which to recharge dwindling banking reserves at the approach of Y2K coupled with foreign withdrawals, we'd say calls for a stock market bottom--particularly those carved in stone--are a tad bit premature.

The bellweather bond gained 3/32 in price, dropping the yield to 6.17%. After yesterday's sharp post-FOMC announcement of a bias toward tightening, today's gain might best be described as a dead cat bounce. Traders expect the bond to be in limbo until Friday's release of the Semptember's employment report and payroll data, except for one potential stumbling block. Tomorrow the European Central Bank is scheduled to meet to decide whether a rate rise is warranted. Hawkish sentiments have been heard as recently as last week by ECB President Wim Duisenberg and board member Otmar Issing about price inflation picking up within the EMU. The impact to U.S. bonds is that as European bond yields rise, investors have a tendency to pare down their holdings of U.S. bonds, while higher rates could also strengthen the euro against other currencies, including the dollar.

In further currency news, there was strong demand for the dollar today from a US investment banks and Japanese trust banks as US asset markets surged higher. The dollar touched 16-day highs against the yen, and broke a 7 day streak of losses against the euro which had attained a 2-month high against the dollar at $1.0776. Today closed with a dollar worth �107.55 and the euro worth $1.0690.

Moving on to gold, the spot price was last quoted in NY at $324, registering no net change over yesterday's quote...after enduring 24 hours of trading that took a long path to get there. It's nice when the technical traders can work out their market corrections and retracements within a 24-hr period, isn't it? On several days since this upward movement began we've seen several spikes (mostly up, some down) that resolved themselves within the course of the day, allowing the business at hand (higher prices) to continue without substantial delay.

A couple GOLDEN VIEWS ago when the price settled down near $300 from earlier highs, we suggested that while all might appear calm on the surface, you could be certain there was a fair degree of damage assessment taking place behind the scenes. The various Reuters reports today further bore that out. One quoted Ted Arnold (whom you might remember from our report yesterday) saying, "Covering this in has, we understand, gutted several very big funds. It also savaged a number of bullion banks...One well-known bullion bank is thought to have lost between $30 million and $50 million between its world-wide book and its option writing." There was also this bit which we offered mid-day with a link to the whole, sordid story......Ghana's Ashanti Goldfields Co Ltd and mining group Lonmin Plc were both in talks with their major banking counterparties to not to push them into default by asking for margin payments. The Reuters boys summed up the situation nicely by saying "As the dust settled from the [gold] rally, market participants in the banking and mining sectors were beginning to count the cost of having been resolutely bearish on gold's prospects."

In a 10:30 am EDT report by Bridge, their reporter offered this comment following gold's brief price-correction: "Dec had been down as much as $10.8 in NYMEX Access trading, but bargain hunters and fund buying cut those losses more than half." Good grief. Doesn't the phrase "bargain hunters and fund buying" sound like what we've heard for years without end in regard to the stock markets? We'll stay with Bridge News for their wrapup on the day's events and the thoughts of those busy futures traders...

NY Precious Metals Review: Gold bounces off lows, settles unch
By Tina Petersen and Mary Powers, Bridge News
Washington--Oct 6--COMEX Dec gold futures bounced off early lows,
settling unchanged at $326 per ounce in rangebound, volatile market
conditions. Dec had been down by as much as $10.80 in NYMEX Access
trading, but afternoon bargain hunters and fund buying reversed those
losses.

Dec gold saw an expected retracement throughout most of the day on
profit-taking and producer selling after fierce gains on Tuesday brought
Dec to a 2-year high of $339 per ounce. A trader said trade and bank selling
pushed the market down in the NYMEX Access session, but fund buying, as
well as a stronger dollar versus the yen, pushed the market back up.
"We're seeing very rangebound trade in volatile technical market
conditions," said the trader. "That stands to reason when we've had a rally
up to $339. We would expect to see substantial retracement and
profit-taking and when the profit-taking began, it snowballed down to the
$316 level, which is now the new support level."

Added another trader: "[Tuesday's] rally created a vacuum, so
inevitably the market would be sold off" in the morning, said a trader.
"The trade saw an opportunity to come in and run some stops and push the
market down," he said.
The near-term picture for gold remains uncertain. While some said they
thought the market should see further profit-taking in the near term,
others said strong fundamentals should keep the market moving up to about
$330.
"There is still a great deal of uncertainty in the gold market," said
a trader. "It is going to take days or weeks before the market settles
down.
Technically, it could go either way. There is a general nervousness in the
market."
Strong fundamentals are backing the rally," a bullish trader said.
"The trend higher has not been taken out." He said that the dips in gold
prices are well supported by the buyers.

However, he said "the big question out there" is how much leases are
covered and hedges lifted and restructured. "How much of short covering
already been done is the bottom line question," he said.
Leonard Kaplan, chief bullion dealer for LFG Bullion, said the gold
market is continuing to be volatile, with anticipated producer selling. He
said gold possibly is establishing a trading range, with support at $315
and resistance at $330. He said lease rates have declined slightly from
last week, with 1-month rates at 3.82%.

[at last check, these were were latest gold lease rates (annualized, of course)
1-month 4.1680%
2-month 4.2580%
3-month 5.1630%
6-month 4.8180%
12-mnth 4.6850%...back to the report...]

Traders said they are guarded to see if other gold producers will
begin embarking on programs of hedge restructuring or buy-backs.
Canada's Cambior Inc. today reported it has hedging positions for 2.7
million ounces of gold at an average price of US $318 per ounce until
2007. As of Sep 30, Cambior said it had sold call options for 1.9 million
ounces of gold at an average price of US $315 per ounce, with a floating
lease rate swap on 648,000 ounces.

In addition, Ashanti Goldfields said Tuesday it has been left with an
obligation to pay margin calls to its gold-hedging counterparties because
of the recent huge rise in the gold price. Ashanti said it has entered an
arrangement with its hedging partners for continuing support.
[That comment about agreements with hedging partners for continuing support sounds nice and friendly, doesn't it? As reported earlier by Reuters, the situation was described as a "crisis." Meanwhile, a host of other mining companies are coming forward with plenty of fast talking about what their hedged postion has or hasn't done to their viability. Companies performed worse than the metal as the Philadelphia Stock Exchange Gold & Silver Index slid 2.5% today.]
***
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN.
---
North of the border, those guys are unflappable...or else well-informed. Canadian Finance Minister Paul Martin said today he wasn't surprised by either of last week's announcement by European central banks to cap their gold sales or by the resulting spike in gold prices. What we all wouldn't give for a look through Mr. Martin's magic glasses into the future.

Today's statistics reveal that yesterday's trading ended with COMEX open interest on all gold contracts totalling 215,041, down 6990 for the day. The December contract alone accounted for 127,203 positions in open interst.

Open interest in the October contract fell Tuesday by 376, leaving 71. This morning total delivery notices for gold issues were 27, bringing the grand total so far for October to 2,464.

Our scout returning from his visit to the COMEX vaults said to simply add Wednesday to the list and rerun yesterday's report. While these tired fingers celebrate, here it is...again. "There was no change in COMEX gold depositories both Monday and Tuesday. Inventory stands at 839,029 Registered ounces and 88,591 Eligible ounces for a total of 927,620 ounces housed within vaults at ScotiaMocatta and Republic National."

Following yesterday's post-trading release of American Petroleum Institute data showing a rise in crude stockpiles (by1.004-million-barrel last week) which was double the market's expectations, this morning's report by the U.S. Department of Energy provided a conflicting view, reporting a 400,000-barrel drop. November crude settled down 18c at $23.27.

And that's the view from here...after the close.

Tubac's ears (10/06/99; 19:36:15MDT - Msg ID:15711)
!!!!!!!!!!!!!!!SILVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Just read on kitco that Gates and WB are cornering Silver! Does anyone have a clue to the legitimacy of this claim? I've got to dig some up, but its drying up here in N. CA.
Let's hope it really does go POSTAL soon.
!!!!!!!!!!!!!!!!!GO SILVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Silver Tongue (10/06/99; 19:21:36MDT - Msg ID:15710)
Eating Crow
Yesterday my prediction was that gold would settle about 214 per ounce at the New York close. I did all right on this until New York Comex opened, then I was blown without ceremony out of the water. This is once occasion though when I don't mind being wrong at all. I do feel bad that I didn't win the gold Clinton coin going to the winner.

Journeyman (10/06/99; 19:20:24MDT - Msg ID:15709)
Prechter's DEFLATION: Does it contradict FOA/Another?
Just received the following from a good friend. ASS-U-MEing Prechter's right, how does DEFLATION fit the FOA/Another model? Or does Prechter's model CONTRADICT FOA/Another? Today's Lesson From At the Crest of the Tidal Wave by Robert Prechter, Jr. Despite a nearly unanimous opinion to the contrary, government cannot impose inflation to solve the deflation threat. Deflation in a credit economy results from a collective state of mind. It is not a mechanical phenomena, as it is to a far greater degree in currency based economies. This is particularly true in today's economy in the US. While the Fed and the government might have had some power to control interest rates temporarily in the past, they have created so much debt that they no longer control the market. The power to determine interest rates is entirely in the hands of creditors in what is now a multi-trillion dollar debt market. Because their collective state of mind is susceptible to a loss of confidence in government paper, the Fed has no choice but to tailor its actions to please them. Soon, the government will have to plead for bondowner's confidence as well, and act to keep it. Although many inflationists continue to claim that "all the government has to do is fire up the printing press," it simply cannot be done without destroying the bond market. If the government and the Fed were to collude in an attempt to inflate the money supply, that very act would panic bond investors, who would sell. Any attempted inflation would more than be offset by the disappearance of purchasing power that is currently being held in the form of bonds, notes and bills. Whatever liquidity the government tries to add to the system will come at the cost of falling prices for debt instruments, resulting in a net destruction of presumed wealth. The government, then, cannot combat deflation, which will run its course regardless of actions taken or not taken. Regards, Journeyman

RossL (10/06/99; 19:12:56MDT - Msg ID:15708)
Great cartoon
http://www.grantspub.com/toon/index.html
Hey everybody! A great cartoon. Just click on the link.

Bonedaddy (10/06/99; 18:54:30MDT - Msg ID:15707)
Peter and Goldsun, Ha!
Hoist with my own petard! I can't help but enjoy the humor. I was going on about how people don't learn form history, and as you fellows pointed out so aptly, I obviously haven't. Oh well, I hope I serve as a good example of what happens when one doesn't remember his lessons.

Journeyman (10/06/99; 18:50:55MDT - Msg ID:15706)
Small Change
In MID 15702 our Crier said a BB may have lost "$30 to $50 millon." Given the situation, that doesn't seem like all that much. What is the net worth of the average BB anyway -- and how many of them are there? Regards, Journeyman

Canuck (10/06/99; 18:01:40MDT - Msg ID:15705)
YGM
Where did you get the forward sales/hedging info?

Thanks

Canuck (10/06/99; 17:59:25MDT - Msg ID:15704)
gidsek
That is to say, I was told that FN was not a forward seller but would like to positively confirm. I believe you and my other source but confirmation eases the nerves so to speak.

Thanks again.

Canuck (10/06/99; 17:56:01MDT - Msg ID:15703)
gidsek msg: 15670
Went long on Franco-Nevada last week, are you sure about no hedging. Please confirm.

Thanks in advance.

TownCrier (10/06/99; 17:44:42MDT - Msg ID:15702)
Gold seen up to $350 in days -PruBache's Arnold
http://biz.yahoo.com/rf/991006/dv.html
Remember Ted Arnold from our GOLDEN VIEW comments yesterday? Reuters today reports more fully on Mr. Arnold's analysis that we mentioned. Mr. Arnold estimates that funds had been short 40 million ounces prior to the announcement by the European central banks, and therefore expects gold to reach $350 on technically driven fund buying in a matter of days.
Arnold says, "Covering this in has, we understand, gutted several very big funds. It also savaged a number of bullion banks...One well-known bullion bank is thought to have lost between $30 million and $50 million between its world-wide book and its option writing."

It is at this point that Arnold says "it is worth pointing out the problem of the grossly overweighted gold portfolios of the European central banks has not gone away. The moratorium is no more than a reprieve... we doubt if the ranks of the 15 will hold for a full five years."

It was yesterday's GOLDEN VIEW that called into question any modicum of substance behind that comment, especially in light of the accounting practice that now shows them to be regularly marking the value of these gold reserves to market. Mr. Arnold worries about their net ability to hold onto this gold for five years. They sure didn't arrive at this point in time with "grossly overweighted gold portfolios" by selling it throughout the many preceding years of history, now, did they? Gimme a break.

TownCrier (10/06/99; 17:19:11MDT - Msg ID:15701)
Gold firms Ashanti,Lonmin meet to stave off crises
http://biz.yahoo.com/rf/991006/ky.html
Ghana's Ashanti Goldfields Co Ltd and mining group Lonmin Plc were both in talks with their major banking counterparties to not to push them into default by asking for margin payments. The Reuters boys summed up the situation nicely by saying "As the dust settled from the [gold] rally, market participants in the banking and mining sectors were beginning to count the cost of having been resolutely bearish on gold's prospects."

Sir Tomcat a short while ago hit the nail on the head.

TownCrier (10/06/99; 16:57:12MDT - Msg ID:15700)
A blast from the recent past...CBSMarketwatch's "Wall St. Eavesdropper" from Sept. 22
http://cbs.marketwatch.com/archive/19990922/news/current/eavesdropper.htx?source=blq/yhoo&dist=yhoo
Gold gets some respect

"Gold bugs rejoice! While the "mainstream" media points to the Bank of England's gold auction as the cause for Tuesday's sudden jump in gold prices, MarketMaven's Michael Kosares prefers to focus on the attendees. One heavy bidder was South African-based Gold Fields (GOLD: news, msgs), buying half of the 25 tons offered. Its chairman, Chris Thompson said he would have bought more if he could and that he plans to attend future BOE auctions, adding that it was time for gold producers to start "supporting their industry." Also in attendance was fellow South African producer AngloGold (AU: news, msgs).
"The action of two of the world's top mining companies serves as a warning shot across the bow of those who short the market," writes Kosares. The most positive news for gold investors is that while stock bourses around the world plummeted, gold rallied strongly. London gold popped up as much as $9.40 to at $264 before settling back to $262.60 at Tuesday's close. Gold's luster also shined brightly in New York and Asia."

This was also found while looking for news. MK, everyone in this Tower outpost is impressed that you are such a towering figure in the gold scene. (Replay a scene from Wayne's World..."We're not worthy!")

To anyone following along with the woes of the mining companies coming to terms with their upside-down hedge books, Gold Fields Ltd here is not to be confused with Ashanti Gamblingfields, er, we mean Ashanti Goldfields Ltd, which was hedged to the hilt and suddenly finding themselves to be the weak-side counterparty. While Ashanti's stock took a dip today, Gold Fields ended up. Hope this clears any confusion from their similar names.

Goldspoon (10/06/99; 16:48:51MDT - Msg ID:15699)
***Tomcat's aceptance speach sets a new rule***
All future winners of the ORICAL award must bestow upon us their flash of wisdom and intelegance by the fine example of Sir Tomcat.......

Just wondering.... ORICAL...ORIFACE...ORAL..."aceptance speach".....root word connection?? anybody?? OR?

JCS (10/06/99; 16:47:16MDT - Msg ID:15698)
Hedge books
Skip,
Thanks for info.
Any idea on DROOY. Looked all over and can't find a thing.

Golden Truth (10/06/99; 16:44:27MDT - Msg ID:15697)
GOLD UP $4.00
Here we go again!! YAHOO!!!!!!!!!!!!!!!!!!!!!!!!!!!

flierdude (10/06/99; 16:26:00MDT - Msg ID:15696)
Comex close October 7, 1999
Goldspun Were on the next leg up so I'll say $338.00 Comex close.

Mike

Tomcat (10/06/99; 16:21:05MDT - Msg ID:15695)
Acceptance Speech

Ladies and Knights of the Roundtable. It is my honor this evening to accept from Sir Goldspoon the prize of being The Oracle of the Day.

As I understand it, an oracle is a person who is respected for his wise council and accurate predictions. With that in mind I would like to council every member to keep getting all the physical gold you.

My prediction is that the POG will continue to rise and fall in increasing volatility which will give the shorts opportunities to buy in the dips. This will be disheartening to many but the fearless members of the honorable table will make it through the storm. Indeed, you will come out way ahead after the POG resumes its climb to the stars.

In the tradition of all prize winners who have gone before me, I would like to thank a very important person in my life; my son Eric. "Thanks son, I love you. Dad".

RossL (10/06/99; 16:13:43MDT - Msg ID:15694)
TC - futures delivery
"First notice of delivery" doesn't really mean anything other than a friendly call from your broker to remind you that your contract is coming due soon.

I can force delivery on a futures contract by holding it until expiration. Lets say I went long in July on an Oct gold contract at 260. If I hold it through expiration, the next day afterwards my account will be debited $26000 and I will be given a warehouse receipt for the 100 ounces of gold. The short will be credited $26000 and must surrender the title to the gold he is required to have in one of the approved warehouses.

A short can get out of his obligation any time (while the market is still liquid) by going long to cancel out his obligation. (and vice versa) In the last few days or hours, most of the speculators will have exited their positions. Whoever is caught short may not be able to exit their position. He may only hope that one of the longs decides he doesn't want delivery and sells before the close. The price may go WAYYYY UP. Otherwise he will have to buy on the spot market if he doesn't have any gold.

http://charts.quotewatch.com/charts/futures/COMEX/GCV9-intraday.html

I just checked this page and found out that there are 316 Oct gold contracts open with 117 volume yesterday. This is not very liquid, but, at the moment, it looks like there is enough eligible gold in the warehouse to cover. The big squeeze could come in December. Thousands of shorts could be skinned and dried!

Goldspoon (10/06/99; 16:13:06MDT - Msg ID:15693)
**Kitco Posters***
Hope ya'll didn't take offence to Goldspoons challenge yesterday....just havin' some funnnnn..... thats all...

CoBra(too) (10/06/99; 15:52:20MDT - Msg ID:15692)
StH-no criticism intended - yahooo -to you too - and no Dot.Coms ...
and thank you for your ongoing great input - invaluable- brother in arms pro gold and monetary truth (no truce to colluders) - BC2

TownCrier (10/06/99; 15:49:56MDT - Msg ID:15691)
Interesting!
http://tfc.com/syndication/TFC/GoldReport.html?G=GoldReport
While wandering around rooting out news this was found. It would seem our good host's words are widely distributed, even outside of USAGOLD-land. Cool. You learn something new every day!

Skip (10/06/99; 15:49:19MDT - Msg ID:15690)
@JCS (Msg ID:15683 re: Hedgebooks)
http://www.harmony.co.za/news/press/a4oct99.htm
Check the link (www.harmony.co.za/news/press/a4oct99.htm) to read about HGMCY being totally unhedged. This bodes VERY well for Harmony's stockholders!!!

--Skip

Goldspoon (10/06/99; 15:46:58MDT - Msg ID:15689)
****Comex Close Unofical Winner!!!*******
By my figgers (ya i know it's speled "figures" but its pernounced figgers) Todays Market Maven.... "USAGOLD ORICAL of the Day" is that man on the prowel...loved by many...... known by few (thousands)...(OK,OK im' gettin there)...My ole buddy...TOMCAT!!! lets here it for Tomcat!!!! Meow, Meow, er i mean HORRAY!!!!

My guess for tomorrow... is the one i had for today... $343.73..my mama said... i was a day early and one card short of a full deck....i've always wondered zackly what that meant...

****Get your Guesses in for tomorrows.. Greatest Game on Earth!!**
What? Why?..cause i said so...

Goldfly er ahh.. not to be insultin' nor nuthin' like that...but uhh...you from Tennessee too??? GO VOLS!!

Platinum laid down on me...but did you see that move he made around noon today ...er... just before gold took off..what?? don't beleive me??? well look at the charts yourself its there.....
Where's Koan????
FOA, its not nice.. not to speak to ole Goldspoon once in a while.....you're there... Goldspoon's bones knows it...i pull the Comex Close price out of the air...but i can feel your presence with my bones....still love ya man.....

YGM (10/06/99; 15:41:09MDT - Msg ID:15688)
Tomcat
Sounds like a very feasible "Part" of the bigger picture. In fact I do believe Another has alluded to this similar type of scenario.---YGM.

Tomcat (10/6/99; 15:29:37MDT - Msg ID:15687)
Something is beginning to smell

It is beginning to look like more mining companies might be in trouble (due to shorting, forward sales, and call writing) than was earlier estimated. If this turns out to be true, then someone is going to have to come in a rescue these bankrupt mines at firesale prices.

Now these mines didn't just jump into their hedged positions. They were urged to do so by their bankers to keep their good credit.

When the smoke clears, who is going to end up with the ownership of these mines and the gold? After these mines are rescued, will the POG then start to rise even higher still?

Perhaps I am a bit skeptical because I came from the streets. But for the benefit of those who grew up honestly, let me tell you how an old street hand would have set this up.

1. As a banker, with mining clients, I would get the mining management replaced with super ambitious greed filled CEOs.
2. I would then train them in how they could get rich with by selling short, writing calls, and selling forward. They would be convinced they had made it to heaven.
3. I would find greedy counter-parties to back the deals.
4. When the POG went up (Oh gosh, what a tragic surprise) I would be there to help the CEOs quit their jobs before they were tarred and feathered. The absent CEOs would then be the scapegoat.
4. I would then be there to save the stokholders from further losses by taking over the mines at a firesale prices. Yes, I would be their hero.

In street parlance, my freinds, this is called a sting. In the end you walk away with someones money and he thanks you for rescuing him.

SteveH (10/6/99; 15:28:16MDT - Msg ID:15686)
Cobra(too)
Criticims absorbed. Thanks.

Did you see? Gold (dec.) is up $2.5 in overseas trading. Yahoooooooooo!

TownCrier (10/6/99; 15:27:15MDT - Msg ID:15685)
Canadian miner Cambior hurt by gold hedge concerns
http://biz.yahoo.com/rf/991006/s6.html
"Every company with a hedge book is having some very intense conversations with counterparties." --John Ing, president of Maison Placements Canada Inc (a Canadian brokerage in Toronto)

In addition to Cambior Inc., the hedging woes of Ghana's Ashanti Goldfields Co Ltd. are discussed.

A mining company seems akin to the US Treasury...just because they "make" the money (being the source) doesn't mean they are worth all that they produce, nor does it ensure that they are a profitable enterprise at the end of the day.

CoBra(too) (10/6/99; 15:26:30MDT - Msg ID:15684)
@StH - sorry for rubbing it in again...
... or some poor soul may have acted on my post re ABX/PDG.
PDG - up 45cts ABX down 1.25 and all other majors down too.

Coincidence, I guess?? G'night CB2

JCS (10/6/99; 15:22:33MDT - Msg ID:15683)
Hedge Books
Anyone know the hedge book positions of
DROOY (DURBAN DEEP)
HMGCY (HARMONY GOLD)
Or where I can find them if you don't know the numbers.
Thanks

CoBra(too) (10/6/99; 15:09:50MDT - Msg ID:15682)
CM - I' pretty unmusical (for a Viennese -that is) but I''m at the age....
of remembering the great sound of s.i.x.t.e.e.n t.o.n.s, in the late 60's. Good stuff-made my day and won't get the tune out of my head for some time - G(ee) S(h)ucks!
see ya later ...

YGM (10/6/99; 14:55:11MDT - Msg ID:15681)
Goldfly
Your tune will see many wks of #1 on the charts. May even go Gold or Platinum. Excellently done & Hilarious. Thanks for sharing it------YGM.

TownCrier (10/6/99; 14:45:20MDT - Msg ID:15680)
Tea leaves
http://biz.yahoo.com/rf/991006/s9.html
Dollar holds ground vs yen, rises against euro

Leigh (10/6/99; 14:39:20MDT - Msg ID:15679)
Cavan Man
Are you prone to seasickness, Cavan?

Cavan Man (10/6/99; 14:34:38MDT - Msg ID:15678)
peter asher
Peter-Hope I didn't sound too "green" in that last post.

Cavan Man (10/6/99; 14:33:27MDT - Msg ID:15677)
Dear FOA
I am told the good ship GOLD is preparing to make sail for a new port. While you were away on ship's leave, the captain and crew have been quite busy preparing for the voyage. Is it time now to set the rigging and hoist the mainsail? Will we be in open water soon? What say ye good Sir Knight?

Cead Mile Failte (back).....CM

AEL (10/6/99; 14:22:07MDT - Msg ID:15676)
phaedrus
I mean the sudden freezing/seizing-up of comex and other markets, accompanied (perhaps) by a prolonged and messy settlement period during which physical metal becomes entirely unavailable, and during which the dollar does indeed lose considerable value generally, but especially against physical metal. I may finally get my check for $3000, but it might only buy a half ounce (rather than 10 ounces) -- that is, if it can buy any at all!

Yes, comex did not shut down in 1980, but the probable (no way to verify for sure) underlying fundamentals make for a potentially explosive, unprecedented situation today, versus then. We shall see. I might be completely wrong. It is a hunch, based mostly on what I have read here (and elsewhere, a bit).

Meanwhile I am having fun with my call. May even buy another! Better than the lottery.

AEL (10/6/99; 14:21:34MDT - Msg ID:15675)
phaedrus
I mean the sudden freezing/seizing-up of comex and other markets, accompanied (perhaps) by a prolonged and messy settlement period during which physical metal becomes entirely unavailable, and during which the dollar does indeed lose considerable value generally, but especially against physical metal. I may finally get my check for $3000, but it might only buy a half ounce (rather than 10 ounces) -- that is, if it can buy any at all!

Yes, comex did not shut down in 1980, but the probable (no way to verify for sure) underlying fundamentals make for a potentially explosive, unprecedented situation today, versus then. We shall see. I might be completely wrong. It is a hunch, based mostly on what I have read here (and elsewhere, a bit).

Goldfly (10/6/99; 14:09:22MDT - Msg ID:15674)
Farfel- this one's for you!
Angel, I hope you like it too. This should really need no introduction, except�. Respects to Tennessee Ernie Ford. The man who said:

"You have to remember, success is in the eye of the beholder."

16 Tons

Let me tell you the story why my name is mud
I worked a hustle in somebody's blood
Fleecing investors and doing wrong
With a line that's a-weak, I'm Martin Armstrong

(Refrain)
You short sixteen tons, what do you get?
Another day order and somebody's debt
BOE don't you call me 'cause I can't cover
I sold your gold down at the COMEX floor

If you see me comin', better run and hide
A lotta men didn't, and their assets are fried
Bars of iron, and vaults of steel
If the Feds don't a-get you, then GATA sure will

(Refrain)

I was bored one morning - I said "gold it don't shine"
Picked up a ledger and I added some lines
Shorted 16 tons of pure refined Gold
And the Vault Clerk said "well a-bless my soul"

(Refrain)

I had a racket but it's down the drain
Leasin' and shortin' is the name of my game
Ran a gold carry with a with the bonds a-buyin'
Can't a-make the margin with my credit line

You short sixteen tons, what do you get?
Another day order and somebody's debt
BOE don't you call me 'cause I can't cover
I sold your gold down at the COMEX floor

I SOOLLLD your GoOoOollllld down at the COMEX floor

Got requests? . goldfly-mania@juno.com

YGM (10/6/99; 14:08:12MDT - Msg ID:15673)
Cobra(too)
Thanks--- Seems like every where you look we get different sets of numbers, right down to the so-called real time quotes. Does anybody really know? I suspect w/ the OTC markets they don't and all may be much worse than we suspect. Like I say the three most used words in the near term will be "Gold/Default & Denial" IMHO--YGM.

YGM (10/6/99; 14:02:47MDT - Msg ID:15672)
Oh well I tried---I'm sure you can figure out the first three!
I'll learn how to use this thing someday -Sorry ---YGM

CoBra(too) (10/6/99; 14:01:43MDT - Msg ID:15671)
Hi there YGM -
Seems like Ashanti defaulted on a Goldman "Sucks" margin call for $400 million on hedge of 10 moz (10 y's production)
-it'll catch up to GS as well when NY Fed runs out of physical - good to see you back for the mayhem! best CB2

gidsek (10/6/99; 13:59:26MDT - Msg ID:15670)
Hedge Positions
Franco Nevada 0% zip.. nada.. :)

gidsek

YGM (10/6/99; 13:57:48MDT - Msg ID:15669)
Hedge Book Figures --According to Tim Hoares' Roger Chaplin
Wed Oct 6 /99 Total Hedge Book Positions-----------------------
Company - Approx % of 1999 prod - Equiv. Yrs Prod'n
Anglogold - 77 1.6
Newmont - 35 0.7
Goldfields - 20 0.3
Barrick -----------------------100-------------------------------- 3.1
Placer Dome-----------------------45-----------------------------------3.0
Rio Tinto ------------------------0-------------------------------------0
Homestake -----------------------20------------------------------------0.2
FCX ------------------------0--------------------------------------0
Ashanti ------------------------61------------------------------------7.4
Normandy ------------------------13-----------------------------------2.5

YGM (10/6/99; 13:52:46MDT - Msg ID:15668)
Hedge Book Figures --According to Tim Hoares' Roger Chaplin
Wed Oct 6 /99 Total Hedge Book Positions-----------------------
Company - Approx % of 1999 prod - Equiv. Yrs Prod'n
Anglogold - 77 1.6
Newmont - 35 0.7
Goldfields - 20 0.3
Barrick - 100 3.1
Placer Dome- 45 3.0
Rio Tinto - 0 0
Homestake - 20 0.2
FCX - 0 0
Ashanti - 61 7.4
Normandy - 13 2.5

Leigh (10/6/99; 13:41:20MDT - Msg ID:15667)
Yellin' of Troy
Dear Yellin': I'm afraid Goldspoon's horse is a platinum one, not palladium. It's my fault; I thought he was palladium, and I said that a couple of time. So you were inadvertently given the wrong idea. I apologize.

Why are you called Yellin' of Troy. Do you yell a lot?

TownCrier (10/6/99; 13:39:56MDT - Msg ID:15666)
Sir Tex and "Three Kings"
In your post yesterday (10/05/99; 23:17:13MDT - Msg ID:15617) you concluded with the comment, "Last but not least.......Three Kings, see it."

Do you agree with The Tower's review of the movie yesterday in our post: TownCrier (10/05/99; 21:34:55MDT - Msg ID:15586)?

Do you (or anybody else that has already enjoyed Three Kings) have any comments on what impression this movie may make on the viewing public in regard to gold and freedom, etc.? Please don't reveal anything that might spoil the drama for those who have not yet seen it.

Yellin' of troy (10/6/99; 13:37:19MDT - Msg ID:15665)
name for goldspoon's palladium horse
I suggest naming the nameless horse Gold Fusion (alluding to
palladium's moment of notoriety)--or does that sound too
skeptical and pessimistic?

phaedrus (10/6/99; 13:29:35MDT - Msg ID:15664)
@AEL re 330 calls
I've got a boatload of those calls too.

What do you mean, you "expect" to lose on your calls? Do you expect the dollar to become completely worthless, or the Comex to go out of business, or what? Their doors didn't close when gold went to $800 before, so why should they now?

TownCrier (10/6/99; 13:26:23MDT - Msg ID:15663)
Playing Matchmaker
Sir HopeingII (10/05/99; 22:41:13MDT - Msg ID:15610) asked a question yesterday summarized "When "delivery intention" is given, can it be changed?"

Sir RossL (10/6/99; 5:54:56MDT - Msg ID:15634) was good enough to provide an answer summarized "First notice of delivery on a COMEX future is not binding."

No one in The Tower is actively engaged in gold derivative trading, so specifics on COMEX "rules of engagement" are always gladly deferred to any among the Round Table that might know the details of any inquiry such as this.

Sir RossL, if you are in a position to do so, it might be helpful to Sir HopeingII (and probably many others--Tower included) if you could elaborate on the point at which these delivery intentions do become "binding" if not so upon First Notice. Are there stats available somewhere, as with "COMEX Delivery Intentions," that track the total of reneged delivery intentions? Our impression was that any action could essentially be undone, but at whatever cost was associated with taking a position in another contract with which to facilitate the undoing.

Thanks to both of you, and everyone else, for the continuing input.

PH in LA (10/6/99; 13:07:57MDT - Msg ID:15662)
Ashanti
On Kitco someone is reporting that CNBC has just reported that Ashanti has announced that it will default on its hedge position. Search of Reuters reveals that on Sept. 30th they had announced an 80% successfull unwinding of their overall hedge position. Go figure!

Thursday September 30, 6:34 am Eastern Time

FOCUS-Ashanti scampers to close its gold hedges

By Patrick Chalmers

LONDON, Sept 30 (Reuters) - Ghanaian producer Ashanti Goldfields Co Ltd said on Thursday it closed most of
its 11 million ounce hedge book this week as gold prices soared.

The move, planned for several weeks, unwound 80 percent of the miner's gold hedge book, equivalent to nine million
ounces.

``A very significant amount of this has been done in the last three days,'' Chief Financial Officer Mark Keatley told
Reuters by telephone from Ghana.

Gold has surged from the $250s per ounce in the last 10 days, boosted first by heavy bidding at Britain's 25-tonne reserve gold auction on September 21 and
then taking off from $270.00 after Sunday's pledge by European central banks to curb reserves sales, gold lending and derivatives activity.

Gold spot and forwards saw frenzied activity through into Wednesday, with spot prices spiking to two-year peaks in the high $320s while one-month lease rates
stretched to 10 percent.

``We were not buying at $327.00. We were not buying anywhere remotely near those prices. On Monday and Tuesday morning the price was in the $280s,''
Keatley said in reply to questions about when hedge positions were covered.

Wednesday's lease rate moves, which pushed the market into backwardation, meaning spot prices exceeded those for futures, were evidence of a bullion market
gasping for liquidity.

Forward hedged miners with floating lease rate contracts, as opposed to fixed rate ones, were particularly exposed to the higher rates, an issue Ashanti addressed
in its news release.

LEASE EXPOSURE

``The company had already, before the rally, eliminated any exposure to floating lease rates during the rest of 1999 and the first quarter of 2000,'' Ashanti said in
the statement.

Gold miners use a variety of hedging strategies to protect themselves from falling gold prices, including both buying and writing options and executing forward
sales.

The significance of choosing a floating lease rate versus a fixed one is that miners on the former can boost profits on forward sales if the difference between gold
lease rates and, normally higher, inter-bank money rates increases.

Such tactics had been a reasonable bet before last May, when Britain's announcement of a 415 tonne reserve sale sparked a 10 percent gold price fall and
increased lease rates.

With lease rates at the levels seen this week, floating rate hedges would be distinctly hazardous, with exposed mines or short funds facing rates five percentage
points above money rates.

``I am very concerned that we are going to see some casualties,'' Jessica Cross of Virtual Metals Research and Consulting said on Wednesday in reference to
those miners overly reliant on gold derivatives.

SUCCESS IN TANZANIA

Ashanti also announced a successful drilling campaign at its Geita project in Tanzania, which it said had boosted resources by 20 percent.

The company was revising the Geita mine plan to lift gold production to 500,000 ounces per year at a cash operating cost below $180 per ounce, it said in the
statement.

The Ghanaian miner repeated its mid-September report that overall production and costs for the second half of 1999 would be broadly in line with the mid-year
forecast of 800,000 ounces at a cash operating cost of $214 per ounce.

AEL (10/6/99; 12:56:29MDT - Msg ID:15661)
phaedrus
I'm happy with my little june 2000 330 gold call, too... bought for $100 (play money), worth upwards of $1500 now. But it is just play money, which I EXPECT to lose. The nuclear blast could occur at any moment. Meanwhile, have fun, but don't bank on it.

phaedrus (10/6/99; 12:49:36MDT - Msg ID:15660)
December Comex Gold finishes Unchanged
Settled at $326, unchanged. Not bad for starting out almost ten bucks down.

Us paper traders are doing just fine, by the way: gold options currently up in the neighborhood of 2000%.

Gandalf the White (10/6/99; 12:30:46MDT - Msg ID:15659)
Sir Elevator Man's other Question
OH INDEED the COMEX did stay open and sold Gold like no end!!! That was the time that the floor Traders were in heaven. -- IF & WHEN the COMEX does come under presure, expect to see a number of rules changes BEFORE the demise of the trading efforts. -- AFTER all fails, THEN we shall see FOA's "freeze" !! Good luck to all you paper traders. Got PHYSICAL ?
<;-)

TownCrier (10/6/99; 12:13:12MDT - Msg ID:15658)
Canada's Martin pleased, not surprised by gold price rise
Mont-Tremblant, Quebec--Oct 6--Canadian Finance Minister Paul Martin
said today that he was not surprised by last week's announcement by
European central banks to cap their gold sales. Martin added that the
resulting spike in gold prices also came as no surprise, but said it will
have spin-off benefits for Canada's economy.

Asked if the central banks' statement had surprised him, Martin said
"not really. I think it was a welcome move by the European central banks."
"We're a major gold producer and obviously, anything that increases
the price of gold is going to be beneficial, especially to an awful lot of
communities in Northern Canada," he added.
Martin's comments come, ironically, just 1 day after Canada announced
it had further decreased its own gold reserves by 136,000 ounces in
September, bringing Canada's dwindling gold reserves to just 1.8 million
ounces.
By Paul Badertscher, Bridge News
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN.

CoBra(too) (10/6/99; 12:00:08MDT - Msg ID:15657)
repost to Steve H.
StH re PDG - even knowing that you're an advocate of pure physical, sound money - please let me follow up on my former post.
PDG - hedge position 4,5 moz = 1,5 y's of production vs 13,5 moz ABX 4-5 y's. Agreed too much at prrices over 350 -400, but actual cost of production favors PDG - if need be.
Conclusion - if gold miners survive it would be the juniors coming close to prefeasibility on major new deposits - as I can't see confiscatory taxation or anything else to that effect (without revolt(ing)s) on a global basis for the "right to min(t)e real money!
CB2

jaydeevee (10/6/99; 11:54:13MDT - Msg ID:15656)
Kitco graphs gone haywire again?
http://www.usagold.com
What is the gold price now?

jaydeevee (10/6/99; 11:50:06MDT - Msg ID:15655)
Gold seems down $7 in a vertical drop
http://www.usagold.com
Any clues anyone?

USAGOLD (10/6/99; 11:31:28MDT - Msg ID:15654)
Cambior on Ropes?
Gold was down significantly early and is now way up.

Here's why:

The Canadian producer Cambior appears to have sold forward and/or written calls on substantially more gold than they have produced for 1999 and will produce over the next three years, according to a Reuters release issued from Canadian Corporate News.

Cambior for 1999 has written calls on 921,000 ounces of gold at $287. Their 1999 production is estimated by president Louis P. Gignac at 630,000 ounces of gold. In addition they have sold forward another 159,000 ounces at $335 avg price.

In other words, they appear they may be over-extended especially if prices continue to rise.

For the year 2000 they have sold forwarded 642,000 ounces at $298 with another 299,000 ounces sold as calls at $323.

For 2001, 642,000 ounces forwarded at $292 with another 382,000 ounces sold as calls at $352.

Lastly for 2002 they have forwards of 597,000 ounces at $292 and 303,000 ounces of calls at $348.

So this appears to be an incredible gamble with stockholder's money. Most analysts in the gold business consider it imprudent to sell forward or write calls on more than you produce on an annual basis. As one of my associates, how could the lender's mentioned below let them get in this deep?? Incredible.

The report goes on to say that "the counterparties to these hedging operations consist of international banks and financial insitutions, principally lenders in the revolving credit facility. In the context of the rapid rise of the gold price, Cambior has been managing its hedge positions and will continue to monitor the situation. Cambior will pursue discussions with such financial institutions concerning the management of this situation."

I should think they would.

Cambior stock went from $4.74 early in the day to $3.04 now and dropping like a rock. Gold is now up $1.50.

The problem here is not just what happens to Cambior but that this could be going on all over the gold mining industry. This situation follows on the heels of the Ashanti situation which in itself is tenuous. Ashanti borrowed money from its market maker to meet a margin call. People don't understand the import of an event like that. That would be like you getting a margin call from your commodities broker. You say "Sorry, I don't have any money." He responds, "Don't worry about it, I'll lend you the money so neither one of us goes under on this deal, since I don't have enough on deposit." Ashanti does have huge gold reserves so this could translate to simply a liquidity crisis rather than an asset crisis. Ashanti stock is down 65% in two days.

So it goes.

Hard metal in your hand -- the only true safety.

I have to say on this Cambior thing that I could be misinterpreting events, but others must see it the same way given the action in both the gold market and Cambior stock.

We don't know if there's any gold loans associated with this but usually there is when forwards are in place.

Gold Dancer (10/6/99; 11:07:28MDT - Msg ID:15653)
PH in LA
What a great joke! I am in the process of upgrading girlfriend 1.0 to wife 1.0. I just became engaged this weekend to the woman I adore and this really made me laugh. I am sure she will also. Thanks.

Gold Dancer

elevator guy (10/6/99; 10:40:35MDT - Msg ID:15652)
@Gandalf the White
Thanks for your perspective! And do you remember if the COMEX stayed open? What I am getting at here, is an FOA/Another scenario of market shut down. Don't wanna be left holding paper. Just trying to time it right, and not get burned.

elevator guy (10/6/99; 10:31:49MDT - Msg ID:15651)
Wife 1.0
Funny you should mention this program! I'm having trouble with the data from my system, as it is often unitelligible. Its hard to tell if there is a critical fault with the hardware, or if there is just lost file fragments jamming up the works.

Also- it appears impossible to run Disk Defragmenter, or scan disk.

Control-alt-delete has no effect. Guess I'll wait and see if the system re-stabilizes itself.

Thats too funny, PH!

PH in LA (10/6/99; 10:17:24MDT - Msg ID:15650)
Joke of the Day
Subject: Wife 1.0, Tech Support Request

Last year I upgraded Girlfriend 1.0 to Wife 1.0 and noticed that the new program began unexpected child processing that took up a lot of space and valuable resources. No mention of this phenomenon was included in the product brochure. In addition, Wife 1.0 installs itself into all other programs and launches during system initialization where it monitors all other system activity. Applications such as Pokernight 10.3 and Beerbash 2.5 no longer run, crashing the system whenever selected.

I can not seem to purge Wife 1.0 from my system. I am thinking about going back to Girlfriend 1.0 but un-install does not work on this program. Can you help me?

Jonathan Powell

Dear Jonathan Powell-
This is a very common problem men complain about but is mostly due to a primary misconception. Many people upgrade from Girlfriend 1.0 to Wife 1.0 with the idea that Wife 1.0 is merely a "UTILITIES & ENTERTAINMENT" program.

Wife 1.0 is an OPERATING SYSTEM and designed by its creator to run everything. WARNING DO NOT TRY TO un-install, delete, or purge the program from the system once installed. Trying to un-install Wife 1.0 can be disastrous. Doing so may destroy your hard and/or floppy drive. Trying to un-install or remove Wife 1.0 will destroy valuable system resources. You can not go back to Girlfriend 1.0 because Wife 1.0 is not designed to do this.

Some have tried to install Girlfriend 2.0 or Wife 2.0 but end up with more problems than the original system. Look in your manual under ----Warnings-Alimony/Child Support.

Others have tried to run Girlfriend 1.0 in the background, while Wife 1.0 is running. Eventually Wife 1.0 detects Girlfriend 1.0 and a system conflict occurs, this can lead to a non- recoverable system crash. Some users have tried to download similar products such as Fling and 1NiteStand. Often their systems have become infected with a virus. I recommend you keep Wife 1.0 And just deal with the situation.

Having Wife 1.0 installed myself, I might also suggest you read the entire section regarding General Protection Faults (GPFs). You must assume all responsibility for faults and problems that might occur. The best course of action will be to push the apologize button then the reset button as soon as lock-up occurs. The system will run smooth as long as you take the blame for all GPFs. Wife 1.0 is a great program, but is very high maintenance.

Suggestions for improved operation of Wife 1.0
-Monthly use of utilities such as TLC and FTD
-Frequently use Communicator 5.0

-Tech Support

PH in LA (10/6/99; 9:58:10MDT - Msg ID:15649)
Recollections of 1980
Gandalf:

Just at the moment when gold was at �$800/oz, someone hired one of those skywriting airplanes on a hot summer Sunday to write: "Gold--Best Investment" in the skies over Los Angeles. At that moment I knew that someone was desperate to unload (distribute) a large amount of gold to the general public. Sure enough... very shortly thereafter the price had fallen dramatically, and Mr. and Mrs. Joe Sixpack had been fleeced again.

The Scot (10/6/99; 9:44:17MDT - Msg ID:15648)
Live Gold or Dead Presidents......Your Choice
How about the above for a bumpersticker, do you think
Joe Sixpack would understand????
The Scot

nugget101 (10/6/99; 9:38:58MDT - Msg ID:15647)
Bill Murphy interview
Bill Murphy (GATA) was on Jeff Rense's show of 10/05 (www.sightings.com).
Check it out if you can.

Jon (10/6/99; 9:35:42MDT - Msg ID:15646)
Volume of shorts
Today's USAGold report quotes an analyst who said the shorts have mostly covered. If that is the case, why isn't POG substantially higher? Could it be that quantity of shorts was greatly overstated? Or perhaps, much of the short position is still open? Comments please. Thanks

Gandalf the White (10/6/99; 9:31:09MDT - Msg ID:15645)
Sir Elevator Guy's Question
Re: COMEX in the 79-80 era. IF you will allow me to setforth my recollection of the $800+. gold spike, -- (BUT remember that I am old and senile! )--- IT was not the same as now !! -- The gold market was greatly influenced by the silver market where the Hunt Bro's were attempting to corner the market and did until they COMEX changed the rules and the Hunts wished to try and sell some of the paper that they had collected. -- The gold market was pushed by "Joe SixPac" and everyone had a gold chain around either their neck (Male) or their waist or ankle (Female)!!
-- This 80's market was like the forthcoming end of this present market projected at about 2005 when ALL the public finally figures out that the best thing to have in your pocket is a GOLD coin rather than the paper with the dead Presidents (and others) pictures on it. --- CONCLUSION -- History will repeat again, but in a far more dramatic way.
<;-)

TownCrier (10/6/99; 9:26:32MDT - Msg ID:15644)
BOJ's Yamaguchi to attend Paris central bank talks
http://biz.yahoo.com/rf/991005/bfy.html
On October 7-9, Bank of Japan Deputy Governor Yutaka Yamaguchi will attend a financial conference hosted by the French central bank. So soon after the gathering of the G7 and IMF, we wonder what's up.

TownCrier (10/6/99; 9:20:15MDT - Msg ID:15643)
Fed adds $4.011 billion in banking reserves; 1st day broader collateral use
http://biz.yahoo.com/rf/991006/jy.html
The Fed debuts its "tri-party" settlement operations developed ostensibly as a Y2K contingency plan. Between this operation (whereby the Fed essentially monetizes a broader array of debt-based collateral) and the Japanese proposal described moments ago, we'll all be hip deep in cash soon. Suggest you act accordingly and get some gold platform shoes...or maybe gold stilts.

TownCrier (10/6/99; 9:00:52MDT - Msg ID:15642)
BOJ mulls controversial new operation
http://biz.yahoo.com/rf/991006/ga.html
The yen has risen about 15% against the dollar since June. the Bank of Japan has come under pressure to adopt a more aggressive policy of easing to "prevent the yen from sapping offshore corporate profits while the recovery is fragile." (Notice here how the pressure and tendency is to weaken the purchasing power of currency to the detriment of an individual's savings in favor of corporate profits. Many southeast Asians have already discovered that gold won't betray them in this fashion.)

The BOJ is considering a new operation to accelerate its supply of funds through outright purchases of short-term government securities by the central bank from the market. Critics say would turn the BOJ into a money printing machine for the government and represent a monetisation of government debt.

Kazuo Mizuno, general manager of Economic Research Department at Kokusai Securities summed it up like this: "If the BOJ accepts to do more, that would strengthen the current vicious cycle of money flow from Japan via Europe to the U.S. financial markets and create massive U.S. external debt, and the BOJ would have to be involved in this cycle not only this year but next year and onwards. As a result, the BOJ would not only lose its independence from the government, but its monetary policy would have to go under control of the United States."

USAGOLD (10/6/99; 8:54:44MDT - Msg ID:15641)
Today's Gold Market Report: A Well-Deserved Breather in Early Trading
MARKET REPORT (10/6/99): Day Eight of the Big Breakout....Gold taking a
well-deserved breather after hitting two year highs at $339 yesterday......... Interesting
quote from a European trader reported on FWN: "We're just easing into the backfill created
by the rally (on Tuesday)...The shorts have mostly covered, there are just a few daily short
players left--nobody will hold short positions overnight with the market longs playing the
market in the manner that they are."..........................Correct me if I'm wrong, but if
that doesn't sound like we are in a free gold market, I don't know what does. The short
position is no longer sacrosanct? Quite an attitude adjustment......At any rate Frederic
Panizutti disagrees with that trader: "The market being still short, any up-move would likely
result in irrational panic buying."..................The Ashanti Goldfields story continues to
cause concern not just for that company itself but the potential ripple effect to other
"hedged" producers. Bridge News says: "Ashanti Goldfields Co. Ltd. said today that the
recent huge rise in the price of gold has left it with an obligation to pay margin calls to its
gold-hedging counterparties, but that it has enter r ed an arrangement with its hedging
partners for continuing support. On Friday, Ashanti said it had restructured 80% of its
hedges to remove its sensitivity to the rising price.".......As a warning to all those who
think a "gold stock is a gold stock" the warning is clear: the XAU retreated significantly as a
result of the Ashanti news and the portential for similar problems surfacing at other
producers........ (Editor's Note: At the time of the Friday announcement, Ashanti forgot to
tell us that they were on the phone to their brokers about some hefty margin calls. I guess
you can define a margin call as "restructuring" if you want to. )................ Alan
Greenspan and the Fed played tag with the interest rate devil at yesterday's meeting and
chose not to get burned with Y2K looming on the not too distant horizon. The stock and
bond markets appeared to be in a quandary over what will happen next. It matters not -- the
markets will determine interest rates. More specifically, Japanese bond traders will
determine U.S. interest rates in the near term............. Today the yen is down and U.S.
stocks and bonds are up...............The gold market has moved away from its long time
trading rhythm wherein the price was set in New York on the COMEX and the rest of the
world played catch-up overnight. Now the market is being driven higher nearly every night
overseas and New York paper players have been throwing water on the
surges.......................Jeff Rhodes, general manager for Standard Bank London's Dubai
office as quoted on this morning's Reuter's London report: "Having lived through the bull
markets of 1978/1980, 1986/1987 and 1993/1995, the first lesson is never to stand in the
way of a runaway bull.''.......................That's it for now, fellow goldmeisters. Have a
good day. MK

The October edition of News & Views will be ready early next week and we invite all
our visitors to take advantage of a free trial subscription to one of the most popular, widely
read and quoted gold newsletters. Last month we predicted an explosion in the gold price.
This month we deal with the nettlesome subject of paper assets in this tenth month of the
penultimate year. And we all know what that means. October brings with it our annual
Halloween issue. Here's an excerpt: "And this October could very well foreshadow a most
fateful stroke of midnight only two months away. October. When markets crash and assets
go bump in the night........." We think you will gain by taking advantage of our
offer...........

Please call 800-869-5115 (Ask for Mary Conway) if you have an interest in receiving
a trial subscription to our widely read newsletter, News & Views: Forecasts,
Commentary and Analysis on the Economy and Precious Metals. Or you can
go to our ORDER FORM and submit your request by E-Mail. You will also receive our
introductory packet on investing in gold.

Peter Asher (10/6/99; 8:52:06MDT - Msg ID:15640)
Goldspoon
Typo --$330.25

elevator guy (10/6/99; 8:01:19MDT - Msg ID:15639)
COMEX in 1979-80?
Has anyone been in the gold market long enough to know what happened to the COMEX exchange in 1979-80, when gold hit an all-time high?

Did the market close? Was there any gold available, and if not, were there still cash settlements on contracts?

Goldspoon (10/6/99; 7:21:50MDT - Msg ID:15638)
***Comex Close****
apdcheif-$399
Canuck- $343
Granny- $357
RossL- $332.30
onlychild$336.50
Tanglewild$318.80 (like your handle)
Silvertongue$313.90
Goldspoon$343.73 (can't stand this guy..such a knowit all)
Tomcat $325 (keep it up you'll go places)
Canamami $321.23
Bill $318.50
Hill Billy Mitchell $309.50
Coin Guy $334.75
Black Blade $xXx.xX $XXx.Xx $323.50
Gandalf The White <;-) $321
SStins $362.50
Marius $338
flierdude $316.00
Simply me $330.50
jaydeevee $318.50
Goldfly, Spike and Spot $332.00
TEX $332.25
Peter Asher +$30.25 from yesterdays close....????
Jason Hommel $$348.00

Belated Guesses
The Scot $333.33
elevator guy $337

Hope i did not miss anyone... and Good Luck!!

Sorry..i'll be to busy tomorrow ...maybe someone else would like to play bookie for a day??

The Scot (10/6/99; 7:04:56MDT - Msg ID:15637)
Gold War
Kitco's gold graph this morning looks like a war zone.
What strange forces these are at work.
The Scot

elevator guy (10/6/99; 7:01:32MDT - Msg ID:15636)
Flat Earth Society! RE: Black Blade Msg id# 15625
I know what the Flat Earth Society is doing now!

Thhey have moved into journalism, and are covering the precious metals markets!

8^)

SteveH (10/6/99; 5:57:33MDT - Msg ID:15635)
Protecting Gold
http://sorrel.humboldt.edu/~jae1/emenLyngScrutiny.html
Gold getting hammered right now, Dec at $317. (did GS get more gold from the Fed?)

Summary: A Michigan Concealed Weapons Board refused to renew a CCW permit. The person sued on a number of counts, one being a 14th Amendment under equal protection of 14th Amendment. The Court ruled that the 2nd Amendment does not provide individual fundamental right to bear arms as to which strict scrutiny analysis would be applicable. The emerson case (see link below) concluded that the 2nd Amendment is an individual right thus countering the Michigan's court ruling regarding Strict Scrutiny not applying and that the state has an obvious "legitmate interest" in limiting access to weapons peculiarly suited for criminal purposes (People v McFadden). That should open the doors to a less discriminatory CCW boards, at least on a complaint to a court regarding any decision using Strict Scrutiny and equal protection.

Rational Basis or Strict Scrutiny

In the United States courts exercise the power of judicial review over the actions of other governmental bodies. They may determine whether an act by the President, Congress, a national, state, or local administrative official, a state legislature, a local governing board, or a lower court is valid. They do not judge whether an act is wise or foolish, but whether is is constitutional or unconstitutional, whether it is permitted or null and void. The U.S. Constitution prescribes the legitimate powers of the national government, reserves others to the states, and protects individuals from governmental invasion of their freedoms of religion, speech, press, and other rights.

Based upon the interpretation of Article VI, clause 2, by Chief Justice John Marshall in Marbury v. Madison, (1803), judges may invalidate a government's action if the power for it is not prescribed in the Constitution, or if it conflicts with a right of the people. Of course the power does not have to be expressly delegated to the national government; it may be implied from Article I, section 8, clause 18, the "elastic clause." See Chief Justice John Marshall again in the opinion of McCulloch v. Maryland, (1819)

In Lyng v. Northwest Cemetery Protective Association the question was whether the Forest Service had the power to build a road and execute its forest management plan, i.e., harvest timber, under the authority of Article IV, section 3, clause 2, or if such action conflicted with the rights of persons to the free exercise of their religion guaranteed by the second clause of the First Amendment.

The Court concluded that the road and timbering were internal government affairs that only incidentally affected the free exercise of religion. Therefore, the Court applied the so-called rational basis test of judicial review. That is, it upheld the government's action as a rational means of accomplishing a legitimate end. If, however, the Court had deemed there was a threat to a fundamental right, it likely would have increased its scrutiny of the government's action, requiring that the means be necessary to achieve a compelling state interest. In other words the Court in Lyng deferred to the government's use of National Forest property. It upheld the decision to build the road so long as it was a reasonable means to achieve a legitimate purpose. The road did not have to be necessary to achieve a compelling state interest. See footnote 4 in then-Associate Justice Harlan F. Stone's opinion of the Court in U.S. v. Carolene Products, 304 U.S. 144 (1938).

http:/nrawinningteam.com/cummings.html is the emerson case that recently ruled the 2nd Amendment is an individual right not a state right.

RossL (10/6/99; 5:54:56MDT - Msg ID:15634)
A note to TC
First notice of delivery on a COMEX future is not binding. What matters is how many longs demand delivery and refuse to roll over their contract at the expiration. A squeeze happens when, in a sort of poker game, longs wait 'till the last hour to get the shorts desperate.

RossL (10/6/99; 5:47:14MDT - Msg ID:15633)
YGM
You're making sense to me!
Thanks for expressing your views.

The Believer (10/6/99; 5:37:41MDT - Msg ID:15632)
YGM
Thanks YGM,
I did get over to Gold-Eagle and read your post.
And yes,I'm hearing the rumors about $2000 gold
and cheap dollars too.

leonard (10/6/99; 5:27:56MDT - Msg ID:15631)
CNBC
stev i just read your post on cnn,if you wont to see biased reporting on gold you have to chick out CNBC,i belive they fear for ther jubs an just say wate ther told to say.

CoBra(too) (10/06/99; 04:10:12MDT - Msg ID:15630)
Can't agree more with your #15628 Sir SteveH.,
only allow me to make one remark. You've named Barrick and Placer Dome as overhedged gold producers. I would think these two companies are very different kettle of fish. While ABX, correctly can be termed a hedge fund, though still having some great gold deposits (question will be who will own them at POG, say 500+), PDG is still a very viable gold miner, with a hedge position congruent to their business needs and structured to be a real "hedge". Since, my group has been in negotiations with the PDG management off and on for some years, I've had the opportunity to learn more of the company's philosophy and have been impressed with their able and savvy management team. The latest "crown jewel" in PDG's mine portfolio are the "Pipeline" deposits at Nevada's Crescent Valley (Battle Mountain Trend)the Cortez JV (60%PDG/40%RTZ), a 10Moz deposit and still counting.
Thank you and regards CB2

The Scot (10/06/99; 03:48:27MDT - Msg ID:15629)
COMEX $$$$
Goldspoon, If it's not too late, put me down for $ 333.33
The Scot

SteveH (10/06/99; 02:44:48MDT - Msg ID:15628)
Send this to moneyline@cnnfn.com
To whom it may concern:

I am an avid watcher of CNN's Moneyline. Oddly, I am also a gold stock investor. Forgive my observation but Moneyline seems to avoid a fair coverage of events in the Gold Market place and is focusing on mega deals in the stockmarket. Both the lack of coverage of gold and the over coverage of 'big deals' paints an inaccurate picture of the market as it is today.

A second observation is that you cover the major indices, to wit: the DOW and NASDAQ, but most technical market watchers have confirmed months ago that the markets are in a confirmed DOW bear market. The DOW and NASDAQ just haven't joined the rest of the market yet but represent on a select 130 stocks. It is clear to me anyway that most money has pulled from small and mid caps and gone into these indices for now. This isn't made clear on your show. Too much chear leading by analysts talking their book, so to speak.

Also, your coverage of events in the gold market has been, forgive my use of this word, lame. Your analysts and especially your advertisers for the most part have very good reasons for not wanting to mention the 'gold' word as it is and gold stocks are a contrary investment to their 'books.' It does not go unnoticed that this $80 runup has been only slightly covered by Moneyline. What is more, you clearly don't have the 'big picture' and, in my opinion, you are going to likely suffer credibility when the gold runs to $1,000 per ounce and you finally get on board with some of the excitement there. Because you don't have anaylysts who understand the market and who aren't short the gold market (in other words, you can't have Bullion Bank gold experts talk about the gold market because they will talk their book: gold shorting -- they have been involved in gold shorting and leasing of gold into the market for years). To get a truly accurate picture of the gold market you have to interview people like Frank Venerasso or Bill Murphy (lepatron@lemetropolecafe.com) for a truer picture of the problems causing the gold market to explode. Once you have interviewed these guys then bring on the bullion banks for there story. Other possible interviewees? Gold mining presidents of non-hedged mining companies. If you pick a highly hedged company like Barrick or Placer Dome you will again get a biased opinion of gold because these folks are heavily short the market or hedged, as it were, and will talk down gold in order to possible save their skin right now.

Why concern yourselves with being the first major network financial news show with a special on gold? Because, by not doing it you will loose credibility. It is clear to me and I would guess others, that you only cover two of the three markets well: bonds and stocks. Any financial knowledgeable person knows there are three sides to investments: stocks, bonds, and gold. And when gold does go to $1,000 per ounce or higher and all of sudden you start to cover it, people will begin to question why it got so high before Moneyline started to explain things. They will realize that Moneyline follows the trends that are popular or that "folks want to hear" and not what is hot and important but not widely understood. But when gold does hit the $1000 mark and you waited to cover it then, people will say, "hey, why are they just now telling me about this?"

Here are some reasons that you may consider doing an expose on the gold shenanigans that may cause an explosion in gold prices:

Rumors of market manipulation and gold leasing by the federal reserve.
Rumors of bail outs by the Fed for 'in-trouble' bullion banks such as Goldman Sach's bullion division.
A whopping 14,000 ton gold short position overhanging the LBMA and COMDEX.
Significant open interest at the above with extremely low gold inventory to back it.
Rumors of physical gold not available in quantity anywhere in the world for shorts to cover their gold hedges or short positions.
GATA (Bill Murphy) and company saying that the gold market is totally manipulated.

So imagine if Moneyline ignores or doesn't cover any of these or only some of these topics and it turns out to be true (as I believe it to be). Credibility folks. Because one day we will all wake up and gold will have risen that far ($1,00 or higher) and you will be scratching your heads in wonderment. Now is the time to investigate the above allegations, rumors, and innuendos to see where the truth lies and the rumors end.

I would suggest your folks scour the www.usagold.com, the www.kitco.com, and the www.gold-eagle.com web sites for clues and possible stories to confirm (or deny). The gold market NOW warrants your attention, for failure to get in early on the affairs here will be a great diservice to your viewers in the end.

Steve

PS. Here is a somewhat shocking story by Bill Murphy of GATA and what he considers going on in the gold market. Note the rumors about the fed intervening in the gold market.

11:35p EDT Tuesday, October 5, 1999

Dear Friend of GATA and Gold:

I'm sending you the whole of GATA Chairman Bill
Murphy's "Midas" commentary tonight at
www.lemetropolecafe.com in the hope of letting
everyone know that any momentary calm in the
gold market only masks the panic that continues
backstage. The short squeeze is just beginning.

Please post this as seems useful.

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

* * *

MIDAS COMMENTARY FOR
TUESDAY, OCTOBER 5, 1999

By Bill Murphy
www.lemetropolecafe.com

Spot Gold $324.40 up $8 Spot
Silver $5.55 down 3 cents

Technicals

"Vox populi, vox Dei" -- "The voice of the people is
the voice God."

The gold market continues its rocket ride. Today the
December futures contract traded as high as $339 early
this morning before selling off going into the Comex
open. The gold market is on fire.

When gold was trading in the $250s, Midas told you that
we had the shorts "right where we want them." Many of
you believed in what I had to say and loaded up on gold
call options. Congratulations. While some of you were
buying calls, futures, gold stocks, etc., the bullion
dealer camp was laughing at us. We knew then that we
had them, and we know know that we do.

Some of the bullion dealers, overhedged gold companies,
and gold-borrowing funds are in big trouble. Last night
I sent out commentary that included this statement:
"Our camp will be more gracious than the Hannibals have
been. We will show mercy on them and let them out of
the back end of our 'enveloping horn.' When the price
of gold hits $340, we will accept their surrender."

I never meant to suggest that I would be happy with
$340 gold. This morning I did a radio interview about
GATA with the well-known Alec Hogge of South African
radio. When asked where I thought the price of gold was
going, I told his listeners that, in my opinion, the
proper equilibrium price is a bit north of $600.

Anyway, never have I received such an onslaught of the
same sort of feedback. Such as:

"As the man at the BIS said ... Gold will take no
prisoners."

"What do you mean that you will accept their surrender
at $340? Peanuts to you."

"Why take prisoners? These jokers have shown no mercy
for the past 10 years! Most of my mining stocks are
still a fraction of what I paid, at least one is in
Chapter 11, and another one (Benguet B) has not traded
over 25 cents (yes, cents) for the past year. (The
story of how it stays listed on the Big Board is the
subject of another investigation.) Gold goes up 25
bucks and you want to be Mr. Nice Guy. Give us a
break!"

The Cafe and the Internet have spoken. In earlier Midas
commentary I suggested that what we would eventually
have is a "fight to the death" in the gold market. In
the Roman Coliseum days the gladiators battled until
one beat the other. The victorious gladiator would look
up to the adjudicator to see if he would get a "thumbs
up" or "thumbs down" on whether to finish off his
vanquished foe. The adjudicator would often listen to
the crowd for direction. It was called "Vox populi, vox
Dei."

You have been resounding. Thumbs down to Hannibal
Lecter and the Hannibal Cannibals.

That can happen in many ways. One of them I told you
about this summer. Do you remember when I mentioned
that one of the Cafe's most plugged-in sources told me
that plans were being set in place to squeeze the
December Comex gold contract? That plan is still intact
and gaining advocates. At the time I noted that squeeze
artists were buying the December gold contract and
selling April and June.

The open interest on Comex is 222,031 contracts, having
gone up 7,449 contracts more yesterday. The December
open interest rose 6,263 contracts and now stands at
136,022 contracts or 13.6 million ounces. There are
less than a million ounces of gold in the Comex
warehouses. Of course most of the specs do not want to
take delivery, but not all the gold in the warehouses
is available either, as much it just sits there for
margin purposes.

The August futures contract was almost squeezed
recently, but one bullion dealer let the shorts off the
hook for a $2 or $3 premium over the contract price.
You might recall that Goldman Sachs took delivery of
more than 90 percent of the August deliveries. Our camp
speculated at that time that they were trying to get
their hands on as much physical gold as possible
(either for themselves or for clients) in case of times
such as we have now.

If the August contract was almost squeezed in a dull,
glacier-like gold environment, what do you think they
will do to the December contract in this new blazing-
hot environment? As we head into the late fall, the
gold shorts are going to have to deal with the monster
call option position that is now only $65 above today's
close, restricted gold lending by the central banks and
building Y2K fears. The recipe for a gold short squeeze
will get better and better.

The gold shorts and the Hannibal Cannibal bullion
dealers have had it their way for years. It is payback
time. Big-time!

Don't be too stressed that silver has not taken off
like gold yet. Many of the hedge funds were long silver
and short gold. They are buying back their gold and
selling silver now. In a recent Midas you were informed
that sources had told us that Moore Capital could be
short as much as 25 million ounces of gold. Moore was
the big silver seller today. They must have tremendous
margin call pressure and need to sell to shore up their
balance sheet.

$9.78 silver coming.

Fundamentals

The big story of the day for most was Ashanti
Goldfields. They have been one of the leading
proponents of hedging and have massive forward sale
positions. The other day they announced that they had
restructured their hedges. The marketplace took that to
mean they covered their hedges. The Cafe's John
Brimelow was not fooled and told me so at the time. The
bullion dealer camp was spreading the word that had
Ashanti had covered and the gold market had taken the
company's buying well. But Brimelow doubted that they
had covered and was proved right today as it was
disclosed that Ashanti's hedge book still represents a
net hedge of 10 million ounces. That shocked industry
participants.

More from today's Platts: "The sharp rise in the gold
price since the Sept. 26 announcement of gold sale
restrictions by the 15 European central banks 'has
resulted in a substantial increase in the value of
Ashanti's unhedged reserves,' the company noted. The
rise in prices and increased volatility 'has led to
certain counterparties being entitled to margin calls,'
the company said. Ashanti 'has entered into a joint
arrangement with its major hedging partners for
continuing support,' it added."

The market told Ashanti today what it thought of this
announcement. Ashanti stock sank to something like 5
1/2 from 9 3/8 with the price of gold going up $8. What
gives?

Ashanti and its bullion dealers, that is what. Sources
told me today that Ashanti has big problems relating to
maturity mismatches, margin call pressures, and forward
sale buyback liquidity problems, and are suffering from
faulty hedging programs laid on them by certain
consultants and bullion dealers.

I was informed today that Ashanti had a $300 million
margin gap with its bullion dealers. I am told that
Goldman Sachs is Ashanti's main dealer. That means that
the bullion dealers front the first $300 million of
margin calls. Of course that is no picnic for the
bullion dealer. Stress surfaces in all quarters and
that stress feeds on itself throughout the bullion
dealer and gold producer camps.

Another source told me that Ashanti started to reel at
$280 gold, much less $325 gold. Ashanti is hedged as
much as 10 years out. There is not a big market for
getting out of forward-sale 10-year-out gold positions.

Ashanti has significant problems that are likely to
worsen.

With every Midas now I try to explain that gold is
exploding when almost no one thought it would because
the industry was working from disinformation supplied
by the bullion dealer camp -- many of them old Hannibal
Cannibals. Their allies too. For instance, note these
comments by Barrick Gold's Jamie Sokalsky in a Dow
Jones story:

"'Gold producers account for perhaps 3,000 tonnes of
short positions, about two-thirds of the market total,'
according to Jamie Sokalsky, chief financial officer of
Toronto's Barrick Gold, one of the world's largest
producers.

"Gold producers took short positions to hedge against
falling prices, essentially locking in sales prices
before gold is even mined. Now, with gold prices
soaring, those short positions are money-losers, and
the market is bracing for massive unwinding by
producers.

"'This is only the first round or two of short
covering,' one commodities analyst said."

Sokalsky is telling everyone that the total number of
gold loans is only 4,500 tonnes (two-thirds of 4,500 is
3,000). He is using Gold Field Mineral Service numbers.
GFMS is a Hannibal apologist. The Cafe uses Frank
Veneroso's numbers and they tell us that the gold loans
are probably a bit greater than 10,000 tonnes.

Who is right? Well, if GFMS was right and the loans
were only 4,500 tonnes, the gold market would not be
doing what it is doing today. Case closed. Yet Barrick,
one of the most heavily hedged gold companies in the
world, continues to spout the Hannibal line. Barrick is
becoming a sad case. Its stock was hit today too as the
Ashanti news has run up the red-flag warning signs of
the companies that have overhedged.

Wake up, Barrick! You have been in the penthouse in
public esteem. If you tarry too long, you might end up
in the outhouse.

There might have been a much bigger story today. More
from Sequin, who put this up at the Kitco gold site:

"The big big rumor today is about the Fed bailing out
Goldman on 10 million ounces. The market is all excited
about it: THEY are doing something. Since it is the
role of the FED (as painful as it might be for us) to
prevent a systemic collapse, there might be some basis
for the rumor.

"Still, I would be surprised, since the Fed hasn't been
seen in the lease market for ages.

"Yes, they get some other CBs to do the dirty stuff for
them. But they are limited by status. So it would be
interesting to know to what extent they are at liberty
to do that.

"Technically, leasing is not selling. However, at 10
million ounces a clip, we might not see them every
other day.

"Today is the day to speak about black holes.

"You know, if you happen to fly in their vicinity, you
get sucked in, but you won't care, since at this point
the whole spaceship will not even be the size of a
grain of sand.

"Well, there is a black hole in our universe and it is
called the 390 December call. It is traded on Comex and
yesterday the open position was a tad above 55,000.

"That's a nice 5.5 million ounces and change. When you
know that major market makers show $3 wide on 10,000
ounces, you can bet on some fun in case we go in the
low 360's.

"Let me explain. As we go close to the strike, the
shorts, who usually are option market makers, will have
to adjust their delta. (The delta is the sensitivity of
an option to spot moves.)

"Hence, the higher the spot goes, the more they will
have to buy. In such an illiquid market a few million
ounces will push it through the strike in seconds.

"Since the law of maximum pain applies these days in
gold, I would not be completely surprised to see a
seriously punishing run-up there and higher. This is of
course without taking the OTC derivatives into account.

"Only five weeks to go, but I know a few options
dealers who are not going to sleep that much."

Sequin is obviously a pro; he knows his stuff. It is
interesting how he is commenting on the December $390
calls too. If he and I are jumping up and down about
it, so are a lot of others. This is explosive!

But what may be more explosive is what Sequin says
about Goldman Sachs and the Fed. How many times have
you heard Midas pound away on this theme? It extends to
the core of the Bank of England sale, etc. And it is
supportive commentary of the "Bombshell" I delivered to
you last Friday in Midas commentary. The key point from
that Midas:

"Two days ago I received information that a futures
commission merchant (a Refco-type firm) was told by
another futures commission merchant that it was not
prepared to deliver gold on its gold forward or futures
contract obligations that were expected by a client of
the firm that was standing for delivery. In essence,
the shorts were declaring force majeure: 'We cannot
deliver.

"This is not a Comex problem as far as I know. From
what I am hearing it is an OTC problem, where few
people really know what is really going on behind the
scenes. The firm that expected delivery was stunned. It
was about to be 'floored.' According to our sources,
this firm then got a phone call from the Federal
Reserve requesting that it not pressure the shorts into
making delivery and asserting that the Fed would make
sure that the longs received their gold. I am not privy
as to exactly how that would happen.

"According to another source, there were actually a
couple of firms that told the longs that they were not
prepared to deliver forward contract gold in the size
expected. Goldman Sachs is one of the firms mentioned
that is not prepared to fulfill its obligations. That
is what my sources are telling me."

Now two days later the word on The Street is that
Goldman was fed 10 million ounces by the Fed. Don't you
think that our "Bombshell" story should gain
credibility and get some legs?

Potpourri and the Gold Shares

The XAU retreated today to close at 84.61 down $4.20.
Gold was strong all day, so the XAU was perplexing to
many. But it isn't really perplexing. We have told you
about the hedge funds being short gold. We have even
told you about the hedge funds being long the big cap
gold stocks. The hedge fund gold shorts are covering
their gold shorts, so they are selling their gold
stocks. They have to get out.

In addition, the Ashanti issue has many money managers
reassessing their gold stock allocations.

>From Reuters: "Gold trading in Pakistan, one of the
largest importers, has largely come to a halt as rising
international prices have left several major players
unable to deliver their commitments, traders said on
Tuesday."

The gold premiums in Asia are holding up surprisingly
well on this mega move up for gold.

Cambior is a great little gold producer, but it's
shares fell 21 percent today, its biggest loss in 4
years on concerns that is too has overly hedged.

Funny, a couple of months ago the Hannibals strongly
suggested that the likes of Newmont sell a good deal of
forward production for fear of losing its credit
ratings. Now the price of gold rallies sharply and the
companies that have stuck their toe too much in the
hedging waters might lose their credit ratings anyway
because they hedged TOO MUCH, not too little. What an
industry!

Anglogold came out with a strong press release today
announcing that it "has no gold lease rate exposure at
all before early 2000 (and limited exposure
thereafter), and this has contributed substantially to
the stability of its hedged position." In other words,
Anglogold's bullion dealers have the "roll risk," not
Anglogold.

Tiger Watch: This hedge fund continues to stink up the
place. Its net assets have slumped from some $22
billion down to $8 billion. The fund lost another 6.7
percent for September and is now down 23 percent for
the year. I wonder how many illiquid positions Tiger
still has on its books and is stuck with.

More bullion dealer hedging problem news from Reuters:

"A bullion trading source said market talk that an
Australian bank was facing huge losses from recent
sharp gains in bullion prices triggered fresh buying as
the bank would be forced to cover its position soon.
Banking sources in bullion ma

SteveH (10/06/99; 02:00:25MDT - Msg ID:15627)
Preacher
www.kitco.com
Date: Tue Oct 05 1999 23:59
Preacher (Perspective) ID#30281:
Copyright � 1999 Preacher/Kitco Inc. All rights reserved
I think we are in a new bull market for gold. Simple proposition.

Gold has broken through the May '99 peak of $291; the Oct '98 peak of $296; and the April '98 peak of $317. Today, it moved up to the Oct'97 peak of $338.50 and backed off.

Still, it has made a lot of progress in a very short time.

The XAU is not faring as well, but it is doing well. The XAU has broken through the May '99 peak, the Oct '98 peak, but has not quite cleared the April '98 peak at 92.??.

So at this point, the metal is outperforming the XAU on a relative basis.

For the record, the XAU peak in Oct '97 was 112.

A bear market is a series of lower lows and lower highs. A bull market is a series of higher lows and higher highs.

So the first thing we must see in a new bull market is a series of highs above previous highs. We are seeing this.

Next we need to see lows above previous lows. The first pullback took us to a low of $296 or so. Let's see if the current pullback stops short of that figure.

We have seen several high-energy predictions of gold at $375 in the near future. Technically, after today's high is breeched, the next technical high sits at $365, set in Feb '97.

Another short-covering rally could push up toward that mark.

Keep it in perspective.

One thing that alarms me is the "phantom" fundamental news we get -- news that is not varifiable. We are told that Goldman Sachs is massively short in the gold market. We saw news earlier from the same sources that Sachs was getting long in a big way in August.

So how do we know Sachs is massively short?

Now we hear rumors that the Fed just arranged to cover Sachs' shorts to the tune of 10 million ounces.

None of this is verifiable info, IMO. This is what I call phantom fundamentals. How do we know that certain rumor-mongers first led us to believe that Sachs was massively short, and now to cover their own tall tales, they come up with another tale that the Fed is bailing Sachs out.

It's like a great drama has unfolded and we don't know if any of it is true.

I keep my eye on the bouncing ball, the price action of gold and the XAU. Gold needs to hold above the previous pullback low. That would be a nice next step in the new bull market.

The Preacher

SteveH (10/06/99; 01:59:35MDT - Msg ID:15626)
GATA
11:35p EDT Tuesday, October 5, 1999

Dear Friend of GATA and Gold:

I'm sending you the whole of GATA Chairman Bill
Murphy's "Midas" commentary tonight at
www.lemetropolecafe.com in the hope of letting
everyone know that any momentary calm in the
gold market only masks the panic that continues
backstage. The short squeeze is just beginning.

Please post this as seems useful.

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

* * *

MIDAS COMMENTARY FOR
TUESDAY, OCTOBER 5, 1999

By Bill Murphy
www.lemetropolecafe.com

Spot Gold $324.40 up $8 Spot
Silver $5.55 down 3 cents

Technicals

"Vox populi, vox Dei" -- "The voice of the people is
the voice God."

The gold market continues its rocket ride. Today the
December futures contract traded as high as $339 early
this morning before selling off going into the Comex
open. The gold market is on fire.

When gold was trading in the $250s, Midas told you that
we had the shorts "right where we want them." Many of
you believed in what I had to say and loaded up on gold
call options. Congratulations. While some of you were
buying calls, futures, gold stocks, etc., the bullion
dealer camp was laughing at us. We knew then that we
had them, and we know know that we do.

Some of the bullion dealers, overhedged gold companies,
and gold-borrowing funds are in big trouble. Last night
I sent out commentary that included this statement:
"Our camp will be more gracious than the Hannibals have
been. We will show mercy on them and let them out of
the back end of our 'enveloping horn.' When the price
of gold hits $340, we will accept their surrender."

I never meant to suggest that I would be happy with
$340 gold. This morning I did a radio interview about
GATA with the well-known Alec Hogge of South African
radio. When asked where I thought the price of gold was
going, I told his listeners that, in my opinion, the
proper equilibrium price is a bit north of $600.

Anyway, never have I received such an onslaught of the
same sort of feedback. Such as:

"As the man at the BIS said ... Gold will take no
prisoners."

"What do you mean that you will accept their surrender
at $340? Peanuts to you."

"Why take prisoners? These jokers have shown no mercy
for the past 10 years! Most of my mining stocks are
still a fraction of what I paid, at least one is in
Chapter 11, and another one (Benguet B) has not traded
over 25 cents (yes, cents) for the past year. (The
story of how it stays listed on the Big Board is the
subject of another investigation.) Gold goes up 25
bucks and you want to be Mr. Nice Guy. Give us a
break!"

The Cafe and the Internet have spoken. In earlier Midas
commentary I suggested that what we would eventually
have is a "fight to the death" in the gold market. In
the Roman Coliseum days the gladiators battled until
one beat the other. The victorious gladiator would look
up to the adjudicator to see if he would get a "thumbs
up" or "thumbs down" on whether to finish off his
vanquished foe. The adjudicator would often listen to
the crowd for direction. It was called "Vox populi, vox
Dei."

You have been resounding. Thumbs down to Hannibal
Lecter and the Hannibal Cannibals.

That can happen in many ways. One of them I told you
about this summer. Do you remember when I mentioned
that one of the Cafe's most plugged-in sources told me
that plans were being set in place to squeeze the
December Comex gold contract? That plan is still intact
and gaining advocates. At the time I noted that squeeze
artists were buying the December gold contract and
selling April and June.

The open interest on Comex is 222,031 contracts, having
gone up 7,449 contracts more yesterday. The December
open interest rose 6,263 contracts and now stands at
136,022 contracts or 13.6 million ounces. There are
less than a million ounces of gold in the Comex
warehouses. Of course most of the specs do not want to
take delivery, but not all the gold in the warehouses
is available either, as much it just sits there for
margin purposes.

The August futures contract was almost squeezed
recently, but one bullion dealer let the shorts off the
hook for a $2 or $3 premium over the contract price.
You might recall that Goldman Sachs took delivery of
more than 90 percent of the August deliveries. Our camp
speculated at that time that they were trying to get
their hands on as much physical gold as possible
(either for themselves or for clients) in case of times
such as we have now.

If the August contract was almost squeezed in a dull,
glacier-like gold environment, what do you think they
will do to the December contract in this new blazing-
hot environment? As we head into the late fall, the
gold shorts are going to have to deal with the monster
call option position that is now only $65 above today's
close, restricted gold lending by the central banks and
building Y2K fears. The recipe for a gold short squeeze
will get better and better.

The gold shorts and the Hannibal Cannibal bullion
dealers have had it their way for years. It is payback
time. Big-time!

Don't be too stressed that silver has not taken off
like gold yet. Many of the hedge funds were long silver
and short gold. They are buying back their gold and
selling silver now. In a recent Midas you were informed
that sources had told us that Moore Capital could be
short as much as 25 million ounces of gold. Moore was
the big silver seller today. They must have tremendous
margin call pressure and need to sell to shore up their
balance sheet.

$9.78 silver coming.

Fundamentals

The big story of the day for most was Ashanti
Goldfields. They have been one of the leading
proponents of hedging and have massive forward sale
positions. The other day they announced that they had
restructured their hedges. The marketplace took that to
mean they covered their hedges. The Cafe's John
Brimelow was not fooled and told me so at the time. The
bullion dealer camp was spreading the word that had
Ashanti had covered and the gold market had taken the
company's buying well. But Brimelow doubted that they
had covered and was proved right today as it was
disclosed that Ashanti's hedge book still represents a
net hedge of 10 million ounces. That shocked industry
participants.

More from today's Platts: "The sharp rise in the gold
price since the Sept. 26 announcement of gold sale
restrictions by the 15 European central banks 'has
resulted in a substantial increase in the value of
Ashanti's unhedged reserves,' the company noted. The
rise in prices and increased volatility 'has led to
certain counterparties being entitled to margin calls,'
the company said. Ashanti 'has entered into a joint
arrangement with its major hedging partners for
continuing support,' it added."

The market told Ashanti today what it thought of this
announcement. Ashanti stock sank to something like 5
1/2 from 9 3/8 with the price of gold going up $8. What
gives?

Ashanti and its bullion dealers, that is what. Sources
told me today that Ashanti has big problems relating to
maturity mismatches, margin call pressures, and forward
sale buyback liquidity problems, and are suffering from
faulty hedging programs laid on them by certain
consultants and bullion dealers.

I was informed today that Ashanti had a $300 million
margin gap with its bullion dealers. I am told that
Goldman Sachs is Ashanti's main dealer. That means that
the bullion dealers front the first $300 million of
margin calls. Of course that is no picnic for the
bullion dealer. Stress surfaces in all quarters and
that stress feeds on itself throughout the bullion
dealer and gold producer camps.

Another source told me that Ashanti started to reel at
$280 gold, much less $325 gold. Ashanti is hedged as
much as 10 years out. There is not a big market for
getting out of forward-sale 10-year-out gold positions.

Ashanti has significant problems that are likely to
worsen.

With every Midas now I try to explain that gold is
exploding when almost no one thought it would because
the industry was working from disinformation supplied
by the bullion dealer camp -- many of them old Hannibal
Cannibals. Their allies too. For instance, note these
comments by Barrick Gold's Jamie Sokalsky in a Dow
Jones story:

"'Gold producers account for perhaps 3,000 tonnes of
short positions, about two-thirds of the market total,'
according to Jamie Sokalsky, chief financial officer of
Toronto's Barrick Gold, one of the world's largest
producers.

"Gold producers took short positions to hedge against
falling prices, essentially locking in sales prices
before gold is even mined. Now, with gold prices
soaring, those short positions are money-losers, and
the market is bracing for massive unwinding by
producers.

"'This is only the first round or two of short
covering,' one commodities analyst said."

Sokalsky is telling everyone that the total number of
gold loans is only 4,500 tonnes (two-thirds of 4,500 is
3,000). He is using Gold Field Mineral Service numbers.
GFMS is a Hannibal apologist. The Cafe uses Frank
Veneroso's numbers and they tell us that the gold loans
are probably a bit greater than 10,000 tonnes.

Who is right? Well, if GFMS was right and the loans
were only 4,500 tonnes, the gold market would not be
doing what it is doing today. Case closed. Yet Barrick,
one of the most heavily hedged gold companies in the
world, continues to spout the Hannibal line. Barrick is
becoming a sad case. Its stock was hit today too as the
Ashanti news has run up the red-flag warning signs of
the companies that have overhedged.

Wake up, Barrick! You have been in the penthouse in
public esteem. If you tarry too long, you might end up
in the outhouse.

There might have been a much bigger story today. More
from Sequin, who put this up at the Kitco gold site:

"The big big rumor today is about the Fed bailing out
Goldman on 10 million ounces. The market is all excited
about it: THEY are doing something. Since it is the
role of the FED (as painful as it might be for us) to
prevent a systemic collapse, there might be some basis
for the rumor.

"Still, I would be surprised, since the Fed hasn't been
seen in the lease market for ages.

"Yes, they get some other CBs to do the dirty stuff for
them. But they are limited by status. So it would be
interesting to know to what extent they are at liberty
to do that.

"Technically, leasing is not selling. However, at 10
million ounces a clip, we might not see them every
other day.

"Today is the day to speak about black holes.

"You know, if you happen to fly in their vicinity, you
get sucked in, but you won't care, since at this point
the whole spaceship will not even be the size of a
grain of sand.

"Well, there is a black hole in our universe and it is
called the 390 December call. It is traded on Comex and
yesterday the open position was a tad above 55,000.

"That's a nice 5.5 million ounces and change. When you
know that major market makers show $3 wide on 10,000
ounces, you can bet on some fun in case we go in the
low 360's.

"Let me explain. As we go close to the strike, the
shorts, who usually are option market makers, will have
to adjust their delta. (The delta is the sensitivity of
an option to spot moves.)

"Hence, the higher the spot goes, the more they will
have to buy. In such an illiquid market a few million
ounces will push it through the strike in seconds.

"Since the law of maximum pain applies these days in
gold, I would not be completely surprised to see a
seriously punishing run-up there and higher. This is of
course without taking the OTC derivatives into account.

"Only five weeks to go, but I know a few options
dealers who are not going to sleep that much."

Sequin is obviously a pro; he knows his stuff. It is
interesting how he is commenting on the December $390
calls too. If he and I are jumping up and down about
it, so are a lot of others. This is explosive!

But what may be more explosive is what Sequin says
about Goldman Sachs and the Fed. How many times have
you heard Midas pound away on this theme? It extends to
the core of the Bank of England sale, etc. And it is
supportive commentary of the "Bombshell" I delivered to
you last Friday in Midas commentary. The key point from
that Midas:

"Two days ago I received information that a futures
commission merchant (a Refco-type firm) was told by
another futures commission merchant that it was not
prepared to deliver gold on its gold forward or futures
contract obligations that were expected by a client of
the firm that was standing for delivery. In essence,
the shorts were declaring force majeure: 'We cannot
deliver.

"This is not a Comex problem as far as I know. From
what I am hearing it is an OTC problem, where few
people really know what is really going on behind the
scenes. The firm that expected delivery was stunned. It
was about to be 'floored.' According to our sources,
this firm then got a phone call from the Federal
Reserve requesting that it not pressure the shorts into
making delivery and asserting that the Fed would make
sure that the longs received their gold. I am not privy
as to exactly how that would happen.

"According to another source, there were actually a
couple of firms that told the longs that they were not
prepared to deliver forward contract gold in the size
expected. Goldman Sachs is one of the firms mentioned
that is not prepared to fulfill its obligations. That
is what my sources are telling me."

Now two days later the word on The Street is that
Goldman was fed 10 million ounces by the Fed. Don't you
think that our "Bombshell" story should gain
credibility and get some legs?

Potpourri and the Gold Shares

The XAU retreated today to close at 84.61 down $4.20.
Gold was strong all day, so the XAU was perplexing to
many. But it isn't really perplexing. We have told you
about the hedge funds being short gold. We have even
told you about the hedge funds being long the big cap
gold stocks. The hedge fund gold shorts are covering
their gold shorts, so they are selling their gold
stocks. They have to get out.

In addition, the Ashanti issue has many money managers
reassessing their gold stock allocations.

>From Reuters: "Gold trading in Pakistan, one of the
largest importers, has largely come to a halt as rising
international prices have left several major players
unable to deliver their commitments, traders said on
Tuesday."

The gold premiums in Asia are holding up surprisingly
well on this mega move up for gold.

Cambior is a great little gold producer, but it's
shares fell 21 percent today, its biggest loss in 4
years on concerns that is too has overly hedged.

Funny, a couple of months ago the Hannibals strongly
suggested that the likes of Newmont sell a good deal of
forward production for fear of losing its credit
ratings. Now the price of gold rallies sharply and the
companies that have stuck their toe too much in the
hedging waters might lose their credit ratings anyway
because they hedged TOO MUCH, not too little. What an
industry!

Anglogold came out with a strong press release today
announcing that it "has no gold lease rate exposure at
all before early 2000 (and limited exposure
thereafter), and this has contributed substantially to
the stability of its hedged position." In other words,
Anglogold's bullion dealers have the "roll risk," not
Anglogold.

Tiger Watch: This hedge fund continues to stink up the
place. Its net assets have slumped from some $22
billion down to $8 billion. The fund lost another 6.7
percent for September and is now down 23 percent for
the year. I wonder how many illiquid positions Tiger
still has on its books and is stuck with.

More bullion dealer hedging problem news from Reuters:

"A bullion trading source said market talk that an
Australian bank was facing huge losses from recent
sharp gains in bullion prices triggered fresh buying as
the bank would be forced to cover its position soon.
Banking sources in bullion markets in Australia said
most Australian banks running gold books were short to
some degree.

"One source said the hedge book of Bankers Trust,
recently acquired by Australia's Macquarie Bank Ltd.
was in 'pretty dismal shape.'"

The gold investment game has changed overnight. I think
the coming play in the gold share sector will be the
small junior companies that have found gold resources
or reserves. They have gold in the ground and no or few
hedges if they are gold producers too. I am picking up
some of these babies.

One of my bigger gold stock positions is one such
company: Golden Star Resources on the AMEX. GSR is
trading right below 1. It once traded at 21. It is a
Frank Veneroso favorite and has six properties (most in
the Guyana Shield) that could become significant mines.
I found out today that two highly regarded hedge fund
managers are bidding for the stock.

The prices of many of the little-guy gold stocks are
nowhere near where they should be. That is because some
long-time shareholders of size are selling now. They
can get out easily for the first time in a long time.
These people do not believe that the gold move is for
real, so they are practically giving the stock away
practically. They will be very sorry. As the price of
gold moves up from these levels, these little golden
jewels should shine as investments.

Gold price dips can, and will, occur at any time. They
present buying opportunities.

-END-

------------------------------------------------------------------------

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Black Blade (10/06/99; 01:05:19MDT - Msg ID:15625)
Oh no! it's round?
As I understand it, the ancient Greeks (circa the time of Plato, etc.) knew that the earth was round by using simple geometry and trigonometry.

Also, has anyone heard of the "Flat Earth Society"? I wonder what those skeptics are up to these days.

YGM (10/06/99; 00:58:16MDT - Msg ID:15624)
CavanMan, Tomcat & Believer
Sorry it's late & I'm just back at the screen. What I said was that IMHO, FOA & Another have the apparent (to me & possibly others) knowledge & perception of world events unfolding w/ respect to money matters and Gold that it's comparable to that of the so called Gnomes of Zurich. I
feel that they have connections to knowledge that few are privy to and in an intentionally obtund way are trying to tell us all to expect a sudden and drastic change in many things financial. Both continually have tried to gently urge us not to rely too heavily on anything paper. Physical Gold is always at the edges of the messages. I apologize for reading my own deductions into what these fine and eloquent gentlemen have taken so long to tell us and sometimes repeat for many who are new to this forum. I
think the defaults will shock the world before this scenario
plays out! I DO NOT BELIEVE for a minute that their messages in any way are meant to stimulate Gold buying for any other reason than that of financial safety for those so inclined to listen to the message and read between the lines. I know this is alot more than I posted at Gold-Eagle today but I feel it needs to be said. All that remains uppermost in my mind is that the real power in the world lives behind the doors of the soundproof meeting rooms of the Central Banks of the world. Tell me where does all the non-publicly held Gold lie? 35% est in Bank Vaults and the rest to a few lucky souls. From every, shall we say extremly rich and connected (Banks and Bullion Circles) person that I've talked to and those (rumors) passed on to people I know there are stories of $2000.00 Gold and a $0.40 - .50 cent U.S.Dollar in the future. Who starts these if there is no fabric of truth. Sound stranger than fiction ? Well as far as I can see the truth usually is. These thoughts have guided my moves into having Gold in the ground so as to always have a edge on the system as I'm not among those with the wealth to stockpile Dory bars and wafers. So I guess I've had little faith in paper for alot longer than I 've been getting an education from here or GE and the Cafe.
Another even warned me once that I should be wary of Government when push came to shove and whose Gold lies under my mining claims. Gold, Default and Denial. I believe these will be the most used words in the near times ahead. Sorry for being long winded if any of you read all of this. Maybe I've read too much and studied too long to have a clear perspective but then who among us knows what lies dead ahead in this new millenium. I will stick to mostly physical and nobody will sway me from my course.
***and yes if I can make one iota of sense to you here I'll gladly post more often.G' Nite--YGM

elevator guy (10/06/99; 00:24:46MDT - Msg ID:15623)
Various
We all know now that the COMEX is a balloon with a couple of marbles in it, and will not be able to deliver gold if called upon by enough to do so.
But will it still settle its accounts in cash? How long can it do so? Is counter-party risk assumed by the brokerage houses, individuals, or what? I'm just wondering how long to stay at the paper party, before moving into physical, and gold and silver stocks.

Where's my buddy Tom Fumich? I didn't see him at Golden Sunday's victory toast.

Goldsun (10/06/99; 00:16:45MDT - Msg ID:15622)
Copernican Confusion
Bonedaddy
Copernicus figured out the basic workings of the solar system - planets revolving around the sun and all that.
Far from being considered a heretic, he was an employee of the Catholic Church, and was encouraged in his astronomical research by the Church leaders.
Education, like money, is a dangerous tool, best kept out of the hands of governments. BTW, I am not a Catholic.
Goldsun

elevator guy (10/06/99; 00:05:49MDT - Msg ID:15621)
Tomorrows' close!
Hi, Goldspoon! I think tomorrow's close will be $337.

Anyone know how to play the LBMA market?

What happened to the COMEX in 1979-1980, when the price reached, was it, $800/oz? Did the COMEX suspend trading?
Was there massive defaults? Was there as big of a short position as there is now?

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