What is gold at this morning?

-- (DowGuy@wallstreet.com), October 06, 1999

Answers

GOLD 7:53 PDT =$321 -$4.5 under yesterdays close

Still a very impressive number. Keep an eye on this metal it is a leading indicator. Like any market it does not move in just one direction forever.

This may be a good lull for anyone still wishing to get some coin or sliver. Invest at your own risk, Y2K is not a a known factor, read all of the information you can get you hands on!!

Things will get worse before they get better....

-- Helium (Heliumavid@yahoo.com), October 06, 1999.

Unlike the unfortunate misguided folks who are still in the stock market, those of us in gold don't have to fret over the daily ups and downs of gold. We're in it for the long haul as a means of preserving our assets. Any rise in value is nice but it's not what we're primarily concerned with. If you want to gamble your money away, stay in stocks or go to Las Vegas.

-- cody (cody@y2ksurvive.com), October 06, 1999.

I made bought Microsoft stock many years ago. If I had bought gold, I'd be living where you guys do. :)

-- (DowGuy@wallstreet.com), October 06, 1999.

p.s. I sold it about a year ago.

-- (DowGuy@wallstreet.com), October 06, 1999.

Andy said gold was at 350.00 last night. That's quite a drop.

-- (DowGuy@wallstreet.com), October 06, 1999.

Gold closed last night at $325...

scratchin'...

The Dog

-- Dog (Desert Dog@-sand.com), October 06, 1999.

DowGuy,

Spot gold has not reached above $331.50 in this latest resurgence of price. It set a 2 year high as it did so. December Gold's high reached $339.00 on Tuesday before starting a retracement. Gold needs to catch its breath. It is. This is normal for any market. The short, intermediate and long term technical indicators are VERY bullish right now. To remain bullish, technically by the charts, the market needs a few days of calm reasoned trading with a slight downward bias in order for the market to gain the technical strength to overwhelm $350 resistance. Will it do so? Yes? When? Probably in the next 2 weeks, and not tomorrow, barring an unforseen event developing to jump it sooner. Y2K is only an underlying factor to the market at this point. Y2K is not likely to be an in-your-face public factor for another 45 to 60 days. In other words Y2K will NOT likely be shouted on the lips of the floor traders in the gold pit until mid or late December, if even then.

-- Dick Moody (dickmoody@yahoo.com), October 06, 1999.

http://www.eGroups.com/group/gata/235.html?

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-

-- Helium (Heliumavid@yahoo.com), October 06, 1999.

DowGuy,

Hey, thanks for starting this thread. Glad to see Dick Moody jumping in with some more expert opinion. Thanks Dick. And DowGuy, was that Microsoft stock you sold last year your only foray into stocks? You seem to be in desperate need of some solid investment advice but, I must say, you sure have a weird way of going about asking for it.

-- Gordon (gpconnolly@aol.com), October 06, 1999.

Dow Guy: If you polish your apples nice and shiny, I may buy one from you on the street next year.

-- cody varian (cody@y2ksurvive.com), October 06, 1999.

My My,

Do you like those sour grapes? :) Why would I need investment advice? I bought Microsoft...lots of it over ten years ago. Sold it. Made a small fortune. All of your little gold ventures put together would not = what a smart investor can make in the stock market.

Piddle around with your gold coins if it makes you happy. :)

-- (DowGuy@wallstreet.com), October 06, 1999.

From www.kitco.com:

CFTC Report

As of Sept. 21, hedge funds and other speculators had sold 65,077 gold futures contracts on the Comex, 2.4 times the number of futures they'd bought. Another report Friday from the Commodity Futures Trading Commission will show by how much the ``short'' positions have been reduced by buying.

``That's going to be one of the most widely anticipated CFTC reports for years,'' said Tyree.

The cost of borrowing gold for one month was recently at an annual rate of 4.02 percent, down from 4.81 percent yesterday. The one-month lease rate on Sept. 29 rose to 9.93 percent, which traders said was the highest ever.

-end snip-

It looks like the gold bull has a long way to go. kitco forum is trying to identify gold mining shares that are not heavily hedged.

Even if the Fed is successful in convincing the gold buyers to not pressure the shorts ( I wonder how the Fed would accomplish that - perhaps a personal request from Mr. Greenspan?), the short positions will have to be covered sooner or later. If the shorts are allowed to continue to roll ahead their short positons, might the longs boycot the exchange? This would be very bad for the Comex.

-- Bill P (porterwn@one.net), October 06, 1999.

Dow Guy, so glad you made a killing,So now you have many bales of Fed notes backed by what? Electronic money? Better get real or at least get some real. or at least some real estate.Better reserve some window ledge space so you'll have elbow room to make the jump!

-- H fats Kissinger (draconionsolutions@uselesseaters.com), October 06, 1999.

Some news from Ashanti: (For educational purposes etc)

LONDON, Oct 5, 1999 (BUSINESS WIRE) -- Jean Claude Gandur, a non-executive director of Ashanti Goldfields Company Limited (the "Company") has informed the Company on 4 October 1999 of his resignation with immediate effect.

Jean Claude, who joined the Company in November 1998, said he was resigning in order to attend to the heavy demand on his time from his other business interests.

Ashanti wishes him every success in his endeavours.

LONDON, Oct 6, 1999 (BUSINESS WIRE) -- Further to the announcement of Oct. 5, 1999, Ashanti Goldfields Company Limited ("Ashanti" or "the Company") announces that it has entered into a temporary standstill arrangement with its hedging counterparties in order to give the Company time to work out a more permanent arrangement with its counterparties. Under this arrangement the counterparties have agreed not to make margin calls or to take certain other actions in respect of the hedging contracts.

-- Jerry B (skeptic76@erols.com), October 06, 1999.

For the spot price of gold:
http://mrci.com/qpnight.htm
http://www.kitco.com/gold. graph.html

For the spot price of silver:
http://www.kitco.com/sil ver.graph.html

For the spot price of platinum:
http://www.kitco.com/p latinum.graph.html

For U.S. Markets and stock quotes:
http://finance.yahoo.com/?u

For Major World Indices:
http://finance.yahoo.com/m2?u

Sincerely,
Stan Faryna

Got 14 days of preps? If not, get started now. Click here.

Click here and check out the TB2000 preparation forum.

-- Stan Faryna (faryna@groupmail.com), October 06, 1999.