The James Joyce Table

Gold, Commodities, Midas du Metropole
Topic du Jour




January 23, 2001 - Spot Gold $266.40 down 30 cents Spot Silver $4.77 unchanged

A Very Bullish British Gold Auction?

The beat goes on. Nothing every changes. No one but the GATA camp ever says anything about the
fraudulent price fixing. What an industry!

As reported last weekend, the extraordinary set up potential for a significant rally in the gold price
was, and is, all there. The money supply is exploding, commodity prices were near multi-year highs,
the dollar is anything but strong, there is a worsening energy crisis in California, silver rallied 35
cents off its lows, platinum and palladium continue to be moon shots, only 16% of the speculators
are bullish and there is a massive short spec gold position, not seen since before the gold price run
up after the Washington Accord was announced.

In times past a set up like that could easily effect a $30 to $60 move in the gold price. In a rigged
market, where the price is fixed by a Gold Cartel, it is only good for a $3 move as the price of gold
must be kept down at levels that will allow the gold borrowers to profitably roll over their gold loans.
As the months go by and prices continuously fail to rise, that price decreases and decreases.

It is almost a daily occurrence that the gold price rallies during Asia and early European trading
hours and then is sold down in the United States just prior to our trading hours, or during those
hours. In addition, gold has not been allowed to rise in price, of some decent amount that would
connote strength, for two days in a row since last February, or for almost a year.

No free market ever trades like this with such consistency, yet no one in the cowered gold industry
says a word. I am sick of it like all of you must be. Thank goodness I leave for South Africa on
Saturday to bring our evidence of this shameful scandal to the people of that country. It is GATA's
hope and expectation that once they know what we all know, some of the key players down there will
become enraged at how they are being ripped off in such hypocritical fashion by the U.S.
power/money elite.

It is a well known, tried and true axiom that price action makes for market commentary in the
press. Yesterday, gold was steaming along up $3.50 headed into today's British auction when it was
trashed late in the day and only finished up $2. Remember the $2 rule (for a long time gold was
never allowed to close much more than approximately $2 higher, so that the price action itself would
not foster any investment interest).

Today, gold spiked up $2.50 ahead of the announcement of the auction results. That announcement
that soon followed was very positive. Some press soon after the auction:

LONDON, Jan 23 (Reuters) - The Bank of England sold 25 tonnes of gold on Tuesday at a sale that
attracted a healthy demand and at a price above market expectations, analysts and traders said.

The price for the auction - in which demand outstripped the amount on offer by 4.8 times - was set
at $268 an ounce, 90 cents above the morning fix of $267.10.

"That was a very positive result," said analyst John Reade at UBS Warburg."It's the highest
premium to the fix of the 10 auctions seen so far and one of the biggest cover ratios."

"I think gold stands a pretty good chance of trading higher from here and we could see $270 within
the next few hours," Reade said. END.

In a free market, with the present technical make up in gold on the Comex, we would have seen
$270 bid in the next few minutes. Instead, The Gold Cartel did what it has done for years and
crushed gold on this bullish news, as it does on all gold bullish news, sending spot gold all the way
down to $265.50. Only last Fall, gold traded during the day at $266 for 21 days in a row and with all
that is going on in the world, here we are with gold right back there again.

Then again, why should that be a surprise. The price of
gold at the end of 1997 was $289 per ounce. The price of
gold at the end of 1998 was $289 per ounce. The price of
gold at the end of 1999 was $289 per ounce.

When will the gold industry face reality and the evidence about the constant fixing of the gold price
and fight back?

As far as these British auctions go, the results are completely irrelevant. I think Reg Howe and Don
Lindley have it nailed (as shown to the Café recently in a chart at the Dos Passos Table). The gold at
the British auctions is sold at the lowest price and it is not revealed who the buyers are. The auctions
conveniently coincide every two months just after the Comex option expiries. What appears to be
happening is that much of the gold is fed to the dealers who then sell calls to other dealers, traders,
etc, who, in turn, delta hedge these calls by selling a certain amount of gold. The bullion dealer
buyers of the gold at the auctions use that gold for their own delta hedging purposes instead of going
into the futures markets on the buy gold side - which would be supportive for the gold price.

That is most likely why gold was bombed today after a supposedly very successful auction.

The question still remains whether the new U.S. Administration is going to continue the gold fraud.
Yesterday, President Bush spoke to his White House staff extolling them not to even come close to
a whiff of impropriety in their affairs. It is understandable that he and the Treasury might need
some time to come up with some kind of plan on how to handle the gold time bomb nightmare. He
deserves time to do so. But, come the Ides of March and nothing has changed, then he and Secretary
O'Neill must be held just as accountable as Clinton/Rubin/Summers.

Speaking of fraud, how about President Clinton pardoning the infamous Marc Rich. In case some of
you missed the story:

Clinton Pardons Trader Marc Rich

By CLARE NULLIS
The Associated Press

GENEVA (AP) - One of the world's wealthiest men is no longer one of the world's most wanted men.

After fleeing to Switzerland more than 15 years ago to escape U.S. charges of racketeering and tax
evasion, Marc Rich was granted a pardon in the final hours of Bill Clinton's presidency on Saturday.

Rich's ex-wife, Denise, is a Democratic party fund-raiser, and reportedly a close friend of Clinton.

The decision to pardon Rich marked the final chapter in a remarkable legal and political drama
between the United States and Switzerland involving the hugely successful and highly secretive
commodities trader.

Rich, whose Marc Rich Group is based in central Switzerland, could not be reached for immediate
comment Sunday. A man answering his home telephone said he was on vacation.

The commodities trader often took his holidays at the exclusive ski resort of St. Moritz and was a
familiar face at conferences. But now he will be able to go beyond Swiss borders without fear of
being snatched by U.S. law enforcement officers.

Rich, who has citizenship in the United States, Spain and Israel, was indicted in 1983 by a U.S.
federal grand jury on more than 50 counts of wire fraud, racketeering, trading with the enemy and
evading more than $48 million in income taxes - crimes that could have earned him more than 300
years in prison.

He allegedly made vast profits through a huge, illegal oil pricing scheme in the wake of the 1973 oil
crisis and evaded taxes by shifting profits from his U.S. subsidiary to the parent company in low-tax
Switzerland. He also was accused of making deals with Iran during the U.S. embassy hostage crisis
in Tehran.

``In 1980, Marc David Rich conspired with the Iranian government to purchase over six million
barrels of oil, in violation of the trade embargo imposed against Iran by the United States,'' read the
U.S. Department of Justice Fugitive Lookout notice.

``The payments were made fraudulently through American banks and the illegal use of American
telecommunications facilities,'' said the notice, still posted on the Internet on Sunday.

In 1982, a New York judge subpoenaed documents from Rich's company, handing out a contempt
fine of $50,000 per day until he complied. The Swiss regarded this as a challenge to national
sovereignty, saying that normal diplomatic channels should have been followed. In a bizarre twist,
the Swiss subsequently seized Rich's documents to prevent them from being sent to the U.S. court.

In July 1984, the United States demanded his extradition. The Swiss refused, saying that tax evasion
was not a crime in Switzerland.

Although Rich later reached an out-of-court settlement in the United States for about $150 million
in tax payments, he remained on the fugitives list for other charges. In 1992, a treasury department
agency even briefly considered kidnapping Rich from Switzerland.

Rich also earned the hatred of U.S. labor unions. They accused him of being responsible for locking
out 1,700 striking workers at the West Virginia-based Ravenswood Aluminum Corp., which he
partly owned. After a 20-month dispute, the strikers were reinstated in mid-1992.

After boardroom battles, defections and dismissals, Rich left the company he had founded - Marc
Rich & Co. - in 1993. It was subsequently renamed Glencore and remains one of the world's largest
commodity dealers.

Rich went back into business in late 1995 with the Marc Rich Group. The Swiss business magazine
Bilanz calculated his wealth at $900 million to $1.3 billion.

The business upheavals in 1992 coincided with a divorce battle. His wife, Denise, sued for a $500
million settlement after he left her for another woman, Gisela Rossi. Denise Rich is now a
successful New York songwriter and fund-raiser for the Democratic party. END.

The White House provided no reasons for Rich's pardon and I understand that the commodity crowd
in New York speculates that Clinton ended up with a minimum of $100 million in his pocket
somehow, somewhere as a payoff from Rich for the pardon.

No one could corner or manipulate a market better than Mark Rich. I wonder if he has been part of
The Gold Cartel all this time?

CARTEL CAPITULATION WATCH

I cannot help but think that the California energy situation is going to have a dramatic effect of
some sort on our economy and financial markets before it is all played out. This morning I shot out
the following to"Azteca de Oro" to get his thoughts:

"The situation appears to be worsening. Nothing makes sense to me.

How can you magically solve the problem without letting prices rise sharply to start a rationing
process via conservation? How can anything get better if the state government gets involved? What
do they know about energy production and deliveries? How can these blackouts that go on and on
not be seriously hurting the economy - or at least effecting economic performance in the very near
future?" END.

"Azteca de Oro came back with such an interesting and informative response I thought I would
share it with you:

"As I have said before, the only way to fix the situation is to let a FREE market reign, and let the
utilities charge for power as much as they can AFTER they can get into long term energy supplier
contracts.

This will encourage conservation by consumers and the bubble will deflate rapidly, also by the
encouragement investors would get by building NEW ADDITIONAL generation capacity. As it is
right now, they have only prolonged the agony for nothing.

The state bought power, with taxpayer money, to supply it to the utilities, so they can sell it at
CAPPED (subsidized) rates.

Meanwhile the bonds, equity and debt of the failing utilities plunge, hurting investors that thought
ENERGY was a sound investment.

These investors are having their worst nightmare, for only in Socialist or Communist societies,
energy is not a business but a property of the State to be rationed out at the political will of the
leaders.

Sadly this is what is happening in California.

This economic distortion, in turn affects the banks, in a systemic way, as the bonds and debt
collapse, knocking off some alarm levels in the banks themselves.

The market is amazing, as the wealth SUBSIDY"imposed" or granted on the customers of
California, is being paid by the energy producers, the investors, and the banks.

The rolling blackouts have affected some refineries that don't pay for premium power
(un-interruptible) or that don't have internal generation facilities.

They have also affected some pipelines.

Fuel shortages are the order of the day in San Francisco airport, through they are managing so far.
They have resorted to running most of the time their EMERGENCY power generation, due to the
blackouts.

This is an invitation for a disaster, as these generators are not meant to be used ALL the time.
When push comes to shove they will need maintenance at the WORST (Murphy's Law) time.

BP is trucking like crazy their gasoline due to pipeline disruptions, in an effort to maintain supply at
their gasoline stations.

Many businesses as you say, are suffering due to the blackouts.

Many high tech companies have their own generation facilities, but the normal economy does not,
and they are being affected.

GDP of California, as a consequence, must be plummeting right now.

The IDIOTS of the media have started pandering that energy costs will lower, due to the lower
consumption forced by the forced slowdown due to lack of electrical energy in the first place.
The only thing that will happen is that supply of energy will keep contracting, at higher prices, if this
situation continues.

They must be brain-dead. Six months ago I warned that the energy infrastructure of the US was
strained and overloaded. It has come to pass right now that the first noticeable affects are trying to
be disguised by the California government.

And they keep ignoring the GAS situation....this is the real time bomb.

Suppliers refuse to continue selling gas to the utilities in California.

And Bush so far he has kept quiet....While he has friends in the energy sector, I doubt if he could
pull magic out of thin air. If he keeps stalling, the thing will blow up.....Perhaps that is the intention
?

Supposing we make it to the other side of this winter with barely enough gas stocks, clearly there is
not enough for the next one, barring that we have a tropical winter next year.

And this is a big supposition, as perhaps supply will be forcibly reduced in March if we do not make
it....

However, recent indications point out that the artificial clouds I was mentioning to you, are being
made to reflect sunlight into space, in order to arrest the rapidly rising surface temperature and the
risk of an Antarctic catastrophic ice shelf collapse.

If there is any truth to these allegations, the next few winters can only be colder, as the missing 2%
- 3% sunlight energy will cause further cooling.

This effect is needed in order to first stabilize Antarctic mean summer temperatures, and then bring
them down appreciably below 32 F in the summer to prevent further ice erosion and encourage ice
growth.
I think there is a lot of denial out there, Bill. Reality will catch up sooner or later.....
Like continued market stability in light of continuing BAD news.....
To me, this is the calm before the storm........." END.

Best Regards,
"Azteca de Oro"

A suggestion for gold producers from Ken"Aloha" Shock:

Ref: Harmony and the financing situation. In New Zealand and to a lesser degree Australia, public
companies make Rights Offerings to existing shareholders rather than going to Banks. The rights
are exercisable at a price sufficiently below recent trading to make them attractive to shareholders
and provide a return in lieu of interest. The Rights also trade on the open market for a month or
two before the exercise date to enable shareholders who do not wish to participate, the opportunity
to sell the rights. In this way acquisitions and major capital improvements are financed with little or
no recourse to Banks. Shareholders who do not like company policy can sell their rights and get
diluted and shareholders who like the company's direction can buy additional Rights in the open
market.

In this way the company and shareholders become more focused and are immune to the influence of
many forces outside management, such as Cannibal Bankers!! Right Offerings are not a
contrivance used by Mickey Mouse companies, in fact it is a preferred method of some of NZ's
largest companies. Recent examples were Air New Zealand for the acquisition of Ansett Airlines in
Australia, Natural Gas for purchase of another Utility company.

These are amoung NZ's largest companies and the method is frequently used and is in fact the
prevalent method in acquisitions.

The North American, Australian and South African Gold miners can EASILY BREAK THE CHAINS
of the CANNIBALS!!! I consider this a first rate method of improving Gold's prospects. Even at this
stage Harmony, could announce a Rights Offering to pay off the Bankers after the acquisition.
Goldfields could do a rights offering now to protect existing shareholders from a Hostile
Barrick/Anglo invasion, which, if successful, would leave open huge new Gold reserves for hedging.
Now we know why the Franco Nevada deal was trashed!!! END.

Some comments from Mark Wellesley-Wood: Chairman, Durban Roodepoort Deep:

"I'm out on a two-week road show through Europe, Mining Analyst Association in London, through
the States and North America. And we will continue to carry this message, because I think we are
looking at a time now where gold could enter an upward spike. With the marginality of DRD, we're
in a good profitable position to now benefit from any upward move in the gold price, and I think the
market should be aware of that." END.

From Peru:

According to Bloomberg, on Jan. 12th, John Bridges, JP Morgan mining analyst, updated his ratings,
putting Newmont, Placer Dome and Buenaventura as"restricted". I'm not exactly sure what it
means, but as far as I know, one only puts out a"restricted" rating when you're involved in some
kind of deal.

"Alberto"

While the games The Gold Cabal are playing are extremely tedious, it won't be long before they are
sent packing. Gold, silver and the gold/silver shares will be THEE place to be for many many years to
come.

MIDAS





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January 20, 2001 - Spot Gold $265 up 30 cents Spot Silver $4.77 down 3 cents

Extraordinary Set Up For Significant Upside Gold Move Continues To Build!

2 plus 2 - time to pay attention!

The gold action on Friday was the same as it has been for many many months. When I woke up,
gold was $2 higher in European trading. As Comex trading hours approached and then commenced,
the price of gold sank like it has almost 100% of the time recently. Only gold could trade 98% of
the time exactly the same way and practically no one comment on that predictable fact.

When the gold scandal breaks into the mainstream public consciousness, as well as in the legal and
criminal arenas, that will be for the investigators and lawyers to pour over. For gold investors, that
pattern may become"spilt milk" soon.

It is very likely that the protagonists on Friday were not the usual suspects.

On January 11, the following appeared in Midas commentary:

Johannesburg (Platts) -- 10Jan2001
South African's Harmony Gold said Wednesday it does not foresee any problems in finalizing
funding arrangements for its Rand 1-bil (126.58-mil) acquisition of Elandsrand and Deelkraal gold
mines from AngloGold. The market here has been buzzing with rumors that funding had become a
problem. However, Harmony's CEO Bernard Swanepoel said that negotiations are progressing well.

He did confirm, however, that Harmony is in discussions with the banks about protecting the
lenders. This means that Harmony might have to buy put options on gold to serve as a cushion if
prices fall below a certain level. But this strategy could lead to some financial losses if there is a
rebound in gold prices. Harmony is one of the few South African gold companies that chooses to
remain unhedged. END.

While Café sources heard rumors of Harmony forward selling all week, we received further
confirmation of this on Friday. Word is that the Hannibal Cannibal bullion banks have forced
Harmony to hedge 1.65 million ounces of gold in order to get their funding.

My guess is that Harmony is not too thrilled about this, but has no choice. That means that the gold
market has been bombed by this bullion bank induced sale recently, so we can identify one major
source of the recent selling.

A second source is the speculative crowd. After the close on Friday, it was revealed in the COT
Report that the large specs are now spectacularly short to the tune of 57,160 contracts. The small
specs are short around 2300 contracts. The small specs are almost never short gold. The total gold
open interest is only 139,407 contracts, which means the percentage of spec shorts is extremely
high.

So now we know that we have an unhappy forced seller and the specs mega short. All this at a time
when the money supply exploded $144 billion the past 6 weeks and with the U.S economy is in a
much more precarious condition than the pundits let on.

It is a documented fact the U.S. savings rate is at record lows and that the U.S public is as invested
in the stock market as at any time in history. All are waiting for the"inevitable rally" that will
make them whole after last year's drubbing. ENTER THE ENERGY CRISIS.

This week I received my electric bill. It was a shocker - more than double of last year. My shock is
the shock of most of the US. What is worse are some of the corporate bills. One Café member told
me he is very disturbed about the viability of his clients because their energy bills have soared from
$2,000 per month last year to $15,000 per month at the present time. They are stunned. Again, that
is happening all over America.

That is the bad news. The worse news is that the future looks bleak in this regard. It will take a
couple of years, at best, to bring natural gas prices back down. And oil? February Crude Oil has
quietly risen all the way back to $32.19 per barrel, up a whopping $1.74 on Friday. OPEC is cutting
production by 1.5 million barrels and Iraq is still not really shipping. Where is this going to take
gasoline prices this summer?

Then again, maybe none of us should pay any attention, because energy is not part of the core of the
CPI or PPI; therefore, it does not really count.???

It is not only energy prices that are moving higher. Also quietly, the CRB has risen to over 230,
even though the grains have been very weak. I suspect that we will see new multi-year highs in the
CRB sooner, rather than later.

Pile the recent move in silver on top of this scene and all in all, a very bullish gold scenario.

OK, those are the sellers. Who are the buyers? My guess is that some of the Gold Cartel have been
covering. As noted in previous commentary, I think they raided the South African rand in order to
induce the Harmony selling, so that they could start covering physical gold shorts, like they are
doing in silver.

That would not be the first time they suckered a gold producer to sell, while they bought. We only
need go back to the Chase Bank induced Newmont Mining"put buying/call writing" of 1999 right
ahead of the Washington Agreement when gold traded at similar prices and lower. Many of the
bullion dealers covered shorts at that time also.

This is why I nicknamed Goldman Sachs"Hannibal Lecter" and some of the other bullion dealers
"Hannibal Cannibals" two years ago. Never in history has there been such a conflict of interest
between banker and client. The Gold Cartel has been eating some of the gold producers for lunch.
Just ask Ashanti.

Speaking of silver, long time silver aficionados felt for some time that a silver open interest of about
75,000 was around rock bottom because it represented the long term hard core silver bulls that
would never get out. Not so. The silver open interest has dropped all the way down to 67,000
contracts. That is pitifully low and reaffirms our thinking that The Gold/Silver Cartel is seriously
covering their silver shorts, while demoralized long-term silver bulls have finally thrown in the
towel.

Silver could easily be squeezed considering the huge silver supply/demand deficit. The silver open
interest could easily double as new buyers enter the picture. Much excitement to come on the visible
silver horizon.

This weekend marks the beginning of a new U.S. administration. Will it mark the end of the
strength in the dollar?

Strong Dollar Policy a Good One

By William Pesek Jr.

Washington, Jan. 18 (Bloomberg) -- Trekking through Africa last year, Lawrence Summers turned
to me and asked if I could spare a $1 bill. The Treasury secretary wanted to explain who he was to a
cluster of Tanzanian school children, not to mention leave his mark. So Summers, pen in hand,
traced his signature, the one stamped on all new bank notes. While the routine got a good laugh, it
was also an apt metaphor for his legacy as U.S. finance minister.

A strong dollar will likely be synonymous with the Rubin/Summers era. Former Treasury chief
Robert Rubin started the mantra: A strong dollar is in the best interest of the U.S. economy.
Summers stuck with it. And currency markets yesterday were relieved to hear Paul O'Neill,
President-elect George W. Bush's nominee for the post, say that he too favors a firm U.S. currency.
O'Neill even impressed markets by wasting no time in stating his preference to a strong buck.

``Let me say at the outset, I am in favor of a strong dollar,'' O'Neill told the Senate Finance
Committee during his confirmation hearing. ``I can't believe that anyone would think to the


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