May 31 - Gold $395.10 up $1.40 - Silver $6.15
up 6 cents
Now Hear This!
The Midas title is to honor, on this Memorial
Day, WW II Navy Submariner, my friend and veteran Café member/GATA
supporter, Navy George!
WISDOM OF THE NAVAJO
A man is driving toward home in Northern Arizona when he comes
upon a Navajo man hitchhiking.
Because the trip has been long and quiet, he stops the car
and the Navajo man climbs in.
During their small talk, the Navajo man glances surreptitiously
at a brown bag on the front seat between them.
"If you're wondering what's in the bag," offers the man, "it's
a bottle of wine. I got it for my wife."
The Navajo man is silent for a while, nods several times and
says, "Good trade."
That little ditty will certainly get me in
trouble with some of our burgeoning number of female Café
members, however, I couldn’t resist – it had me chuckling
The London and New York markets were closed
today for a holiday so we don’t really know how the oil and
gold markets will react to the recent violence in the Saudi
oil town of Khobar. Certain minor gold markets were open and
bullion rallied $1.40 with silver gaining 6 cents.
The Saudis have given assurance oil supply
and their coming production increase will not be affected
by the massacre. We shall see. Tell that to the dead oil workers
and their families. Three out of four of the murderers even
escaped somehow to come back and haunt the Saudi oil industry
at a later date. Oil may not rally too much, but the terrorists
are coming closer and closer to seriously interrupting the
Saudi oil flow. Besides, who in their right mind would want
to work there? Also, who in their right mind would want to
be short oil, unless hedged with a guaranteed supply source?
Time will tell on the oil score.
Meanwhile, this development comes with gold
specs the least long in over a year. The small specs are the
least long in almost two years. Therefore we have a set up
for gold to really rocket as the specs pile in on the long
side, especially if gold takes out its 200-day moving average
which is nearly $3 higher than Friday’s close.
The Café’s Sentiment Indicator leaped on
Sunday after being very so-so for five weeks. This tells me
the Saudi oil town massacre will affect those interested in
the gold market all over the world.
The silver open interest is down approximately
25 % off its highs at 85,489. With the physical market has
tight as it has been in memory, silver could fly at any time.
The caveat for our camp is The Gold Cartel.
As we know, gold has become a "reverse barometer indicator."
The days when it should take off most, cabal forces sit all
over it to calm down financial markets. However, with the
potential of 70,000 specs jumping on the long side in the
weeks to come, they are going to have their hands full keeping
gold down below $400.
There is every reason to anticipate gold
and silver taking out their highs made early this spring in
the months to come.
CARTEL CAPITULATION WATCH
I am preparing for my presentation at Joe
Martin’s Vancouver gold conference on June 13 and for a group
of portfolio/hedge fund managers in Boston in the latter part
of June who collectively handles over $1 billion dollars in
The theme is going to be why it is so important
to be aware of what GATA knows and why this knowledge ought
to lead to extraordinary investment gains in coming months
and years. With the recent events in Iraq and Saudi Arabia,
I thought it a good time on this Memorial Day Weekend to pound
away at a portion of this theme to Café members. Those who
remain short gold and silver for much longer will be memorializing
for different reasons down the road.
For my upcoming presentations I am going
to hammer home three key points:
*1 - Officialdom has lied to the investment
world about what is really going on in the gold world.
*2 - They have done so to cover up a vast
conspiracy concerning gold held for the world’s public; 11,000+
tonnes more than acknowledged of CB gold has left the vaults
of the central banks in order to artificially suppress the
*3 - As a result, this "Gold Cartel" is running
out of enough central bank gold to continue their scheme.
More than half the central bank gold is GONE! With a growing
supply/demand deficit of 1500+ tonnes per year, the price
of gold has to explode to bring the supply/demand situation
into equilibrium, whether that be next month, or next year!
My presentation won’t go into anywhere near
this amount of detail, however, here is some support for just
point one. Much of this will be review for vet Café members,
yet it even astounds me when I reread what our team has come
up with over the years and how it all fits into GATA’s long-standing
gold price manipulation and cover-up accusations.
After the price of gold spiked in September
1999, following the surprise Washington Agreement, one which
limited the sale of gold by 15 European countries to 400 tonnes
per year and held the amount of lending to the existing amount
at the time (there was no mention of swaps), the IMF called
a meeting of its members in Santiago, Chile. During this meeting,
the IMF directed its members to count gold left in its vaults
via lending and swapping operations to be counted on their
books as bank reserves, i.e., to perpetuate a hoax. GATA’s
Mike Bolser made this discovery essentially finding The Gold
Cartel’s playbook. As a result, Mike and the rest of the GATA
ARMY have been all over this ruse for years by exposing this
deception with concrete evidence. In the years to come, the
horrific ramifications of this fraud upon the financial world
will be astounding.
Some examples of the various "officialdom"
From GATA’s Sid Reynold's October 23, 2003
commentary at The Matisse Table:
#11. IMF has directed CB’s not to disclose
how gold is leased/swapped, only total reserves (proof below).
The IMF has denied this in writing, "This
is not correct: the IMF in fact recommends that swapped gold
be excluded from reserve assets." Refer
http://www.gata.org/bofi.html, and search
However, numerous member countries/entities
have proven the IMF has lied ie
• Philippines: "Beginning January 2000, in compliance with the
requirements of the IMF's reserves …, gold under the swap arrangement
remains to be part of reserves and a liability is deemed incurred
corresponding to the proceeds of the swap." Refer www.bsp.gov.ph/statistics/sefi/fx-int.htm,
and search for "swaps"……
Central Bank: "Following the recommendations set out in the
IMF operational guidelines of … developed in 1999, all reversible
gold transactions, including gold swaps, are recorded as collateralised
loans in balance of payments and international investment
position statistics. This treatment implies that the gold
account would remain unchanged on the balance sheet." http://solutions.synearth.net/2003/02/21….
Clearly this reveals the IMF is lying with
the ECB unintentionally acknowledging this lie. The fact the
GATA ARMY has caught the IMF not telling the truth is bad
enough. Then there is the Treasury/Exchange Stabilization
Fund, which has been caught fabricating too thanks to the
brilliant work of James Turk (www.goldmoney.com),
whose discovery made it into Reg Howe’s superb law suit in
Boston Federal Court. This was recently rehashed by GATA’s
Andrew Hepburn and the Netherlands' Mihaly Schroth. Mihaly
writes on April 26:
In the past we had a debate whether or not the Exchange Stabilization
Fund (ESF) was active in the gold market (Reg Howe & Andrew
Hepburn). A bit from Andrew Hepburn's essay:
The U.S. Treasury explicitly denies that
the ESF has been used for gold market interventions. On the
"Frequently Asked Questions" section of their website, the
following claim is made: "The ESF has not been used to manipulate
gold prices. In fact, the ESF has not held gold since 1978."
As noted above, the Treasury claims that,
"The ESF has not held gold since 1978." This is demonstrably
false. The Federal Reserve's Statement of U.S. Reserve Assets
for January 2001 contains the following line item: "Gold Stock,
including Exchange Stabilization Fund."
Keep in mind that one month earlier, Reg
Howe filed suit against (among others) the Secretary of the
Treasury. That might explain why the above line item was altered
for the February 2001 Statement of U.S. Reserve Assets to
read: "Gold Stock."
As is apparent, the Federal Reserve removed
the explanation, "including Exchange Stabilization Fund."
No reason was provided when the line item was altered. More
importantly perhaps, the Fed has stonewalled repeated inquiries
asking why this change was made. While Fed officials have
responded to letters on the subject, at no point have they
explained the rationale behind the removal of the ESF reference.
So, the Federal Reserve altered the Statement
of U.S. Reserve Assets. First the ESF was included, and then
removed. My guess is they will have to remove some more, because
I found the following on:
Salient Statistics-United States:
Stocks, yearend, Treasury 38,140
And now watch the footnote:
3 Includes gold in Exchange Stabilization
Fund. Stocks were valued at the official price of $42.22 per
So, how long will it be before they are gonna
remove it from this site.
OK, now let us go back in time:
BOARD OF GOVERNORS
FEDERAL RESERVE SYSTEM
Washington, D.C. 20551
June 25, 2001
The Honorable Jim Bunning
United States Senate
Washington, D.C. 20510
Thank you for your recent
letter requesting information related to an inquiry received
from two of your constituents, Mr. and Mrs. Rupert Raymond.
The Raymond's letter principally concerns remarks made at
a January 1995 meeting of the Federal Open Market Committee
(FOMC) by Virgil Mattingly, in his capacity as general counsel
to the FOMC. A memorandum addressed to me from Mr. Mattingly
on this matter is enclosed for your information. The memorandum
responds to the matter raised by the Raymonds in their letter.
I would like to take this
opportunity to confirm the statements I made last year regarding
the Federal Reserve and gold in a letter to one of your colleagues,
Senator Joseph Lieberman. In that letter I said:
"The Federal Reserve owns
no gold and therefore could not sell or lease gold to influence
its price. Likewise the Federal Reserve does not engage in
financial transactions related to gold, such as trading in
gold options or other derivatives. Most importantly, the Federal
Reserve is in complete agreement with the proposition that
any such transactions on our part, aimed at manipulating the
free price of gold or otherwise interfering with the free
trade of gold, would be wholly inappropriate."
These statements accurately
reflect the facts and long standing Federal Reserve policy
I hope this information is
helpful. Please let me know if I can be of further assistance.
June 8, 2001
TO: Chairman Greenspan
FROM: J. Virgil Mattingly
SUBJECT: Inquiries regarding "gold swaps"
This memorandum responds to
your request for information related to recent inquiries the
Federal Reserve has received regarding remarks I made at a
January 1995 meeting of the Federal Open Market Committee
("FOMC") in my capacity as general counsel.
These inquiries focus primarily
on a statement attributed to me that appears on page 69 of
the published transcript of the January 31-Feb1, 1995, FOMC
meeting to the effect that the Exchange Stabilization Fund
("ESF") has engaged in "gold swaps." Given the passage of
time, some six years, I have no clear recollection of exactly
what I said that day but I can confirm that I have no knowledge
of any "gold swaps" by either the Federal Reserve or the ESF.
I believe that my remarks, which were intended as a general
description of the authority possessed by the Secretary of
the Treasury to utilize the ESF, were transcribed inaccurately
or otherwise became garbled. The Federal Reserve's lack of
involvement with gold and gold-related financial instruments
is set forth accurately in your January 19, 2000, letter to
Senator Lieberman, a copy of which is attached. My remarks
should not be interpreted as modifying in any respect what
is set for that letter.
With respect to activities
of the ESF, I note the Treasury Department stated in a recent
federal court filing that the ESF has not held any gold since
Now, wait a minute! We have
just shown above that the ESF HAS HELD gold since 1978. Mattingly,
with his "garbled" remark reveals how disingenuous and murky
he is as a Fed lawyer. Clearly, he is copping a plea about
the ESF when he cites the Treasury Departments incorrect statement,
in an attempt to cover his own deceptive butt.
Here is the Howe vs. BIS court
filing Mattingly is referring to:
The U.S. Treasury also denied
intervening in the gold market. In a court filing dated March
15, 2001, then-Secretary of the Treasury Paul O’Neill asserted:
at this juncture, the secretary specifically denies that the
Treasury or the [Exchange Stabilization Fund] since 1978 has
traded in gold or gold derivatives for the purpose of influencing
the price of gold or the exchange value of the dollar. In
fact, the ESF has not held any gold since 1978.
Then, there is the devious
Greenspan with his "wholly inappropriate" comment - YES INDEED
inappropriate – yet, his words too do not pass any kind of
On July 24, 1998, Greenspan
told the House Banking Committee: "Central banks stand ready
to lease gold in increasing quantities should the price rise."
He repeated that statement a few days later to the Senate
Is the Federal Reserve the
only central bank Greenspan is NOT referring to? If so, why
did he not say so? This is what the Reserve Bank of Australia,
whose government is our strategic ally, has to say on this
subject on Page 31 of its annual report for 2003:
"Foreign currency reserve
assets and gold are held primarily to support intervention
in the foreign exchange market. In investing these assets,
priority is therefore given to liquidity and security, in
order to ensure that the assets are always available for their
intended policy purposes."
The Reserve Bank of Australia's admission can be found here:
This brings us back to Greenspan.
How does he explain this GATA ARMY revelation:
These denials do not square
with a remark found in a January 1995 Federal Open Market
Committee meeting transcript. Responding to a question raised
by then Federal Reserve Board Governor Lawrence Lindsey about
the legal authority of the U.S. Treasury’s Exchange Stabilization
Fund to engage in the financial rescue package for Mexico
then under discussion, J. Virgil Mattingly, general counsel
of the Fed and FOMC, stated (p.69):
It's pretty clear
that these ESF operations are authorized. I don't think there
is a legal problem in terms of the authority. The statute
[31 U.S.C. s. 5302] is very broadly worded in terms of words
like 'credit' -- it has covered things like the gold swaps
-- and it confers broad authority. [Emphasis supplied.]
Hello??? Mattingly??? ESF
authorized gold swaps??? This shoots down Mattingly and the
US Treasury once again!
Meanwhile, with what we have
learned over the past six years, there is no way the Fed has
not actively been involved in the gold market for some time.
Yes, Lindsey is referring to the ESF, further proof of lying
by the Treasury higher ups, however, no way the Fed is not
directing some of the activity utilizing Greenspanesque language
to define what the real meaning of "IS" is.
Not only do the statements
by the ESF, Treasury, Mattingly, and Greenspan not pass the
smell test, the above evidentiary material reveals them to
be speaking falsehood after falsehood (which would not hold
up in any court of law under scrutiny), and that is putting
it both mildly and politely. When the gold scandal comes to
fruition, all of these characters and institutions should
be held accountable.
There has not been a legitimate
audit of US gold in 50 years. Congress is up in arms about
proper due diligence in the corporate sector and appropriate
accounting procedures as a result of recent scandals. Then
why won’t they approve a legit audit of the US gold reserves?
There is a good deal more
of additional GATA evidence catching these people in their
nefarious games, games which are going to terribly harm the
average American from a financial market point of view in
the years to come.
One of those bits of evidence
relates to Fed/Treasury gold swaps and US government covert
gold activity caught by GATA’s Mike Bolser, publicized by
James Turk, and then covered up by the U.S. Mint in a ludicrous
"Bolstering GATA's allegation
that gold swaps may have jeopardized the ownership of a substantial
portion of the U.S. reserve is an accounting change made in
September 2000. The U.S. Mint reclassified approximately 1,700
tonnes of gold at West Point, New York, to "Custodial Gold
Bullion" from "Gold Bullion Reserve." This, of course, suggests
that the gold was being held in custody by the mint for its
real owner. (Online copies of the August 2000 and September
2000 Status Report of U.S. Treasury-Owned Gold are no longer
available. However, a reference to the accounting change is
made on the Frequently Asked Questions section of the Treasury’s
The mint did not explain why the West Point gold was reclassified
and the gold at Fort Knox and Denver was not. But before it
could be pressed on the issue, in July 2001 the mint redesignated
94% of the U.S. gold reserve as "Deep Storage." Once again,
no reason was provided for the accounting change."
Clearly again, the GATA ARMY
caught the Treasury and Fed with their pants down. The Treasury
panicked and classified all denominated US gold as "DEEP STORAGE
GOLD," so as not to deal with this custodial gold issue any
further. As it seems to appear from this comical change of
classification, a good portion of our US gold might be gone
and could actually be spoken for in surreptitious swap transactions
– and could mean our gold reserves are really in the ground
to be delivered to the US in the future by the likes of Barrick
Gold, etc. Thus, the Treasury/Fed appears to be saying, "You
caught us, thus we are covering our big dumb behinds." When
you follow this "Mint" classification flow, it reads like
Abbot and Costello’s "Who’s On First" routine.
What is most important to
understand is that GATA is right and this means the gold loans/swaps
are 16,000+ tonnes (as extrapolated over and over again in
previous MIDAS commentary), meaning more than half of the
central bank gold is already spoken for, which also tells
us The Gold Cartel is gradually running out of bullets to
keep the gold price from exploding. Gold and silver are TIME
BOMBS! We have some real gold price excitement ahead of us.
An excerpt of an excerpt from
outstanding outside Cafe commentary by Ken Gerbino. It is
important to keep in mind gold soared in 1993 with the dollar
going UP, not down:
The Fed Can't Stop Inflation
Kenneth J. Gerbino
Posted May 28, 2004
The following is an excerpt
from a recent client letter
Here are some hard-core facts that you need to consider
Here is something else important
to understand. The dollar is not always that good a
barometer of the gold price. From 1976 to 1980 the dollar
index went from 106 to 92, down only 13%, yet gold during
this time went from $103 to $850, up over 700%.
From 1985 to 1995 the dollar index collapsed
from 140 to 80, down 43%. Gold during this time went from $325
to $390, up only 20%. Gold should go opposite to the dollar
but the magnitude of the
move has a life all its own and regardless of all complexities
and theories the bottom line is that it is the world's heavyweight
champ of money and liquid wealth, regardless of whatever everything
else is doing. Besides, the price of gold is based on supply
and demand of gold not dollars. If the top 10 gold mines in
the world closed down for any reason, that would take 20% of
the mine supply off the market. Regardless of the dollar, you
could bet gold would go up. The gold/dollar relationship has
merit, but it is not the key determinate to the ultimate value
of gold. Gold is headed higher regardless of the dollar, the
Fed, or interest rates. The gold stocks are also. The current
sell-off in the mining shares is a buying opportunity.
to dominate much of our news:
I subscribed to this thing hoping to get the full article
for you. This part of it I found on one of the message boards...should
they email it to me, I will forward to you.
China Reform Monitor No. 546, May 28, 2004
American Foreign Policy Council, Washington, DC
Editor: Al Santoli
Associate Editors: Miki Scheidel, Lisa-Marie Shanks
CHINA’S DEMAND DRIVES OIL PRICES HIGHER
China is considering diversifying its foreign exchange reserves
out of U.S. dollars, according to Guo Shuqing, Beijing’s top
foreign exchange manager, reports China Business Weekly. Due
to concerns over the weak U.S. dollar, the country’s US$440
billion foreign exchange stockpile is being altered to include
more European and Asian bonds. The possibility of Beijing
offloading some of its vast U.S. Treasury holdings sends shivers
through the investment community, as
it risks further deterioration in the U.S. foreign exchange
deficit and increases the possibility of a weaker dollar.
I work for a utility in western Canada and they can't get
enough gas meters; management's initial response was that
the supplier out of the US is reported to have production/labour
issues. Typically our customer service people would hang about
10-12 meters per day and now, in the middle of a housing boom,
they are doing only 4-5 per day. They say there is a huge
back log of angry customers wanting hook up. Now management
has changed their story to say that more and more customers
are choosing electricity over natural gas as the cost is now
about the same....but of course they would turn to electricity
after they give up waiting for gas!!
studs are now almost impossible to find as well. The main
distributor, who has locked up his supplier to a 10 year deal,
says he is making a killing selling to China and is no longer
selling to his Western Canadian outlets. He will have too
much money to care about his old customers after just a few
years of this frenzy - never mind 10 years from now!!
I've seen this before. GATA's bullishness cited by analyst
as a countervailing negative in investor sentiment assessment.
You guys are becoming distressingly mainstream...
Seems more and more in the mainstream are
getting GATA confused with MIDAS commentary.
Some thoughts on the XAU:
Island Reversal (confirmed?)
The XAU seems to have completed and confirmed
an island reversal formation. The island is formed between
the levels of 76 and 86 between April 28th/29th
when the XAU gaped down at the 86 level and May 19th,
21st and again on the 25th when the
XAU gapped up at the 83 level, at the 85 level and again at
the 86 level. Though this island is on the daily charts instead
of the more powerful weekly charts it could be significant.
Jack D. Schwager writes in his book "Getting
Started in TA":
Island reversals can often signal major trend
transitions and should be given significant weight unless
the gap is eventually filled. …it is usually a good idea to
wait at least three to five days after the island reversal’s
initial formation before concluding that it is a valid reversal
We have had seven trading days since the
breakout of the 19th of May, five trading days
since the 21st and three trading days since the
most recent upside island gap of the 25th without
filling any of the gaps.
In conjunction with the USDX’s breakdown
from its wedge formation as pointed out by Sinclair, things
are looking quite good for the PM’s.
All the best,
Thought you might like to see some pictures
from Mahendra’s presentation and his reception at Sipango
in Dallas last Thursday. A special thanks to long time GATA
supporter and Café member Nancy Klune, our designated photographer:
Picture one is myself and my webmaster Mike
Cunningham ( those in search of a very good one can reach Mike,
also an accomplished pilot, at email@example.com). Picture
four is of me and Mahendra. Picture 5 depicts Mahendra speaking
to the attendees. Picture 7 is of Nanik Daryanani, who flew
in from Spain to meet Mahendra.
few points concerning Mahendra:
*Mahendra, who has been compared to a Nostradamus-like
persona at a VERY young age, is someone who connects with
nature. He is not about religion as far as his work is concerned,
which he realizes upsets certain conservatives in the US and
followers of certain other religions. However, what he emits
is certainly about his own spirituality (he does not smoke
or drink, is a strict vegetarian, meditates 4 hours a day,
supports charities and adopts orphans). Ironically, some of
his biggest Cafe fans are devout Christians.
*Most of his major clients are institutional
money managers and there are even a few out there with even
more mainstream stature.
*A brief review of his market predictions
(since this MIDAS may be read by those who don’t read my daily
commentary – for those who want to know more they should go
- Silver is his number one pick. Look for
around $12 this year if silver holds above $7.95 for 21
days. In the years to come, look for $48 per ounce to $98
- Gold will trend higher. Could soar anytime
after September 4. His target is $1600, then to fall back
to a $1,000 new base before advancing again.
- Oil could go as high as $100 per barrel.
The play is a five year one.
- The risk reward ratio in the US stock
market is lousy. Exit on rallies. Look for the Dow to tank
to 5,000 to 7,000.
- The US housing market is in big trouble.
- Around 10 days ago, Mahendra jumped on
coffee and suggested we all do so, which was one of his
biggest new positions. It has exploded. Have no clue when
he will get out.
To order Mahendra’s 2004 book: http://www.mahendraprophecy.com/orderform.asp
Ironically, many of Mahendra’s positions
have been ones I have expounded on for years. The fact that
many of our predictions and posits of what is to come in the
financial markets happen to coincide is just the way it has
worked out and is MOST comforting to me. Mahendra does his
thing. I do mine. Seems a "twain" has been met here. I will
continue to do all my own work, however you can bet your booty
I will want to know what Mahendra is thinking and what he
sees ahead for the financial markets and for the ensuing precious
metals bull market journey.
One thing for SURE, if both of us are right
and you want to hit an investment home run in gold and silver,
GATA BE IN IT TO WIN IT!
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