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More evidence compiled by Howe about central bank efforts to suppress gold

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  • GATAComm@aol.com
    11:40a Saturday, December 20, 2003 Dear Friend of GATA and Gold: GATA consultant Reg Howe has inspected the books of the Bank for International Settlements,
    Message 1 of 1 , Dec 20, 2003
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      11:40a Saturday, December 20, 2003

      Dear Friend of GATA and Gold:

      GATA consultant Reg Howe has inspected the books of
      the Bank for International Settlements, the Commodity
      Futures Trading Commission, the U.S. Office of the
      Comptroller of the Currency, and other financial
      authorities for his new analytical essay, "Gold
      Derivatives: Hitting the Iceberg."

      Howe's major conclusions:

      "That producer hedge book reductions have had little
      if any impact on total gold derivatives reported by
      the BIS suggests, as does the absolute data itself,
      that producer hedging never accounted for much more
      than the very visible tip of a gold derivatives
      iceberg consisting in major part of transactions
      related to the gold carry trade, which never could
      have grown to the size implied by the BIS data
      without the active support of the G-10 central
      banks....

      "Clearing house rules require that losses to trading
      accounts be posted each day at settlement. Losses of
      the size incurred by the commercial gold shorts over
      the past few months beg two tough questions: What risk
      management system would allow losses of this magnitude
      to accrue without mandating the closure of losing
      positions? And are the central banks, directly or
      indirectly, assuming the burden of these losses?....

      "While gold derivatives reported by the BIS declined
      slightly in this year's first half, the gold
      derivatives of U.S. commercial banks, including J.P
      Morgan Chase, rose in the second and third quarters
      by nearly 1,000 tonnes. These increases, which came
      at the same time that the commercial shorts on the
      COMEX were raising their open positions to record
      levels notwithstanding eye-popping mark-to-market
      losses, lend further support to the hypothesis that
      the commercial shorts consist primarily of bullion
      banks with both heavy exposure to the gold carry
      trade and substantial official support."

      Together with GATA consultant Mike Bolser's recent
      study, "Government Intervention: Gold and Long-Term
      Interest Rates," which can be found here --

      http://www.gata.org/Bolser121803.htm

      -- this research documents how central banks are
      struggling to defeat free markets and deceive the
      world about international economic policies and
      conditions. This is essentially totalitarian
      and unjust and thus is likely to have a bad end.

      Howe concludes:

      "The gold community has prospered more than most
      over the past year. And having endured years of
      oppression by government, not to mention ridicule
      by establishment figures of all stripes and colors,
      gold bugs have earned the right to enjoy their
      good fortune. But real gold bugs are not
      profiteers. They are freedom fighters. For them,
      securing their own financial survival and that of
      their families is important but not sufficient, for
      they dream of a world in which gold is again the
      international monetary numéraire and where all
      peoples and nations meet on a level economic
      playing field characterized by free markets and
      an absence of malignant government intervention.

      You can find Howe's "Gold Derivatives: Hitting the
      Iceberg" at his Golden Sextant Internet site here:

      http://www.goldensextant.com/commentary26.html#anchor25233

      If you read nothing about markets over the next year
      besides these works of Bolser and Howe, you still will
      know more about what is really happening than if you
      read the major financial publications from cover to
      cover every day.

      GATA is deeply grateful to Bolser and Howe for their
      scholarship and courage.

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

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

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

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