Pressure NOT To
Deliver Gold?
Is There Enough?
By Bill Murphy
Copyright © 1999 crazytimes/Kitco Inc. All rights reserved
Note - Bill Murphy will be Jeff's Guest Tuesday, 10-5.
In the last Midas, I reported to you that several sources told me that the Federal Reserve was "jawboning" futures commission merchants not to pressure firms to "deliver gold." In other words, they know that the gold is not there for the shorts to deliver and, as I have long suspected, it appears that they are protecting the positions of certain bullion dealers and of other financial institutions that are short gold. This corroborative information is clear evidence that the gold market has been manipulated as the Gold Anti-Trust Action Committee has alleged.
Two days ago, I received information that a futures commission was told by another futures commission merchant that it was prepared not to deliver gold on its " gold forward or futures contract" obligations that was expected by a client of the firm who 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 they do not pressure the shorts into making delivery and that they 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 to me that is not prepared to fulfil its obligations. That is what my sources in the market place are telling me.
It should be of no surprise to any of you that Counterparty Risk Management Group Co-Chair's, Goldman Sachs and J.P. Morgan were all over London CNBC this morning talking down the gold market. Sources tell me that Goldman suggested on the tube that the big gold shorts covered on the run up while Morgan's Kevin Crisp was calling for $275 to $280 gold when this blip was sorted out. Whose risk are they both concerned about?
Strange. Today, Goldman Sachs and Chase banks were big buyers of gold options on Comex. Why buy options if you are not bullish or you believe the gold market has topped out for the time being. Yes, the buying can be for clients. Are their clients not listening to them? On that note, for maybe the first time in Comex history, the gold option volatility is higher than that for the silver contract.
There are other Goldman Sachs stories out there, but I want more confirmation of them before I present them to you.
Last night, I received a phone from a "very plugged in hedge fund manager" who confirmed to me that George Soros is long "forward" gold. NOT COMEX GOLD. That is not a rumor anymore; that is a fact, according to my source. Soros is also long aluminum and silver according to that same source.
This source also tells me that George Soros most likely does Comex business with Refco as do many of the big hedge funds. I do not know about who he does his OTC business with or who he trades with in London. However, according to this hedge fund manager, one should start at Refco as a starting place in tying this altogether.
This extraordinary development is an affront to all that believe in free markets.
There has been an orchestration by some bullion dealers and some of our own "officialdom" to hold down the gold price so that their own selfish interests can be served. In the meantime, gold miners are out of work, gold companies are going bankrupt, gold stock shareholders have been decimated, etc.
This is an outrage of the highest order and it has been going on for some time.