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Gold Market Commentary

June 26, 2000

Spot Gold $283, down $2.40
Spot Silver $4.94, down 2 cents

The technicals -- from the best to the worst, what does it matter? Another gold spike has been stomped by the manipulation crowd. The culprits midweek were AIG, the big insurance conglomerate, and yesterday it was Credit Suisse, both mentioned in the past as part of the "gold pool."

The Australian gold producers are almost always blamed when the price of gold is set back. But last week I learned it was an Australian producer BUYBACK that caused the early Thursday price spike in the United States. Thus the anti-gold cabal could not even use that lame excuse this time for gold's poor performance.

The impressive looking gold chart now looks very unimpressive, as the recent consolidation looks like a heavy brick on a flag poll. But is that any reason to be bummed out? NO! Because more and more gold market participants are finally getting the picture that the gold price has been rigged for some time. More and more of these participants are learning who is doing the rigging.

As this learning grows, so does the understanding that the price of gold can explode at any time because of the incredibly bullish natural supply/demand fundamentals. Critical (understanding) mass of all of this cannot be too far off. When that happens, rocket ship ride we go. Charts won't mean a thing.

So I don't just repeat just my own sentiments to you, here is an excerpt from and one of the most respected gold analysts in South Africa:

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MONEYWEB: So if you were Bernard Swanepoel of Harmony Gold Mine, or if you were Mike Prinsloo of Durban Deep, would you be looking for international partners at this stage, or perhaps the two of them getting together?

NICK GOODWIN: Yes, I think so. Look, also the gold price has been low for a very long time and more and more people internationally are starting to speak about the fact that it's going up, and they're looking at the dollar and saying the dollar has had a major run for a long period of time, and it looks like it's now vulnerable to start weakening. And if you look at the correlation historically between the gold price and the dollar, there's quite a close correlation. When the dollar is very strong, gold tends to be weak, and when the dollar is weak, gold tends to pick up. So we're starting to think that maybe the U.S. economy is starting to slow down, and, in fact, it might not be a soft landing, it might be a hard landing, because it's a really difficult thing to time. And the dollar could start weakening and gold could start picking up, because intrinsically at this point gold should be at least about $320 per ounce. And I'm getting more and more convinced that somebody is trying to control it, because there is so much at stake in terms of the positions that are held by various mines. And I think the biggest one is Ashanti where, last time the gold price ran, they lost $300 million within days. It can happen again, and you've got an intermediary there. You've got the gold broker, which sits between the mine and the central bank, and he's got to settle the gold. Now if that mine would effectively go bankrupt, then there's no way they are going to be able to mine the gold to settle with the bank, and the gold broker is going to be short of gold. So it's just strange, whenever the gold price gets to $290, it looks like someone is hitting it on the head.

MONEYWEB: But surely, if the natural supply and demand situation is such, you can't hold it down forever?

NICK GOODWIN: You can't, exactly. And I think, as I've explained to you before on the show, that this year is the first year that we are going to start getting a shortage of gold developing, even with the sales from central banks and hedging equal to what people have hedged in the past. We're looking at about 200 tons shortage, and this will grow to about 700 tons over three years, which is an unsustainable situation. This gold price just can't stay here. And to open new mines now, you need at least $350 an ounce and this is why these companies are so desperate to merge, because in fact they can't expand their production any more.

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To understand how bullish this comment is, note that Nick Goodwin is using the supply demand numbers of Gold Field Mineral Services, the apologist for the bullion dealers. Goodwin understands the gold shortage to be 200 tonnes this year growing to 700 tonnes in three years. We believe Veneroso Associates to be correct and they say the deficit is 1,500 tonnes per year ALREADY.

That deficit is being met by gold lending and gold derivative contracts. Consequently, the danger of a gold price explosion is greater than nearly everyone in the gold industry understands. That is why we keep getting these price spikes. I don't believe that any other market in history has traded like the gold market has over the past year.

It is also why the gold cabal keeps beating the price of gold back below $290. They are petrified of losing control of the beast they have created to feed their greed. Many, many times over I have explained that the gold loans over the past years have been rolled over at or just below $290. If the price of gold moves higher than that, these gold loans go under water. Since that is how the gold pool is holding down the price, they cannot allow that to happen. No matter how high the inflation, no matter how high the oil price.

Nick Goodwin is not the only one to suggest recently that something is amiss in the gold market:

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In 1792 the U.S. Congress adopted a bimetallic standard (gold and silver) for the new nation's currency - with gold valued at $19.30 per troy ounce
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