first majestic silver

Taylor on Gold

June 4, 2002

Over the past two weeks, two major U.S. institutions told their clients to sell gold and gold shares because the said they believed the move in gold was all but over. It was not surprising to the readers of this newsletter that the two major banks who tried to sway their clients from owning gold were two of the most significant defendants named in Reginald Howe's anti-gold price fixing law suit filed before a Federal District Court in Boston.The two clients which are the most prominent among the gold cartel were JP Morgan Chase and Goldman Sachs.

Despite their negative views on gold, a market that has learned recently not to take the "Abby Joseph Cohen's" of this world too seriously largely ignored their warnings. Gold continues to look strong having risen above its 22 year downtrend line. And, at the end of this week, a spot close of $326 exceeded its 50-day moving average of $306.49 and its 200-day moving average of $288.73.

True enough gold did fail to take out the $330 level this past week, so that key resistance level remains. But there is no question that gold remains very encouraging for us bulls and there can be no denying that the Gold Cartel is having trouble trashing gold as they did during the hey days of the Clinton Strong Dollar policy days. In fact, the recent weakness of the dollar if it continues as we expect it will, is likely to negatively impact financial assets for many reasons, some of which were discussed above. And as imaginary or paper money looses value, gold is always the beneficiary.

Certainly it would seem the psychology is changing with respect to gold. This is not true much among the American population. Indeed, I would argue that he has hardly begun to notice gold's rise. But among major mining companies, and the gold bullion Cartel as well as other central banks that may not have been aligned directly with the U.S., It seems as though the establishment's effort to trash the gold price is becoming considerably more difficult. This is so we suspect because demand for gold as money is beginning to grow on the part of many nations including countries in the middle east, a group of Muslim countries, China, Russia, India and Japan. And then there are a number of major mining companies that are in the process of buying gold on the market to unwind their overhedged positions.

And as John Hathaway pointed out in his excellent piece written earlier this week, central bankers are human too. As they see the value of gold rising and the value of paper declining, they are going to have a difficult psychological problem in continue to sell gold in favor of increasingly worthless paper money.

Yet, we can expect the Cartel and the establishment to trash gold if it is at all possible. So the J.P. Morgan and Goldman Sachs put their analysts to work to help the company gouge the American people one more time for the benefit of the multi-millionaire bankers. What is key to know here is what GATA has been telling us all along and that is that these banks and their clients have an enormous short position in gold. In the current climate of rising gold prices and disturbing economics and rising global tensions that suggests still higher prices, it is more than conceivable that these two major leaders of the gold Cartel may have sent their analysts out to "talk gold down" so as to help their firms cover their gold short positions.

J.P. Morgan's technical analysts operating out of London contradicted the consensus of most technical analysts with respect to gold according to Byron Kennedy who wrote about this story on May 22nd. He said that the company's, "London-based technical analysis team is warning clients long of gold to "exercise an increasing degree of vigilance given the potential for a bearish reversal."

Based on a host of technical indicators of their choosing, such as Elliot Wave count, momentum-based oscillators, the metal's price action as well as moving averages and actual bullion positions. Essentially, the J.P. Morgan analysts said that it is highly unlikely gold will rise above the $330 to $341 range.

And then on May 29th, Goldman Sachs analyst Daniel McConvey had the following to say about gold and gold shares according to Susan Lerner of

"Investors expecting gold stocks and the precious metal to continue to glitter may be in for a surprise, according to one analyst who downgraded several gold miners Wednesday. 'We believe that gold will be more challenged to rise substantially from current $324 levels over the next year due to weakness in physical jewelry demand," Goldman Sachs' analyst Daniel McConvey told clients.

Gold Cartel Is Also Trashing American Freedom and Liberty

Richard Russell about the best there is when it comes to understanding markets. I read his material every day. I never miss. Not only is his understanding essential for me to help my subscribers understand the big picture for markets, but Richard also understands that when you detach gold from a monetary system, you not only destabalize a country's monetary system, but you also most certainly take away its liberties. Few Americans any longer understand that. But Richard does. Thus he published the following comments in this past week in his daily column called "Richard's Remarks"

"The piece below was written by my old buddy, Aaron Russo. Aaron ran for governor of Nevada, he's also been a film producer, his best-known film being "Trading Places" with Eddy Murphy. At any rate, this is an interesting view of the forces aligned against gold. The letter was written to Bill Murphy, the head of GATA (Gold Anti-Trust Action Committee).

"Dear Bill,

"I think it is very important that people realize that the war against gold is more then just a profit motive by Goldman Sachs, Citicorp, and Morgan Chase although it is that as well..... All these institutions are major shareholders in the private for profit federal reserve system, and they all have a common purpose in knocking gold down.

"The big picture is that they are trying to establish a "cashless society" where all "money" is digitized and computerized so people will believe they have no need for cash. Their plans cash will become ancient history, therefore the need for debit cards and other devices (implanted chips) that allow electronic transfers.

"In this way all transactions can and will be monitored. However it gets worse and even more treacherous, because they will then have the ability to turn off your debit card or other device at their will if you do not behave as they desire. (If you ever tried to buy something and your credit card was not working, you know what i am talking about)

"If you are an independent thinker and you stand up to the slave-masters you will not be capable of buying food or paying your mortgage. This is the very definition of totalitarianism. We will have the New World Order run by the bankers. Gold is the one thing that stands in their way because it is debt free money not made by their system and that is precisely why it is so important for them to denigrate gold while at the same time controlling the marketplace, and controlling the mines by lending them money and forcing them to sell forward.

"The common man must never be allowed to think of gold as money but rather as jewelry or an ornament. That is why the price must not be allowed to rise because that give gold credibility and allows people to get around institutionalized digitized money. This battle we are undertaking is not about profits on a higher gold price but a war for our very souls, our country, our freedom and a future for free thinking individuals who choose not to live in a world run by banking institutions and the wealthy families who control those institutions.

"Unfortunately this is not theory or wild speculation on my part but first hand knowledge. The job you are doing is awe inspiring and you are creating a synergy that gives me hope we can win. I just want everyone to know what is really at stake. God bless.... Aaron Russo"


Another American about the same age as Richard Russell also understand that the detachment of gold from our monetary system is leading America toward dictatorship. So why does he do it? In our July 2002 issue we plan to publish Greenspan's famous article titled "Gold & Economic Freedom in which he very clearly illustrates his understand of how essential gold as money is in order for a country to retain its liberties. But perhaps those were his views back in 1966 when he wrote this article? Not so he told Congressman Ron Paul in February 2001. He told the Congressman that he had recently read that 1966 article and that he "would not change a word" were he to write it again today.

Our take on that is that Greenspan is knowingly playing a role as an import ant cog in a machine designed to destroy America and its Constitution. Over the next several months, we will explore this theme because it helps understand that the rigging of the gold markets is but a sub-theme of an overall movement to clandestinely transfer from the American people to a group of Fabian Socialists, of which the American aristocracy are core members.

Gold Markets May be Ready to Explode/
"Citibank Gold Short Position in Trouble"

The $330 range, which the Morgan analyst said could not be violated is VERY important as the following June 1, 2002 quote from Bill Murphy in suggests:

"Another remarkable trading day in gold on Friday. Four times the cabal took gold down and four times they failed to keep it down. That came after gold nearly took out $330 in early overseas trading. Naturally, it was sent lower in the U.S. where gold price-capping attempts are the most prominent.

"This is the fifth good weekly close on a Friday in a row. That is also extraordinary and bodes well for next week. Many technicians find Friday closes to have added weight to gauge future market performance.

"Gold has also closed three days in a row over pivotal $325. In my opinion this is of similar technical importance to the two closes above $305. It signals the shorts are no longer in control of the gold price. That confirms what GATA's South African source relayed to me weeks ago regarding what two J.P. Morgan executives told him about "losing control of the gold price." ($325 is the area where in October 1999 Bank of England chief Eddie George was squirming). This is what Reg Howe wrote in his Complaint submitted to the Boston Federal Court in the fall of 2000: '55. The fifth wave of preemptive selling in excess of two standard deviations occurred in response to this rally as the Fed, the Bank of England and the BIS struggled to halt and reverse it. According to reliable reports received by the plaintiff, this effort was later described by Edward A. J. George, Governor of the Bank of England and a director of the BIS, to Nicholas J. Morrell, Chief Executive of Lonmin Plc:

'We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K.'

Unfortunately that infamous quote has never been denied in, or out, of court! Then Bill Murphy continued with the following:

"I am hearing more and more recently about the big hedge funds being long gold. That was brought to The Café's attention MANY months ago by Midas. This is VERY important. We know who the sellers are! They are big and powerful. They are also running out of gold. The buyers, as a group, are showing they have even more clout than the price-fixers. There is a de-facto bull Gold Cartel taking on the bear Gold Cartel. In addition to the most powerful hedge funds, the Arabs, gold producers (forward sale buy-backs), Chinese, Russians and Indian/Japanese public are substantial buyers."

In speaking to Bill Murphy yesterday, he told me he could not divulge which hedge funds, but he said he lunched with an analyst for one of the biggest of the big household name funds there is and they are taking a long position in gold.

Bill Murphy also passed on the following to Café members this past week:


"Certain bullion banks are in DEEP, DEEP trouble. This email from a GATA ARMY man confirms what GATA and Reg Howe have been saying for YEARS:

"Just heard from a reliable source that the inside gossip at Citibank is that their short position in gold is in trouble. According to this source, the information is spreading throughout the Citibank employees. It was also mentioned that JP Morgan and Goldman were in the same boat. According to this source, they have been accommodating the US Treasury for the past few years thanks to Rubin and expect their losses to be reimbursed although the reimbursement is not in writing.

"This source also says that back in the 1980's, the savings and loan guys were also going to be taken care of and then they went bankrupt." Fred

"All three of these banks were named in Reg Howe's lawsuit. Robert Rubin went from Goldman Sachs to the U.S. Treasury to Citibank. How cozy!

"This should make it clear to EVERYONE why the U.S. Treasury was named in Reg Howe's lawsuit.

"What is to striking to me is the "not in writing" comment in this email. U.S. Treasury involvement in gold can explain the huge gold derivative positions that Reg found at J. P. Morgan and Chase, pre merger. Citibank had a large amount too. We could never figure out how the credit committees would let them carry such dangerously large short positions. ALL ALONG we have surmised these positions might be back-stopped by the Treasury. I have said so over the years in Midas. What is fascinating is that the Treasury probably could not put their maneuver in writing for fear the document would surface. Can you imagine if GATA every got its hands on a document like that!!!!

"I think history will show that one of the most important documents ever produced in the gold world will be the Gold Derivative Banking Crisis a GATA contingent handed to the Speaker of the House, Denny Hastert, two years ago. It was also given to every member of the House and Senate banking committees and to the Chief Economist of the Senate Banking Committee.

"I say so because I believe a gold derivative banking crisis is kicking in RIGHT NOW, at its earliest stages. The gold derivative neutron bomb is quietly going off. When gold takes out $330, that ought to be apparent to financial world."

Gold is still being mined and refined at the rate of almost 2,600 tonnes per year.
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